Goertek Inc. Annual Report 2022
Goertek Inc.
Annual Report 2022
April 2023
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Goertek Inc. Annual Report 2022
Annual Report 2022
Section Ⅰ Important Notes, Contents and Interpretations
The Board of Directors, the Board of Supervisors, directors, supervisors and
senior management of the Company guarantee that the information presented 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 and joint legal liabilities.
Jiang Bin, the person in charge of the Company, and Li Yongzhi, the person in
charge of accounting and the accounting department (accounting supervisor)
guarantee that the financial report in this annual report is authentic, accurate and
complete.
All directors have attended the board meeting to review the annual report.
The future plans and some forward-looking statements mentioned herein are
planned matters which shall not constitute a substantial commitment of the
Company to investors. Therefore, both investors and relevant persons should
maintain their risk awareness and understand the differences among plan,
forecast and commitment. Please pay attention to investment risks.
The Company faces the risks in market, operation and management. Investors
are kindly reminded to pay attention to possible investment risks. For details, see
"Section III Management Discussion and Analysis, XI Outlook for the Future
Development of the Company" in this report.
The profit distribution proposal considered and approved by the Board of
Directors of the Company is as follows: based on the total share capital registered
on the record date of equity distribution minus the repurchased shares in the
Company's specific securities repurchase account, the Company will distribute
cash dividend of RMB 1.00 (tax inclusive) for per 10 shares to all the shareholders,
as well as 0 bonus shares (tax inclusive), and there is no conversion of capital
surplus into share capital.
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Goertek Inc. Annual Report 2022
Contents
Section Ⅰ Important Notes, Contents and Interpretations .................................................. 2
Section Ⅱ Company Information and Financial Highlights ................................................. 7
Section III Management Discussion and Analysis ................................................................ 11
Section IV Corporate Governance ......................................................................................... 37
Section V Environmental and social responsibilities .......................................................... 63
Section VI Important Matters ................................................................................................ 65
Section VII Changes in Shares and Information about Shareholders ................................. 78
Section VIII Information of Preference Shares........................................................................ 85
Section IX Information on the Bonds .................................................................................... 86
Section X Financial Report.................................................................................................... 87
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Goertek Inc. Annual Report 2022
Directory of Reference Files
(1) Financial statements with signatures and seals of the legal representative, the person in charge of
accounting and the person in charge of accounting department (accounting supervisor);
(2) The originals of 2022 annual report and its abstract signed by the legal representative of the
Company;
(3) The originals of the auditor’s report with the seal of Zhongxi Certified Public Accountants
(special general partnership) Co., Ltd. and the signature and seal of the certified public accountants;
(4) The originals of all company documents and announcements publicly disclosed in newspapers
designated by China Securities Regulatory Commission (CSRC) during the reporting period.
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Goertek Inc. Annual Report 2022
Interpretations
Terms Refers to Content of interpretation
Company, the Company, Goertek Inc. Refers to Goertek Inc.
Goertek Group Refers to Goertek Group Co., Ltd., Controlling shareholder of the Company
Weifang Goertek Electronics Co., Ltd., wholly owned subsidiary of the
Weifang Goertek Refers to
Company
Goertek Microelectronics Refers to Goertek Microelectronics Inc. controlled subsidiary of the Company
Weifang Goertek Microelectronics Co., Ltd., controlled subsidiary of the
Weifang Goertek Microelectronics Refers to
Company
Goertek Optical Refers to Goertek Optical Technology Co., Ltd., controlled subsidiary of the Company
Goertek Technology Vina Company Limited, wholly owned subsidiary of the
Goertek Technology (Vietnam) Refers to
Company
ODM Refers to Original Design and Manufacturing
JDM Refers to Joint Design and Manufacturing
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
Micro speaker Refers to
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.
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
MEMS Refers to
components, optical system and electric control system of driving components
into a whole unit of microsystem, featured with miniaturization, intelligence,
multi-function, high integration and being suitable for mass production.
The acoustic component composed of one or several micro speakers and other
Speaker module Refers to electronic devices, which are assembled together through an injection molded
housing.
A portable device that can be worn or carried directly, or integrated into the
Smart wearable devices Refers to
user's clothes or accessories.
A computer simulation system that can create and experience virtual world by
Virtual Reality/VR Refers to using computer to generate a simulation environment into which immerses the
users.
A technology that skillfully integrates virtual information with the real world.
By making extensive use of multimedia, 3D modeling, real-time tracking and
registration, intelligent interaction, sensing and other technical means, it
Augmented Reality/AR Refers to applies the computer-generated text, images, 3D models, music, video and
other virtual information to the real world after simulation. These two kinds of
information complement each other to achieve “augmentation” of the real
world.
The new types of smart wireless earphones represented by TWS (True Wireless
Stereo) earphones connect the left and right earphones with smart phones or
Smart wireless earphones Refers to 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.
Also known as SiP (System in Package) packaging module at the system level,
Microsystem module Refers to it integrates multiple chips and passive components into the same package
through advanced packaging technologies such as 3D packaging, to form a
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Goertek Inc. Annual Report 2022
module with whole or main functions of an electronic system, so as to realize
the optimal combination of performance, volume, weight and other indicators.
It is a versatile next-generation microelectronics technology.
A detection device that is capable of feeling the measured information, and able
to transform the perceived information into electrical signals or other required
Sensor Refers to 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
Refers to yuan (RMB), ten thousand yuan (RMB), hundred million yuan (RMB)
100,000,000
Reporting period Refers to January 1, 2022 to December 31, 2022
Other notes: In this report, any difference between the sum of some amounts and the sum of detailed items is due to rounding.
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Goertek Inc. Annual Report 2022
Section Ⅱ Company Information and Financial Highlights
I. Company Information
Stock abbreviation Goertek Inc. Stock code 002241
The stock exchange where stocks
Shenzhen Stock Exchange
are listed
Name of the Company in Chinese Goertek Inc.
Abbreviation of the Company in
Goertek Inc.
Chinese
Name of the Company in English
Goertek Inc.
(if any)
Abbreviation of the Company in
Goertek
English (if any)
Legal representative of the
Jiang Bin
Company
Registered address 268 Dongfang Road, High-tech Industrial Development District, Weifang
Postal code of registered address 261031
Previous changes of registered
No change
address of the Company
Business address 268 Dongfang Road, High-tech Industrial Development District, Weifang
Postal code of business address 261031
Company website http://www.goertek.com
E-mail ir@goertek.com
II. Contacts and Contact Information
Board Secretary Securities Affairs Representative
Name Jia Jun'an Xu Yanqing, Xu Dapeng
268 Dongfang Road, High-tech Industrial 268 Dongfang Road, High-tech Industrial Development
Contact address
Development District, Weifang District, Weifang
Tel. 0536-3055688 0536-3055688
Fax 0536-3056777 0536-3056777
E-mail ir@goertek.com ir@goertek.com
III. Information Disclosure and Place of the Report
Website of the stock exchange for release of the
Shenzhen Stock Exchange (http://www.szse.cn)
Annual Report
Name and website of the media for release of the Securities Times, China Securities Journal, Shanghai Securities News,
Annual Report Securities Daily, CNINFO (http://www.cninfo.com.cn)
Place where the Annual Report is available for
Office of Board of Directors of the Company
inspection
IV. Changes in Registration
Unified Social Credit Code 91370700729253432M
The changes in main business since the Company
No change
was listed (if any)
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Goertek Inc. Annual Report 2022
Changes of controlling shareholders of the
No change
Company (if any)
V. Other Relevant Information
Accounting firm engaged by the Company
Zhongxi Certified Public Accountants (special general
Name of the accounting firm
partnership)
Room 1101, No. 11, Chongwenmenwai Street, Dongcheng
Business address of the accounting firm
District, Beijing
Names of accountants signing the report Du Yeqin, Zhang Shuli
The sponsor institution engaged by the Company to perform continuous supervision during the reporting period
Applicable Not applicable
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
2022 2021 Year-on-year change 2020
Operating revenue (RMB) 104,894,324,162.26 78,221,418,618.02 34.10% 57,742,742,893.96
Net profit attributable to
shareholders of the Company 1,749,181,131.83 4,274,702,999.38 -59.08% 2,848,007,269.61
(RMB)
Net profit attributable to
shareholders of the Company
1,627,378,630.73 3,832,421,177.27 -57.54% 2,758,911,040.03
excluding non-recurring profits and
losses (RMB)
Net cash flow from operating
8,317,113,364.68 8,598,475,527.88 -3.27% 7,682,256,113.68
activities (RMB)
Basic earnings per share (RMB /
0.52 1.29 -59.69% 0.89
share)
Diluted earnings per share (RMB /
0.52 1.28 -59.38% 0.89
share)
Weighted average return on net
6.17% 17.61% -11.44% 16.40%
assets
End of 2022 End of 2021 Year-on-year change End of 2020
Total assets (RMB) 77,176,355,467.91 61,079,051,133.27 26.35% 49,117,826,313.41
Net assets attributable to
shareholders of the Company 29,491,882,199.49 27,327,747,993.97 7.92% 19,653,252,273.26
(RMB)
Indicate whether the lower of the net profit before and after non-recurring gains and losses was negative for the last three accounting
years, and the latest auditor’s report indicated that there was uncertainty about the Company’s ability to continue as a going concern.
Yes No
Indicate whether the lower of the net profit before and after non-recurring gains and losses was negative. Yes No
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Goertek Inc. Annual Report 2022
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 international
accounting 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 to
international accounting standards and Chinese accounting standards
2. Differences in net profits and net assets in the financial reports disclosed according to foreign accounting
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 to foreign
accounting standards and Chinese accounting standards.
Ⅷ. Key Quarterly Financial Indicators
Unit: RMB
The first quarter The second quarter The third quarter The fourth quarter
Operating revenue 20,111,796,850.74 23,491,677,031.37 30,549,276,176.86 30,741,574,103.29
Net profit attributable to
901,114,518.82 1,177,731,691.33 1,761,261,980.08 -2,090,927,058.40
shareholders of the Company
Net profit attributable to
shareholders of the Company
878,301,318.86 1,136,026,374.30 1,470,919,799.57 -1,857,868,862.00
excluding non-recurring profits and
losses (RMB)
Net cash flow from operating
1,466,497,950.54 3,122,178,119.98 -1,028,533,463.06 4,756,970,757.22
activities
Whether there is significant difference between the above individual or aggregate financial indicators and that of what disclosed in
the 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 2022 2021 2020 Explanation
Mainly
investment
Profits and losses on disposal of non-current
income from
assets (including the write-off portion of the 122,922,237.61 -122,148,708.58 -219,544,001.32
disposal of equity
provision for asset impairment)
owned in other
companies
Mainly special
Government subsidies included in the current
funds for
profits and losses (except those closely related
enterprise
to the Company's normal business, comply
351,383,799.43 464,119,437.91 221,372,903.17 innovation and
with national policies and regulations, and
development and
continuously grant in accordance with a certain
other government
standard quota or quantity)
subsidies
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Goertek Inc. Annual Report 2022
In addition to the effective hedging business
related to normal business of the Company, the Mainly the gains
profits and losses from the changes in fair from the fair
value arising from holding financial assets held value changes
for trading and financial liabilities held for -367,080,970.87 185,179,920.90 102,685,404.04 and transaction of
trading, as well as the investment income from the Company's
the disposal of financial assets held for trading, foreign exchange
financial liabilities held for trading and derivatives
available-for-sale financial assets
Other non-operating revenue and expenditures
15,710,102.76 13,554,671.71 5,874,633.40
other than those mentioned above
Mainly tax
benefits and
investment
Other profit and loss items that meet the income from
42,288,231.23 2,603,363.20 3,236,394.55
definition of non-recurring profit and loss large-
denomination
deposits and
other products
Less: Impact of income tax 26,114,589.64 84,270,186.15 21,159,380.84
Impact of minority interests (after tax) 17,306,309.42 16,756,676.88 3,369,723.42
Total 121,802,501.10 442,281,822.11 89,096,229.58 --
Details of other profit and loss items that meet the definition of non-recurring profit and loss：
Applicable Not applicable
Mainly tax benefits and investment income from large-denomination deposits and other products
Description of defining the non-recurring profit and loss items, which are listed in Explanatory Announcement No. 1 on Information
Disclosure for Companies with Public Offerings of Securities - Non-recurring Profit and Loss, as recurring profit and 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 on
Information Disclosure for Companies with Public Offerings of Securities - Non-recurring Profit and Loss, as recurring profit and
loss in the reporting period.
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Goertek Inc. Annual Report 2022
Section III Management Discussion and Analysis
Ⅰ. The situation of the industry during the reporting period
During the reporting period, the Company's main business is categorized into the industry of the manufacturing of computer,
communication, and other electronic equipment, and is divided into three segments including precision components business, smart
audio device business and smart hardware business. The Company operates mainly in consumer electronics, automotive electronics
and other industries, with the main products including acoustics, optics, microelectronics, structural components and other precision
components, as well as smart hardware products such as virtual reality (VR)/augmented reality (AR) products, TWS smart earphones,
smart wearable devices, gaming console and accessories, and smart home products. The Company serves the leading global customers
in the technology and consumer electronics industry by providing them with vertically integrated product solutions of precision
components and smart hardware, as well as the related design, R&D and manufacturing services.
In the mobile era with smartphones as the core hardwares, a large number of outstanding well-known enterprises in technology and
consumer electronics industry had emerged worldwide based on the integration of hardware devices, software content and innovative
applications, which drove the whole industry and related enterprises in its industrial chain to achieve significant growth and enterprise
development through a long period of time in the past. However, affected by many adverse factors such as macroeconomic weakness
and high inflation in many European and American countries in 2022, global smartphone product shipments declined significantly, and
the transition of the technology and consumer electronics industry from the mobile era to the post-mobile era accelerated. During the
reporting period, the Company continued to seize opportunities in the industry with the approach of the post-mobile era to consolidate
its core competitiveness, actively expand the business of next-generation smart hardware and related components, and promote the
Company's overall business development.
According to the statistics of IDC, a well-known consulting agency, the global smartphone shipment in 2022 reached about 1.21 billion
units, with an approximately 11% YoY decline. As the shipments decline, the pace of innovation in technologies and application
scenarios of smartphone products has slowed down, the demand of smartphone related precision component has shrunk as well.
However, at the same time, advanced technologies such as 5G, AI, intelligent interaction, sensor, software algorithm are further
integrated into next-generation smart hardware products, thus creating a large number of new applications and demands, so as to
promote the sustainable development of next-generation smart hardware products such as VR/AR devices, smart wireless earphones,
smart wearable devices and smart home products.
In the first half of 2022, the global VR industry maintained a relatively strong momentum of growth. However, in the second half of
2022, due to the adverse impact of macroeconomic downturn, inflation, weak consumption and other factors, VR products performed
poorer than expected in the third and fourth quarters which are traditionally the peak season of sales in Europe and the United States,
and thus impacted the annual performance of the VR industry. According to the statistics of IDC, the global shipment of VR products
declined in 2022 compared to the previous year. However, according to the estimates of the Company's internal market research
department, the total shipments of the world's top three VR device brands in 2022 still grew over the previous year. Though the growth
of the global VR industry is slightly slower than expected, the well-known brand companies in consumer electronics and Internet
industries kept actively investing in VR, which promotes the continuous development of related hardware technology and software
content. In 2022, AR products were still in the early stages of technological breakthroughs and product maturity. The global market
size of AR products is still limited, and the hardware technologies still face challenges in many areas such as chip, optical display,
communication, power consumption, size, weight, and others. However, the great market potential still attracts extensive attention and
continuous investment from well-known companies in the industry.
In November 2022, five government authorities including the Ministry of Industry and Information Technology co-issued The Virtual
Reality and Industry Application Integration Development Action Plan (2022-2026) to further laid down the overall requirements,
goals, key tasks and projects for the development of China's VR industry, which was expected to promote the sustainable and healthy
development of the industry.
According to the statistics of FutureSource, a famous consulting agency, the global shipment of TWS smart earphones reached about
340 million units in 2022, up about 13% YoY. And about 98.61 million smart speakers were shipped globally in 2022, declined about
8.6% YoY. With the integration of AI, natural language processing and smart voice interaction technologies, the smart earphones,
smart speakers and other products are expected to further develop in the future.
According to the statistics of IDC, another well-known consulting agency, the global shipment of smart wearable products such as
smart watches reached about 149 million units in 2022, with approximately 9.4% YoY increase. While the overall market size is
growing steadily, next-generation health monitoring technology such as non-invasive glucose monitoring is also under development
and improvement, which is expected to create new applications and market demands for smart wearable products in the future.
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Goertek Inc. Annual Report 2022
The development of next-generation smart hardware products has also boosted the demand for related precision components such as
precision optical components and modules, precision acoustic components, MEMS sensors and microsystem modules, haptic
components, and precision structural parts.
From the perspective of competition, the global technology and consumer electronics industry still presents a centralized trend. Well-
known enterprises with strong competitiveness and brand awareness demonstrate clear competitive advantages by possessing a large
amount of technologies, talents, funds, brands and industrial ecosystem resources, thus continuously lead the technology and product
innovation in the industry.
From the perspective of supply chain, developing countries including China are demonstrating more and more important roles. On one
hand, China still has advantages in terms of political/economic environment, infrastructure, industrial foundation
management/technical talent resources and other aspects. The overall competitiveness of electronic manufacturing enterprises of China
is improving, and they undertake the demand of manufacturing service of the global supply chain. On the other hand, considering the
complicated international political and economic environment, some enterprises faced the challenges of setting up a global supply
chain, which needs to be tackled prudently in a scientific manner.
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 by providing
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 device business and
smart hardware business. The precision components business focuses on acoustics, optics, microelectronics, structural components,
and other precision components. The related products include micro speaker/receiver, speaker module, haptic component (actuator),
wireless charging device, antenna, MEMS microphone, MEMS sensors, microsystem module, VR optical component and module, AR
optical component, AR light engine, precision structural parts and etc. The above-mentioned products are widely applied in devices
such as smartphones, tablets, smart wireless earphones, VR, AR, smart wearable and smart home devices. Smart audio device business
focuses on providing products related to audio, voice interaction, AI, and other technologies. The main products include smart wireless
earphones (TWS), wired/wireless earphones, smart speakers, etc. Smart hardware 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. In addition, the Company actively explored business opportunities related to automotive
electronics during the reporting period, and made progress in some new directions such as car sensors, optical modules, etc.
The Company has innovative competitive advantages in the fields of acoustics, optics, MEMS microelectronics and precision
manufacturing, and owns many intellectual property rights in the field of precision parts and components. In addition, the Company
has accumulated rich experience in products and projects by cooperating with industry-leading clients in the field of smart audio device
and smart hardware through "ODM", "JDM" and other business modes. During the reporting period, the Company maintained good,
long-term cooperative relationships with leading clients in the global technology and consumer electronics industry. As a result, the
Company has been highly recognized by global clients for its product solutions and services, and remains being the industry-leading
manufacturer in the fields of micro speakers, MEMS microphones, MEMS sensors, VR products, TWS, smart wearable products,
gaming console and accessories, etc.
During the reporting period, due to the business growth in VR, smart home gaming consoles and accessories, the revenue of the
Company grew significantly. The Company's position in the industry has also been further improved as well. The Company won many
honors, including being ranked the 3rd company in the Top-100 China electronic component enterprises based on comprehensive
economic indexes, the 67th in the Top-500 private enterprises in China's manufacturing industry, the 118th in the Top-500 private
enterprises in China, and held the position of executive member company of CITIF.
Ⅲ. Analysis of Core Competitiveness
1.Industry-leading precision and intelligent manufacturing capabilities
In technology and consumer electronics related fields, the Company has been widely recognized for precision manufacturing
capabilities and obtains great reputation. Relying on the core capabilities and long-term experience in the field of precision
manufacturing, the Company has continuously improved the processing accuracy, efficiency and quality of precision components and
smart hardware products. The Company has in-house development capabilities of various core raw materials, and The Company
adopted multiple advanced processes and technologies such as ultra-high-precision mold, high-precision metal/non-metal processing,
ultrasonic technology and laser technology, to build industry-leading precision manufacturing capabilities in the production of precision
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Goertek Inc. Annual Report 2022
optical components, MEMS sensors, microsystem modules and precision structural parts, thus ensuring the delivery of the products
with high precision, high efficiency and high quality.
The Company, based on the capacities of advanced equipment development and flexible automation production, actively explores the
intelligent manufacturing mode for upgrading. In the fields of automation, machine vision and AI related to intelligent manufacturing,
the Company has built a future-oriented core capability of intelligent manufacturing by continuing investing in independent R&D,
introducing global advanced technologies, core equipment and best practice experience for system integration, thus improving the
manufacturing in all aspects through the application of information, automation, artificial intelligence and 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. Through cross-domain
technology integration, the Company provides customers with advanced and systematic solutions for precision components and smart
hardware products. The Company attaches great importance to the integration and cultivation of outstanding talents in the fields of
acoustics, optics, microelectronics, wireless communication, precision manufacturing, automation, and other sectors around the world.
The Company has set up a team of technical personnel with profound technical strength and rich experience in product projects, and
has made a long-term cooperation with many well-known universities and scientific research institutions, such as Tsinghua University,
Zhejiang University, Shandong University, Southeast University, Ocean University of China, Spring Institute of Chinese Science and
Technology, Xiamen University, and Changchun University of Science and Technology, which forms an open and comprehensive
technology R&D platform in support of continuous innovation and R&D of technologies and products.
During the reporting period, the Company applied for 3,388 patents, including 2,545 invention patents. A total of 2,195 patents has
been granted, including 1,250 invention patents. As of December 31, 2022, the Company has totally applied for 29,206 patents,
including 3,738 foreign patent applications and 15,647 invention patents applications; a total of 17,720 patents have been granted,
including 5,415 invention patents.
3. Continuous strategic innovation and transformation, and stable high-value customer relationships
Facing the complex macroeconomic situation of domestic and overseas, the management of the Company actively carries out strategical
innovation and transformation. While continuing to consolidate the core competitive advantages in conventional business, the Company
firmly grasps the innovation opportunities of next-generation smart hardware products in the technology and consumer electronics
industry. Relying on the high-value customer resources and good customer relationships worldwide, the Company, oriented by the
market and technology, continues to explore new business growth opportunities in the fields of consumer electronics and automotive
electronics. The Company optimizes the allocation of strategical resource, supports strategical product development, continues
strengthening and further utilize the customer resource advantages by closely following the world-class customers, in an effort to
transform the needs of high-value customers into an inexhaustible driving force for the Company's sustainable development.
4. Excellent core management team
Although the Company experiences a rapid and sound development, the core management team keeps a steady and efficient style 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 management team promptly
response to the market and makes changes and innovations continuously, to keep and enhance the Company's capabilities of strategic
management, operation, R&D, precision and intelligent manufacturing. The Company attaches importance to and promotes the
internationalization, specialization and rejuvenation of its core management team, and actively brings in senior management talents
and professionals from many international leading enterprises. At the same time, the Company has strengthened the echelon of its
talent team, more and more young talents grow up into the Company's core management team through training and practice. The
Company boasts a management team with both experience and vitality that continues to promote the Company's stable and fast
development in the future.
IV. Analysis of Main Business
1. Overview
In 2022, as the global economy faced downward pressure from a macroeconomic perspective, China's economic development was also
affected by multiple unexpected factors at home and abroad. In the face of a severe external environment, China responded decisively
and exercised timely regulation, introduced and implemented a package of policies and follow-up measures to stabilize the economy,
and promoted economic stabilization and recovery, thus ensuring steady economic performance.
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Goertek Inc. Annual Report 2022
During the reporting period, the Company, by adhering to the product strategy of "Precision Components + Smart Hardware & Devices”,
served the leading enterprises in the global technology and consumer electronics industry, actively promoted the development of
precision components (acoustics, optics, microelectronics, structural parts, etc.) and emerging smart hardware business (VR/AR, smart
wireless earphones, smart wearable and smart home devices, etc.). At the same time, the Company continued to promote its internal
reform and operation management improvement, so that the Company’s operation from decision making to implementation operation
would be more efficient. This could lay a solid foundation for future development.
During the reporting period, in the face of numerous challenges such as the weak global economy, high inflation in Europe and the
United States, and the downturn in the consumer electronics industry, the management team and all staff of the company went all out
to overcome these challenges calmly, completed various important tasks such as business expansion, project delivery and operational
improvement, and promoted the stable development of various business fields. The Company's revenue in 2022 continued to grow
significantly.
In the fourth quarter of 2022, the Company experienced fluctuations during the production of one of its new smart acoustic device
products (for details, please refer to the relevant announcement made by the Company). After the occurrence of the above incidents,
the Company's management team responded actively by communicating frequently with customers, facilitating the solution of the
incidents, making an effort to maintain and improve customer relations, and ensured that other business cooperation is carried out as
usual. The Company fully considered the impact of this matter, and based on the principle of prudence, increased the provision for
related asset impairment, which resulted in a decline in the Company's net profit in 2022. In response to the above incidents, the
Company has carefully reflected on its mistakes and learned important lessons, and subsequently, rectified the shortcomings in relevant
work. The Company firmly believes that this contingency will not weaken the Company's core competitiveness, shake the Company's
business foundation, or undermine the Company's stable and healthy development in the long term.
During the reporting period, the Company achieved an operating revenue of RMB 104,894.3242 million, with a 34.10% YoY increase.
The Company realized a net profit attributable to shareholders of listed companies of RMB 1,749.1811 million, with a 59.08% YoY
decline. The operating cost of the Company was RMB 93,233.4765 million, with a 38.81% YoY increase.
During the reporting period, the total amount of the Company's selling expenses, administrative expenses, R&D expenses and financial
expenses was RMB 8,218.4527 million, with a 22.05% YoY increase.
During the reporting period, the Company further strengthened the development of new technologies, products and techniques, actively
brought in high-level R&D talents, and invested RMB 5,198.3122 million in R&D, accounting for 4.96% of the revenue and 17.18%
of the latest audited net assets of the Company.
During the reporting period, the net cash flow from operating activities of the Company was RMB 8,317.1134 million, with a 3.27%
YoY decline.
2. Revenue and cost
(1) Composition of operating revenue
Unit: RMB
2022 2021
Proportion in Proportion in Year-on-year change
Amount Amount
operating revenue operating revenue
Total of operating
104,894,324,162.26 100% 78,221,418,618.02 100% 34.10%
revenue
Classified by industry
Electronic
102,966,939,788.80 98.16% 76,946,324,805.73 98.37% 33.82%
components
Other business
1,927,384,373.46 1.84% 1,275,093,812.29 1.63% 51.16%
income
Classified by product
Precision
14,003,616,502.68 13.35% 13,840,133,491.33 17.69% 1.18%
components
Smart audio
25,880,868,282.31 24.67% 30,297,084,891.23 38.73% -14.58%
device
14
Goertek Inc. Annual Report 2022
Smart hardware 63,082,455,003.81 60.14% 32,809,106,423.17 41.94% 92.27%
Other business
1,927,384,373.46 1.84% 1,275,093,812.29 1.63% 51.16%
income
Classified by region
Domestic 9,182,257,334.82 8.75% 7,571,525,782.78 9.68% 21.27%
Overseas 95,712,066,827.44 91.25% 70,649,892,835.24 90.32% 35.47%
Classified by sales mode
Direct selling 104,414,898,362.49 99.54% 77,770,329,729.13 99.42% 34.26%
Distribution 479,425,799.77 0.46% 451,088,888.89 0.58% 6.28%
(2) Industries, products, regions and sales modes accounting for more than 10% of the Company's operating revenue or
operating profit
Applicable Not applicable
Unit: RMB
Gross YoY change (%) YoY change
YoY change (%)
Operating revenue Operating cost profit of operating (%) of gross
of operating cost
margin revenue profit margin
Classified by industry
Electronic
102,966,939,788.80 91,509,198,680.69 11.13% 33.82% 38.54% -3.03%
components
Classified by product
Precision
14,003,616,502.68 11,035,414,492.23 21.20% 1.18% 3.70% -1.91%
components
Smart audio
25,880,868,282.31 24,417,812,289.94 5.65% -14.58% -10.12% -4.68%
device
Smart hardware 63,082,455,003.81 56,055,971,898.52 11.14% 92.27% 98.46% -2.77%
Classified by region
Domestic 7,668,917,691.68 6,712,603,655.53 12.47% 11.50% 13.37% -1.44%
Overseas 95,298,022,097.12 84,796,595,025.16 11.02% 36.01% 41.01% -3.16%
Classified by sales mode
Direct selling 102,489,902,939.54 91,100,679,999.97 11.11% 33.98% 38.73% -3.05%
Distribution 477,036,849.26 408,518,680.72 14.36% 6.66% 5.46% 0.97%
If the statistical caliber of the Company's main business data has been adjusted in the reporting period, adjusted statistics of main
business are based on the caliber at the end of the reporting period of last year.
Applicable Not applicable
(3) Whether the Company's revenue from physical products sales is greater than the revenue from providing services
Yes No
Classification of
Item Unit 2022 2021 Year-on-year change
industry
Electronic Sales volume Ten thousand PCS 453,825.95 540,341.87 -16.01%
components Output volume Ten thousand PCS 461,666.20 546,976.95 -15.60%
industry Inventory volume Ten thousand PCS 41,876.34 34,036.09 23.04%
Reasons for changes in the relevant data over 30% year-on-year
Applicable Not applicable
15
Goertek Inc. Annual Report 2022
(4) Fulfillment of major sales contracts and major procurement contracts signed by the Company as of the reporting period
Applicable Not applicable
(5) Composition of operating cost
Classification of industry
Unit: RMB
2022 2021
Classification of Year-on-year
Item Proportion in Proportion in
industry Amount Amount change
operating cost operating cost
80,345,630,863.8
Direct materials 87.80% 55,843,214,176.77 84.54% 43.88%
6
Electronic Direct labor
4,168,178,564.20 4.56% 4,058,480,923.72 6.14% 2.70%
components expenses
Manufacturing
6,995,389,252.63 7.64% 6,152,377,303.86 9.31% 13.70%
expenses
Explanation
During the reporting period, the Company's overall sales volume increased. At the same time, the sales revenue of smart hardware
products with a relatively high proportion of material cost increased.
(6) Whether there is any change in consolidation scope during the reporting period
Yes No
During the current period, the Company acquired 8 subsidiaries through establishment. They are respectively Goertek Optical
Technology (Qingdao) Co., Ltd, Goertek Optical Technology (Shanghai) Co., Ltd., Qingdao Resonance Venture Capital Management
Co., Ltd., Qingdao Resonance Phase I Venture Capital Fund Partnership (Limited Partnership), Weifang Goertek Electronics Co., Ltd.,
Qingdao Goertek Horizons Technology Co., Ltd., Weifang High-tech Zone Goertek Education Center and GOERTEK
MICROELECTRONICS VIETNAM COMPANY LIMITED.
During the current period, the Company disposed of two subsidiaries, namely Shenzhen Mototek Smart Technology Co., Ltd. and
Qingdao Resonance Venture Capital Management Co., Ltd.
(7) Significant changes or adjustments in the Company's business, products or services during the reporting period
Applicable Not applicable
(8) Major customers and suppliers
Major customers of the Company
Sales revenue from top five customers (RMB) 92,215,461,912.74
Proportion of total sales revenue from top five customers in total
87.91%
annual sales amount
Proportion of sales revenue from related parties among top five
0.00%
customers in total annual sales amount
Information of top five customers
Proportion in total annual sales
No. Name of customer Sales amount (RMB)
amount
1 Customer 1 32,642,129,185.96 31.12%
2 Customer 2 29,741,869,268.77 28.35%
3 Customer 3 19,794,346,646.32 18.87%
4 Customer 4 6,317,827,464.88 6.02%
5 Customer 5 3,719,289,346.81 3.55%
16
Goertek Inc. Annual Report 2022
Total -- 92,215,461,912.74 87.91%
Other information of major customers
Applicable Not applicable
The top five customers do not have associated relationship with the Company. The Company's directors, supervisors, senior
management, core technicians, shareholders holding more than 5% of total shares, actual controllers and other related parties do not
directly or indirectly own rights and interests in the main customers.
Major suppliers of the Company
Total purchase amount from top five suppliers (RMB) 34,784,627,246.36
Proportion of total purchase amount from top five suppliers in
38.35%
total annual purchase amount
Proportion of purchase amount from related parties among top
0.00%
five suppliers in total annual purchase amount
Information of top five suppliers
Proportion in total annual
No. Name of supplier Purchase amount (RMB)
purchase amount
1 Supplier 1 19,413,509,317.84 21.41%
2 Supplier 2 8,083,723,203.19 8.91%
3 Supplier 3 4,219,990,040.96 4.65%
4 Supplier 4 1,652,205,913.87 1.82%
5 Supplier 5 1,415,198,770.50 1.56%
Total -- 34,784,627,246.36 38.35%
Other information of major suppliers
Applicable Not applicable
The top five suppliers do not have associated relationship with the Company, and the Company's directors, supervisors, senior
management, core technicians, shareholders holding more than 5% of total shares, actual controllers and other related parties do not
directly or indirectly own rights and interests in the main suppliers.
3. Expenses
Unit: RMB
Note of significant
2022 2021 Year-on-year change
change
Selling expenses 548,298,842.05 444,869,977.08 23.25% No significant change
Administrative expenses 2,294,505,645.46 1,951,657,773.32 17.57% No significant change
Financial expenses 149,123,081.74 167,099,982.36 -10.76% No significant change
R&D expenses 5,226,525,154.99 4,170,074,282.10 25.33% No significant change
4. R&D Investment
Applicable Not applicable
17
Goertek Inc. Annual Report 2022
Name of major Status of Expected benefits to future
Purpose of project Objectives
R&D project project development of the Company
Collaborate with major customers
Develop a new generation
to iterate intelligent hardware Continuously consolidate the
of micro speaker module
R&D project of products, complete R&D of a Company's competitive
products with high
micro speaker In progress number of micro speaker module advantage and market share
sensitivity, low distortion,
module products, and achieve mass in the field of acoustic
large amplitude, waterproof
production and application on precision components.
and dustproof features.
customer products
To complete the R&D, verification, The project facilitates the
application and mass production of Company’s business
To develop MEMS sensors MEMS sensors and microsystem expansion in the field of
R&D project of
and microsystem module modules featuring voice MEMS sensors and
MEMS sensor
products applied to smart In progress interaction, adapterization and microsystem modules, and
and microsystem
hardware and automotive noise reduction, signal further enhances the
module
electronics. transmission and status monitoring, Company's comprehensive
used in the field of smart hardware strength in the field of
and automotive electronics MEMS.
The project helps enhance the
Company's competitive
Develop the precision
advantage and market share
optical components and Complete the R&D and mass
in the field of VR/AR
module products by using production of optical lens and
R&D project of precision optical components
emerging optical module products for new
VR/AR precision and modules, promote the
technologies such as generation of all-in-one VR
optical In progress Company's ability to provide
“Pancake” folded-lightpath products, and improve the ability
components and customers with customized
lenses and optical of comprehensive solution of
modules VR/AR optical solutions, and
waveguide technology, and optical devices and light engines
improve the Company's
promote their application in for AR products.
vertical integration ability
VR/AR products.
and profitability in the field
of VR/AR.
To complete the design, technical
To develop micro Enhance the competitiveness
verification and commercial
projection modules for AR, of the Company in AR
R&D project of application of related micro
AR-HUD, and so on, and optical modules, and extend
AR optical In progress projection modules, and develop
promote its application in the Company's capabilities in
modules micro projection module solutions
consumer electronics, optical modules to the field
for consumer electronics and
automotive electronics, etc. of automotive electronics
automotive electronics
Develop lightweight all-in- Cooperate with our customer to
one VR HMD products complete R&D, validation, mass The project helps consolidate
R&D project of
featured with high- production of a number of new- the Company's competitive
all-in-one VR In progress
definition display, precise generation all-in-one VR HMD advantage and market share
HMD
motion tracking and other products based on the latest chip in the field of VR.
features. platform
Cooperate with our customer to It helps consolidate the
R&D project of
Develop a new generation complete R&D, validation, mass Company's competitive
TWS smart
of TWS smart wireless In progress production of a number of new- advantage and market share
wireless
earphones generation of TWS smart wireless in the field of TWS smart
earphones
earphones wireless earphones.
18
Goertek Inc. Annual Report 2022
Develop a new generation
Consolidate the Company's
R&D project of of smart wearable devices
Cooperate with our customer to competitive advantage and
smart wearable with functions of
complete R&D, validation, mass market share in smart
devices for sport independent In progress
production of a new generation of wearable devices such as
and health related communication, health
smart watches and smart bands smart watches and smart
applications monitoring features and
bands
etc.
To complete the R&D and trial
production of a number of AR
glasses products, based on the
It helps enhance the
latest chip platform, with the
Develop wireless Company's R&D experience
R&D project of functions of data processing and
lightweight AR glasses and and technology accumulation
smart wireless wireless communication, using
their main functional In progress in the field of AR and
lightweight AR advanced precision optics and
modules for future AR facilitates the business
glasses micro-display technologies such as
applications. expansion of the Company in
optical waveguide and silicon-
AR field.
based LED, so as to develop the
solution capability for AR glasses
and their main functional modules
R&D personnel of the Company
2022 2021 Year-on-year change
Number of R&D personnel 12,305 12,895 -4.58%
Proportion of R&D personnel 14.42% 13.46% 0.96%
Academic structure of R&D personnel
Bachelor 8,099 9,148 -11.47%
Master 2,550 2,414 5.63%
PhD 54 63 -14.29%
Age of R&D personnel
Below the age of 30 5,346 5,105 4.72%
Aged between 30 to 40 6,172 7,162 -13.82%
Over the age of 40 787 628 25.32%
The Company’s investment in R&D
2022 2021 Year-on-year change
Amount of R&D Investment (RMB) 5,198,312,190.48 4,301,342,763.66 20.85%
Proportion of R&D investment in
4.96% 5.50% -0.54%
operating revenue
Capitalized amount of R&D investment
597,278,121.61 662,993,650.30 -9.91%
(RMB)
Proportion of capitalized R&D
11.49% 15.41% -3.92%
investment in R&D investment
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
19
Goertek Inc. Annual Report 2022
5. Cash flow
Unit: RMB
Item 2022 2021 Year-on-year change
Sub-total of cash inflow from
92,960,786,011.89 85,523,439,745.15 8.70%
operating activities
Sub-total of cash outflow from
84,643,672,647.21 76,924,964,217.27 10.03%
operating activities
Net cash flow from operating
8,317,113,364.68 8,598,475,527.88 -3.27%
activities
Sub-total of cash inflow from
1,141,805,421.45 3,276,323,800.48 -65.15%
investing activities
Sub-total of cash outflow from
10,218,818,104.61 10,044,700,261.35 1.73%
investing activities
Net cash flow from investing
-9,077,012,683.16 -6,768,376,460.87 34.11%
activities
Sub-total of cash inflow from
31,722,066,906.40 14,003,754,499.97 126.53%
financing activities
Sub-total of cash outflow from
29,714,438,433.99 13,616,577,139.69 118.22%
financing activities
Net cash flow from financing
2,007,628,472.41 387,177,360.28 418.53%
activities
Net increase in cash and cash
1,662,092,566.77 2,224,708,917.50 -25.29%
equivalents
Main influencing factors of significant year-on-year changes in relevant data
Applicable Not applicable
(1) The sub-total of cash inflow from investing activities was RMB 1,141.8054 million, with a year-on-year decline of 65.15%, and
the net cash flow generated from investing activities was RMB -9,077.0127 million, with a year-on-year decline of RMB 2,308.6362
million, mainly due to the higher cash inflow from investing activities during the previous reporting period and the increase of the
Company's purchase of long-term assets, such as fixed assets, and structured deposits.
(2) The subtotal cash inflow from financing activities was RMB 31,722.0669 million, with a year-on-year increase of 126.53%; the
subtotal cash outflow from financing activities was RMB 29,714.4384 million, with a year-on-year increase of 118.22%; and the net
cash flow generated from financing activities was RMB 2,007.6285 million, with a year-on-year increase of 418.53%, mainly due to
the increase in cash received from borrowings during the reporting period.
The reason for significant difference between the net cash flow from the Company's operating activities during the reporting period
and net profit in current year.
Applicable Not applicable
The net cash flow generated from operating activities exceeded the net profit of the current year by 364.38%, mainly due to the
expansion of operation scale and the increase of accumulated asset depreciation and amortization and the provision for asset impairment.
V. Analysis of Non-main Business
Applicable Not applicable
Unit: RMB
Proportion in total Whether it is
Amount Explanation of the cause
profit sustainable
Investment income -36,243,969.62 -2.40% No
Gains on changes in
-57,081,334.97 -3.78% No
fair value
Asset impairment -1,782,744,359.91 -118.12% Mainly due to the provision for No
20
Goertek Inc. Annual Report 2022
losses impairment of assets related to a
new smart acoustic product
during the reporting period
Non-operating income 21,477,460.44 1.42% No
Non-operating
122,730,370.49 8.13% No
expenses
VI. Analysis of Assets and Liabilities
1. Major changes in asset composition
Unit: RMB
End of 2022 At the beginning of 2022
Proportion Proportion YoY change Note of significant
Amount in total Amount in total (%) change
assets assets
Cash at bank and
12,682,871,091.80 16.43% 10,048,521,696.09 16.45% -0.02%
on hand
Accounts
14,396,180,782.93 18.65% 11,899,214,525.92 19.48% -0.83%
receivable
Increased inventories
along with the
Inventories 17,348,670,744.58 22.48% 12,082,308,485.38 19.78% 2.70%
expansion of
operation scale
Long-term equity
361,008,671.83 0.47% 437,402,203.91 0.72% -0.25%
investments
Raised funds to
invest in projects,
increased the
purchase of
production
equipment, testing
Fixed assets 21,459,756,268.25 27.81% 18,123,352,480.76 29.67% -1.86%
devices, and some
infrastructure projects
have been converted
into fixed assets after
reaching their
intended state of use
Construction in
2,424,443,775.33 3.14% 2,127,055,853.77 3.48% -0.34%
progress
Right-of-use assets 580,175,922.73 0.75% 330,796,520.66 0.54% 0.21%
Increased operating
Short-term capital along with the
7,120,846,026.67 9.23% 4,284,859,347.02 7.02% 2.21%
borrowings expansion of
operation scale
Contract liabilities 2,295,347,547.31 2.97% 2,210,825,761.69 3.62% -0.65%
Long-term
2,206,000,000.00 2.86% 2,204,215,784.74 3.61% -0.75%
borrowings
Lease liabilities 470,704,507.75 0.61% 210,209,955.40 0.34% 0.27%
The number of
Accounts payable 25,748,758,270.19 33.36% 18,529,609,655.40 30.34% 3.02%
purchasing orders
21
Goertek Inc. Annual Report 2022
increased along with
business expansion
Current portion of
non-current 1,095,618,327.74 1.42% 501,408,170.04 0.82% 0.60%
liabilities
Other current
4,252,178.60 0.01% 14,844,359.01 0.02% -0.01%
liabilities
Deferred tax
816,118,632.40 1.06% 389,933,389.40 0.64% 0.42%
liabilities
Financial liabilities
202,293,742.46 0.26% 15,190,564.34 0.02% 0.24%
held for trading
With the expansion
of operation scale,
company's purchase
payments settled by
banker's acceptance
Notes payable 4,850,498,246.08 6.28% 2,742,876,464.23 4.49% 1.79%
bills increased, and
the amount of
outstanding
acceptance bills
increased
Foreign assets account for a relatively high proportion
Applicable Not applicable
Proportion of Whether
Measures overseas there is a
Cause of Assets scale Operation
Asset details Location to ensure Earnings assets in the significant
formation (RMB) mode
asset safety net assets of impairment
the Company risk
Effective
Goertek
Production & internal
Technology Establishment 4,107,738,419.61 Vietnam Normal 13.58% No
sales control
(Vietnam)
mechanism
The assets scale refers to the net assets of overseas subsidiaries. The proportion of overseas assets in the net assets
Other
of the Company refers to the proportion of the net assets of overseas subsidiaries in the net assets of the listed
circumstances
Company at the end of the reporting period
2. Assets and liabilities measured at fair value
Applicable Not applicable
Unit: RMB
Profit and loss Cumulative Impairment Purchase
Sales amount in
Opening from changes in changes in fair accrued in amount in the
Item the reporting Other changes Closing balance
balance fair value in the value included current reporting
period
reporting period in equity period period
Financial assets
1. Financial
assets held for
trading
300,234,328.79 -49,950,701.98 210,000,000.00 11,100,146.56 471,383,773.37
(excluding
derivative
financial assets)
2. Derivative
20,462,992.36 164,830,672.72 646,234.52 185,939,899.60
financial assets
22
Goertek Inc. Annual Report 2022
3. Other debt
14,575,230.24 190,438,343.84 182,637,699.96 22,375,874.12
investments
4. Investments
in other equity 465,677,764.54 63,867,720.18 201,302,452.01 20,893,800.00 39,145,000.85 699,249,262.24
instruments
Sub-total of
800,950,315.93 114,879,970.74 63,867,720.18 601,740,795.85 203,531,499.96 50,891,381.93 1,378,948,809.33
financial assets
Total of above
800,950,315.93 114,879,970.74 63,867,720.18 601,740,795.85 203,531,499.96 50,891,381.93 1,378,948,809.33
amounts
Financial -
15,190,564.34 30,332,436.75 15,190,564.34 202,293,742.46
liabilities 171,961,305.71
Other changes
None
Whether 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
Book value at the end of the
Items Reasons for restrictions
reporting period (RMB)
Cash at bank and on hand 1,392,748,538.84 Deposit for bills and borrowings
Notes receivable 5,848,815.01 Bill pledge and others
Current portion of non-current When large-denomination certificates of deposit is
70,184,291.67
assets pledged to the bank, the bank will issue financing
Other non-current assets 544,796,722.20 guarantees, notes and so on
Total 2,013,578,367.72
Ⅶ. Analysis of Investment
1. Overall situation
Applicable Not applicable
Investment amount in 2022 (RMB) Investment amount in 2021 (RMB) YoY change (%)
9,210,478,674.05 7,494,700,261.35 22.89%
Other explanations:
To better reflect the overall investment status of the Company during the reporting period, the statistical indicators were adjusted, along
with the corresponding statistics of the same period of last year. The investment amount of the same period of last year was RMB
533.09 million before adjustment and RMB 7,494.70million after adjustment. The total investment amount of the Company in 2022
was RMB 9,210.48 million, with a year-on-year growth of 22.89%, mainly due to the increased investment for purchasing equipment.
2. Major equity investments acquired during the reporting period
Applicable Not applicable
23
Goertek Inc. Annual Report 2022
3. Major non-equity investments in progress during the reporting period
Applicable Not applicable
Unit: RMB
Reasons
for failure
Accumulated
Whether it Accumulated to reach
Amount actual
is the income by the
Name of Investment Project invested during investment by Source Project Estimated Disclosure date
investment the end of planned Disclosure index (if any)
project mode industry the reporting the end of the of funds progress income (if any)
in fixed the reporting progress
period reporting
assets period and
period
expected
benefits
For details, see
Announcement of Goertek
Inc. on Signing of
Investment Cooperation
Agreement between the
Wholly-owned Subsidiary
Project of of the Company and the
Dongguan Management Committee of
Songshan Self- Dongguan Songshan Lake
Electronic Not Not Not
Lake Self-built Yes 184,507,138.34 495,232,699.67 raised 22.21% January 3, 2019 High-tech Industrial
components applicable applicable applicable
Goertek funds Development Zone
Industrial published in the information
Park disclosure media such as
CNINFO
(http://www.cninfo.com.cn),
Securities Times, China
Securities Journal, Shanghai
Securities News, Securities
Daily.
Not Not
Total -- -- -- 184,507,138.34 495,232,699.67 -- -- -- -- --
applicable applicable
24
Goertek Inc. Annual Report 2022
4. Financial asset investment
(1) Securities investment
Applicable Not applicable
Unit: RMB
Cumulative Purchase Sales
Profit and loss Profit and Book value at
Initial Accounting changes in amount amount
Security Security Security Book value at from changes in loss in the the end of the Accounting Source of
investment measurement fair value in the in the
type code abbreviation the beginning fair value in the reporting reporting items funds
cost model included in reporting reporting
reporting period period period
equity period period
Domestic
Financial Self-
and Fair value
KOPN KOPN 84,852,571.05 98,804,286.66 -66,082,088.60 32,722,198.06 assets held raised
foreign measurements
for trading funds
stocks
Total 84,852,571.05 -- 98,804,286.66 -66,082,088.60 32,722,198.06 -- --
Date of announcement disclosure
by the Board of Directors for February 11, 2017
approval of securities investment
Date of announcement disclosure
by shareholders meeting for
March 2, 2017
approval of securities investment
(if any)
(2) Derivatives investment
Applicable Not applicable
1) Investments in derivatives for hedging during the reporting period
Applicable Not applicable
Unit: RMB 10,000
Profit and loss from Cumulative changes Amount of purchase Amount of sales Proportion of
Type of derivatives Amount of initial
changes in fair value in fair value included during the reporting during the reporting Closing balance investment amount in
investment investment
in the reporting period in equity period period the Company's net
25
Goertek Inc. Annual Report 2022
asset at the end of the
reporting period
Option 121,138.30 -1,799.24 931,833.60 760,458.70 292,513.20 9.67%
Forward 518,981.98 -5,986.25 2,828,663.79 2,731,278.67 616,367.10 20.37%
Swap 178,519.60 7,072.43 519,780.22 380,493.00 317,806.82 10.50%
Total 818,639.88 -713.06 4,280,277.61 3,872,230.37 1,226,687.12 40.54%
Description of whether
the accounting policies
The Company's derivatives transactions are calculated in accordance with Accounting Standards for Business Enterprises No. 22 — Recognition and Measurement
and specific accounting
of Financial Instruments. The initial measurement is based on the fair value of the derivatives on the date of the signing of the transaction contracts, and the
principles for the
subsequent measurement is based on its fair value. The derivative instrument with positive fair value is recognized as an asset, while the one with negative fair value
Company's hedging
is recognized as a liability. The profits and losses generated by changes in fair value are directly recognized in current profit and loss.
business has changed
The accounting policies and specific accounting principles for the Company's derivatives have no significant change compared with that of previous reporting
significantly compared
period.
with that of previous
reporting period
Statement of actual
profit and loss in the The actual profit and loss of the Company's investments in derivatives for hedging during the reporting period was -309.9996 million.
reporting period
Statement of hedging To avoid exchange rate risks in daily operations, the Company hedged against its risks through financial derivatives. The changes in the value of the financial
effect derivatives effectively hedged the risk of changes in the existing position, and the overall hedging result is within expectations.
Source of funds for
Self-raised funds
derivatives investment
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
Risk analysis 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
control measures for
approved by the Board of Directors or the general meeting of shareholders. 2. The Company has formulated a strict management system for financial derivatives
derivatives positions
transactions, which clearly stipulates the operating principles, approval authority, responsible departments and persons, internal operating procedures, information
during the reporting
isolation measures, internal risk reporting system and risk handling procedures, and information disclosure of financial derivatives transactions, in order to control
period (including but not
trading risks arising therefrom. 3. The Company shall carefully review the terms of contracts signed with qualified banks and other financial institutions, and strictly
limited to market risk,
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
liquidity risk, credit risk,
fair value of financial derivatives, timely assess the changes in risk exposure of financial derivatives transactions, and regularly report to the management of the
operational risk, legal
Company. If any abnormal situation, inform the Board of Directors of the risk and take emergency measures accordingly. 5. The internal audit department regularly
risk, etc.)
conducts internal audit on the compliance of financial derivatives transactions.
In case of changes in 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
market price or fair the settlement date determined by the Company.
26
Goertek Inc. Annual Report 2022
value of invested
derivatives during the
reporting period, the
analysis of fair value of
the derivatives shall
disclose the specific
methods used and the
setting of relevant
assumptions and
parameters
Litigation involved None
Date of announcement
disclosure by the Board
of Directors for approval March 30, 2022
of the investment in
derivatives
Date of announcement
disclosure by
shareholders meeting for
May 13, 2022
approval of the
investment in
derivatives
Special opinions of The Company carries out financial derivatives transactions mainly to avoid foreign exchange risks associated with RMB exchange rate fluctuations and effectively
independent directors on control the cost uncertainty caused by foreign exchange risks. The Company has formulated the Management System of Goertek Inc.'s Financial Derivatives Trading
the Company's Business, which is conducive to strengthen the management and control of the risks associated with financial derivatives transactions. The deliberation, approval,
derivatives investment 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,
and risk control without damage to the legitimate rights and interests of minority shareholders. Therefore, the Company has been approved to carry out the business above.
2) Investments in derivatives for speculation during the reporting period
Applicable Not applicable
The Company did not make any investment in derivatives for speculation during the reporting period.
27
Goertek Inc. Annual Report 2022
5. Use of raised funds
Applicable Not applicable
(1) Overall use of raised funds
Applicable Not applicable
Unit: RMB 10,000
The
Total amount
amount of
Proportion
of raised Total raised
The total Accumulated of
Accumulated funds amount of funds
amount of total amount accumulated Purpose of the
amount of with raised that
Year of Means of Total fund raised funds of raised total amount raised funds
raised funds changed funds that have
raising raising raised used during funds with of raised that have not
that have purposes have not been
the reporting changed funds with been yet used
been used during been yet idle for
period purposes changed
the used more
purposes
reporting than
period two
years
Supplementing
Public working
issuance of capital and
2020 convertible 398,903.00 130,147.65 337,203.58 0.00 0.00 0.00% 61,699.42 deposited in 0.00
corporate the special
bonds account for
raised funds
Total -- 398,903.00 130,147.65 337,203.58 0.00 0.00 0.00% 61,699.42 -- 0.00
Description of overall use of raised funds
The Company actually invested RMB 1,301.4765 million of raised fund in current period. As of December 31, 2022, the Company had used a total
of RMB 3,372.0358 million of raised funds, with RMB 616.9942 million unused (interest excluded), of which RMB 450 million was used to
temporarily supplement the working capital, and the remaining funds was deposited in the special account for raised funds of the Company.
(2) Projects in which the raised funds were proposed to be invested
Applicable Not applicable
Unit: RMB 10,000
The date Whether
Whether
on which there is
Committed the Accumulated Investment Whether
Total Total Amount the Benefits any
investment project investment progress at it
committed investment invested project realized significant
projects and has been amount at the the end of achieved
investment after during the reaches during the change in
investment of changed end of the the period the
of raised adjustment reporting its reporting the
over-raised (including reporting (3)＝ expected
funds (1) period intended period feasibility
funds partial period (2) (2)/(1) benefits
usage of the
changes)
state project
Committed investment projects
The project of
binaural true August
No 218,903.00 218,903.00 55,521.72 220,141.92 100.57% 2,685.01 No No
wireless smart 31, 2022
earphones
AR/VR and
related optical
August
module project No 60,000.00 60,000.00 30,205.61 60,581.38 100.97% 42,339.54 Yes No
31, 2022
- AR/VR
project
28
Goertek Inc. Annual Report 2022
AR/VR and
related optical
June 30,
module project No 40,000.00 40,000.00 30,589.63 33,758.03 84.40% 4,468.07 Yes No
2023
- optical
module project
Qingdao R&D December Not Not
No 80,000.00 80,000.00 13,830.69 22,722.25 28.40% No
center project 31, 2023 applicable applicable
Sub-total of
committed
-- 398,903.00 398,903.00 130,147.65 337,203.58 -- -- 49,492.62 -- --
investment
projects
Direction of the investment with over raised funds
None
Total -- 398,903.00 398,903.00 130,147.65 337,203.58 -- -- 49,492.62 -- --
Explain the
reasons for
failure to
achieve the
planned
progress and
estimated ① Affected by changes in the market and customers’ projects, the binaural true wireless smart earphones project did not achieve
profit by item the expected profit.
(including the ② Affected by the actual needs of the Company and project, Qingdao R&D Center project was behind schedule. The Company
reasons why may accelerate subsequent investment based on the actual needs, in an effort to achieve the maximum efficiency of the raised
"Not funds.
applicable" is
selected under
"Whether the
estimated
profit was
achieved")
Description of
significant
change in the Not applicable
feasibility of
the project
Amount, use of
over-raised
funds and Not applicable
progress of use
thereof
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
Change in Supervisors, which reviewed and approved the Proposal on Changing the Implementation Subject and Implementation Location of
location of the Some Investment Projects with Raised Capital and Increasing the Capital of Wholly-owned Subsidiaries, and agreed to change: the
project implementation subject of AR/VR and related optical module projects from Goertek Inc. to the Company’s subsidiaries Weifang
invested with Goertek and Goertek Optical; The implementation location was changed accordingly from Goertek Photoelectric Park in Weifang
raised funds 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 Not applicable
with raised
funds
29
Goertek Inc. Annual Report 2022
Upfront Applicable
investment of
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
the project with
Supervisors, which reviewed and approved the Proposal on Replacing the Self-raised Funds Invested in the Projects in Advance
raised funds
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
and
investment projects in advance. The fund replacement above has been verified by Zhongxi Certified Public Accountants (special
replacement
general partnership) Co., Ltd., and an authentication report has been issued.
thereof
Applicable
① On July 9, 2020, the Company held the 7th meeting of the 5th Board of Directors and the 5th meeting of the 5th Board of
Supervisors, which reviewed and approved the Proposal on Temporary Replenishment of Working Capital with Idle Raised Funds.
It was agreed that the Company shall use the idle raised funds not exceeding RMB 2.5 billion to temporarily supplement working
capital. The validity period shall not exceed 12 months from the date of approval by the Board of Directors. After expiration, it
shall be returned to the special account for raised funds in a timely manner. The Company returned RMB 0.8 billion and RMB 1.7
billion of the raised funds to the special account for raised funds in advance on September 17, 2020 and November 4, 2020
respectively.
② On November 5, 2020, the Company held the 11th meeting of the 5th Board of Directors and the 9th meeting of the 5th Board
of Supervisors, which reviewed and approved the Proposal on Temporary Replenishment of Working Capital with Partial Idle
Raised Funds. It was agreed that the Company temporarily supplements the working capital with idle raised funds of no more than
Temporary RMB 2.5 billion. The validity period shall not exceed 12 months from the date of approval by the Board of Directors. After
replenishment expiration, it shall be returned to the Company's special account for raised funds in a timely manner. The Company returned RMB
of working 0.5 billion and RMB 2 billion of the raised funds to the special account for raised funds on October 29, 2021 and November 3,
capital with 2021 respectively.
idle raised ③ On November 8, 2021, the Company held the 24th meeting of the 5th Board of Directors and the 19th meeting of the 5th Board
funds of Supervisors, which reviewed and approved the Proposal on Temporary Replenishment of Working Capital with Partial Idle
Raised Funds. It was agreed that the Company temporarily supplements the working capital with idle raised funds of no more than
RMB 1.2 billion. The validity period shall not exceed 12 months from the date of approval by the Board of Directors. After
expiration, it shall be returned to the Company's special account for raised funds in a timely manner. The Company returned the
above-mentioned RMB 300 million, RMB 100 million and RMB 100 million of the raised funds to the special account for raised
funds on February 24, 2022, May 16, 2022, and August 29, 2022 respectively. The Company returned the remaining RMB 700
million of the raised funds to the special account for raised funds on November 4, 2022.
④ On November 21, 2022, the Company held the 1st meeting of the 6th Board of Directors and the 1st meeting of the 6th Board
of Supervisors, which reviewed and approved the Proposal on Temporary Replenishment of Working Capital with Partial Idle
Raised Funds. It was agreed that the Company temporarily supplements the working capital with idle raised funds of RMB 450
million. The validity period of which shall not exceed 12 months from the date of approval by the Board of Directors. After
expiration, it shall be returned to the special account for raised funds in a timely manner.
Amount and
reasons for the
balance of
raised funds in Not applicable
the
implementation
of the project
Purpose of the
raised funds
The unused raised funds shall be deposited in the special account for raised funds.
that have not
been yet used
Problems or
other situations
in the use and None
disclosure of
raised funds
(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.
30
Goertek Inc. Annual Report 2022
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
Type of Registered
Name of company Main business Total assets Net asset Operating revenue Operating profit Net profit
company capital
Goertek Electronic
Technology Vina Subsidiary component 796,907,040.00 12,409,733,040.39 4,107,738,419.61 18,006,535,442.52 1,410,777,715.29 1,409,023,464.60
Company Limited manufacturing
Weifang Goertek Electronic
Electronics Co., Subsidiary component 1,405,601,925.00 17,913,095,353.28 4,352,685,419.96 42,724,868,464.90 419,812,739.34 421,807,998.29
Ltd. manufacturing
Goertek Electronic
(HongKong) Subsidiary component 1,542,045.00 24,132,254,761.29 1,519,208,415.75 64,224,417,880.80 414,865,735.06 402,793,144.67
Co.,Limited manufacturing
Yili Precision Electronic
Manufacturing Subsidiary component 330,000,000.00 3,693,141,919.10 861,868,622.80 2,623,240,930.28 389,987,170.03 343,924,705.39
Co., Ltd. manufacturing
Weifang Goertek Electronic
Microelectronics Subsidiary component 500,000,000.00 2,513,660,559.63 1,749,075,557.18 2,541,277,266.22 282,115,675.05 252,636,135.90
Co., Ltd. manufacturing
Acquisition and disposal of subsidiaries during the reporting period
Applicable Not applicable
Approach on acquisition and disposal of Impact on overall production,
Name of company
subsidiaries during the reporting period operation and performance
Goertek Optical Technology (Qingdao) Co., Ltd Newly established No significant impact
Goertek Optical Technology (Shanghai) Co., Ltd Newly established No significant impact
Qingdao Resonance Venture Capital Management
Newly established No significant impact
Co., Ltd.
Qingdao Resonance Phase I Venture Capital Fund
Newly established No significant impact
Partnership (Limited Partnership)
Weifang Goertek Electronics Co., Ltd. Newly established No significant impact
Qingdao Goertek Horizons Technology Co., Ltd Newly established No significant impact
Weifang High-tech Zone Goertek Education Center Newly established No significant impact
Goertek Microelectronics Vietnam Company
Newly established No significant impact
Limited
Shenzhen Mototek Smart Technology Co., Ltd. Sales of equities No significant impact
Qingdao Resonance Venture Capital Management
Sales of equities No significant impact
Co., Ltd.
Description of major subsidiaries and associates
None
31
Goertek Inc. Annual Report 2022
Ⅹ. Structural Entities Controlled by the Company
Applicable Not applicable
XI. Outlook for the Future Development of the Company
1. Industry trend and competition
In the mobile era, smartphones and related products have been the main focus of innovation and the growth drivers of the global
technology and consumer electronics industry over years. According to the forecast of IDC, a well-known consulting agency, the global
smartphone shipment in 2023 will reach about 1.19 billion units, with an approximately 1.1% YoY decline. The global smartphone
shipment is expected to grow at an CAGR of only about 2.6% between 2023 and 2027. The slow-down of the growth reflects the trend
that the global technology and consumer electronics industry is stepping into the post-mobile era.
In the post-mobile era, with the development of new technologies such as semiconductor, 5G, micro-display, sensor, intelligent
interaction, battery, cloud and edge computing, more and more next-generation smart hardware products with greatly improved
functions and diversified applications are emerging. In particular, new breakthroughs in the fields of AI, natural language processing
and content generation technology are expected to further promote the development and application of those smart hardware products.
According to the forecast of IDC, the global shipment of VR/AR products is expected to reach 10.1 million units in 2023, with
approximately a 14% YoY increase. The CAGR of global VR shipment from 2023 to 2026 is expected to be around 32%. The steady
growth of VR end user, the upgrade of VR hardware and the development and maturity of VR content and applications such as social
networking, games, entertainment and live broadcasting, will help the VR industry to grow continuously in the next few years.
According to the forecast of IDC, the global shipment of AR products is expected to reach 0.3 million units in 2023, with approximately
an 11% YoY increase. The CAGR of global AR shipment from 2023 to 2026 is expected to be around 137%. With the abilities to
combine virtual world over reality and to seamless connect to the mobile Internet ecosystem, AR product shows unlimited future
possibilities and great market potential, and is expected to become one of the core smart hardware products in the post-mobile era.
Technological breakthroughs in semiconductor chips, optical waveguide, micro displays and other fields are also expected to promote
the development and maturity of AR products in the next few years.
According to the forecast of IDC, the global shipment of smart watches is expected to reach 162 million units in 2023, with
approximately a 9.1% YoY increase. The CAGR of global shipment of smart watches from 2023 to 2027 is expected to be around
6.1%. The global market of smart wearable products is growing steadily but also incubate the opportunity of an explosive growth. In
the post-mobile era, consumers pay greater attention to fitness and health. For millions of people around the globe those who has
hypertension, diabetes and sub-health issues, high precision and reliable health monitoring technologies, especially precise blood
pressure monitoring and non-invasive blood sugar monitoring technologies, are currently the focus of innovation of the industry.
Breakthroughs in the above technologies are expected to bring dramatic growth to smart wearable products before long.
According to the forecast of FutureSource, the global shipment of TWS smart earphones is expected to reach about 366 million units
in 2023, with approximately a 7.6% YoY increase. With the combination of AI, natural language processing and smart voice interaction
technologies, the user experience of TWS smart earphones is expected to continuously improve, and its penetration is expected to
continuously increase as well.
The further development of next-generation smart hardware products will also boost the demand for related precision components such
as precision optics and modules, precision acoustic components, MEMS sensors and microsystem modules, haptic components and
precision structural parts, which will also create new business opportunities for the Company.
In terms of the competitive landscape, the global technology and consumer electronics industry may continue to demonstrate a
centralized trend. In the post-mobile era, massive investment in technological innovation and R&D is required for the development of
smart hardware products, for which the "soft power" of the ecosystem, such as developer base, user base, software applications,
entertainment content, community loyalty and data monetization, becomes more and more important. The leading companies 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.
In terms of the supply chain, the electronic manufacturers in China are strengthening their overall competitiveness. These manufacturers
are expected to better meet the needs of electronic product manufacturing in the post-mobile era and gain new opportunities of
development. However, it should also be noted that the changes in international political and economic landscapes, especially the
relationship between major countries, may have a significant impact to pattern of the industrial supply chain. To which, manufacturers
need to pay more attention and respond carefully and scientifically.
2. Strategy for future development
32
Goertek Inc. Annual Report 2022
Looking into the future, the Company will actively respond to the innovation-driven development strategy, promote the upgrade of
industrial structure, strengthen technological innovation, and accelerate the development of a modern industrial system. It will grasp
the opportunities of transformation from the mobile era to the post-mobile era by closely following the development of 5G, AI, IoT,
cloud computing and other advanced technologies. The Company will continue to strengthen its development in the field of next-
generation smart hardware products and related precision components, constantly consolidate the strategical cooperation with world-
class customers, and fulfill the economic and social responsibilities of the enterprises, thus to achieve stable and healthy growth of the
Company’s value in return for shareholders.
(1) Actively grasp the new opportunities in the post-mobile era, and further promote the Company's strategy of "precision components
+ smart hardware". Continue to strengthen the competitiveness of precision components and smart hardware products, and actively
develop the business related to next-generation smart hardware products. Utilize the synergy between the Company's component
business and system device business, continue to strengthen the core capabilities in precision and intelligent manufacturing, and provide
customers with the first-class vertically integrated product solutions and "one-stop" R&D and manufacturing services.
(2) Continue the key-account strategy, remain customer-oriented, maintain good relationships with core customers, and utilize the
Company's advantages in customer resource. Focus on serving leading customers in the global technology and consumer electronics
industry, and continue to consolidate long-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 our business, technology, engineering, operation and delivery services, in order to achieve win-win
cooperation and to grow with the world-class customers.
(3) Adhere to technological innovation and continue to invest in R&D. Constantly improve the Company's technical competitiveness
in acoustics, optics, microelectronics, precision manufacturing, automation, IT technology, software algorithm, etc., to build the core
technical competitiveness for future development of the enterprise. Firmly implement the talent strategy by recruiting outstanding
personnel 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 push forward
internal reform and innovation, and to build core competitiveness upon continuous reform and innovation activities. Create an 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 respected world-class
enterprise.
3. Business operation during the reporting period and business plan for next year
In 2022, the Company carried the "precision components + smart hardware" strategy, remained customer-oriented and focused on key
accounts. By leveraging the synergy between the components business and system device business, the Company grasped business
opportunities in next-generation smart hardware such as VR, gaming consoles and accessories, and gained continuous revenue growth.
While consolidating the advantages in conventional business, the Company also explored new opportunities in both consumer
electronics and automotive electronics fields, and obtained progresses in precision optical components and modules, car sensors,
microsystem modules and etc. The Company continued to invest in R&D and technological innovation, completed more patent
applications and gained more patent approvals, strengthened the capabilities of R&D and talent team, and further strengthened the core
competitiveness of the Company.
Looking into the year of 2023, the Company still faces many challenges due to downward pressure of global economy and the
complexities in the external environment. However, there are new business opportunities in the global technology and consumer
electronics industry. The next-generation smart hardware products are more and more adopted in many fields. The hardware and
software ecosystems are constantly being improved. The Company's main business still have the potential of continuous growth and
the internal operation could also be further improved. The management and the staff of the Company will continue to implement our
strategy and to achieve business objectives, so as to return the shareholders and investors with good business performance and
continuous growth of the value of the Company.
(1) Maintain strategic focus and grasp development opportunities
The Company will seize the business opportunities of smart hardware products in the post-mobile era by adhering to the "precision
components + smart hardware" strategy and utilize the synergy between the components and system device business. The Company
will further expand the business of smart hardware products by virtue of its core technological capabilities and advanced product
solutions in the field of precision components. And through that business development, the Company will create more applications and
33
Goertek Inc. Annual Report 2022
demand for the precision components. By integrating the core capabilities in precision manufacturing and intelligent manufacturing,
the Company will be able to provide first-class "one-stop" R&D and manufacturing services to global customers.
(2) Adhere to the customer-orientation philosophy and key-accounts strategy, identify and serve strategic customers
Follow the 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. The
Company will continuously build excellent customer service team to satisfy our customers in long term in all aspects of business,
technology, engineering, operation, and delivery, to enhance customer loyalty and satisfaction, and achieve win-win cooperation with
customers.
(3) Empower business expansion and create new opportunities
Based on the consolidation of the existing business advantages in precision components and smart hardware products, the Company
will further explore new directions and opportunities. By grasping the opportunities in precision optical components and modules,
sensors, microsystem modules, VR, AR, and other products, the Company will secure the key projects to obtain core customers, and
follow up with new opportunities in automotive electronics, micro-display and other fields as well.
(4) Improve lean operation and complete successful delivery of key projects
The Company will constantly promote the idea of lean operation, learn from the project experience in 2022, to improve the level of
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 and the business objectives, and to achieve the
goals of the Company.
(5) Continue to invest in independent R&D and technological innovation, strengthen core competitiveness with talent strategy
The Company will continue to invest in R&D and technological innovations centered on future strategic directions, and strengthen the
technical capabilities in the fields of acoustics, optics, microelectronics, precision and intelligent manufacturing. The Company will
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 development with
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 in production operation of the Company, take the initiative to identify
and resolve potential risks, and ensure sustainable development of production and operation activities.
4. The demand and planning of fund
The Company maintains a healthy asset and liability structure, and obtained a good long-term cooperative relationship with banks and
other major financial institutions. In 2023, the Company will continue to improve the management of cash, optimize payment terms,
control capital expenditure and enhance the efficiency of fund. The Company will carefully evaluate various financing tools to optimize
the asset-liability ratio and debt structure. The Company will also carefully manage financial derivatives trading activities with strict
standards, to actively avoid liquidity risks and foreign exchange risks. And with all the measures above, to thus provide stable and
sufficient financial support to the development of the Company.
5. Future risks
(1) Macroeconomic risks
Global economy has yet to recover. Inflation remains high in major European and American countries. Unfavorable factors that
affecting investment and consumption still exist, which may hinder the development of the global technology and consumer electronics
industry in the short term. The world political and economic situation remains complex and grim. Trade disputes between major
countries and geopolitical events have brought uncertainties to global economy, which may adversely affect the business of the
Company. Some intelligent hardware products, such as smartphones, have slowed down or stagnated in growth rate, and some next-
generation smart hardware products may develop slower than expected. This may impact the global market demand as well as the
Company's business performance.
(2) Operational risks
① Risks of relatively concentrated customers
The competitive pattern of global technology and consumer electronics industry, along with the Company's business model and key
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 industry leaders who have
significant competitive advantages and market position, and have maintained long-term and stable cooperative relations with the
34
Goertek Inc. Annual Report 2022
Company, under some special circumstances, they may bring fluctuations and risks to the Company's business if their 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 also imports a
considerable number of raw materials, equipment and other products from overseas. These import and export businesses are primarily
settled in US dollars. Although the Company has adopted appropriate risk hedging tools, the significant fluctuation of RMB/US dollar
exchange rate may still bring certain exchange rate risks to the Company.
③ Risks of loss of core technical talents
The technology and consumer electronics industry is a talent intensive industry. Therefore, the demand for core technical talents is
strong, and the competition for talents is very fierce. Core technical talents are the key resources for the Company to continuously
improve its core competitiveness and realize long-term development. For this reason, the Company will continue to improve various
incentive and restraint mechanisms in order to retain core technical talents. Under fierce competition, there may still be the loss of core
technical talents, which may put the Company at a disadvantage in the competition and affect the business development in some cases.
(3) Risks of management
In recent years, the Company has successfully expanded its business in each product line. The business scale has been expanded
significantly, as well as the variety of products and the size of the staff has grown rapidly. The growing business brings higher
requirements to the Company in overall operation and management ability. The Company implements the strategic plan of developing
core customer business and exploring new opportunities, which also requires the Company's management to maintain excellent abilities
of judgment, execution and management. If the Company's management fails to match the business growth, or fails to be improved to
meet the needs of the Company's development, it may affect the execution of strategic planning and the delivery of business objectives,
thus bringing management risks to the Company.
Ⅻ. Reception, research, communication, interview and other activities during the reporting
period
Applicable Not applicable
Main content of
Reception Type of Type of Index of related
Reception time List of attendees discussion and
place communication attendees information
information provided
The record of
Investors participated
investor relations
in the Company's The Company's overall
The activities
April 8, 2022 Other Other performance operation and business
Company published on
presentation meeting development
www.cnifo.com.cn
of 2021
on April 8, 2022
The record of
investor relations
Hua An Fund, The Company's overall
The Conference Institutional activities
April 27, 2022 BlackRock Assets, operation and business
Company Call Investors published on
Yinhua Fund, etc. development
www.cnifo.com.cn
on April 27, 2022
The record of
investor relations
Macquarie, Huaxin The Company's overall activities
The Conference Institutional
August 30, 2022 Securities, Huatai operation and business published on
Company Call Investors
Securities, etc. development www.cnifo.com.cn
on August 30,
2022
35
Goertek Inc. Annual Report 2022
The record of
investor relations
Allianz Global The Company's overall activities
September 28, The Conference Institutional
Investors, CPPIB, operation and business published on
2022 Company Call Investors
Manulife, etc. development www.cnifo.com.cn
on September 28,
2022
The record of
Investors participated
investor relations
in the 2022 Online
The Company's overall activities
November 16, The Collective Reception
Other Other operation and business published on
2022 Company Day for Investors of
development www.cnifo.com.cn
Listed Companies in
on November 16,
Shandong Province
2022
36
Goertek Inc. Annual Report 2022
Section IV Corporate Governance
Ⅰ. Corporate Governance in Practice
During the reporting period, the Company continuously improved the corporate governance structure, the internal management and
control system, and continued to carry out corporate governance activities in strict accordance with the requirements of relevant laws,
regulations and normative documents such as Company Law, Securities Law, Corporate Governance of Listed Companies, Rules
Governing the Listing of Shares on Shenzhen Stock Exchange as well as with relevant documents of China Securities Regulatory
Commission and the relevant instructions of Shandong Securities Regulatory Bureau, so as to further standardize the Company'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 documents
concerning administrative supervision measures taken by the supervised departments was received.
By the end of the reporting period, the details of actual practice of corporate governance are as follows:
1. Shareholders and shareholders' meetings: The Company has convened and held shareholders' meetings in strict accordance with 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; In addition, lawyers
were engaged to witness the legitimacy of the convening, holding and voting procedures of each general meeting of shareholders.
2. The Company and controlling shareholders: The Company, with independent business and operation autonomy, is independent of
the controlling shareholders in business, personnel, assets, organizations and finance. The Board of Directors, Board of Supervisors
and internal institutions of the Company operate independently. The controlling shareholders exercise their rights through shareholders’
meeting, and there was no direct or indirect interference with the Company’s operations and decision-making beyond the general
meeting of shareholders.
3. Directors and the Board of Directors: The Company elects directors in strict accordance with the selection and appointment
procedures stipulated in the Articles of Association. There are three independent directors in the Board, the number of directors and
the composition of the Board of Directors meet the requirements of laws and regulations and the Articles of Association. All directors
may carry out their work in accordance with Rules of Procedure of the Board of Directors and Working System for Independent
Directors, they attended all the Board of Directors meetings, and all the related trainings as required.
4. Supervisors and the Board of Supervisors: The election of supervisors and the composition of the Board of Supervisors were in strict
accordance with relevant provisions of Company Law and Articles of Association. The Company's supervisors strictly followed the
Rules of Procedure of the Board of Supervisors. All supervisors scrupulously attended the sessions, seriously fulfilled their 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 improved its fair and transparent performance evaluation
standards and incentive a restraint mechanism for directors, supervisors and senior management. The appointment of Company’s senior
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, actively communicates
and coordinates with stakeholders, to balance the interests of the society, shareholders, the Company, employees and other 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 the provisions
of Rules Governing the Listing of Shares on Shenzhen Stock Exchange, Articles of Association and Investor Relations Management
Rules, and discloses information as per the law, so as to ensure that the information disclosure is true, timely, accurate and complete.
All shareholders were given equal access to the information. The Company has gradually revised and improved the Insider Information
Management Rules, further improved the insider information management, strengthened the confidentiality of insider information,
maintained the fair principle of information disclosure and protected the legitimate rights and interests of investors. The Company has
appointed the secretary of the Board of Directors as the head of investor relations management of the Company, responsible for the
Company's information disclosure and investor relations management. The Company has designated Securities Times, China Securities
Journal, Shanghai Securities News, Securities Daily and cninfo.com.cn to disclose Company’s information in a faithful, accurate and
timely manner, strictly in accordance with relevant laws and regulations, Rules on Information Disclosure and Rules on Internal
Reporting of Material Information, so that all shareholders have a fair chance to get information.
Whether there is any significant difference between actual situation of corporate governance and laws, administrative regulations and
the provisions on governance of listed companies issued by CSRC
37
Goertek Inc. Annual Report 2022
Yes No
There is no significant difference between the actual situation of corporate governance and the laws, administrative regulations and
the provisions on governance of listed companies issued by CSRC
Ⅱ. Particulars about the independence of the Company from controlling shareholder and
actual 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, organization and
finance. The ownership of the assets is clear and belongs to the Company. The Company has the capability of self-operation in its
marketing, production and procurement etc., does not depend on major shareholders or their affiliated enterprises, there is no mixed
operation with major shareholders.
1. Business independence: The Company had its own production, procurement and sales system, and was completely independent 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 the Company,
and rules and regulations has been established for appraisal of employees’ performance. Personnel of the Company were independent
from the controlling shareholder. The Senior Management of the Company did not hold any positions other than director and 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 organization of
the Company operated independently, and each functional department is completely independent from controlling shareholder in terms
of authority, personnel, production operation premises, etc., and there is no subordinate relationship between the controlling shareholder
and its functional departments.
4. Asset independence: The title relationship between the Company and the controlling shareholder was clear. The Company’s assets
were complete. The Company has independent and complete production system, auxiliary production system and supporting facilities,
as well as land use right, industrial property right, patented technology and other assets.
5. Financial independence: The Company has its own separate financial department and an independent accounting system and financial
management system from the controlling shareholder. The Company makes financial decisions on its own according to the
requirements of relevant accounting systems of listed companies. At the same time, implement vertical management on financial affairs
of its subsidiaries. The Company opened accounts in the bank independently, made tax declarations and performed 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
Percentage of
Session Type of meeting investor Convening date Disclosure date Meeting resolution
participation
For details, refer to the
Announcement of Resolutions
of the 2021 Annual General
Annual general Meeting published by
General meeting of
meeting of 41.71% May 12, 2022 May 13, 2022 Securities Times, China
shareholders of 2021
shareholders Securities Journal, Shanghai
Securities News, Securities
Daily and CNINFO
(http://www.cninfo.com.cn)
The first Extraordinary For details, refer to the
39.83% July 26, 2022 July 27, 2022
extraordinary general general meeting Announcement of the
38
Goertek Inc. Annual Report 2022
Percentage of
Session Type of meeting investor Convening date Disclosure date Meeting resolution
participation
meeting of of shareholders Resolution of the 1st
shareholders in 2022 Extraordinary Shareholders'
Meeting in 2022 published by
Securities Times, China
Securities Journal, Shanghai
Securities News, Securities
Daily and CNINFO
(http://www.cninfo.com.cn)
For details, refer to the
Announcement of the
Resolution of the 2nd
The second Extraordinary Shareholders'
Extraordinary
extraordinary general November 15, November 16, Meeting in 2022 published by
general meeting 35.66%
meeting of 2022 2022 Securities Times, China
of shareholders
shareholders in 2022 Securities Journal, Shanghai
Securities News, Securities
Daily and CNINFO
(http://www.cninfo.com.cn)
For details, refer to the
Announcement of the
Resolution of the 3rd
The 3rd Extraordinary Shareholders'
Extraordinary
Extraordinary December 19, December 20, Meeting in 2022 published by
general meeting 30.84%
Shareholders' 2022 2022 Securities Times, China
of shareholders
Meeting in 2022 Securities Journal, Shanghai
Securities News, Securities
Daily and CNINFO
(http://www.cninfo.com.cn)
2. Extraordinary general meeting of shareholders requested by the Preference shareholders with voting
rights restored
Applicable Not applicable
V. Directors, Supervisors and Senior Management
1. Basic Information
Number
Number of Number Other
of shares Number of Reason
shares held of shares increase
Appointment Term start Term end increased shares held for
Name Position Gender Age at the decreased or
status date date during at the end of change
beginning of during the decrease
the the period in shares
the period period changes
period
July 27, November
Jiang Bin Chairman Incumbent Male 57 287,397,406 287,397,406
2007 14, 2025
Vice Incumbent July 27, April 6,
Jiang Long Male 49 250,345,197 250,345,197
Chairman (resigned as 2007 2023
39
Goertek Inc. Annual Report 2022
Vice
Chairman
October April 6,
President and President
30, 2014 2023
on April 6,
2023)
February November
Director
Duan 4, 2016 14, 2025
Incumbent Male 47 3,474,500 3,474,500
Huilu Vice March 25, November
President 2011 14, 2025
Incumbent
(Serving as
Vice President of June 2, April 7,
President the Company 2021 2023
Li Youbo Male 46
since April 7,
2023)
November November
Director Incumbent
15, 2022 14, 2025
Independent November November
Wang Kun Incumbent Female 47
Director 8, 2019 14, 2025
Huang Independent November November
Incumbent Female 58
Yidong Director 15, 2022 14, 2025
Jiang Independent November November
Incumbent Male 54
Fuxiu Director 15, 2022 14, 2025
Chairman of
Feng November November
Board of Incumbent Male 55
Pengbo 15, 2022 14, 2025
Supervisors
Employee
Xu September November
representative Incumbent Female 46
Xiaofeng 17, 2013 14, 2025
Supervisor
Employee
Wei April 27, November
representative Incumbent Male 45
Wenbin 2021 14, 2025
Supervisor
Gao Vice April 12, November
Incumbent Male 47
Xiaoguang President 2012 14, 2025
Vice October November
Liu Chunfa Incumbent Male 47 864,000 864,000
President 10, 2013 14, 2025
Jiang Vice October November
Incumbent Male 53
Hongzhai President 10, 2013 14, 2025
Vice October November
Yu Dachao Incumbent Male 45
President 24, 2016 14, 2025
Vice
President, October November Increase
Jia Jun'an Incumbent Male 52 200,000 600,000 800,000
Secretary of 10, 2013 14, 2025 holdings
the Board
Chief
January November
Li Yongzhi Financial Incumbent Male 45
27, 2021 14, 2025
Officer
Liu November November
Director Resigned Male 52
Chengmin 29, 2016 15, 2022
Xia Independent October November
Resigned Female 65
Shanhong Director 20, 2016 15, 2022
Wang Independent October November
Resigned Male 63
Tianmiao Director 20, 2016 15, 2022
Chairman of
Sun September November
Board of Resigned Male 57 7,089,534 7,089,534
Hongbin 17, 2013 15, 2022
Supervisors
40
Goertek Inc. Annual Report 2022
Incumbent
Kazuyoshi Vice (resigned on October March 7,
Male 56
Yoshinaga President March 7, 24, 2016 2023
2023)
Zhu Vice June 2, November
Resigned Male 49
Shengbo President 2021 15, 2022
Total -- -- -- -- -- -- 549,370,637 600,000 0 549,970,637 --
Whether there is any resignation of directors, supervisors and senior management during the reporting period
Yes No
Changes in directors, supervisors and senior management
Applicable Not applicable
Name Position Type Date Reason
Leave office
Liu Chengmin Director upon expiration November 15, 2022 Leave office upon expiration of term
of term
Leave office
Independent
Xia Shanhong upon expiration November 15, 2022 Leave office upon expiration of term
Director
of term
Leave office
Independent
Wang Tianmiao upon expiration November 15, 2022 Leave office upon expiration of term
Director
of term
Leave office
Chairman of Board
Sun Hongbin upon expiration November 15, 2022 Leave office upon expiration of term
of Supervisors
of term
Leave office
Zhu Shengbo Vice President upon expiration November 15, 2022 Leave office upon expiration of term
of term
Independent Elected as an independent director of the
Huang Yidong Elected November 15, 2022
Director 6th Board of Directors of the Company
Independent Elected as an independent director of the
Jiang Fuxiu Elected November 15, 2022
Director 6th Board of Directors of the Company
Chairman of Board Elected as Chairman of the 6th Board of
Feng Pengbo Elected November 15, 2022
of Supervisors Supervisors
2. Biographical Information
Professional backgrounds, main working experience and current duties of the Directors, Supervisors and the Senior Management
(1) Members of the Board of Directors of the Company:
Jiangbin, male, a Chinese citizen with no foreign residency right, who was born on September 1966, holding a master's degree in
business administration from Tsinghua University and bachelor's degree in electronic engineering from Beihang University. Mr. Jiang,
Chairman of the company, founded Goertek Inc. in 2001. He has more than 30 years of working experience in the electro-acoustic
industry. He also serves as standing member of the 12th executive committee of the All-China Federation of Industry and Commerce,
rotating chairman of China Electronic Components Association, and vice chairman of Industry of Virtual Reality Alliance. He has won
the titles of National Model Worker, Shandong Province Model Worker, National Leading Entrepreneur in Electronic Information
Industry, Leading Entrepreneur in Shandong Province, and Outstanding Talent in Qilu.
Jiang Long, male, a Chinese citizen with no foreign residency right, who was born in February 1974, Ph.D. in strategic management
from the University of Maryland, a master's degree holder in management science from Renmin University of China, and a bachelor's
degree holder in materials engineering from Tsinghua University. He served as the vice chairman and president of the Company as of
the end of the reporting period. Joined the Company in 2004, Mr. Jiang successively served as vice president, senior vice president and
executive vice president of the company. Mr. Jiang is also the Vice President of China Audio Industry Association and the chairman
41
Goertek Inc. Annual Report 2022
of China Electronic Components Association-Electroacoustic Chapter. Mr. Jiang has extensive experience in marketing, sales and
business management. Mr. Jiang resigned as vice chairman, director and president of the Company on April 6, 2023.
Duan Huilu, male, a Chinese citizen with no foreign residency right, who was born in February 1976, with a bachelor's degree in
accounting from Shandong University of Finance and Economics. Mr. Duan, Director and Vice President of the company, He joined
the company in 2001 and successively served as the company's accountant, finance manager, finance department manager and chief
financial officer. Mr. Duan has more than 20 years of working experience in corporate finance.
Li Youbo, male, a Chinese citizen with no foreign residency right, who was born in December 1977, with a bachelor's degree in
automation from Dalian University of Technology. He served as the director and vice president of the Company as of the end of the
reporting period. He joined the company in 2003 and successively served as engineer, technical manager, head of the business
department, etc. Mr. Li has nearly 20 years of experience in R&D and manufacturing of electroacoustic components/devices. Li Youbo
has assumed the position of President of the Company since April 7, 2023.
Wang Kun, female, a Chinese citizen with no foreign residency right, who was born in April 1976, with a Ph.D. in accounting from
Hong Kong University of Science and Technology and a bachelor's degree in accounting from Nankai University. She is currently an
associate professor at the Department of Accounting, School of Economics and Management, Tsinghua University, deputy director
and senior researcher of the Research Center of Corporate Governance of Tsinghua University, and an independent director of the
Company and China International Futures Co., Ltd. Ms. Wang used to serve as lecturer and director of the doctoral program in the
Department of Accounting, School of Economics and Management, Tsinghua University, and independent director of Beijing
Thunisoft Co., Ltd., Integrated Electronic Systems Lab Co., Ltd., etc. She has won the Excellence in Teaching Award of the School of
Economics and Management of Tsinghua University for several times and has rich experience in finance and auditing.
Huang Yidong, female, a Chinese citizen with permanent residency in Japan, who was born in March 1965, with a Ph.D. in electronic
engineering from Tsinghua University. She is currently a professor in the Department of Electronic Engineering of Tsinghua University,
deputy director of the Academic Committee of Tsinghua University, and fellow of OSA. She is also the executive director of the
Optical Society of China, member of the Micro-nano Optics Professional Committee, vice chairman of the China Electronic Education
Society, vice president of the Higher Education Branch, deputy editor-in-chief of ACS Photonics magazine, and independent director
of the Company and Zhuhai Optical Library Technology Co., Ltd. She used to serve as distinguished researcher of NEC Institute of
Optical-Wireless Devices, deputy dean and head of the Department of Electronic Engineering of Tsinghua University, and dean of
Tianjin Institute of Electronic Information of Tsinghua University.
Jiang Fuxiu, male, a Chinese citizen with no foreign residency right, who was born in June 1969, served as a postdoctoral fellow in
accounting at Guanghua School of Management, Peking University, and has a Ph.D. in economics from Nanjing University. He is a
professor and doctoral supervisor in the Department of Finance, Business School, Renmin University of China. He also serves as an
independent director of the Company and Beijing Chunju Technology Co., Ltd. He used to serve as an independent director of Beixun
Group Co., Ltd., Yantai Longyuan Power Technology Co., Ltd., Beijing Zhongxin International Travel Co., Ltd., Datang International
Power Generation Co., Ltd., etc.
(2) Members of the Supervisory Board of the Company
Feng Pengbo, male, a Chinese citizen with no foreign residency right, was born in July 1968. He has a bachelor's degree in mechanical
manufacturing technology and equipment from Xi'an University of Technology and the professional title of Senior Engineer, and won
the honor of Model Worker in Shandong Province. He is the chairman of the Supervisory Board. Mr. Feng is an expert in the automation
and has rich experience in automation equipment R&D and manufacturing.
Xu Xiaofeng, female, is a Chinese citizen with no foreign residency right, who was born in October 1977, has a bachelor's degree in
electrical technology from Zhengzhou Institute of Aeronautical Industry Management majoring and a bachelor's degree in business
administration from China University of Petroleum. He is currently a supervisor of the Company and the person in charge of the work
of the Party and masses. Ms. Xu joined the company in 2001, and successively served as the assistant manager of the quality control
department, the enterprise development department and the operation department, and the head of the Company's employee service
center. Ms. Xu has rich experience in business management.
Wei Wenbin, male, a Chinese citizen with no foreign residency right, who was born in July 1978, has a bachelor's degree in material
shaping and control engineering from Jilin University. He is currently a supervisor and head of the employee management department
of the Company. Mr. Wei joined the company in 2004, and successively served as the head of the company's production and operation
management department, human resources management department, lean manufacturing management department, employee
management and other related departments.
(3) Senior management personnel of the Company
Jiang Long (Refer to the resume above for details.)
Li Youbo (Refer to the resume above for details.)
42
Goertek Inc. Annual Report 2022
Liu Chunfa, male, a Chinese citizen with no foreign residency right, who was born in October 1976, graduated from Lanzhou Railway
Institute majoring in mechatronics. Vice President of the company. Since joining the Company in 1999, he successively served as
engineer and assistant manager of the R&D department, technical manager of the technical engineering department, senior product
manager, head of the manufacturing department, senior manager of the R&D department, person in charge of the business department,
etc. Mr. Liu has over 20 years of experience in the fields of electroacoustic components, especially in miniature loudspeakers and
receivers.
Jiang Hongzhai, male, a Chinese citizen with no foreign residency right, who was born in December 1970, graduated from Shandong
Institute of Information Technology, majoring in computer application. Vice President of the company. Mr. Jiang used to serve as
factory director of Yuefeng Electronic Technology (Dongguan) Co., Ltd., and engineer of Weifang Radio Eighth Factory. He joined
the Company in 2006 and successively served as deputy general manager of equipment department, employee management department,
manager of subsidiaries business, etc. Mr. Jiang has more than 20 years of experience in the field of precision machining, and has rich
experience in logistics support such as administration and infrastructure, etc.
Yu Dachao, male, a Chinese citizen with no foreign residency right, who was born in May 1978, has a bachelor's degree in computer
science and engineering, Tianjin University of Technology. Vice President of the company. He joined the Company in 2005 and
successively served as the manager, product manager, deputy general manager of the R&D department, head of the business department,
and head of the supply chain management department. Mr. Yu has rich experience in the fields of intelligent electronic product
development and supply chain management.
Gao Xiaoguang, male, a Chinese citizen with no foreign residency right, who was born in March 1976, has a master’s degree in business
administration from Southern Cross University, Australia. Vice President of the company. He joined the Company in 2001, and
successively served as manager, deputy manager and general manager of the device business department and head of the marketing
system. He has rich experience in market expansion and key client maintenance.
Duan Huilu (Refer to the resume above for details.)
Jia Jun'an, male, a Chinese citizen with no foreign residency right, who was born in February 1971, holds a Ph.D. degree in economics
from Xiamen University, a master's degree of economics from Shandong University, a bachelor's degree in economics from Shandong
University of Finance and Economics. Vice President and the Secretary of the Board. He used to serve as the tax manager of KPMG
Enterprise Consulting (China) Co., Ltd., Qingdao Branch. Mr. Jia joined the company in 2010 and served as deputy general manager
of financial department. Mr. Jia is a member of Chinese Institute of Certified Public Accountants (CICPA) and member of Association
of Chartered Certified Accountants (ACCA), and holds the Certificate for Secretary of the Board of Directors, and his qualification
complies with relevant provisions of Rules Governing the Listing of Shares on Shenzhen Stock Exchange and the Articles of
Association.
Kazuyoshi Yoshinaga, male, Japanese citizen, who was born in September 1967, holds a master's degree in business administration
from University of Washington and a bachelor's degree in mechanics from Tongji University. He currently serves as vice president of
the Company, and deputy secretary-general of the China Virtual Reality Industry Association. He was an associate partner at IBM. He
joined the Company in 2015, and has extensive experience in the field of strategy and transformation management. Kazuyoshi
Yoshinaga resigned on March 7, 2023.
Li Yongzhi, male, a Chinese citizen with no foreign residency right, who was born in November 1978, holds a master’s degree in
business management and a bachelor's degree in management from Hefei University of Technology. Chief Financial Officer of the
company and the Head of the Accounting Office. He joined the Company in 2005 and successively served as accountant and financial
manager of the financial department. Mr. Li is senior accountant and certified management accountant (CMA), with more than 15
years of experience in corporate finance.
Positions held in shareholders’ entities
Applicable Not applicable
Receive
Position
remuneration or
Name of the undertaken in
Name Term start date Term end date allowance from
shareholder entity shareholder
shareholders’ entity
unit
(Yes/No)
Goertek Group Co.,
Jiang Bin Chairman November 15, 2021 November 14, 2024 No
Ltd.
Goertek Group Co.,
Jiang Long Director November 15, 2021 November 14, 2024 No
Ltd.
43
Goertek Inc. Annual Report 2022
Goertek Group Co.,
Duan Huilu Director November 15, 2021 November 14, 2024 No
Ltd.
Positions held in
shareholders’ None
entities
Positions held in other entities
Applicable Not applicable
Receive
remuneration or
Position undertaken
Name Name of other entity Term start date Term end date allowance from
in other unit
shareholders’ entity
(Yes/No)
Weifang Goertek
Jiang Bin Chairman November 23, 2019 November 22, 2025 No
Electronics Co., Ltd.
Goertek Optical
Jiang Bin Chairman April 20, 2022 April 19, 2025 No
Technology Co., Ltd
Beijing Goertek Investment
Jiang Bin Executive Director January 22, 2019 January 21, 2025 No
Management Co., Ltd.
Weifang Goertek Education
Jiang Bin Executive Director March 22, 2019 March 21, 2025 No
Investment Co., Ltd.
Rongcheng Goertek
Jiang Long Chairman July 15, 2020 July 14, 2023 No
Technology Co., Ltd.
Goertek Technology Vina
Jiang Long Chairman January 31, 2019 December 31, 2024 No
Company Limited
Jiang Long Goertek Electronics, Inc. Director May 1, 2020 April 30, 2023 No
Weifang Goertek Director / General
Jiang Long November 26, 2019 November 25, 2025 No
Electronics Co., Ltd. Manager
Goertek Optical Director / General
Jiang Long April 20, 2022 April 19, 2025 No
Technology Co., Ltd Manager
Goertek Technology Co., Executive Director
Jiang Long December 10, 2021 December 9, 2026 No
Ltd. / General Manager
Goertek Intelligence Executive Director
Jiang Long August 18, 2020 August 17, 2023 No
Technology Co., Ltd. / General Manager
Goertek Microelectronics
Jiang Long Chairman October 20, 2020 April 7, 2023 No
Inc.
Qingdao Goertek
Jiang Long Executive Director October 22, 2021 October 21, 2024 No
Intelligent Sensor Co., Ltd.
Weifang Goertek
Jiang Long Executive Director December 9, 2019 April 7, 2023 No
Microelectronics Co., Ltd.
Shanghai Goertek
Jiang Long Executive Director October 14, 2020 April 7, 2023 No
Microelectronics Co., Ltd.
Beijing Goertek
Jiang Long Executive Director August 7, 2020 April 7, 2023 No
Microelectronics Co., Ltd.
Wuxi Goertek
Jiang Long Executive Director August 7, 2020 April 7, 2023 No
Microelectronics Co., Ltd.
Shenzhen Goertek
Jiang Long Executive Director July 23, 2020 April 7, 2023 No
Microelectronics Co., Ltd.
Rongcheng Goertek
Jiang Long Executive Director November 1, 2021 April 7, 2023 No
Microelectronics Co., Ltd.
44
Goertek Inc. Annual Report 2022
Qingdao Goertek
Jiang Long Microelectronics Research Executive Director November 30, 2020 April 7, 2023 No
Institute Co., Ltd.
Jiang Long Enkris Semiconductor Inc. Director November 18, 2021 April 7, 2023 No
Qingdao Virtual Reality
Jiang Long Chairman April 12, 2022 April 11, 2025 No
Institute Co., Ltd.
Goertek Optical
Jiang Long Technology (Shanghai) Director February 16, 2022 February 15, 2025 No
Co., Ltd
Qingdao Goertek Horizons Director / General
Jiang Long May 19, 2022 May 18, 2025 No
Technology Co., Ltd Manager
Goertek Optical
Jiang Long Technology (Qingdao) Co., Director June 29, 2022 June 28, 2025 No
Ltd
Goertek Technology Vina
Duan Huilu Director January 31, 2019 No
Company Limited
Goertek Technology Co.,
Duan Huilu Supervisor August 14, 2021 August 13, 2024 No
Ltd.
Goertek Investment Co., Executive Director
Duan Huilu December 7, 2015 December 6, 2025 No
Ltd. / General Manager
Weifang Goertek
Duan Huilu Director November 23, 2021 November 22, 2024 No
Electronics Co., Ltd.
Weifang Goertek Trading Executive Director
Duan Huilu August 26, 2020 August 25, 2023 No
Co., Ltd. / General Manager
Beijing Goertek Investment
Duan Huilu Supervisor January 22, 2019 January 21, 2025 No
Management Co., Ltd.
Goertek (HongKong)
Duan Huilu Director April 26, 2019 April 25, 2025 No
Co.,Limited
Qingdao Goertek
Executive Director
Duan Huilu Commercial Factoring Co., January 11, 2021 January 10, 2024 No
/ General Manager
Ltd.
Liu Chunfa Goertek Vina Co., Ltd. Director January 1, 2019 No
Goertek Technology Vina
Liu Chunfa Director January 31, 2019 No
Company Limited
Shanghai Goertek
Liu Chunfa Supervisor April 25, 2020 April 24, 2023 No
Technology Co., Ltd.
Jiang Yili Precision
Executive Director July 5, 2019 July 4, 2022 No
Hongzhai Manufacturing Co., Ltd.
Weifang Goertek
Jiang
Communication Executive Director June 26, 2021 June 25, 2024 No
Hongzhai
Technology Co., Ltd.
Dongguan JoyForce
Jiang
Precision Manufacturing Executive Director December 11, 2019 December 10, 2025 No
Hongzhai
Co., Ltd.
Jiang Kunshan Goertek
Executive Director November 9, 2020 November 8, 2026 No
Hongzhai Electronics Co., Ltd
Jiang Nanning Goertek
Chairman November 12, 2021 November 11, 2024 No
Hongzhai Electronics Co., Ltd
Jiang Nanning Goertek Trading Chairman November 29, 2021 November 28, 2024 No
45
Goertek Inc. Annual Report 2022
Hongzhai Co., Ltd.
Beijing Goertek Executive Director
Yu Dachao November 30, 2019 November 29, 2025 No
Technology Co., Ltd. / General Manager
Xi’an Goertek Electronic
Yu Dachao Executive Director May 7, 2019 May 6, 2025 No
Technology Co., Ltd.
Qingdao Goertek Acoustics Executive Director
Yu Dachao December 10, 2021 December 9, 2024 No
Technology Co., Ltd. / General Manager
Yishui TECO Electronic Chairman / General
Yu Dachao December 10, 2019 December 9, 2025 No
Technology Co., Ltd. Manager
Goertek Technology Vina
Yu Dachao Director January 31, 2021 No
Company Limited
Gao Yishui Goertek Electronics Executive Director
February 13, 2021 April 19, 2022 No
Xiaoguang Co., Ltd. / General Manager
Gao Shenzhen Goertek Executive Director
October 29, 2021 October 28, 2024 No
Xiaoguang Technology Co., Ltd. / General Manager
Gao Shanghai Goertek
Executive Director April 25, 2020 April 24, 2023 No
Xiaoguang Technology Co., Ltd.
Gao
Goertek Electronics, Inc. Manager December 19, 2018 December 18, 2024 No
Xiaoguang
Gao AKM Industrial Company Non-executive
March 12, 2015 July 31, 2022 No
Xiaoguang Limited director
Goertek Investment Co.,
Jia Jun'an Supervisor December 7, 2021 December 6, 2024 No
Ltd.
Weifang Goertek
Jia Jun'an Supervisor November 26, 2019 November 25, 2025 No
Electronics Co., Ltd.
AKM Industrial Company Non-executive
Jia Jun'an November 17, 2015 July 31, 2022 No
Limited director
Goertek Optical
Li Yongzhi Supervisor March 23, 2021 April 21, 2022 No
Technology Co., Ltd
Goertek Intelligence
Li Yongzhi Supervisor August 18, 2020 August 17, 2023 No
Technology Co., Ltd.
Kunshan Goertek
Li Yongzhi Supervisor November 9, 2020 November 8, 2023 No
Electronics Co., Ltd
Qingdao Goertek
Li Yongzhi Commercial Factoring Co., Supervisor January 11, 2021 January 10, 2024 No
Ltd.
Nanning Goertek
Li Yongzhi Supervisor November 12, 2021 November 11, 2024 No
Electronics Co., Ltd
Nanning Goertek Trading
Li Yongzhi Supervisor November 29, 2021 November 28, 2024 No
Co., Ltd.
Xi’an Goertek Electronic
Li Yongzhi Supervisor May 7, 2019 May 6, 2025 No
Technology Co., Ltd.
Yishui TECO Electronic
Li Yongzhi Supervisor December 10, 2019 December 9, 2025 No
Technology Co., Ltd.
Rongcheng Goertek
Li Yongzhi Supervisor July 15, 2020 July 14, 2023 No
Technology Co., Ltd.
Goertek Microelectronics
Li Yongzhi Director December 23, 2020 December 22, 2023 No
Inc.
Li Youbo Shanghai Goertek General Manager July 23, 2020 July 22, 2023 No
46
Goertek Inc. Annual Report 2022
Technology Co., Ltd.
Weifang Goertek
Li Youbo Supervisor May 9, 2022 May 8, 2025
Electronics Co., Ltd.
Zhu Nanning Goertek
Director November 12, 2021 November 11, 2024 No
Shengbo Electronics Co., Ltd
Zhu Nanning Goertek Trading
Director November 29, 2021 November 28, 2024 No
Shengbo Co., Ltd.
Zhu
Goertek Vina Co., Ltd Chairman January 1, 2019 No
Shengbo
Zhu Goertek Technology Vina
Director January 31, 2019 No
Shengbo Company Limited
Zhu Goertek Precision Industry
Executive Director October 30, 2020 October 29, 2025 No
Shengbo Vietnam Company Limited
Zhu Goertek Technology (Hong
Executive Director August 7, 2020 No
Shengbo Kong) Co.,Limited
Zhu Weifang Goertek Executive Director
May 9, 2022 May 8, 2025 No
Shengbo Electronics Co., Ltd. / Manager
Weifang Goertek
Wei
Communication General Manager June 26, 2021 June 25, 2024 No
Wenbin
Technology Co., Ltd.
Seetrum Companion
Huang (Shanghai) Enterprise
Managing Partner November 12, 2020 No
Yidong Management Center
(Limited Partnership)
Huang Advanced Fiber Resources Independent
March 31, 2021 March 30, 2024 Yes
Yidong (Zhuhai), Ltd. Director
Beijing Seetrum
Huang
Technology Co., Ltd. Co., Supervisor May 20, 2021 No
Yidong
Ltd.
Tianjin Hi-Chip
Huang
Technology Group Director April 29, 2022 April 28, 2025 No
Yidong
Corporatiion.
Feng Weifang Lokomo Precision Executive Director
April 27, 2015 April 21, 2022 No
Pengbo Industry Co., Ltd. / General Manager
Feng Shenzhen Mototek Smart
Supervisor November 22, 2019 November 21, 2025 No
Pengbo Technology Co., Ltd.
Feng Qingdao Virtual Reality
Chairman July 9, 2020 April 24, 2022 No
Pengbo Institute Co., Ltd.
Feng BUAA Goertek (Weifang)
Chairman August 31, 2021 No
Pengbo Intelligent Robot Co., Ltd.
Description
of
incumbency None
in other
units
Penalties imposed by securities regulatory authorities on current and outgoing directors, supervisors and senior management of the
company in the past three years
Applicable Not applicable
47
Goertek Inc. Annual Report 2022
3. Remuneration of Directors, Supervisors and Senior Management
The decision-making procedure, basis and actual payment of the remuneration of directors, supervisors and senior management
The remuneration for the Company's directors shall be deliberated by the board of directors before being submitted to the general
meeting of shareholders for determination; the remuneration for supervisors shall be deliberated by the board of supervisors before
being submitted to the general meeting of shareholders for determination; the remuneration for senior management personnel shall be
proposed by the remuneration and appraisal committee and determined by the board of directors upon deliberation.
Remuneration of directors, supervisors and senior management during reporting period
Unit: RMB 10,000
The total amount
Whether to get
of pre-tax
Appointment paid by the
Name Position Gender Age remuneration
status related party of
received from
the company
the company
Jiang Bin Chairman Male 57 Incumbent 181.50 No
Vice Chairman and President
Jiang Long (resigned from the above Male 49 Incumbent 175.50 No
positions on April 6, 2023)
Duan Huilu Director, Vice President Male 47 Incumbent 118.50 No
Director and Vice President
Li Youbo (Serving as President of the Male 46 Incumbent 118.50 No
Company since April 7, 2023)
Wang Kun Independent Director Female 47 Incumbent 18.00 No
Huang
Independent Director Female 58 Incumbent 2.25 No
Yidong
Jiang Fuxiu Independent Director Male 54 Incumbent 2.25 No
Feng Chairman of Board of
Male 55 Incumbent 5.63 No
Pengbo Supervisors
Xu Employee representative
Female 46 Incumbent 47.63 No
Xiaofeng Supervisor
Wei Employee representative
Male 45 Incumbent 47.93 No
Wenbin Supervisor
Gao
Vice President Male 47 Incumbent 118.50 No
Xiaoguang
Liu Chunfa Vice President Male 47 Incumbent 118.50 No
Jiang
Vice President Male 53 Incumbent 118.50 No
Hongzhai
Vice President, Secretary of the
Jia Jun'an Male 52 Incumbent 116.25 No
Board
Yu Dachao Vice President Male 45 Incumbent 118.50 No
Li Yongzhi Chief Financial Officer Male 45 Incumbent 114.00 No
Sun Chairman of Board of
Male 57 Resigned 0.00 Yes
Hongbin Supervisors
Zhu
Vice President Male 49 Resigned 105.00 No
Shengbo
Xia
Director Female 65 Resigned 15.75 No
Shanhong
Wang
Independent Director Male 63 Resigned 15.75 No
Tianmiao
48
Goertek Inc. Annual Report 2022
Liu
Director Male 52 Resigned 15.75 No
Chengmin
Kazuyoshi
Vice President Male 56 Resigned 117.00 No
Yoshinaga
Total -- -- -- -- 1,691.18 --
VI. Performance of Directors' Duties during the Reporting Period
1. Board of Directors
Session Convening date Disclosure date Meeting resolution
For details, refer to the Announcement on the
Resolution of the 26th Meeting of the 5th Board of
The 26th Meeting of
Directors published in Securities Times, China
the 5th Board of February 17, 2022 February 18, 2022
Securities Journal, Shanghai Securities News,
Directors
Securities Daily, and CNINFO
(http://www.cninfo.com.cn)
For details, refer to the Announcement on the
Resolution of the 27th Meeting of the 5th Board of
The 27th Meeting of
Directors published in Securities Times, China
the 5th Board of March 29, 2022 March 30, 2022
Securities Journal, Shanghai Securities News,
Directors
Securities Daily, and CNINFO
(http://www.cninfo.com.cn)
For details, refer to the Announcement on the
Resolution of the 28th Meeting of the 5th Board of
The 28th Meeting of
Directors published in Securities Times, China
the 5th Board of April 26, 2022 April 27, 2022
Securities Journal, Shanghai Securities News,
Directors
Securities Daily, and CNINFO
(http://www.cninfo.com.cn)
For details, refer to the Announcement on the
Resolution of the 29th Meeting of the 5th Board of
The 29th Meeting of
Directors published in Securities Times, China
the 5th Board of May 20, 2022 May 21, 2022
Securities Journal, Shanghai Securities News,
Directors
Securities Daily, and CNINFO
(http://www.cninfo.com.cn)
For details, refer to the Announcement on the
Resolution of the 30th Meeting of the 5th Board of
The 30th Meeting of
Directors published in Securities Times, China
the 5th Board of June 10, 2022 June 11, 2022
Securities Journal, Shanghai Securities News,
Directors
Securities Daily, and CNINFO
(http://www.cninfo.com.cn)
For details, refer to the Announcement on the
Resolution of the 31st Meeting of the 5th Board of
The 31st Meeting of
Directors published in Securities Times, China
the 5th Board of July 8, 2022 July 11, 2022
Securities Journal, Shanghai Securities News,
Directors
Securities Daily, and CNINFO
(http://www.cninfo.com.cn)
For details, refer to the Announcement on the
The 32nd Meeting of Resolution of the 32nd Meeting of the 5th Board of
the 5th Board of August 29, 2022 August 30, 2022 Directors published in Securities Times, China
Directors Securities Journal, Shanghai Securities News,
Securities Daily, and CNINFO
49
Goertek Inc. Annual Report 2022
(http://www.cninfo.com.cn)
For details, refer to the Announcement on the
Resolution of the 33rd Meeting of the 5th Board of
The 33rd Meeting of
Directors published in Securities Times, China
the 5th Board of September 13, 2022 September 14, 2022
Securities Journal, Shanghai Securities News,
Directors
Securities Daily, and CNINFO
(http://www.cninfo.com.cn)
For details, refer to the Announcement on the
Resolution of the 34th Meeting of the 5th Board of
The 34th Meeting of
Directors published in Securities Times, China
the 5th Board of October 27, 2022 October 28, 2022
Securities Journal, Shanghai Securities News,
Directors
Securities Daily, and CNINFO
(http://www.cninfo.com.cn)
For details, refer to the Announcement on the
Resolution of the 1st Meeting of the 6th Board of
The 1st Meeting of
Directors published in Securities Times, China
the 6th Board of November 21, 2022 November 22, 2022
Securities Journal, Shanghai Securities News,
Directors
Securities Daily, and CNINFO
(http://www.cninfo.com.cn)
For details, refer to the Announcement on the
Resolution of the 2nd Meeting of the 6th Board of
The 2nd Meeting of
Directors published in Securities Times, China
the 6th Board of December 2, 2022 December 3, 2022
Securities Journal, Shanghai Securities News,
Directors
Securities Daily, and CNINFO
(http://www.cninfo.com.cn)
2. Directors’ attendance at Board of Directors and general meeting of shareholders
Directors’ attendance at Board of Directors and general meeting of shareholders
Number of
Whether there Attendance of
Attendance Attendance by
Entrusted is absence in the general
required Attendance in Tele- Absence
Name presence person for two meeting of
during the person (times) communicatio (times)
(times) consecutive shareholders
reporting n (times)
times (times)
period (times)
Jiang Bin 11 10 1 0 0 No 4
Jiang Long 11 10 1 0 0 No 4
Duan Huilu 11 10 1 0 0 No 4
Li Youbo 2 1 1 0 0 No 1
Wang Kun 11 0 11 0 0 No 3
Huang Yidong 2 0 2 0 0 No 1
Jiang Fuxiu 2 0 2 0 0 No 1
Xia Shanhong 9 0 9 0 0 No 3
Wang
9 0 9 0 0 No 2
Tianmiao
Liu Chengmin 9 0 9 0 0 No 2
Statement on failure to attend the Board of Directors for two consecutive times
None
50
Goertek Inc. Annual Report 2022
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, Securities Law,
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 Companies on the Main
Board, Articles of Association and Rules of Procedure of the Board of Directors. They fulfilled their duty of due diligence by forming
a consensus after full discussion on major governance and business matters of the Company, and resolutely supervising 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 safeguard the legitimate rights and
interests of the Company and all shareholders.
VII. Performance of Special Committees under the Board of Directors during the Reporting
Period
Number Important
Performance Specific
Committee of Convening opinions and
Members Meeting content of other objections (if
name meetings date suggestions
duties any)
held proposed
We reviewed and
approved proposals
such as Inspection
Report on Important
Matters including
January 26, Related Transactions Not
Approved Not applicable
2022 and Guarantees in the applicable
2nd half of 2021,
Internal Audit Work
Report for Q4 2021
and the entire year of
2021.
Wang Kun,
Audit We reviewed and
Jiang Bin, Xia 6
committee approved proposals
Shanhong
such as Proposal on
Deliberation of
Annual Report of
2021 and its Abstract,
March 28, Proposal on Not
Approved Not applicable
2022 Deliberation of applicable
Financial Accounts of
2021, Proposal on the
Deliberation of Self-
assessment Report on
Internal Control of
2021.
51
Goertek Inc. Annual Report 2022
Number Important
Performance Specific
Committee of Convening opinions and
Members Meeting content of other objections (if
name meetings date suggestions
duties any)
held proposed
We reviewed and
approved proposals
such as Proposal on
the deliberation of
April 25, Goertek Inc. Quarterly Not
Approved Not applicable
2022 Report in Q1 2022, applicable
Special Auditor’s
Report on the Deposit
and Use of Funds
Raised in Q1 2022.
We reviewed and
approved Proposal on
the Company's Not
May 19, 2022 Approved Not applicable
Foreign Investment applicable
Involving Related
Transactions
We reviewed and
approved proposals
such as Proposal on
Deliberation of
Goertek Inc. Interim
Report of 2022 and
August 26, Not
Abstract of Interim Approved Not applicable
2022 applicable
Report of 2022,
Special Audit Report
on the Deposit and
Use of Raised Funds
in the Semiannual
Period of 2022.
We reviewed and
approved proposals
October 26, such as Proposal on Not
Approved Not applicable
2022 Deliberation of applicable
Goertek Inc. Quarterly
Report in Q3 2022.
We reviewed and
approved Proposal on
March 18, the Grant of Reserved Not
Approved Not applicable
2022 Restricted Stock in the applicable
2021 Stock Option
Remuneration Jiang Bin, Xia
and Incentive Plan
and Shanhong,
7 We reviewed and
assessment Wang
approved proposals
committee Tianmiao
such as Proposal on
Not
June 7, 2022 the Adjustment of the Approved Not applicable
applicable
List of Initial
Incentive Participants
of the Incentive and
52
Goertek Inc. Annual Report 2022
Number Important
Performance Specific
Committee of Convening opinions and
Members Meeting content of other objections (if
name meetings date suggestions
duties any)
held proposed
the Number of
Granted Reserved
Restricted Stocks and
the Cancellation of
Some Restricted
Stocks in the 2021
Stock Option and
Incentive Plan.
We reviewed and
approved Proposal on
Deliberation of Not
June 7, 2022 Approved Not applicable
Goertek Inc.'s Home applicable
No. 6 ESOP (Draft)
and Its Abstract, etc.
We reviewed and
approved proposals
such as Proposal on
the Adjustment of the
List of Initial
September 9, Not
Incentive Participants Approved Not applicable
2022 applicable
and the Number of
Granted Reserved
Restricted Stocks in
the 2022 Stock Option
Incentive Plan.
We reviewed and
approved proposals
October 25, such as Proposal on Not
Approved Not applicable
2022 the Remuneration of applicable
Members of the 6th
Board of Directors.
We reviewed and
approved Proposal on
November Not
the Remuneration of Approved Not applicable
14, 2022 applicable
Senior Management
Personnel
We reviewed and
approved Proposal on
Adjustment of
Jiang Fuxiu,
November Goertek Inc.'s “Home Not
Jiang Bin, Approved Not applicable
30, 2022 No. 6” Employee applicable
Huang Yidong
Stock Ownership Plan
(Draft) and its
Abstract, etc.
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
53
Goertek Inc. Annual Report 2022
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
32,783
Reporting Period
Number of Staff of major subsidiaries at the end of the Reporting
52,575
Period
Total number of staff at the end of the Reporting Period 85,358
Total number of staff who receive remuneration during the
85,358
Reporting Period
Number of retired staff the Company and its major subsidiaries
0
are required to compensate
Specialty composition
Category Number
Production staff 60,313
Sales staff 684
Technical staff 19,496
Financial staff 281
Administrative staff 4,584
Total 85,358
Education background
Category Number
PhD 76
Master 3,641
Bachelor 15,460
College degree 17,079
Below college degree 49,102
Total 85,358
2. Remuneration policy
The Company always takes human resources as the most important strategy and the top priority by continuously innovating the
incentive plans to stimulate employees’ vitality and tap their potential. In 2022, the Company implemented an effective employee
incentive and retention strategy among key groups and for its core business, so as to share the growth of corporate benefits with its
employees by optimizing the allocation mechanism.
Despite external risks and challenges in 2022, the Company insisted on deliberating and adjusting remuneration, making employees'
incomes increasing steadily. For core positions and key groups supporting the strategic new business development of the Company, a
special incentive and retention policy has been implemented to effectively achieve the precision talent attraction and retention. To
further reserve talents for sustainable and sound development of the Company, we continuously raise the remuneration level of fresh
graduates, adopted the strategy of "reward + house purchase subsidy” to retain high-end talents, and offered the "moat" special retention
incentive to core engineers.
In terms of incentives, the Company continued implementing stock and option incentive plans for backbone employees, and released
a new "Home No. 6" employee stock ownership plan in 2022 to drive employees to grow together with the Company. In recent years,
through continuous innovation of equity incentives, the number of shareholders has increased year by year, and long-term incentives
have become an important way for the Company to attract, retain and motivate employees to grow stronger together.
In terms of welfare, the Company continued improving employee welfare, with a commitment to build a welfare system with Goertek
characteristics, and improve home ownership, children's education, health care, holiday benefits, etc. in 2022. In addition, we kept
54
Goertek Inc. Annual Report 2022
taking care of employee demands, seeking well-being for employees, improving employees' level of satisfaction with welfare, and
enhancing employees' sense of belonging.
3. Training programmes
In 2022, the Human Resources Management Department worked in line with the company's development strategy and business
demands. Under the guidance of the development plan of the global training center, the Company's talent training system was further
consolidated and improved. The capability building programs for key groups such as management personnel, professionals and new
employees focused more on business needs, and training resources became more systematic and standardized. At the same time, by
developing the administrative management mechanism and setting up relevant functions, we continued to create the learning
atmosphere within the Company, in an effort to build a learning organization, enhance the ability of employees, and help the Company
achieve its business goals.
In 2023, the Company, under the unified planning of the learning and development center, will carry out personnel training work by
closely surrounding the talent strategy. Horizontally, the Company will expand the groups of trainees. Vertically, improve various
types of training programs and strengthen the overall talent training system, and step up the training for key talents to meet the
Company's strategic needs for strategic talents. At the same time, the Company will focus on improving the digitalization of training
to enrich employees’ learning experience, enhance employees’ capabilities, and improve the overall capabilities and performance of
the Company.
4. Labor outsourcing
Applicable Not applicable
X. Profit Distribution and Conversion of Capital Surplus into Share Capital
Formulation, 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 (2022-2024), and clarifies the standard,
ratio, and the decision making procedures of the distribution policy, which ensures the continuity and stability of the profit distribution
policy, in order to fully protect the legitimate rights and interests of minority investors. The Company did not make changes to the
profit distribution policy during the reporting period.
Special description of the cash dividend policy
Whether in compliance with provisions in the Articles of
Association or requirements of the resolution of the Yes
extraordinary general meeting of shareholders:
Whether the dividend standard and the proportion are definite
Yes
and clear:
Whether the related decision-making procedures and
Yes
mechanisms are complete:
Whether independent directors perform their duties responsibly
Yes
and play their due roles:
Whether minority shareholders have the opportunity to fully
express their opinions and demands and their legitimate rights Yes
and interests are fully protected:
Whether the conditions and procedures are transparent and
comply with regulations while the cash dividend policy is The cash dividend policy has not been adjusted.
adjusted or changed:
The profits of Goertek in the Reporting Period and the parent company's profits distributable to shareholders are positive, but the
Company did not put forward a proposed plan for cash dividend distribution.
Applicable Not applicable
Profit distribution and conversion of capital surplus into share capital during the reporting period.
Applicable Not applicable
55
Goertek Inc. Annual Report 2022
Number of bonus shares per 10 shares 0
Dividend per 10 shares (RMB) (tax inclusive) 1.00
Conversion of capital surplus into share capital per 10 shares
0
(shares)
Share capital base of the distribution proposal (shares) 3,405,162,949
Cash dividend amount (RMB) (tax inclusive) 340,516,294.90
Cash dividend amount distributed by other means (such as shares
0.00
repurchase) (RMB)
Total cash dividends (including other means) (RMB) 0.00
Distributable profit (RMB) 16,507,798,239.34
Proportion of total cash dividends (including other means) in
100%
total profit distribution
Cash dividends
If the Company is in developing stage, and there are major capital expenditure arrangements, the minimum proportion of cash
dividends in profit distribution should reach 20%.
Detailed description of the proposal for profit distribution or capitalization from capital surplus funds
According to the standard unqualified opinion auditor’s report issued by ZHONGXI CPAs (Special General Partnership) for
Goertek, the parent company reports a net profit of RMB -358,777,530.78 in 2022, net distributable profit of RMB
9,410,101,500.47 at the end of 2022, and the balance of capital surplus of RMB 8,421,030,014.05. The net distributable profit in the
consolidated balance sheet is RMB 16,507,798,239.34. The profit distribution in 2022 is as follows: based on the total share capital
registered on the record date of equity distribution minus the repurchased shares in the Company's specific securities repurchase
account, the Company will distribute cash dividend of RMB 1.00 (tax inclusive) for per 10 shares to all the shareholders, as well as
0 bonus shares (tax inclusive), and there is no conversion of capital surplus into share capital.
XI. Equity Incentive Plan, Employee Stock Ownership Plan or Other Employee Incentives
Applicable Not applicable
1. Equity incentive
(1) Stock Option Incentive Plan in 2021 (hereinafter referred to as “the Incentive Plan 2021”):
On April 16, 2021, Goertek convened the 19th meeting of the 5th Board of Directors, which approved Proposal of 2021 Stock Option
Incentive Plan of Goertek Inc. (Draft) and the Summary, Proposal of Rules on the Implementation and Assessment of 2021 Stock
Option Incentive Plan, and Proposal of Requesting the General Meeting of Shareholders to Authorize the Board of Directors to Handle
Matters Relevant to 2021 Stock Option Incentive Plan. The 14th meeting of the 5th Board of Supervisors approved relevant proposals,
reviewed the list of participants awarded for the first time, and expressed the review opinions. Independent directors of the Company
expressed their agreed opinions on the Incentive Plan 2021 independently.
On April 17, 2021, Goertek disclosed the List of Participants Awarded for the First Time of the Incentive Plan on the website
http//: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, the
Company disclosed the Result of Review by the Board of Supervisors on the List of Participants Awarded for the First Time of 2021
Stock Option Incentive Plan. On May 8, 2021, the Company disclosed Self-examination Report on the Trading of Shares by Insiders
of the 2021 Stock Option Incentive Plan.
On May 7, 2021, the proposals mentioned above were approved on the annual general meeting of 2020. The Board of Directors were
authorized to handle relevant matters regarding the Incentive Plan 2021.
On June 2, 2021, Goertek convened the 21st meeting of the 5th Board of Directors and the 16th meeting of the 5th Board of Supervisors.
Proposal of the Adjustment of Participants Awarded for the First Time of the 2021 Stock Option Incentive Plan, Number of Stock
Options and Exercise Price, and the Proposal of Resolution of Grant Stock Options to the Participants were approved. The Board of
Supervisors expressed the results of review on the list of incentive participants. Independent Directors expressed their agreed opinions
on relevant matters independently. Beijing Tian Yuan Law Firm issued the Legal Opinions of Beijing Tian Yuan Law Firm on Relevant
Matters Regarding the Adjustment and First Grant of the 2021 Goertek Inc. Stock Option Incentive Plan.
56
Goertek Inc. Annual Report 2022
On June 24, 2021, Goertek completed the registration of the Incentive Plan 2021.
On March 29, 2022, Goertek convened the 27th meeting of the 5th Board of Directors and the 21st meeting of the 5th Board of
Supervisors, at which the Proposal on the Grant of Reserved Restricted Stock in the 2021 Stock Option Incentive Plan was approved.
The independent directors of the Company expressed their independent opinions on this, and the Board of Supervisors verified and
issued verification opinions on matters related to the list of initial incentive participants and grant arrangements reserved for stock
options. Beijing Tian Yuan Law Firm issued legal opinions correspondingly.
On April 20, 2022, Goertek completed the granting and registration of reserved stock options in the Incentive Plan 2021.
On June 10, 2022, the Company convened the 30th meeting of the 5th Board of Directors and the 24th meeting of the 5th Board of
Supervisors,, and approved the Proposal on Adjusting the Exercise Price of the Company's 2021 Stock Option Incentive Plan, Proposal
on the Adjustment of the List of Initial Incentive Participants of the Incentive and the Number of Granted Reserved Restricted Stocks
and the Cancellation of Some Restricted Stocks in the 2021 Stock Option Incentive Plan and Proposal on the Achievement of the
Exercise Conditions of Initial Granted Stock Options for the First Exercise Period in the 2021 Stock Option Incentive Plan. The Board
of Directors determined that the exercise conditions for the initial granted stock options for the first exercise period of Incentive Plan
2021 had been fulfilled, and the incentive participants may exercise their options in accordance with the relevant provisions of the
Incentive Plan 2021 from June 24, 2022 to June 23, 2023. The Board of Supervisors expressed the review opinions on the list of
incentive participants and matters on the achievement of exercise conditions. Independent Directors expressed their agreed opinions
on relevant matters independently. Beijing Tian Yuan Law Firm issued legal opinions correspondingly.
On April 7, 2023, the Company convened the 3rd meeting of the 6th Board of Directors and the 3rd meeting of the 6th Board of
Supervisors, and approved the Proposal on the Adjustment of the List of Initial Incentive Participants of the Incentive and the Number
of Granted Reserved Restricted Stocks and the Cancellation of Some Restricted Stocks in the 2021 Stock Option Incentive Plan and
the Proposal on the Achievement of the Exercise Conditions of Initial Granted Stock Options for the First Exercise Period in the 2021
Stock Option Incentive Plan. The Board of Directors determined that the exercise conditions for the first exercise period of the reserved
grant portion of the 2021 stock option incentive plan had been fulfilled, and the incentive participants may exercise their options in
accordance with the relevant provisions of this incentive plan from April 20, 2023 to April 19, 2024 (the actual exercise start time is
determined according to the processing completion time of China Securities Depository and Clearing Co., Ltd., but not earlier than
April 20, 2023). The Board of Supervisors expressed the review opinions on the adjustment of the list of incentive participants and
achievement of exercise conditions. Independent Directors expressed their agreed opinions on relevant matters independently. Beijing
Tian Yuan Law Firm issued legal opinions correspondingly.
(2) Stock Option Incentive Plan in 2022 (hereinafter referred to as “the Incentive Plan 2022”)
On July 8, 2022, Goertek convened the 31st meeting of the 5th Board of Directors, which approved Proposal of 2022 Stock Option
Incentive Plan of Goertek Inc. (Draft) and the Summary, Proposal of Rules on the Implementation and Assessment of 2022 Stock
Option Incentive Plan, and Proposal of Requesting the General Meeting of Shareholders to Authorize the Board of Directors to Handle
Matters Relevant to 2022 Stock Option Incentive Plan. At the 25th meeting of the 5th Board of Supervisors, the Company, in addition
to approving relevant proposals, expressed the review opinions on the list of initial incentive participants. Independent directors of the
Company expressed their agreed opinions on the Incentive Plan 2022 independently. Beijing Tian Yuan Law Firm issued legal opinions
correspondingly.
On July 11, 2022, Goertek disclosed the List of Initial Incentive Participants in the Goertek Inc. Incentive Plan 2022 on the website
http//:www.cninfo.com.cn. The Company started to publicize the names and positions of these participants on July 11, 2022. The Board
of Supervisors reviewed the participants and published the Review Opinions and Disclosure Statement by the Board of Supervisors on
the List of Initial Incentive Participants in the 2022 Stock Option Incentive Plan.
On July 26, 2022, the proposals mentioned above were approved on the 1st extraordinary general meeting of 2022. The Incentive Plan
2022 was approved. The Board of Directors were authorized to handle relevant matters regarding the Incentive Plan 2022. On July 27,
2022, the Company disclosed the Self-examination Report on the Trading of Shares by Insiders of the 2022 Goertek Inc. Stock Option
Incentive Plan.
On September 13, 2022, Goertek convened the 33rd meeting of the 5th Board of Directors and the 27th meeting of the 5th Board of
Supervisors. The Proposal of the Adjustment of Initial Incentive Participants and Number of Stock Options in the 2022 Stock Option
Incentive Plan and the Proposal on Granting Stock Options to the Participants were approved. The Board of Supervisors verified and
expressed the review opinions on matters related to the incentive plan. Independent Directors expressed their agreed opinions on
relevant matters independently. Beijing Tian Yuan Law Firm issued legal opinions correspondingly.
On September 21, 2022, Goertek completed the registration of the 2022Incentive Plan.
Stock options granted to Directors and senior management
Applicable Not applicable
57
Goertek Inc. Annual Report 2022
The Appraisal and incentive mechanism for senior management
The remuneration standard for senior management shall be formulated by the remuneration 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
Shareholding
Participants Number Total shares held Changes Source of funds
percentage
Goertek Home No. 3
ESOP: part of Directors,
Supervisors, senior
management, key 1,600 0 None 0.00% self-raised
management personnel,
and key business
personnel
Goertek Home No. 4
ESOP: Directors
(excluding Independent
Directors), Supervisors,
4,000 2,190,100 None 0.06% n.a.
senior management, key
management personnel
and key business
personnel
Goertek Home No. 5
ESOP: Directors
(excluding Independent
Directors), Supervisors,
25 5,500,000 None 0.16% self-raised
senior management, key
management personnel
and key business
personnel
Goertek Home No. 6
ESOP: Directors
(excluding independent
directors), supervisors, 1,000 0 None 0.00% self-raised
senior management
personnel and key
business personnel
Total shares held of Directors, Supervisors and senior management in ESOPs during the reporting period
Number of shares held at Number of shares held at
Shareholding
Name Position the beginning of the the end of the reporting
percentage
reporting period period
Duan Huilu, Feng
Jianliang, Xu Xiaofeng,
Wei Wenbin, Gao
Xiaoguang, Liu Chunfa, Directors, Supervisors,
3,289,000 3,039,000 0.09%
Jiang Hongzhai, Jia senior management
Jun’an, Feng Pengbo, Yu
Dachao, Yoshinaga
Kazuyoshi, Li Yongzhi,
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Goertek Inc. Annual Report 2022
Li Youbo, Zhu Shengbo
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 Company, after expiration of the lock-up period of Goertek's Home No. 4 ESOP and Home No. 5
ESOP, reduced part of its shares in accordance with relevant regulations. By the end of the reporting period, Goertek's Home No. 3
ESOP has expired and the liquidation has been completed. Goertek's Home No. 4 ESOP held 2.1901 million shares, accounting for
0.06% of total shares, while the Home No. 5 ESOP held 5.5 million shares, accounting for 0.16% of total share capital.
Exercise of shareholders' rights during the reporting period
During the reporting period, the ESOPs exercised the shareholders' rights to participate in cash dividend of 2021, but did not participate
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-settled share-based
payment in exchange for services received from employees could not exercise until the completion of services for a vesting period, or
until the achievement of a specified performance condition, Goertek at each balance sheet date during the vesting period recognizes
the services received for the current period as related costs or expenses, and capital surplus, at amount equal to the fair value of the
equity instruments at the grant date, based on the best estimate of the number of equity instruments expected to exercise. In 2022, the
amortized expenses of Goertek’s Home No. 4 ESOP, Home No. 5 ESOP and Home No. 6 ESOP were RMB 138.6938 million, RMB
120.1858 million and RMB 8.4695 million respectively, which were recognized as related expenses and capital surplus.
Termination of ESOP during the reporting period
Applicable Not applicable
On January 15, 2022, the Company published the Announcement on Self-termination of the Expiration of the Home No. 3 ESOP, and
the Home No. 3 ESOP expired on January 15, 2022 and was automatically terminated.
Other explanations:
None
3. Other employee incentive measures
Applicable Not applicable
XII. Construction and implementation of the Company’s Internal Control System During the
Reporting Period
1. Construction and implementation of internal control
During the reporting period, in order to ensure the development of business activities and the realization of Goertek's strategic goals,
Goertek attached great importance to the construction of internal control system. We gradually established a basic compliance, sound
and effective internal control system covering all aspects of operation and management in accordance with the industry and asset
structure characteristics.
(1) Internal supervision
The Company has established the Internal Audit System, and has set up an independent internal audit department, which is responsible
for internal audit work, the audit and efficiency supervision of financial revenue, expenditure, the implementation of financial system,
the Company’s rules and regulations. The internal audit department also responsible for making proposals on the improvement of the
Company's internal control system.
59
Goertek Inc. Annual Report 2022
Under the direct leadership of the Audit Committee, the audit department independently carries out internal audit and supervision，
supervising the operation and management, financial condition and internal control implementation of the Company and its subsidiaries.
Besides, the audit department issues independent auditor’s opinions, and regularly reports summaries and working plans to the Audit
Committee.
(2) Risk assessment
In combination with characteristics of the industry and actual operating status, the Company timely assesses internal and external risks
such as environmental risk, business risk and financial risk, weighs the risk and return according to the results of risk analysis 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 various internal
controls, avoids the mere formality of internal policies and regulations, and improves the effectiveness and soundness of internal control.
(4) Information disclosure
The Company formulated the Information Disclosure Policy, the Accountability System Regarding Major Errors in the Annual Report
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 revised in time, which has
detailed the scope of inside information and related personnel, and the administrative measures on registration of personnel with inside
information in material matters. The Company's information disclosure in 2022 complied with the relevant laws 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 Period
Not applicable
XIV. Self-assessment Report on Internal Control or Auditor’s Report on Internal Control
1. Self-assessment on internal control
Disclosure date of the Internal
April 18, 2023
Control Self-assessment Report
Disclosure index of the Internal The Goertek Inc. Self-assessment Report on Internal Control of 2022 Disclosed on
Control Self-assessment Report www.cninfo.com.cn on April 18, 2023
Proportion of the total assets of
entities included in the assessment
scope to the total assets of the 100.00%
Company’s consolidated financial
statements
Proportion of the total revenue of
entities included in the assessment
scope to the total revenue of the 100.00%
Company’s consolidated financial
statements
Defect Identification Standard
Category Financial report Non-financial report
The qualitative standard of the
The qualitative standard of the assessment of internal
assessment of internal control defects in
control defects in financial reporting are as follows:
Qualitative criteria non-financial reporting determined by
Signs of material defects in financial reporting
Goertek are as follows: The
include:
identification of defects in non-financial
60
Goertek Inc. Annual Report 2022
(1) Fraud of directors, supervisors and senior report is mainly determined by the
management on the financial report; impact of defects on the effectiveness of
business processes and the possibility of
(2) Corrections of previously disclosed financial
occurrence. If the possibility of defect
reports;
occurrence is low, and the defect will
(3) Material misstatement of current period financial
reduce the efficiency and effectiveness
statements identified by certified public accountant
of work, or increase the uncertainty of
but not identified by the Company’s internal control;
the effectiveness, or make it deviate
(4) Ineffective supervision on the financial statements from the expected goal, it is a general
by the audit committee and the internal audit defect. If the possibility of defect
department. occurrence is relatively high, and the
Signs of important defects in financial reporting defect will significantly reduce the
include: efficiency or effectiveness of work, or
(1) Failure to select and apply accounting policies in significantly increase the uncertainty of
accordance with Generally Accepted Accounting the effectiveness, or make it
Principles; significantly deviate from the expected
(2) No anti-fraud procedures and control measures goal, it is an important defect. If the
have been established; possibility of defect occurrence is high,
and the defect will seriously reduce the
(3) No corresponding control mechanism has been
efficiency or effectiveness of work, or
established or implemented for the accounting
seriously increase the uncertainty of the
treatment of unconventional or special transactions,
effectiveness, or make it seriously
and there is no corresponding compensatory control;
deviate from the expected goal, it is a
(4) One or more defects is or are existing in the control
material defect
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.
The quantitative standard of the assessment of
internal control defects in financial reporting are as
follows:
(1) If one of the following conditions is met, it may
be recognized as a material defect:
Item Impact of defects
Potential
≥ 5%, with an amount ≥ RMB 10
misstatement
million
of total profit
The quantitative standard of the
Potential
assessment of internal control defects
misstatement ≥ 1%
in non-financial reporting is in
Quantitative criteria of total assets
accordance with the quantitative
Potential standard of defects in financial
misstatement ≥ 1% reporting.
of revenue
(2) If one of the following conditions is met, it may
be recognized as an important defect:
Item Impact of defects
Potential 3%≤misstatement <5%
misstatement of
total profit
Potential 0.5≤misstatement <1%
misstatement of
61
Goertek Inc. Annual Report 2022
total assets
Potential 0.5≤misstatement <1%
misstatement of
revenue
(3) If one of the following conditions is met, it may
be recognized as a minor defect:
Item Impact of defects
Potential <3% of total profit
misstatement of
total profit
Potential <0.5% of total assets
misstatement of
total assets
Potential <0.5% of total revenues
misstatement of
revenue
Number of material defects in
0
financial reporting
Number of material defects in non-
0
financial reporting
Number of important defects in
0
financial reporting
Number of important defects in
0
non-financial reporting
2. Auditor’s Report on internal control
Applicable Not applicable
The opinion paragraph in the auditor’s report on internal control
We believe that Goertek Inc. maintained effective internal control over accounting reports in all material aspects in accordance with
the Basic Standards for Internal Corporate Control and relevant provisions on December 31, 2022.
Disclosure of the Auditor’s Report on Internal Control Disclosed
Disclosure date of the Auditor’s Report on Internal Control April 18, 2023
The Audit Report on Internal Control of Goertek Inc. (Zhong Xi
Disclosure index of the Auditor’s Report on Internal Control Special Audit No. 2023T00212) published on
www.cninfo.com.cn on April 18, 2023
Type of internal control auditor’s report opinions standard unqualified opinion
Material defects found in non-financial reporting No
Whether the accounting firm issued a modified auditor’s report on internal controls
Yes No
Whether the Auditor’s Report on internal control is consistent with the Self-assessment Report of the board of directors
Yes No
XV. Rectification of Problems Identified by Self-examination in the Special Actions on
Governance of Listed Companies
Not applicable
Not applicable
62
Goertek Inc. Annual Report 2022
Section V Environmental and social responsibilities
I. Major Environmental Issues
Whether the listed company or its subsidiaries are entities with pollutant discharges announced by local environmental protection
authorities
Yes No
Policies and industry standards related to environmental protection
All Goertek Inc.'s projects are encouraged according to the Decision of the National Development and Reform Commission on
Amending the Catalogue of Industrial Structure Adjustment (2019 version) and are in line with national industrial development policies;
and the projects meet the requirements of the Opinions of the People's Government of Shandong Province on the Implementation of
the "Three Lines and One List” Ecological Zoning Management Approach. The pollutants are discharged in strict accordance with the
requirements of the environmental impact assessment standard and the pollution discharge standard.
All projects of Yili Precision Manufacturing Co., Ltd. are carried out in line with national industrial development policies according to
the Decision of the National Development and Reform Commission on Amending the Catalogue of Industrial Structure Adjustment
(2019 version); and the projects meet the requirements of the Opinions of the People's Government of Shandong Province on the
Implementation of the "Three Lines and One List” Ecological Zoning Management Approach. The pollutants are discharged in strict
accordance with the requirements of the environmental impact assessment standard and the pollution discharge standard.
Administrative licenses for environmental protection
Goertek Inc. obtained the registration receipt of the pollution discharge permit in accordance with the Measures for the Management
of Pollution Discharge Permits (Trial) (Revised in 2019). The registration number is 91370700729253432M004Y, and the certificate
is valid from November 12, 2020 to November 11, 2025.
Yili Precision Manufacturing Co., Ltd. has applied for a pollution discharge permit as required. The certificate number is
913707840744048096001V, and the certificate is valid from July 7, 2022 to July 6, 2027.
Industry emission standards and the details of pollutant emissions involved in production and operation activities
Types of
Name of Enforced
major Locations Total Discharge
Name of the major Number of standards Total
pollutants Type of of Concentration/intensity approved exceeding
Company or pollutants discharging of discharge
and discharge discharging of pollutant discharged discharge the
subsidiaries and particular ports pollutant volume
particular ports volume standard
pollutants discharge
pollutants
Hazardous Indirect Not Not Not Not Not
Goertek Inc. Solid waste Not applicable None
waste discharge applicable applicable applicable applicable applicable
COD: COD: COD:
Yili Precision COD; COD: 50mg/L; 500mg/L; 20.07t/a; 26.862t/a;
Intermittent
Manufacturing Wastewater ammonia 1 In the plant ammonia nitrogen: ammonia ammonia ammonia None
discharge
Co., Ltd. nitrogen 5mg/L nitrogen: nitrogen: nitrogen:
45mg/L 1.963t/a 2.6029t/a
Treatment of pollutants
In accordance with The Environmental Impact Assessment and Approval, the Company establishes supporting measures for solid waste
storage, disposal and comprehensive utilization, along with leakage prevention and seepage prevention measures, and ensures the
normal operation of all the above measures.
In accordance with The Environmental Impact Assessment and Approval, Yili Precision Manufacturing Co., Ltd. constructs supporting
treatment facilities for water and gas waste, takes measures of noise reduction, storage, disposal and comprehensive utilization of solid
waste, and leakage and seepage prevention, and ensures the normal operation of all above measures.
Environmental self-monitoring programme
The Company entrusts third-party monitoring organizations to monitor the environmental factors of the plant area and issue an
inspection report every year.
Yili Precision Manufacturing Co., Ltd. has installed online equipment for monitoring COD, ammonia nitrogen, flow rate and PH value
at the main wastewater discharge outlet, which is networked with the local department of environmental protection authorities. A third
party shall be entrusted to conduct environmental self-monitoring of waste water, waste gas, groundwater and soil pollutants in strict
accordance with the requirements of discharge permit, and related information shall be disclosed as required.
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Goertek Inc. Annual Report 2022
Emergency response plan for unexpected environmental events
Goertek, combined with The National Environmental Emergency Response Plan and The Guidelines to Develop Emergency Response
Plan for Environmental Pollution Accidents, has formulated The Environmental Emergency Response Plan based on various risk
factors, and has reported the plan to the High-tech Branch of Weifang Municipal Ecology and Environment Bureau for recording (No.
370708-2022-036-L). Goertek also organizes relevant training and drills on a regular basis, in order to improve the emergency 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 Plan and The
Guidelines to Develop Emergency Response Plan for Environmental Pollution Accidents, formulates the Yili Environmental
Emergency Plan, and puts it on record in Anqiu Branch of Weifang Municipal Ecology and Environment Bureau (record No. 370784-
2020-004-H). Relevant training and drills are organized on a regular basis to further improve employees’ ability to deal with emergency
events and achieve continuous improvement.
Investment in environmental governance and protection and the payment of environmental protection tax
The Company and its subsidiaries pay environmental protection tax as required, with a total of RMB 77,095.67 in 2022.
Measures taken to reduce carbon emissions during the reporting period and their effects
Applicable Not applicable
The Company adheres to the energy management policy of ''compliant use of energy, improved efficiency, reduce emission, full
participation of all staffs and green development'', and incorporates this policy into its product manufacturing chain. By taking the
establishment of energy management system as a scientific management basis, the Company optimized its organizational structure of
management, improved systems and processes, and emphasized the focus of management, so as to tap the potential for energy saving,
actively improve the overall level of energy efficiency, and integrate emission reduction and green development targets into its internal
operation. It was awarded the honor of "National Green Factory" in 2022.
The Company strived to promote clean energy applications, increased the proportion of green energy in all energy sources. It has
accumulatively reduced emission of 38,601.01 tCO2e by introducing the distributed photovoltaic power generation projects. It actively
carried out energy-saving publicity activities and dug deep into energy-saving technological transformation projects. Through the
construction of high-efficiency refrigeration rooms and the promotion of energy-saving technologies such as vacuum pumps, frequency
conversion, and automatic control, the Company managed to improve energy utilization efficiency and reduce emissions by 26,164
tCO2e.
Administrative penalties received for environmental issues during the reporting period
None
Other environmental information that should be disclosed
None
Other information related to environmental protection
None
II. Performance of Social Responsibility
During the reporting period, while the Company was committed to achieving its own development, it has also performed well in the
protection of the rights and interests of shareholders, creditors, employees, suppliers, customers and consumers, as well as in
environmental protection and sustainable development, public relations and social public welfare undertakings. For details, see the
Corporate Social Responsibility Report of 2022 released on "www.cninfo.com.cn". on April 18, 2023.
III. Consolidate and Carry Forward the Achievements of Poverty Alleviation and Rural
Revitalization
The Company has not carried out such work during the reporting period.
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Goertek Inc. Annual Report 2022
Section VI Important Matters
I. Fulfilment of Commitments
1. The commitments of the Company's actual controllers, shareholders, related parties, purchasers and companies that have been completely fulfilled during
the reporting period or remain valid by the end of the reporting period.
Applicable Not applicable
Commitment Commitment Performance of
Commitment matters Commitment party Commitment type Commitment content
time period commitments
Commitments made
during the joint-stock Not applicable
reform
Commitments made in
the report of acquisition
Not applicable
or in the report of equity
changes
Commitments made
Not applicable
during asset restructuring
Mr. Jiang Bin, the actual Mr. Jiang Bin and Mr. Jiang Long promise that the
Commitments made controller, and Mr. Jiang Company shares transferred each year during their tenure
Commitment to restricted October 8, Long-term
during initial public long, shareholder and the will not exceed 25% of the total company shares held by Strictly fulfilled
stock 2007 standing
offering or refinancing related party of the actual them, and the shares will not be transferred within six
controller months after their resignation in future
At present, there is no competition between the main
Mr. Jiang Bin and Ms. Hu businesses of Goertek Inc. and the commitment parties
Shuangmei, the actual (company and persons) in this clause or other entities
controllers of the controlled by the commitment parties (company and
Commitments made
Company, Goertek Group Horizontal competition persons). In future, in order to fundamentally avoid the October 8, Long-term
during initial public Strictly fulfilled
Co., Ltd and Mr. Jiang related commitment possibility of competing with Goertek Inc., the 2007 standing
offering or refinancing
Long, the shareholders commitment parties (company and persons) promise as
who hold more than 5% follows: 1) The commitment parties (company and
of the Company shares persons) will not engage in the same or similar business
as Goertek Inc. in order to avoid direct or indirect
65
Goertek Inc. Annual Report 2022
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.
Stock option incentive plan of 2021: The Company From the
undertakes not to provide loans or any other form of issuance date
Equity incentive April 16,
The Company Others commitments financial assistance to any participants to obtain relevant of the Strictly fulfilled
commitments 2021
rights and interests under this incentive plan, including commitment to
guarantee for their loans the completion
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Goertek Inc. Annual Report 2022
of the
implementation
of the stock
option
incentive plan
of 2021
From the
issuance date
of the
Stock option incentive plan of 2022: The Company commitment to
undertakes not to provide loans or any other form of the completion
Equity incentive
The Company Others commitments financial assistance to any participants to obtain relevant July 8, 2022 of the Strictly fulfilled
commitments
rights and interests under this incentive plan, including implementation
guarantee for their loans of the stock
option
incentive plan
of 2022
From March 5, 2020 to the end of the use of the funds From March 5,
raised from convertible corporate bonds issuing or within 2020 to the end
36 months after the funds raised are in place, the of the use of
Other commitments made Company will no longer increase the funds usage in March 5, funds raised or
The Company Others commitments Strictly fulfilled
to minority shareholders financial business (including capital investment, 2020 within 36
borrowing, guarantee and other forms of capital months after
investment). The Company will not use the funds raised the funds raised
directly or in disguise for financial business are in place
During the time
All raised funds
The Company promises not to carry out venture capital period of
have been
investment during the period of temporary working temporary
returned on
capital supplement with raised funds, and undertakes to liquidity
November 4,
Other commitments made use these raised funds only for production and operation November 8, replenishment
The Company Others commitments 2022, thus the
to minority shareholders related to the main business. The Company shall not 2021 with raised
commitment
directly or indirectly use raised funds for the subscription funds starting
has been
or placement of stocks, or for the trading of stocks and from
completely
their derivatives, convertible corporate bonds, etc. November 8,
fulfilled
2021
Other commitments made The Company Others commitments The Company's temporary use of some idle raised funds November During the time Strictly fulfilled
67
Goertek Inc. Annual Report 2022
to minority shareholders to supplement the working capital shall be used only for 21, 2022 period of
production and operation related to the main business. temporary
The Company shall not directly or indirectly use raised liquidity
funds for the subscription or placement of new shares, or replenishment
for the trading of shares and their derivatives, convertible with raised
bonds, etc. The Company undertakes that temporarily use funds starting
of idle raised funds to supplement working capital shall from
be for daily production and operation activities only. The November 21,
Company will not use idle raised funds to directly or 2022
indirectly make high-risk investments such as securities
investment and derivatives trading.
Not to reduce his holdings of company shares or engaging For the next 6
Mr. Jia Jun'an, Vice Completely
Other commitments made Commitment to restricted in insider trading or short-swing trading within 6 months consecutive
President, Secretary of April 6, 2022 fulfilled on
to minority shareholders stock from April 6, 2022, nor to buy or sell company stocks months from
the Board October 5, 2022
during sensitive time periods. April 6, 2022
Not to reduce his holdings of company shares or engaging For the next 6 Completely
Mr. Jia Jun'an, Vice
Other commitments made Commitment to restricted in insider trading or short-swing trading within 6 months April 15, consecutive fulfilled on
President, Secretary of
to minority shareholders stock from April 15, 2022, nor to buy or sell company stocks 2022 months from October 14,
the Board
during sensitive time periods. April 15, 2022 2022
For the next 6
Not to reduce his holdings of company shares or engaging
Mr. Jia Jun'an, Vice consecutive Completely
Other commitments made Commitment to restricted in insider trading or short-swing trading within 6 months September
President, Secretary of months from fulfilled on
to minority shareholders stock from September 23, 2022, nor to buy or sell company 23, 2022
the Board September 23, March 22, 2023
stocks during sensitive time periods.
2022
Carry out in accordance with relevant laws and
regulations and relevant provisions of Shenzhen Stock
Exchange, not reduce his shareholding of the Company
during the shareholding increase period and within the
Within 3 Completely
Mr. Jia Jun'an, Vice legal lock-up period, and complete the shareholding
Other commitments made Commitment to restricted September months from fulfilled on
President, Secretary of increase plan within the implementation period. The
to minority shareholders stock 28, 2022 September 28, December 27,
the Board operation of shareholding increase shall strictly abide by
2022 2022
the relevant regulations of the China Securities
Regulatory Commission and the Shenzhen Stock
Exchange and not engage in trading, trading of shares
during sensitive periods, and short-swing trading.
68
Goertek Inc. Annual Report 2022
Whether the
commitments are fulfilled Yes
on time
If the commitments are
not fulfilled within the
time limit, specific
reasons for the failure of
Not applicable
complying and the work
plan for the next step
shall be explained in
details
69
Goertek Inc. Annual Report 2022
2. If the Company's assets or projects have profit forecasts and the reporting period is still in the profit
forecasting period, the Company shall make statement on 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 made by the Board of Directors about the modified audit opinion for the
latest period
Applicable Not applicable
V. Explanation of the Accounting Firm's “Modified Auditor’s Report” by the Board of
Directors, the Board of Supervisors and Independent Directors (if Any) During the Reporting
Period
Applicable Not applicable
VI. Explanation of changes in Accounting Policies, Accounting Estimates or Correction of
Major Accounting Errors Compared with the Financial Report of Previous Year
Applicable Not applicable
1. Changes in accounting policy
The Ministry of Finance issued the Interpretation No. 15 of the Accounting Standards for Business Enterprises (Finance and Accounting
[2021] No. 35) in 2021, and the Interpretation No. 16 of the Accounting Standards for Business Enterprises (Finance and Accounting
[2022] No. 31) in 2022. The above changes in accounting policy have no significant impact on the financial statements of the Group
and the Company.
2. There is no change in accounting estimates during the reporting period.
3. There is no correction of major accounting errors during the reporting period.
VII. Explanation of Changes in the Scope of the Consolidated Statements Compared with
Previous Year's Financial Report
Applicable Not applicable
During the reporting period, the Company established 8 subsidiaries: Goertek Optical Technology (Qingdao) Co., Ltd, Goertek Optical
Technology (Shanghai) Co., Ltd, Qingdao Resonance Venture Capital Management Co., Ltd., Qingdao Resonance Phase I Venture
Capital Fund Partnership (Limited Partnership), Weifang Goertek Electronics Co., Ltd., Qingdao Goertek Horizons Technology Co.,
Ltd, Weifang High-tech Zone Goertek Education Center, and Goertek Microelectronics Vietnam Company Limited. During the
reporting period, the Company disposed of 2 subsidiaries: Shenzhen Mototek Smart Technology Co., Ltd. and Qingdao Resonance
Venture Capital Management Co., Ltd.
70
Goertek Inc. Annual Report 2022
VIII. Appointment and Dismissal of Accounting Firms
Accounting firm currently appointed
Zhongxi Certified Public Accountants (special general
Name of the domestic accounting firm
partnership)
Remuneration of the domestic accounting firm (unit: RMB 10,000) 220
Consecutive audit service years of the domestic accounting firm 4
Name of certified public accountant of the domestic accounting
Du Yeqin, Zhang Shuli
firm
Consecutive audit service years of certified public accountant of Du Yeqin has been in service for 3 years on end, and Zhang
the domestic accounting firm Shuli for 1 year
Name of overseas accounting firms (if any) None
Remuneration of overseas accounting firms (unit: RMB 10,000) (if
0
any)
Consecutive audit service years of overseas accounting firms (if
None
any)
Names of certified public accountants of the overseas accounting
None
firms
Consecutive audit service years of certified public accountants of
None
overseas accounting firms (if any)
Whether to reappoint accounting firm in current period
Yes No
Employment of internal control audit accounting firms, financial consultants or sponsors
Applicable Not applicable
During the reporting period, the Company engaged Zhongxi Certified Public Accountants (special general partnership) as the internal
control audit accounting firm and paid the internal control audit fee of RMB 800,000 during the period.
IX. Delisting After the Disclosure of Annual Report
Applicable Not applicable
X. Bankruptcy or Reorganization Related Events
Applicable Not applicable
No bankruptcy or 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 or rectification occurred during the reporting period.
XIII. Integrity Issues of the Company, Controlling Shareholders and Actual Controllers
Applicable Not applicable
71
Goertek Inc. Annual Report 2022
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 and
its related parties.
6. Business between the related parties and the financial company controlled by the Company
Applicable Not applicable
There was not any financial company controlled by the Company.
7. Other significant affiliated transactions
Applicable Not applicable
No other significant affiliated transactions occurred during the reporting period.
XV. Significant Contracts and 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.
72
Goertek Inc. Annual Report 2022
2. Significant guarantees
Applicable Not applicable
Unit: RMB 10,000
External guarantee of the Company and its subsidiaries (excluding guarantees for subsidiaries)
Disclosure
Whether
Name of date of the The amount Actual Actual Counter- Whether the
Guarantee Collateral Guarantee guarantee
guaranteed amount limit of the occurrence amount guarantee (if guarantee is
type (if any) period for related
party limit of the guarantee date guaranteed any) complete
parties
guarantee
Not
applicable
The Company's guarantee to its subsidiaries
Disclosure
Whether
Name of date of the The amount Actual Actual Counter- Whether the
Guarantee Collateral Guarantee guarantee
guaranteed amount limit of the occurrence amount guarantee (if guarantee is
type (if any) period for related
party limit of the guarantee date guaranteed any) complete
parties
guarantee
Goertek Joint
March 27, September
(HongKong) 208,938.00 6,964.60 liability 1 year Yes No
2021 10, 2021
Co.,Limited guarantee
Goertek Joint
March 27, October 20,
(HongKong) 208,938.00 6,964.60 liability 1 year Yes No
2021 2021
Co.,Limited guarantee
Goertek Joint
March 30, September
(HongKong) 208,938.00 6,964.60 liability 1 year No No
2022 10, 2022
Co.,Limited guarantee
Goertek Joint
March 30, October 20,
(HongKong) 208,938.00 6,964.60 liability 1 year No No
2022 2022
Co.,Limited guarantee
Goertek Joint
April 20, January 16,
(HongKong) 208,938.00 79,379.03 liability 3 years Yes No
2019 2020
Co.,Limited guarantee
Goertek Joint
April 20, January 17,
(HongKong) 208,938.00 3,499.71 liability 3 years Yes No
2019 2020
Co.,Limited guarantee
Goertek Joint
April 20, February 24,
(HongKong) 208,938.00 49,448.66 liability 3 years Yes No
2019 2020
Co.,Limited guarantee
Goertek Joint
March 27, August 20,
(HongKong) 208,938.00 17,411.50 liability 1 year Yes No
2021 2021
Co.,Limited guarantee
Goertek Joint
March 30, August 20,
(HongKong) 208,938.00 17,411.50 liability 1 year Yes No
2022 2022
Co.,Limited guarantee
Goertek Joint
March 30, May 17,
(HongKong) 208,938.00 20,545.57 liability 1 year No No
2022 2022
Co.,Limited guarantee
Goertek Joint
March 30, May 24,
(HongKong) 208,938.00 14,277.43 liability 1 year No No
2022 2022
Co.,Limited guarantee
Goertek
Technology Joint
March 27,
Vina 156,500.00 June 6, 2021 2,154.46 liability 1 year Yes No
2021
Company guarantee
Limited
73
Goertek Inc. Annual Report 2022
Goertek
Technology Joint
March 30, June 22,
Vina 65,000.00 1,173.20 liability 1 year No No
2022 2022
Company guarantee
Limited
Goertek
Technology Joint
March 27,
Vina 156,500.00 June 6, 2021 230.00 liability 1 year Yes No
2021
Company guarantee
Limited
Goertek
Technology Joint
March 30, June 22,
Vina 65,000.00 108.00 liability 1 year No No
2022 2022
Company guarantee
Limited
Goertek
Technology Joint
March 27, July 30,
Vina 156,500.00 3,516.54 liability 1 year Yes No
2021 2021
Company guarantee
Limited
Goertek
Technology Joint
March 27, October 18,
Vina 156,500.00 318.26 liability 1 year Yes No
2021 2021
Company guarantee
Limited
Goertek
Technology Joint
March 27, August 1,
Vina 156,500.00 270.77 liability 1 year Yes No
2021 2021
Company guarantee
Limited
Goertek
Technology Joint
March 27, June 29,
Vina 156,500.00 571.38 liability 1 year Yes No
2021 2021
Company guarantee
Limited
Goertek Joint
March 27, November
Microelectr 2,640.00 3.45 liability 1 year Yes No
2021 19, 2021
onics Inc. guarantee
Goertek Joint
March 30, November
Microelectr 2,089.38 2.77 liability 1 year No No
2022 18, 2022
onics Inc. guarantee
Weifang
Goertek Joint
March 27, March 27,
Microelectr 650.00 7.80 liability 1 year Yes No
2021 2021
onics Co., guarantee
Ltd.
Weifang
Goertek Joint
March 30, May 12,
Microelectr 300.00 20.06 liability 1 year No No
2022 2022
onics Co., guarantee
Ltd.
Rongcheng
Goertek Joint
March 30, May 12,
Microelectr 300.00 liability 1 year No No
2022 2022
onics Co., guarantee
Ltd.
Goertek March 27, 1,500.00 June 10, 199.88 Joint 1 year Yes No
74
Goertek Inc. Annual Report 2022
Intelligence 2021 2021 liability
Technology guarantee
Co., Ltd.
Total amount of guarantee Total amount of actual
limit to subsidiaries guarantee to subsidiaries
489,742.38 238, 408.37
approved during the occurred during the
reporting period (B1) reporting period (B2)
Total amount of guarantee Total balance of actual
limit to subsidiaries guarantee to subsidiaries
1,074,768.78 50, 056.23
approved at the end of the occurred at the end of the
reporting period (B3) reporting period (B4)
The guarantee between subsidiaries
Disclosure
Whether
Name of date of the The amount Actual Actual Counter- Whether the
Guarantee Collateral Guarantee guarantee
guaranteed amount limit of the occurrence amount guarantee (if guarantee is
type (if any) period for related
party limit of the guarantee date guaranteed any) complete
parties
guarantee
Not
applicable
Total amount of company guarantee (namely the sum of the previous three items)
Total amount of actual
Total amount of guarantee
external guarantee
limit approved during the
489,742.38 occurred during the 238, 408.37
reporting period
reporting period
(A1+B1+C1)
(A2+B2+C2)
Total balance of actual
Total amount of external
external guarantee
guarantee limit approved
1,074,768.78 occurred at the end of the 50, 056.23
at the end of the reporting
reporting period
period (A3+B3+C3)
(A4+B4+C4)
The proportion of the total amount of actual
guarantee (i.e. A4+B4+C4) to the net assets of the 1.70%
Company
Including:
Balance of guarantees for shareholders, actual
0
controllers and their affiliate parties (D)
Balance of guarantee provided directly or indirectly
to the parties with an asset-liability ratio of more than 48,752.20
70% (E)
Amount of total guarantees exceeding 50% of net
0
assets (F)
Total amount of the above three kinds of guarantees
48,752.20
(D+E+F)
Explanation of unexpired guarantee contracts for
which there are guarantee liabilities or there are
evidence showing the possibility of joint and several None
liability for repayment during the reporting period (if
any)
Description of external guarantees provided in
None
violation of prescribed procedures (if any)
Specific description of complex guarantees
None
75
Goertek Inc. Annual Report 2022
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 occurred during
the reporting period on http://www.cninfo.com.cn, Securities Times, China Securities Journal, Shanghai Securities News and Securities
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 board of
supervisors, which approved The Proposal of Planning the Spin-off of the Holding Subsidiary. It agreed to plan and prepare the spin-
off of the Company's holding subsidiary Goertek Microelectronics Co., Ltd. For details, please see The Informative Announcement 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, 2021 to
approve The Proposal on the Introduction of External Investors of the Holding Subsidiary and Affiliate Transactions. It agreed to accept
a total of RMB 2,149.987749 million capital investment from 15 external investors, including Qingdao Microelectronics Innovation
Center Co., Ltd., Mr. Tang Wenbo, Gongqingcheng Chunlin Equity Investment Partnership(L.P.), Qingdao Henghuitai Industry
Development Fund Co., Ltd., and Goertek Group Co., Ltd., in exchange of 10.4075% of Goermicro's equity after above capital increase
and share expansion. After the above investment, the percentage of shares of Goermicro held by the Company was diluted from 95.8773%
to 85.8989%, which did not change the accounting consolidation scope of the financial statements of the Company. Details can be
found in The Announcement of Goertek Inc. on the Introduction of External Investors of the Holding Subsidiary 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 of
Supervisors, which approved The Proposal on 'Plan for the Spin-off of Goertek Microelectronics Inc., a subsidiary of Goertek Inc., for
Listing on the Growth Enterprise Board' and other related proposals. Details can be found in related announcements published 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 of
Supervisors, which approved The Proposal of 'Planning on the Spin-off of Goertek Microelectronics Inc. and Listing on the Growth
Enterprise Board of Shenzhen Stock Exchange (Revised)' and other related proposals. The above-mentioned proposals have been
reviewed 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 and
http://www.cninfo.com.cn on November 9, 2021 and November 26, 2021.
On December 28, 2021, Goermicro received The Notice of Acceptance of Application Documents for Initial Public Offering of Shares
and Listing on GEM of Goertek Microelectronics Inc. (Shenzhen Stock Exchange (2021) No. 549). In accordance with related
regulations, the Shenzhen Stock Exchange checked the application report and related application documents submitted by Goermicro
for initial public offering and listing on GEM, and decided to accept the application. Details can be found in The Informative
76
Goertek Inc. Annual Report 2022
Announcement of Goertek on The Acceptance of Shenzhen Stock Exchange of The Application Documents of The Spin-off of Goertek
Microelectronics Inc. and Listing on GEM issued by the Company on December 29, 2021.
According to the Announcement on the Results of the 74th Review Meeting of the GEM Listing Committee in 2022 issued by the
Shenzhen Stock Exchange on October 19, 2022, Goertek Microelectronics Inc. (IPO) meets the requirements for issuance, listing and
information disclosure.
On March 31, 2023, as the financial information recorded in the IPO application documents of Goertek Microelectronics Inc. had
expired, a supplementary submission was required. According to the relevant provisions of the Review Rules of Shenzhen Stock
Exchange for Stock Issuance and Listing, the review for issuance and listing review was suspended.
77
Goertek Inc. Annual Report 2022
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
Transferred
New Bonus
Number Percentage from Other Sub-total Number Percentage
shares shares
reserves
I. Shares
Subject to - -
478,911,375 14.02% 414,250,361 12.11%
Selling 64,661,014 64,661,014
Restrictions
1. State
shareholding
2. Shares
held by
state-owned
corporates
3. Shares
held by
- -
other 478,911,375 14.02% 414,250,361 12.11%
64,661,014 64,661,014
domestic
shareholders
Including:
held by
domestic
corporates
held by
- -
domestic 478,911,375 14.02% 414,250,361 12.11%
64,661,014 64,661,014
individuals
4. Shares
held by
foreign
shareholders
Including:
held by
foreign
corporates
held by
foreign
individuals
II. Shares
Without 2,937,409,661 85.98% 68,743,178 68,743,178 3,006,152,839 87.89%
Restrictions
1. RMB
common 2,937,409,661 85.98% 68,743,178 68,743,178 3,006,152,839 87.89%
shares
78
Goertek Inc. Annual Report 2022
2. Domestic
listed
foreign
shares
3. Overseas
listed
foreign
shares
4. Others
III. Total
Number of 3,416,321,036 100.00% 4,082,164 4,082,164 3,420,403,200 100.00%
Shares
Reasons for changes in shares
Applicable Not applicable
On June 10, 2022, the Company held the 30th meeting of the 5th Board of Directors and the 24th meeting of the 5th Board of
Supervisors, which approved the Proposal on the Exercise Conditions for the First Exercise Period of the Initial Grant of the 2021
Stock Option Incentive Plan. Grantees who meet the exercise conditions may exercise stock options during the first exercise period by
means of voluntary exercise. The actual exercise period is from June 24, 2022, to June 23, 2023. For details, please refer to the
Announcement of Goertek Inc. on the Adoption of a Voluntary Exercise Mode for the First Exercise Period of the Initial Grant of the
2021 Stock Option Incentive Plan, disclosed by the Company on http://www.cninfo.com.cn, Securities Times, China Securities Journal,
Shanghai Securities News and Securities Daily. During the reporting period, the grantees accumulatively exercised 4,082,164 shares
during the first exercise period for the initial grant of 2021 stock option incentive plan.
Approval of changes in shares
Applicable Not applicable
On June 10, 2022, the Company held the 30th meeting of the 5th Board of Directors and the 24th meeting of the 5th Board of
Supervisors, which approved the Proposal on the Exercise Conditions for the First Exercise Period of the Initial Grant of the 2021
Stock Option Incentive Plan, among others. The Board of Directors held that the exercise conditions for the first exercise period of the
initial grant of the 2021 Stock Option Incentive Plan had been met. 503 grantees may exercise stock options during the first exercise
period by means of voluntary exercise.
Transfer of ownership change of shares
Applicable Not applicable
According to the 2021 Stock Option Incentive Plan of Goertek Inc. (Draft), the first exercise period of the initial grant is from June 24,
2022, to June 23, 2023.
The impact of share changes on the financial indicators such as basic earnings per share, diluted earnings per share and net assets per
share attributable to the Company's common shareholders in the latest year and the latest period
Applicable Not applicable
During the reporting period, the exercise of stock options by grantees under the 2021 Stock Option Incentive Plan correspondingly
affected basic earnings per share and diluted earnings per share, but did not have a significant impact.
Other content that the Company considers necessary or that the securities regulator requires to be disclosed
Applicable Not applicable
2. Changes in restricted shares
Applicable Not applicable
Unit: share
Starting number Closing number
Increased in
Name of of restricted Decreased in of restricted Type for Date of the removal
reporting
shareholder shares in current period shares in restricted shares of restrictions
period
reporting period reporting period
Jiang Bin 280,115,554 64,567,500 215,548,054 Restricted shares January 1, 2022
79
Goertek Inc. Annual Report 2022
of senior
executives
Restricted shares
Jiang Long 187,758,898 187,758,898 of senior January 1, 2022
executives
Restricted shares
Hu Shuangmei 16,200,000 16,200,000 of senior January 1, 2022
executives
Restricted shares
Sun Hongbin 6,667,150 422,384 7,089,534 of senior January 1, 2022
executives
Restricted shares
Duan Huilu 3,355,875 750,000 2,605,875 of senior January 1, 2022
executives
Restricted shares
Jia Jun'an 150,000 450,000 600,000 of senior January 1, 2022
executives
Restricted shares
Liu Chunfa 863,898 215,898 648,000 of senior January 1, 2022
executives
Total 495,111,375 872,384 65,533,398 430,450,361 -- --
II. Issuance and Listing of Securities
1. Securities issuance (excluding preference shares) during the reporting period
Applicable Not applicable
2. Description of changes in the total number of shares, the structure of shareholders, and the structure of
assets and liabilities
Applicable Not applicable
At the 30th meeting of the 5th Board of Directors and the 24th meeting of the 5th Board of Supervisors, the Company approved the
Proposal on the Exercise Conditions for the First Exercise Period of the Initial Grant of the 2021 Stock Option Incentive Plan. As the
exercise conditions for the first exercise period of the initial grant of the 2021 Stock Option Incentive Plan had been met, the Company
agreed that grantees may exercise stock options by means of voluntary exercise. During the reporting period, as grantees voluntarily
exercised stock options, a total of 4,082,164 additional shares were issued.
3. Existing internal employee shares
Applicable Not applicable
III. Shareholders and actual controllers
1. Number of shareholders and corresponding shareholding
Unit: share
Total Total Total Total number of preference
number of number of number shareholders whose voting
common common of rights were restored at the
524,569 523,319 0 0
shareholders shareholders preferenc end of the previous month
at the end of as the end of e before disclosure date of
the reporting the previous sharehold the annual report
80
Goertek Inc. Annual Report 2022
period month ers whose
before voting
disclosure rights
date of the were
annual report restored
at the end
of the
reporting
period (if
any)
Shareholding of shareholders with more than 5% of shares or the top 10 shareholders
Total common Increase/ The number Pledge or freeze status
The number of
shares held at decrease of common
Name of Type of shares held
Percentage the end of the during the shares held Share
shareholder shareholder without trading Number
reporting reporting with trading status
restrictions
period period restrictions
Domestic
Goertek
non-state-
Group Co., 14.84% 507,680,170 507,680,170
owned
Ltd.
corporation
Domestic
Jiang Bin 8.40% 287,397,406 215,548,054 71,849,352
Individual
Domestic
Jiang Long 7.32% 250,345,197 187,758,898 62,586,299 Pledged 93,500,000
Individual
Hong Kong
Securities
Clearing Overseas
3.64% 124,575,288 124,575,288
Company corporation
Ltd.
(HKSCC)
China
Securities
Finance Other 2.43% 83,044,011 83,044,011
Corporation
Limited
National
Social
Security Other 0.76% 26,000,000 26,000,000
Fund
Portfolio 103
Domestic
Chen Shihui 0.62% 21,332,500 21,332,500
Individual
Tian'an Life
Insurance
Co., Ltd. - Other 0.58% 20,000,000 20,000,000
traditional
products
Dajia Life
Insurance
Other 0.51% 17,567,904 17,567,904
Co., Ltd. -
universal
81
Goertek Inc. Annual Report 2022
products
Taiping Life
State-owned
Insurance 0.50% 17,174,970 17,174,970
legal entity
Co., Ltd.
Strategic investors or
general legal entities who
become the top 10
None
shareholders as a result of
the placement of new
shares (if any)
Explanation of the
association of the above Jiang Bin and Jiang Long are brothers; Goertek Group Co., Ltd. is a company controlled by Jiang Bin
shareholders or their action and Jiang Long.
in concert
Explanation on
entrustment/acceptance and
None
waiver of voting rights by
the aforesaid shareholders
Special notes on the existing
special account of securities The specific securities repurchase account of Goertek Inc. holds 74,265,451 common shares,
repurchasing in the Top 10 accounting for 2.17%.
shareholders (if any)
Shareholding of top 10 shareholders of shares without sales restrictions
Number of shares without sales restrictions Type of shares
Name of shareholder
held at the end of the reporting period Type of shares Number
Goertek Group Co., Ltd. 507,680,170 Ordinary shares in RMB 507,680,170
Hong Kong Securities
Clearing Company Ltd. 124,575,288 Ordinary shares in RMB 124,575,288
(HKSCC)
China Securities Finance
83,044,011 Ordinary shares in RMB 83,044,011
Corporation Limited
Jiang Bin 71,849,352 Ordinary shares in RMB 71,849,352
Jiang Long 62,586,299 Ordinary shares in RMB 62,586,299
National Social Security
26,000,000 Ordinary shares in RMB 26,000,000
Fund Portfolio 103
Chen Shihui 21,332,500 Ordinary shares in RMB 21,332,500
Tian'an Life Insurance Co.,
20,000,000 Ordinary shares in RMB 20,000,000
Ltd. - traditional products
Dajia Life Insurance Co.,
17,567,904 Ordinary shares in RMB 17,567,904
Ltd. - universal products
Taiping Life Insurance Co.,
17,174,970 Ordinary shares in RMB 17,174,970
Ltd.
Explanation on association
or action in concert among
top 10 shareholders of
shares without sales Jiang Bin and Jiang Long are brothers; Goertek Group Co., Ltd. is a company controlled by Jiang Bin
restrictions, or between top and Jiang Long.
10 shareholders of shares
without sales restrictions
and top 10 shareholders
82
Goertek Inc. Annual Report 2022
Explanation on the top ten
common shareholders’
At the end of the reporting period, the shares held by Goertek Group Co., Ltd., the controlling
participation in the
shareholder of the Company include the 150,000,000 shares held in the customer credit transaction
financing and loan
guarantee securities account of Southwest Securities Co., Ltd.
businesses of securities
trades(if any)
Whether the Company’s top 10 common shareholders and top 10 common shareholders without share sales restrictions agreed on
any repurchase 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 any
repurchase in the reporting period.
2. Particulars about the controlling shareholder
Nature of the controlling shareholder: Private corporate
Type of the controlling shareholder: Legal entity
Legal
Name of the controlling
representative/Head Date of establishment Organization code Business scope
shareholder
of the Company
Residential interior
decoration; medical
services; technology import
and export; investing
activities conducted with
own funds; non-residential
Goertek Group Co., Ltd. Jiang Bin April 24, 2001 913707007286084226
real estate leasing; technical
services; wholesale of
edible agricultural products;
tree planting management;
electronic products sales,
etc.
Shareholdings of the
controlling shareholder in None
other listed companies
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 controller
Nature of the actual controllers: Domestic individual
Type of the actual controllers: Individual
Whether he/she has obtained
Name of the actual controller Relationship with the actual controller Nationality the right of residence in another
country or region
Jiang Bin Himself China No
Hu Shuangmei Himself China No
Acting in concert (including agreement,
Jiang Long China No
relative and common control)
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Goertek Inc. Annual Report 2022
Mr. Jiang Bin is currently the board chairman of the Company; Mr. Jiang Long served as the vice
Main occupation and title chairman and president of the Company during the reporting period. (He resigned from the above
positions on April 6, 2023.)
Information about other listed
companies at home and abroad Goertek Inc.
controlled in the last ten years
Change on the actual controllers in the reporting period
Applicable Not applicable
No change on the actual controllers of the Company in the reporting period
Block Diagram for Property Right and Control Relationship Between the Company and its Actual Controllers
Jiang Bin Hu Shuangmei
Goertek Group Co., Ltd.
Goertek Inc.
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.1
shareholder 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 parties
involved in the reorganization of the Company or in any commitments related to the sales of share
Applicable Not applicable
IV. Specific Implementation of Share Repurchase in the Reporting Period
Progress of share repurchase
Applicable Not applicable
The progress of repurchased shares reduction through centralized trading at competitive price
Applicable Not applicable
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Goertek Inc. Annual Report 2022
Section VIII Information of Preference Shares
Applicable Not applicable
There are no preference shares in the reporting period.
85
Goertek Inc. Annual Report 2022
Section IX Information on the Bonds
Applicable Not applicable
86
Goertek Inc. Annual Report 2022
Section X Financial Report
I. Auditor’s Report
Auditor’s Opinion Standard unqualified opinion
Auditor’s Report Sign-off Date April 17, 2023
Name of the audit institution ZHONGXI CPAs (SPECIAL GENERAL PARTNERSHIP)
Auditor’s Report Number Zhong Xi Cai Shen No. 2023S00781
Name of the Certified Public Accountant Du Yeqin, Zhang Shuli
Text of the auditor’s report
Auditor’s Report
Zhong Xi Cai Shen No. 2023S00781
To all the shareholders of Goertek Inc.,
I. Opinion
We have audited the accompanying financial statements of Goertek Inc. (hereinafter referred to as "Goertek"), including the
consolidated and Company's balance sheets as of December 31, 2022, consolidated and Company's income statements, consolidated
and Company's cash flow statements, consolidated and Company's statements of changes in shareholder' equity, and notes 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 the Accounting
Standards for Business Enterprises, fairly reflecting the consolidated and Company's financial position as of December 31, 2022 and
of the consolidated and Company's financial performance and cash flows for 2022.
II. Basis for Opinion
We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants of China. Our responsibilities
under those Standards are further described in the “Certified Public Accountants’ Responsibilities for the Audit of the Financial
Statements” section of the auditor’s report. We are independent of Goertek Inc. in accordance with the Code of Ethics for Certified
Public
Accountants of China (“Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditor’s 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 financial statements
of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters. We determine that the following matters are critical
audit matters that need to be communicated in the audit report.
(I) Revenue recognition
1. Description of the matters
Goertek Inc. is mainly in the business of producing and selling electronic components, and for the accounting policy of revenue
recognition, please refer to ''32. Income'' in ''V. Significant Accounting Policies and Accounting Estimates'' of notes to the financial
statements. In 2022, the operating revenue in the consolidated financial statements of Goertek Inc. is RMB 104,894.32 million.
Revenue is one of the key performance indicators of Goertek Inc. and is the major source of profit of the Company, and the accuracy
and completeness of revenue recognition has a significant impact on the profits of the Company. Therefore, we identified the
recognition of Goertek Inc.’s revenue as a key audit matter.
2. Audit measures
We performed the following audit procedures in recognition of the operating revenue:
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Goertek Inc. Annual Report 2022
(1) Understood, evaluated and tested the design and operation effectiveness of internal control related to revenue recognition;
(2) Performed analytical review procedure to analyze the rationality of changes in the operating revenue and gross profits;
(3) Identified the risk in the commodity ownership and the contractual terms related to remuneration transfer, evaluated whether the
accounting policies for revenue recognition in different modes were appropriate, and evaluated whether the time point for revenue
recognition of the Company was consistent with the requirements in the Accounting Standards for Business Enterprises by checking
the major sales contracts or orders, understanding the policies for receipt and return of goods, communicating with the management
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 confirmation
procedures on a sampling basis;
(5) Selected samples to reconcile the shipping orders, declarations for exportation, waybills (receipt forms) and other supporting
documents against the product sales revenue recognized before and after the balance sheet date to evaluate whether the revenue was
recognized in the appropriate accounting period.
(II) Provision for decline in the value of inventories
1. Description of the matters
For the related accounting policies, please refer to ''15. Inventory'' in ''V. Significant Accounting Policies and Accounting Estimates''
of notes to the financial statements. As of December 31, 2022, the inventory balance was RMB 18,419.65 million, the amount of
provision for decline in the value of inventories was RMB1,070.98 million, and the book value was RMB 17,348.67 million.
On the balance sheet date, inventory is measured at cost or net realizable value (whichever is lower). The provision for decline in the
value of inventories is generally made at the difference between an inventory item’s cost and its net realizable value. To determine the
net realizable value of the inventory, the Management needs to estimate the selling price of the inventory, the costs to be incurred by
the time of completion, selling expenses, and related taxes. In November 2022, Goertek Inc. announced that it had received a notice
from a major overseas customer to suspend the production of one of its smart acoustic products. The matter resulted in the related
inventory being partially excess and obsolete.
We identified the provision for decline in the value of inventories as a key audit matter because the amount of inventory is significant
and the provision for decline in the value of inventories requires significant accounting judgment and estimates by the Management.
2. Audit measures
We performed the following audit procedures on the provision for inventory write down:
(1) We understood, evaluated, and tested the effectiveness of the design and operation of internal controls related to the provision for
inventory write down;
(2) We implemented the inventory monitoring procedure, paying attention to slow-moving, excessive, obsolete, or damaged inventory
items, and checking the relevant inventory list with the Management's inventory write down list;
(3) We obtained the year-end inventory age list and performed an analytical review of older inventories based on the condition of the
products to evaluate the rationality of the provision for inventory write down;
(4) We obtained the inventory write down calculation table and reviewed the net realizable value of inventory and the amount of
provision for inventory provision, so as to evaluate the rationality of accounting judgments made by the Management in determining
the net realizable value of inventory;
(5) In response to the suspension of production of a smart acoustic product for a major overseas customer, we paid special attention to
the delivery of inventory and the disposal plan of raw materials and work-in-progress inventory.
(III) Provision for impairment of fixed assets
1. Description of the matters
For the provision for impairment of fixed assets, please refer to ''25. Impairment of Long-term Assets'' in ''V. Significant Accounting
Policies and Accounting Estimates''. As of December 31, 2022, the book value of the Company's fixed assets was RMB 21,459.76
million, and the provision for impairment of fixed assets in 2022 was RMB 579.46 million.
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Goertek Inc. Annual Report 2022
In November 2022, Goertek Inc. announced that it had received a notice from a major overseas customer to suspend the production of
one of its smart acoustic products. This matter resulted in impairment of the related fixed assets. The Management conducted
impairment tests on the related fixed assets on the balance sheet date. If the impairment test results show that the recoverable amount
of an asset is lower than its book value, the provision for impairment shall be accrued according to the difference and recorded into the
impairment loss. The recoverable amount is the higher of the net 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.
Since the book value of fixed assets has a significant impact on financial statements and the provision for impairment of fixed assets
requires the management to make significant accounting judgments and estimates, we identified the provision for impairment of fixed
assets as a key audit matter.
2. Audit measures
We mainly implemented the following audit procedures for the provision for impairment of fixed assets:
(1) We understood, evaluated, and tested the effectiveness of the design and operation of internal control related to the provision for
impairment of fixed assets;
(2) We inspected relevant fixed assets on site and implemented monitoring procedures to verify whether there are idle situations and
determine whether there are signs of impairment;
(3) In response to the suspended production of a smart acoustic product for a major overseas customer, we paid special attention to the
use of related fixed assets and related disposal plans;
(4) We analyzed the Management's judgment on whether there are signs of possible impairment of fixed assets at the end of the period,
evaluated the appropriateness of the Management's fixed asset impairment test method, and reviewed the key assumptions and
rationality of judgments adopted by the Management in the impairment test method;
(5) We obtained appraisal reports on fixed assets from third-party institutions and reviewed the appraisal scope, assumptions,
conclusions, etc. in the appraisal reports.
IV. Other Information
The Management of Goertek Inc. (the Management) is responsible for Other Information. Other Information includes information
covered in the 2022 Annual Report of Goertek Inc. but excludes financial statements and auditor’s reports.
Our auditor’s opinions on financial statements do not cover Other Information. We also do not express any kind of verification
conclusion on Other Information.
In combination with our audit of the financial statements, we're obliged to read the Other Information. In the process, we consider
whether the Other Information is materially inconsistent with the financial statements or the information we learned during the audit,
or whether there is a material misstatement.
Based on the work that we have already done, if we determine that the Other Information contains material misstatements, we should
report the fact. In this regard, we have nothing to report.
V. Responsibilities of Management and Governance for the Financial Statements
The management of Goertek Inc. is responsible for the preparation and fair presentation of the financial statements in accordance with
the Accounting Standards for Business Enterprises, and for the design, implementation and maintenance of such internal control
necessary to ensure that the financial statements are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, Management is responsible for assessing the ability of Goertek Inc. to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management intends
to liquidate Goertek Inc. or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the financial reporting process of Goertek Inc.
VI. Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with the Auditing Standards will always detect a material misstatement
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Goertek Inc. Annual Report 2022
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users made on the basis of these financial statements.
As part of an audit in accordance with the Auditing Standards, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the financial statements due to fraud or error, design and perform audit
procedures to address those risks, and obtain audit evidence that is sufficient and appropriate as the basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit to design appropriate audit procedures.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by Management.
4. Conclude on the appropriateness of Management's use of the going concern basis of accounting. And, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Goertek Inc.’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, if such disclosures are inadequate, to express a qualified opinion. Our
conclusions are based on the information obtained up to the date of our auditor’s report. However, future events or conditions may
cause Goertek Inc. to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements fairly
represent the underlying transactions and events.
6. Obtain sufficient and appropriate audit evidence on the financial information of entities or business activities within Goertek Inc. to
express an opinion on the financial statements. We are responsible for the instruction, supervision and execution of the Group’s audit,
and assume full responsibility for the auditor’s opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
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 requirements regarding
independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence and, where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
Zhongxi Certified Public Accountants (SPECIAL Certified Public Accountant in China
GENERAL PARTNERSHIP) (Engagement partner): ___________
Du Yeqin
Beijing China Certified Public Accountant in China: ___________
Zhang Shuli
April 17, 2023
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Goertek Inc. Annual Report 2022
II. Financial Statements
The currency in the notes to the financial statements is: RMB
1. Consolidated Balance Sheet
Prepared by: Goertek Inc.
December 31, 2022
Unit: RMB
Item December 31, 2022 January 1, 2022
Current assets:
Cash at bank and on hand 12,682,871,091.80 10,048,521,696.09
Deposit reservation for balance
Lending funds
Financial assets held for trading 338,662,097.66 119,267,279.02
Derivative financial assets
Notes receivable 25,847,492.24 50,094,700.47
Accounts receivable 14,396,180,782.93 11,899,214,525.92
Financing receivables 22,375,874.12 14,575,230.24
Advances to suppliers 50,656,153.43 97,544,817.98
Premiums receivable
Reinsurance accounts receivable
Provision of cession receivable
Other receivables 96,442,803.18 374,669,355.98
Including: Interest receivable
Dividends receivable
Redemptory financial asset for sale
Inventories 17,348,670,744.58 12,082,308,485.38
Contract assets
Assets held for sale
Current portion of non-current assets 70,302,566.25
Other current assets 530,991,435.56 475,772,227.60
Total current assets 45,563,001,041.75 35,161,968,318.68
Non-current assets:
Loans and advances disbursed
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 361,008,671.83 437,402,203.91
Investments in other equity instruments 699,249,262.24 465,677,764.54
Other non-current financial assets 318,661,575.31 201,430,042.13
Investment properties
Fixed assets 21,459,756,268.25 18,123,352,480.76
Construction in progress 2,424,443,775.33 2,127,055,853.77
Bearer biological assets
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Goertek Inc. Annual Report 2022
Oil and gas assets
Right-of-use assets 580,175,922.73 330,796,520.66
Intangible assets 2,720,793,670.68 2,762,793,788.85
Development costs 361,178,111.91 242,956,092.44
Goodwill 16,859,185.08 16,859,185.08
Long-term prepaid expenses 337,561,524.06 207,195,490.25
Deferred tax assets 1,369,530,623.51 495,124,421.81
Other non-current assets 964,135,835.23 506,438,970.39
Total non-current assets 31,613,354,426.16 25,917,082,814.59
Total assets 77,176,355,467.91 61,079,051,133.27
Current liabilities:
Short-term borrowings 7,120,846,026.67 4,284,859,347.02
Borrowings from banks and other
financial institutions
Borrowing funds
Financial liabilities held for trading 202,293,742.46 15,190,564.34
Derivative financial liabilities
Notes payable 4,850,498,246.08 2,742,876,464.23
Accounts payable 25,748,758,270.19 18,529,609,655.40
Advances from customers
Contract liabilities 2,295,347,547.31 2,210,825,761.69
Financial assets sold for repurchase
Customer deposits and deposits from
banks and other financial institutions
Receiving from vicariously traded
securities
Receiving from vicariously sold
securities
Employee benefits payable 1,039,571,778.39 1,066,570,159.63
Taxes payable 284,911,767.58 356,610,000.28
Other payables 78,974,306.79 80,187,733.17
Including: Interest payable
Dividends payable
Handling charges and commissions
payable
Dividend payable for reinsurance
Liabilities held for sale
Current portion of non-current liabilities 1,095,618,327.74 501,408,170.04
Other current liabilities 4,252,178.60 14,844,359.01
Total current liabilities 42,721,072,191.81 29,802,982,214.81
Non-current liabilities:
Reserve fund for insurance contracts
Long-term borrowings 2,206,000,000.00 2,204,215,784.74
Debentures payable
Including: Preference shares
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Goertek Inc. Annual Report 2022
Perpetual bonds
Lease liabilities 470,704,507.75 210,209,955.40
Long-term payables
Long-term employee benefits payable
Provisions
Deferred income 532,374,144.38 540,321,080.65
Deferred tax liabilities 816,118,632.40 389,933,389.40
Other non-current liabilities 172,261,037.39
Total non-current liabilities 4,197,458,321.92 3,344,680,210.19
Total liabilities 46,918,530,513.73 33,147,662,425.00
Shareholders’ equity:
Share capital 3,420,403,200.00 3,416,321,036.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital surplus 10,280,659,251.03 9,478,106,194.30
Less: Treasury stock 2,291,973,146.75 2,291,973,146.75
Other comprehensive income 122,377,334.36 -100,146,769.57
Specific reserve
Surplus reserve 1,446,536,121.51 1,446,536,121.51
General risk reserve 6,081,200.00 6,081,200.00
Undistributed profits 16,507,798,239.34 15,372,823,358.48
Total equity attributable to the owners of
29,491,882,199.49 27,327,747,993.97
the Company
Minority interests 765,942,754.69 603,640,714.30
Total shareholders’ equity 30,257,824,954.18 27,931,388,708.27
Total liabilities and shareholders’ equity 77,176,355,467.91 61,079,051,133.27
Legal representative: Principal in charge of accounting: Head of the accounting department:
Jiang Bin Li Yongzhi Li Yongzhi
2. Parent company balance sheet
Unit: RMB
Item December 31, 2022 January 1, 2022
Current assets:
Cash at bank and on hand 3,297,113,271.47 4,068,082,163.75
Financial assets held for trading 182,610,198.06 102,214,286.66
Derivative financial assets
Notes receivable 7,252,050.59 15,951,819.79
Accounts receivable 8,870,599,478.20 8,009,174,174.20
Financing receivables 20,812,233.59 12,277,005.37
Advances to suppliers 12,302,281.24 33,005,000.34
Other receivables 7,549,205,233.13 3,927,667,930.14
Including: Interest receivable
Dividends receivable
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Goertek Inc. Annual Report 2022
Inventories 4,322,610,550.17 5,386,290,840.96
Contract assets
Assets held for sale
Current portion of non-current assets 70,184,291.67
Other current assets 150,596,159.89 89,132,401.04
Total current assets 24,483,285,748.01 21,643,795,622.25
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 6,761,368,254.99 6,182,937,106.09
Investments in other equity instruments
Other non-current financial assets 187,386,179.39 81,254,792.77
Investment properties
Fixed assets 10,645,143,425.63 9,979,950,421.03
Construction in progress 1,126,851,927.87 1,083,563,418.24
Bearer biological assets
Oil and gas assets
Right-of-use assets 280,327,936.71 70,843,695.85
Intangible assets 1,984,169,023.39 2,283,338,054.04
Development costs 241,947,146.57 105,363,784.94
Goodwill
Long-term prepaid expenses 20,436,053.45 6,206,772.89
Deferred tax assets 788,677,414.86 233,025,132.43
Other non-current assets 669,073,701.52 297,122,363.13
Total non-current assets 22,705,381,064.38 20,323,605,541.41
Total assets 47,188,666,812.39 41,967,401,163.66
Current liabilities:
Short-term borrowings 4,444,406,920.52 3,346,827,327.53
Financial liabilities held for trading 19,392,000.00 4,080,000.00
Derivative financial liabilities
Notes payable 4,648,250,141.38 2,348,480,930.59
Accounts payable 9,328,082,173.15 9,328,493,202.63
Advances from customers
Contract liabilities 1,005,783,290.09 340,559,741.33
Employee benefits payable 493,789,544.79 550,001,996.91
Taxes payable 40,037,090.10 37,673,083.32
Other payables 2,600,416,992.05 3,270,836,911.14
Including: Interest payable
Dividends payable
Liabilities held for sale
Current portion of non-current liabilities 1,006,575,141.61 412,234,240.19
Other current liabilities 1,487,433.65 9,670,427.10
Total current liabilities 23,588,220,727.34 19,648,857,860.74
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Goertek Inc. Annual Report 2022
Non-current liabilities:
Long-term borrowings 2,206,000,000.00 990,921,555.56
Debentures payable
Including: Preference shares
Perpetual bonds
Lease liabilities 267,086,388.96 52,713,002.49
Long-term payables
Long-term employee benefits payable
Provisions
Deferred income 184,692,979.14 186,139,483.46
Deferred tax liabilities 536,571,810.07 373,963,793.59
Other non-current liabilities
Total non-current liabilities 3,194,351,178.17 1,603,737,835.10
Total liabilities 26,782,571,905.51 21,252,595,695.84
Shareholders’ equity:
Share capital 3,420,403,200.00 3,416,321,036.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital surplus 8,421,030,014.05 7,706,634,091.21
Less: Treasury stock 2,291,973,146.75 2,291,973,146.75
Other comprehensive income
Specific reserve
Surplus reserve 1,446,533,339.11 1,446,533,339.11
Undistributed profits 9,410,101,500.47 10,437,290,148.25
Total shareholders’ equity 20,406,094,906.88 20,714,805,467.82
Total liabilities and shareholders’ equity 47,188,666,812.39 41,967,401,163.66
3. Consolidated income statement
Unit: RMB
Item 2022 2021
I. Revenue 104,894,324,162.26 78,221,418,618.02
Including: Operating revenue 104,894,324,162.26 78,221,418,618.02
Interest income
Earned premium
Total revenue from handling
charges and commissions
II. Total Operating Cost 101,718,859,767.81 74,123,260,660.02
Including: cost of sales 93,233,476,543.28 67,167,666,659.66
Interest expense
Handling charge and
commission expense
Surrender value
Net payments for insurance
claims
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Goertek Inc. Annual Report 2022
Net amount of withdrawal of
insurance contract reserve
Expenditures of policy dividend
Amortized reinsurance
expenditures
Taxes and surcharges 266,930,500.29 221,891,985.50
Selling expenses 548,298,842.05 444,869,977.08
General and administrative
2,294,505,645.46 1,951,657,773.32
expenses
Research and development
5,226,525,154.99 4,170,074,282.10
expenses
Financial expenses 149,123,081.74 167,099,982.36
Including: Interest expenses 303,539,076.90 209,622,292.85
Interest income 189,356,256.02 91,492,632.72
Add: Other income 373,205,863.18 466,722,801.11
Investment income ("-" for loss) -36,243,969.62 469,239,884.79
Including: Investment income
2,298,237.32 23,111,753.41
from associates and joint ventures
Profits or losses
arising from derecognised financial assets -23,037,232.06 -7,852,608.05
at amortised cost
Exchange gains ("-" for loss)
Net exposure hedging income ("-"
for loss)
Gains on changes in fair value ("-"
-57,081,334.97 -48,848,625.93
for loss)
Credit impairment losses ("-" for
-14,220,595.92 -29,693,677.67
loss)
Asset impairment losses ("-" for
-1,782,744,359.91 -241,075,506.45
loss)
Gains on disposal of assets ("-" for
-47,898,939.73 -31,179,825.99
loss)
III. Operating Profit ("-" for loss) 1,610,481,057.48 4,683,323,007.86
Add: Non-operating income 21,477,460.44 22,444,738.18
Less: Non-operating expenses 122,730,370.49 99,858,949.06
IV. Total Profit (“-” for total losses) 1,509,228,147.43 4,605,908,796.98
Less: Income tax expenses -281,790,237.36 298,842,312.64
V. Net profit ("-" for net loss) 1,791,018,384.79 4,307,066,484.34
(I) Classification by continuity of
operations
1. Net profit from continuing
1,791,018,384.79 4,307,066,484.34
operations (“-” for net loss)
2. Net profit from discontinued
operations (“-” for net loss)
(II) Classification by ownership of the
equity
1. Net profit attributable to the 1,749,181,131.83 4,274,702,999.38
96
Goertek Inc. Annual Report 2022
shareholders of the Company
2. Minority interests 41,837,252.96 32,363,484.96
VI. Other comprehensive income, net of
225,089,038.47 21,620,809.04
tax
Other comprehensive income, net of tax
attributable to the shareholders of the 222,524,103.93 11,863,242.95
Company
(I) Other comprehensive income
items which will not be reclassified 2,195,604.99 39,220,079.94
subsequently to profit or loss
1. Changes in remeasurement of
defined benefit plan
2. Shares of other comprehensive
income of the investee accounted for using
equity method that will not be
subsequently reclassified to profit or loss
3. Changes in fair value of
2,195,604.99 39,220,079.94
investments in other equity instruments
4. Changes in fair value
attributable to change in the credit risk of
financial liability designated at FVPL
5. Others
(II) Other comprehensive income
items which will be reclassified 220,328,498.94 -27,356,836.99
subsequently to profit or loss
1. Shares of other comprehensive
income of the investee accounted for using
-27,351,340.30 7,950,273.16
equity method that will be reclassified to
profit or loss
2. Changes in fair value of other
debt investments
3. Shares of financial assets
reclassified to other comprehensive
income
4. Provision for credit impairment
of other debt investments
5. Effective portion of gains or
losses on hedging instruments in a cash
flow hedge
6. Translation differences on
translation of foreign currency financial 247,679,839.24 -35,307,110.15
statements
7. Others
Net other comprehensive income, net of
2,564,934.54 9,757,566.09
tax, attributable to minority shareholders
VII. Total comprehensive income 2,016,107,423.26 4,328,687,293.38
Attributable to the shareholders of the
1,971,705,235.76 4,286,566,242.33
Company
Attributable to minority shareholders 44,402,187.50 42,121,051.05
97
Goertek Inc. Annual Report 2022
VIII. Earnings per share
(I) Basic earnings per share 0.52 1.29
(II) Diluted earnings per share 0.52 1.28
In case of consolidation of enterprises under common control during current period, the net profit before consolidation realized by
consolidated party is RMB 0.00. The net profit realized by the consolidated party in the previous period is RMB 0.00.
Legal representative: Principal in charge of accounting: Head of the accounting department:
Jiang Bin Li Yongzhi Li Yongzhi
4. Parent Company Income Statement
Unit: RMB
Item 2022 2021
I. Revenue 42,977,392,050.91 38,570,677,177.70
Less: Cost of sales 37,992,035,039.68 33,462,769,638.76
Taxes and surcharges 166,468,610.77 154,866,730.44
Selling expenses 357,947,471.28 366,931,444.56
General and administrative
1,883,669,477.96 1,596,480,325.17
expenses
Research and development
2,842,072,542.12 2,398,742,531.34
expenses
Financial expenses -286,250,474.81 194,864,359.66
Including: Interest expenses 244,537,695.61 146,895,744.91
Interest income 119,926,860.39 46,415,186.23
Add: Other income 59,312,468.45 219,224,748.04
Investment income ("-" for loss) 656,680,494.07 197,716,898.27
Including: Investment income
-7,694,836.13
from associates and joint ventures
Profits or losses arising
from derecognised financial assets at -2,297,194.72
amortised cost (“-” for loss)
Net exposure hedging income ("-"
for loss)
Gains on changes in fair value ("-"
81,215,298.02 -12,391,097.59
for loss)
Credit impairment losses ("-" for
7,287,106.67 -9,464,407.85
loss)
Asset impairment losses ("-" for
-1,496,859,325.46 -60,378,317.10
loss)
Gains on disposal of assets ("-" for
-3,522,548.55 -19,259,431.72
loss)
II. Operating Profit ("-" for loss) -674,437,122.89 711,470,539.82
Add: Non-operating income 10,715,077.09 14,343,882.35
Less: Non-operating expenses 88,097,731.93 81,884,486.81
III. Total profit (“-” for total losses) -751,819,777.73 643,929,935.36
Less: Income tax expenses -393,042,246.95 -114,650,228.04
IV. Net profit ("-" for net loss) -358,777,530.78 758,580,163.40
(I) Net profit from continuing -358,777,530.78 758,580,163.40
98
Goertek Inc. Annual Report 2022
operations (“-” for net loss)
(II) Net profit from discontinued
operations (“-” for net loss)
V. Other comprehensive income, net of tax
(I) Other comprehensive income
items which will not be reclassified
subsequently to profit or loss
1. Changes in remeasurement of
defined benefit plan
2. Shares of other comprehensive
income of the investee accounted for using
equity method that will not be
subsequently reclassified to profit or loss
3. Changes in fair value of
investments in other equity instruments
4. Changes in fair value
attributable to change in the credit risk of
financial liability designated at FVPL
5. Others
(II) Other comprehensive income
items which will be reclassified
subsequently to profit or loss
1. Shares of other comprehensive
income of the investee accounted for using
equity method that will be reclassified to
profit or loss
2. Changes in fair value of other
debt investments
3. Shares of financial assets
reclassified to other comprehensive
income
4. Provision for credit impairment
of other debt investments
5. Effective portion of gains or
losses on hedging instruments in a cash
flow hedge
6. Translation differences on
translation of foreign currency financial
statements
7. Others
VI. Total comprehensive income -358,777,530.78 758,580,163.40
VII. Earnings per share
(I) Basic earnings per share
(II) Diluted earnings per share
5. Consolidated statement of cash flows
Unit: RMB
Item 2022 2021
99
Goertek Inc. Annual Report 2022
I. Cash flows from operating activities:
Cash received from sale of goods or
87,859,623,816.37 79,015,187,941.07
rendering of services
Net increase in customer deposits and
deposits from banks and other financial
institutions
Net increase in borrowings from banks
and other financial institutions
Net increase in borrowing funds from
other financial institutions
Cash receipts from original insurance
contract premium
Net cash received from reinsurance
business
Net increase in deposits and
investments from policy holders
Cash received from for interests, fees
and commissions
Net increase in borrowing funds
Net increase in repurchase business
funds
Net cash received from securities
trading brokerage
Refund of taxes and surcharges 3,177,120,800.53 2,491,572,718.66
Cash received relating to other
1,924,041,394.99 4,016,679,085.42
operating activities
Sub-total of cash inflow from operating
92,960,786,011.89 85,523,439,745.15
activities
Cash paid for goods and services 70,912,862,925.28 63,038,774,946.46
Net increase in loans and advances to
customers
Net increase in deposits with central
bank and other financial institutions
Payments of claims for original
insurance contracts
Net increase in lending funds
Cash paid for interests, fees and
commissions
Cash payments of policy dividend
Cash paid to and on behalf of
9,048,023,602.48 7,719,283,934.60
employees
Payments of taxes and surcharges 835,585,413.96 748,229,544.50
Cash paid relating to other operating
3,847,200,705.49 5,418,675,791.71
activities
Sub-total of cash outflow from operating
84,643,672,647.21 76,924,964,217.27
activities
Net cash flow from operating activities 8,317,113,364.68 8,598,475,527.88
II. Cash flows from investing activities
100
Goertek Inc. Annual Report 2022
Cash received from disposal of
1,060,923,791.21 3,101,972,150.22
investments
Cash received from returns on
9,371,384.39 36,359,530.84
investments
Net cash received from disposal of fixed
assets, intangible assets and other long- 49,533,749.98 121,860,250.62
term assets
Net cash received from disposal of
322,965.16 6,872,916.88
subsidiaries and other business units
Cash received relating to other investing
21,653,530.71 9,258,951.92
activities
Sub-total of cash inflow from investing
1,141,805,421.45 3,276,323,800.48
activities
Cash paid to acquire fixed assets,
intangible assets and other long-term 8,090,107,306.38 6,961,607,745.79
assets
Cash paid to acquire investments 2,118,347,402.73 3,083,092,515.56
Net increase in pledged loans
Net cash paid to acquire subsidiaries
and other business units
Cash paid relating to other investing
10,363,395.50
activities
Sub-total of cash outflow from investing
10,218,818,104.61 10,044,700,261.35
activities
Net cash flow from investing activities -9,077,012,683.16 -6,768,376,460.87
III. Cash flows from financing activities
Cash received from capital
395,195,770.87 2,178,807,429.01
contributions
Including: Cash received from capital
contributions by minority shareholders of 276,358,071.55 2,178,807,429.01
subsidiaries
Cash received from borrowings 28,642,971,147.51 10,317,581,649.46
Cash received relating to other
2,683,899,988.02 1,507,365,421.50
financing activities
Sub-total of cash inflow from financing
31,722,066,906.40 14,003,754,499.97
activities
Cash repayments of borrowings 25,446,211,817.27 9,404,218,099.41
Cash payments for distribution of
dividends, profits, or cash payments for 953,234,131.28 674,578,631.48
interest expenses
Including: Cash payments for dividends
and profits to minority shareholders of the 5,932,783.34
subsidiaries
Cash payments relating to other
3,314,992,485.44 3,537,780,408.80
financing activities
Sub-total of cash outflow from financing
29,714,438,433.99 13,616,577,139.69
activities
Net cash flow from financing activities 2,007,628,472.41 387,177,360.28
101
Goertek Inc. Annual Report 2022
IV. Effect of foreign exchange rate
414,363,412.84 7,432,490.21
changes on cash and cash equivalents
V. Net Increase in cash and cash
1,662,092,566.77 2,224,708,917.50
equivalents
Add: Cash and cash equivalents at
9,137,900,902.04 6,913,191,984.54
beginning of year
VI. Cash and cash equivalents at end of
10,799,993,468.81 9,137,900,902.04
year
Legal representative: Jiang Bin Principal in charge of accounting: Li Head of the accounting department: Li
Yongzhi Yongzhi
6. Parent company cash flow statement
Unit: RMB
Item 2022 2021
I. Cash flows from operating activities:
Cash received from sale of goods or
44,433,843,690.52 41,440,959,868.63
rendering of services
Refund of taxes and surcharges 2,133,662,516.06 1,790,617,461.55
Cash received relating to other operating
444,026,016.74 413,354,244.31
activities
Sub-total of cash inflow from operating
47,011,532,223.32 43,644,931,574.49
activities
Cash paid for goods and services 35,135,811,819.24 33,515,828,921.22
Cash paid to and on behalf of employees 4,730,047,823.61 4,068,784,659.43
Payments of taxes and surcharges 204,340,880.43 194,091,540.85
Cash paid relating to other operating
2,185,115,476.07 1,609,432,568.10
activities
Sub-total of cash outflow from operating
42,255,315,999.35 39,388,137,689.60
activities
Net cash flow from operating activities 4,756,216,223.97 4,256,793,884.89
II. Cash flows from investing activities
Cash received from disposal of investments 292,167,856.22 236,295,118.62
Cash received from returns on investments 650,503,164.62 544,414.32
Net cash received from disposal of fixed
assets, intangible assets and other long-term 2,121,526,013.95 323,227,247.63
assets
Net cash received from disposal of
subsidiaries and other business units
Cash received relating to other investing
13,607,538,495.79 8,951,126,589.67
activities
Sub-total of cash inflow from investing
16,671,735,530.58 9,511,193,370.24
activities
Cash paid to acquire fixed assets, intangible
5,264,058,543.36 4,448,253,564.40
assets and other long-term assets
Cash paid to acquire investments 1,586,419,475.27 418,652,038.10
Net cash paid to acquire subsidiaries and
102
Goertek Inc. Annual Report 2022
other business units
Cash paid relating to other investing
17,199,579,824.51 8,806,986,219.18
activities
Sub-total of cash outflow from investing
24,050,057,843.14 13,673,891,821.68
activities
Net cash flow from investing activities -7,378,322,312.56 -4,162,698,451.44
III. Cash flows from financing activities
Cash received from capital contributions 118,837,699.32
Cash received from borrowings 24,900,350,751.32 9,085,440,334.00
Cash received relating to other financing
9,056,368,411.19 6,191,082,902.13
activities
Sub-total of cash inflow from financing
34,075,556,861.83 15,276,523,236.13
activities
Cash repayments of borrowings 22,139,255,620.15 7,202,245,451.93
Cash payments for distribution of dividends,
882,706,689.89 618,985,623.65
profits, or cash payments for interest expenses
Cash payments relating to other financing
10,020,646,445.56 6,373,227,380.30
activities
Sub-total of cash outflow from financing
33,042,608,755.60 14,194,458,455.88
activities
Net cash flow from financing activities 1,032,948,106.23 1,082,064,780.25
IV. Effect of foreign exchange rate changes on
59,283,372.51 -5,853,969.14
cash and cash equivalents
V. Net Increase in cash and cash equivalents -1,529,874,609.85 1,170,306,244.56
Add: Cash and cash equivalents at beginning
3,480,290,203.30 2,309,983,958.74
of year
VI. Cash and cash equivalents at end of year 1,950,415,593.45 3,480,290,203.30
103
Goertek Inc. Annual Report 2022
7. Consolidated statement of changes in shareholders' equity
Amount of current period
Unit: RMB
2022
Shareholders' equity attributable to the Company
Other
equity
instruments
Total
Item Less: Other General Minority
Specific Surplus Undistributed shareholders’
Preference shares
Perpetual bonds
Share capital Capital surplus Treasury comprehensive risk Other Sub-total interests
reserve reserve profits equity
stock income reserve
Other
I. Balance
-
at 3,416,321,036 9,478,106,194. 2,291,973, 1,446,536,121 6,081,200. 15,372,823,35 27,327,747,9 603,640,714 27,931,388,70
100,146,769.5
December .00 30 146.75 .51 00 8.48 93.97 .30 8.27
7
31, 2021
Add:
Changes in
accounting
policy
Corrections
of errors in
previous
period
Business
merger
under
common
control
Others
II. Balance 3,416,321,036 9,478,106,194. 2,291,973, - 1,446,536,121 6,081,200. 15,372,823,35 27,327,747,9 603,640,714 27,931,388,70
104
Goertek Inc. Annual Report 2022
at January .00 30 146.75 100,146,769.5 .51 00 8.48 93.97 .30 8.27
1, 2022 7
III. Changes
in Current
802,553,056.7 222,524,103.9 1,134,974,880. 2,164,134,20 162,302,040 2,326,436,245.
Period (“-” 4,082,164.00
3 3 86 5.52 .39 91
for
decrease)
(I) Total
222,524,103.9 1,749,181,131. 1,971,705,23 44,402,187. 2,016,107,423.
comprehens
3 83 5.76 50 26
ive income
(II) Capital
invested 858,469,728.2 862,551,892. 117,995,183 980,547,076.1
4,082,164.00
and reduced 2 22 .97 9
by owners
1. Common
shares 209,719,886.1 213,802,050. 179,264,458 393,066,508.8
4,082,164.00
invested by 3 13 .74 7
owners
2. Capital
contributed
from other
equity
instrument
holders
3. Amounts
of share-
based
payments 648,749,842.0 648,749,842. 10,626,166. 659,376,008.5
recognized 9 09 45 4
in
shareholder
s' equity
-
4. Other 71,895,441. -71,895,441.22
22
105
Goertek Inc. Annual Report 2022
-
(III) Profit - -
668,411,117.
distribution 668,411,117.00 668,411,117.00
00
1.
Appropriati
on of
surplus
reserve
2.
Appropriati
on of
general risk
reserve
3.
Dividends -
- -
to owners or 668,411,117.
668,411,117.00 668,411,117.00
shareholder 00
s
4. Other
(IV)
Internal
carry-over
of
shareholder
s' equity
1. Capital
surplus
converted
into capital
(or share
capital)
2. Surplus
reserve
converted
into capital
106
Goertek Inc. Annual Report 2022
(or share
capital)
3. Surplus
reserve for
making up
losses
4. Carry-
over
undistribute
d profits
from
defined
benefit plan
changes
5. Carry-
over
undistribute
d profits
from other
comprehens
ive income
6. Other
(V) Specific
reserve
1.
Withdrawal 9,450,078.
9,450,078.52 9,450,078.52
in current 52
period
2. Use in -
-
current 9,450,078. -9,450,078.52
9,450,078.52
period 52
-
(VI) Other -55,916,671.49 54,204,866.03 -95,331.08 -1,807,136.54
1,711,805.46
IV. Balance 3,420,403,200 10,280,659,25 2,291,973, 122,377,334.3 1,446,536,121 6,081,200. 16,507,798,23 29,491,882,1 765,942,754 30,257,824,95
at .00 1.03 146.75 6 .51 00 9.34 99.49 .69 4.18
107
Goertek Inc. Annual Report 2022
December
31, 2022
Amount in previous period
Unit: RMB
2021
Shareholders' equity attributable to the Company
Other equity
instruments
Total
Item Preference shares
Less: Other General Minority
Perpetual bonds Capital Specific Surplus Undistributed shareholders’
Share capital Treasury comprehensive risk Other Sub-total interests
surplus reserve reserve profits equity
Other
stock income reserve
I. Balance
-
at 3,275,438,42 317,690,852 3,811,658,79 516,007,64 1,370,122, 6,081,200 11,500,277,79 19,653,252, 80,418,514.8 19,733,670,78
112,010,012.5
December 7.00 .25 1.28 4.95 868.85 .00 1.35 273.26 3 8.09
2
31, 2021
Add:
Changes in
accounting
policy
Corrections
of errors in
previous
period
Business
combinatio
n involving
enterprises
under
common
control
Other
108
Goertek Inc. Annual Report 2022
II. Balance -
3,275,438,42 317,690,852 3,811,658,79 516,007,64 1,370,122, 6,081,200 11,500,277,79 19,653,252, 80,418,514.8 19,733,670,78
at January 112,010,012.5
7.00 .25 1.28 4.95 868.85 .00 1.35 273.26 3 8.09
1, 2022 2
III.
Changes in
-
Current 140,882,609. 5,666,447,40 1,775,965, 76,413,252 3,872,545,567. 7,674,495,7 523,222,199. 8,197,717,920.
317,690,852 11,863,242.95
Period (“-” 00 3.02 501.80 .66 13 20.71 47 18
.25
for
decrease)
(I) Total
193,810,124.2 4,274,702,999. 4,468,513,1 42,121,051.0 4,510,634,174.
comprehens
5 38 23.63 5 68
ive income
(II) Capital
-
invested 140,882,609. 4,080,674,27 1,999,998, 1,903,867,4 2,178,807,42 4,082,674,866.
317,690,852
and reduced 00 6.46 595.63 37.58 9.01 59
.25
by owners
1. Common
-
shares 140,882,609. 3,209,305,79 1,999,998, 1,034,005,0 2,178,807,42 3,212,812,514.
316,184,720
invested by 00 3.20 595.63 85.96 9.01 97
.61
owners
2. Capital
contributed
from other
equity
instrument
holders
3. Amounts
of share-
based
payments 871,368,483. 871,368,483 871,368,483.2
recognized 26 .26 6
in
shareholder
s' equity
4. Other - - -1,506,131.64
109
Goertek Inc. Annual Report 2022
1,506,131.6 1,506,131.6
4 4
- - -
(III) Profit 75,858,016
575,516,354.0 499,658,337 -5,932,783.34 505,591,121.0
distribution .34
9 .75 9
1.
Appropriati
75,858,016 -
on of
.34 75,858,016.34
surplus
reserve
2.
Appropriati
on of
general risk
reserve
3.
Dividends
- - -
to owners
499,658,337.7 499,658,337 -5,932,783.34 505,591,121.0
or
5 .75 9
shareholder
s
4. Other
(IV)
Internal
- - -
carry-over 1,585,773,12 173,358,921.8 1,801,773,4 110,000,000.0
224,033,09 181,946,881.3 555,236.32 1,691,773,49
of 6.56 4 97.25 0
3.83 0 7.25
shareholder
s' equity
1. Capital
surplus
converted
into capital
(or share
capital)
2. Surplus
110
Goertek Inc. Annual Report 2022
reserve
converted
into capital
(or share
capital)
3. Surplus
reserve for
making up
losses
4. Carry-
over
undistribute
d profits
from
defined
benefit plan
changes
5. Carry-
over
undistribute - -
173,358,921.8
d profits 181,946,881.3 555,236.32 8,032,723.1 8,032,723.14
4
from other 0 4
comprehens
ive income
- -
1,585,773,12 1,809,806,2 110,000,000.0
6. Other 224,033,09 1,699,806,22
6.56 20.39 0
3.83 0.39
(V)
Specific
reserves
1.
Withdrawal
in current
period
2. Use in
111
Goertek Inc. Annual Report 2022
current
period
(VI) Other
IV. Balance
-
at 3,416,321,03 9,478,106,19 2,291,973, 1,446,536, 6,081,200 15,372,823,35 27,327,747, 603,640,714. 27,931,388,70
100,146,769.5
December 6.00 4.30 146.75 121.51 .00 8.48 993.97 30 8.27
7
31, 2022
8. Parent company statement of changes in shareholders’ equity
Amount of current period
Unit: RMB
2022
Other equity
instruments
Other
Preference shares
Perpetual bonds
Item Less: Treasury Specific Total shareholders’
Share capital Capital surplus comprehensive Surplus reserve Undistributed profits Other
stock reserve equity
Other
income
I. Balance at
December 31, 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
2021
Add:
Changes in
accounting
policy
Corrections of
errors in
previous
period
Others
II. Balance at
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
January 1,
112
Goertek Inc. Annual Report 2022
2022
III. Changes in
Current Period
4,082,164.00 714,395,922.84 -1,027,188,647.78 -308,710,560.94
(“-” for
decrease)
(I) Total
comprehensive -358,777,530.78 -358,777,530.78
income
(II) Capital
invested and
4,082,164.00 714,395,922.84 718,478,086.84
reduced by
owners
1. Common
shares
4,082,164.00 114,831,273.32 118,913,437.32
invested by
owners
2. Capital
contributed
from other
equity
instrument
holders
3. Amounts of
share-based
payments
599,564,649.52 599,564,649.52
recognized in
shareholders'
equity
4. Other
(III) Profit
-668,411,117.00 -668,411,117.00
distribution
1.
Appropriation
of surplus
reserve
113
Goertek Inc. Annual Report 2022
2. Dividends
to owners or -668,411,117.00 -668,411,117.00
shareholders
3. Other
(IV) Internal
carry-over of
shareholders'
equity
1. Capital
surplus
converted into
capital (or
share capital)
2. Surplus
reserve
converted into
capital (or
share capital)
3. Surplus
reserve for
making up
losses
4. Carry-over
undistributed
profits from
defined benefit
plan changes
5. Carry-over
undistributed
profits from
other
comprehensive
income
6. Other
(V) Specific
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Goertek Inc. Annual Report 2022
reserves
1. Withdrawal
in current 9,450,078.52 9,450,078.52
period
2. Use in
-9,450,078.52 -9,450,078.52
current period
(VI) Other
IV. Balance at
December 31, 3,420,403,200.00 8,421,030,014.05 2,291,973,146.75 1,446,533,339.11 9,410,101,500.47 20,406,094,906.88
2022
Amount in previous period
Unit: RMB
2021
Other equity instruments
Preference shares
Perpetual bonds
Other
Item Less: Treasury Specific Undistributed Total shareholders’
Share capital Capital surplus comprehensive Surplus reserve Other
Other
stock reserve profits equity
income
I. Balance at
December 31, 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
2021
Add:
Changes in
accounting
policy
Corrections of
errors in
previous
period
Others
II. Balance at
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
January 1,
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Goertek Inc. Annual Report 2022
2022
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
(“-” for
decrease)
(I) Total
comprehensive 5,552,363.15 758,580,163.40 764,132,526.55
income
(II) Capital
invested and
140,882,609.00 -317,690,852.25 4,005,283,568.58 1,999,998,595.63 1,828,476,729.70
reduced by
owners
1. Common
shares
140,882,609.00 -316,184,720.61 3,209,305,793.20 1,999,998,595.63 1,034,005,085.96
invested by
owners
2. Capital
contributed
from other
equity
instrument
holders
3. Amounts of
share-based
payments
795,977,775.38 795,977,775.38
recognized in
shareholders'
equity
4. Other -1,506,131.64 -1,506,131.64
(III) Profit
75,858,016.34 -575,516,354.09 -499,658,337.75
distribution
1.
Appropriation
75,858,016.34 -75,858,016.34
of surplus
reserve
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Goertek Inc. Annual Report 2022
2. Dividends
to owners or -499,658,337.75 -499,658,337.75
shareholders
3. Other
(IV) Internal
carry-over of
-114,033,093.83 -224,033,093.83 -5,552,363.15 555,236.32 4,997,126.83 110,000,000.00
shareholders'
equity
1. Capital
surplus
converted into
capital (or
share capital)
2. Surplus
reserve
converted into
capital (or
share capital)
3. Surplus
reserve for
making up
losses
4. Carry-over
undistributed
profits from
defined benefit
plan changes
5. Carry-over
undistributed
profits from
-5,552,363.15 555,236.32 4,997,126.83
other
comprehensive
income
6. Other -114,033,093.83 -224,033,093.83 110,000,000.00
(V) Specific
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Goertek Inc. Annual Report 2022
reserves
1. Withdrawal
in current
period
2. Use in
current period
(VI) Other
IV. Balance at
December 31, 3,416,321,036.00 7,706,634,091.21 2,291,973,146.75 1,446,533,339.11 10,437,290,148.25 20,714,805,467.82
2022
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Goertek Inc. Annual Report 2022
III. Company Profile
Goertek Inc. (hereinafter referred to as ''the Company'' or ''Goertek'') was established on July 27, 2007, through an overall change of
WeiFang IEA Electro-Acoustic Co., Ltd. (hereinafter referred to as "IEA").
IEA, the predecessor of the Company, was a joint venture established by law on June 25, 2001. In May 2007, the Company was changed
to a domestic enterprise with the approval of the document of Wei Wai Jing Mao Wai Zi (2007) No. 172.
Based on the resolution of the 2nd extraordinary shareholders' meeting of IEA in 2007, held on June 26, 2007, Weifang Yitonggong
Electronics Co., Ltd (the name of the Company was changed to "Goertek Group Co., Ltd." in October 2016, hereinafter referred to as
"Goertek group") transferred its 29.40 million shares in IEA to 17 natural persons including Jiang Bin and Jiang Long, Langfang
Development Zone Yongzhen Electronic Technology Co., Ltd. (hereinafter referred to as "Yongzheng Electronic") and Beijing 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 Long jointly
entered into an initiator agreement, changing IEA as a whole to Goertek Acoustic Inc. in the form of initiation, in which the net assets
of IEA, audited on June 30, 2007, were taken as the capital contribution upon stock discount at a ratio of approximately 1:0.8
As approved by the document of China Securities Regulatory Commission [2008] No. 613, the principal undertaker CITIC Securities
Co., Ltd. issued 30 million common shares (Class A shares) through offline inquiry and placement in combination with online
subscription, pricing, and issue, at the price of RMB 18.78 per share. The raised funds mentioned above were verified by Bandung
Certified Public Accountants Co., Ltd. which issued the capital verification report (Wan Kuai Ye Zi [2008] No. 19). The stocks of the
Company were listed and traded at Shenzhen Stock Exchange on May 22, 2008. The Company changed its registered capital to RMB
120 million and completed the industrial and commercial change registration on July 22, 2008.
As reviewed and approved at the annual general meeting of shareholders of the Company of 2008, held on April 17, 2009, the total
share capital of the Company, namely 120 million shares as of December 31, 2008, was taken as the basis to convert capital surplus to
share capital. 10 bonus shares for every 10 shares were converted to all shareholders, with a total of 120 million shares converted. Thus,
the total share capital of the Company was changed to 240 million shares. The above change in the registered capital has been verified
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 the annual general meeting of shareholders of the Company of 2009, held on February 26, 2010, the total
share capital of the Company, namely 240 million shares as of December 31, 2009, was taken as the basis to convert capital surplus to
share capital. 5 bonus shares for every 10 shares were converted to all shareholders, and a total of 120 million bonus shares were
converted. Thus, the total share capital of the Company was changed to 360 million shares. The above change in the registered capital
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 by the China Securities Regulatory Commission in its Reply on Approving Non-public Issuing of Stocks by Goertek
Acoustic Inc. (Zheng Jian Xu Ke [2010] No. 1255), on September 29, 2010, the Company had the principal underwriter CITIC
Securities Co., Ltd. to issue 15.791275 million (Class A shares) to 5 specific objects through private issuing at the price of RMB 33.01
per share. The net amount of actual raised funds was RMB 506.21998775 million. The raised funds above have been verified by Crowe
Horwath Certified Public Accountants Co., Ltd. which has issued the capital verification report (Hao Hua Yan Zi [2010] No. 90. The
Company changed its registered capital to RMB 375.791275 million and completed the industrial and commercial change registration
on December 13, 2010.
As reviewed and approved at the annual general meeting of shareholders of the Company of 2010, held on May 25, 2011, the total
share capital of the Company, namely 375.791275 million shares as of December 31, 2010, was taken as the basis to convert capital
surplus to share capital. 10 bonus shares for every 10 shares were converted to all shareholders, and a total of 375.791275 million
bonus shares were converted. Upon such conversion, the total share capital of the Company was changed to 751.582550 million shares.
The above change in registered capital has been verified by Crowe Horwath Certified Public Accountants Co., Ltd. which has issued
the capital verification report (Guo Hao Yan Zi [2011] No. 49), and the industrial and commercial change registration was completed
on June 24, 2011.
As approved by the China Securities Regulatory Commission in its Reply on Approving Non-public Issuing of Stocks by Goertek
Acoustic Inc. (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 raised funds was
RMB 2,320.77885875 million. The raised funds mentioned above have been verified by Crowe Horwath Certified Public Accounts
Co., Ltd. (special general partnership) which has issued the capital verification report (Guo Hao Yan Zi [2012] No. 408A14). The
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Goertek Inc. Annual Report 2022
Company changed its registered capital to RMB 848,016,733 and completed the industrial and commercial change registration on May
7, 2012.
As reviewed and approved at the Company's general meeting of shareholders of 2012 held on May 9, 2013, the Company's total share
capital of 848,016,733 shares as of December 31, 2012, was taken as the basis for distributing cash dividends of RMB 1.5 (tax inclusive)
for every 10 shares to all the shareholders, with cash dividends of RMB 127,202,509.95 in total. The Company also converted capital
surplus to share capital, and 8 bonus shares for every 10 shares were converted to all shareholders, with a total of 678,413,386 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 and commercial 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 the Company
requested conversion of shares, the registered capital of the Company was changed to RMB 1,526,581,348. The scope of business was
changed to development, manufacturing and sales of: Acoustic, optical and wireless communication technologies and related products,
robots and automation equipment, intelligent electromechanical and information products, precision molds for electronic products,
precision hardware, semiconductor products and MEMS products, consumer electronics, LED package and relevant application
products; Development and sales of the software related to the above products; Services related to the above technologies and products;
Import and export of goods and technologies (excluding radio transmission and satellite receiving equipment, except for the items
prohibited by the national laws and regulations). (For the items requiring approval by law, business activities may only be conducted
in respect thereof upon approval of relevant department)
As reviewed and approved at the Company's annual general meeting of shareholders of 2016, held on April 14, 2017, the Company's
total share capital of 1,538,642,707 shares as of April 27, 2017, on which the profit distribution equity of the Company was registered,
was taken as the basis for the distribution of cash dividends RMB 1.5 (tax inclusive) for every 10 shares to all the shareholders, with a
total of RMB 230,796,406.05 distributed. 10 shares per every 10 shares were converted to all shareholders as well.
According to the Proposal on Redemption of ''Goertek Convertible Bonds'' reviewed and approved at the 8th meeting of the 4th Board
of Directors held by the Company on May 23, 2017, it was resolved to exercise the conditional redemption right of ''Goertek Convertible
Bonds'' to redeem all the unconverted ''Goertek Convertible Bonds'' at the price of the par value of the bonds plus the accrued interest
for current period. ''Goertek Convertible Bonds'' was no longer traded and converted from June 30, 2017. After the above change, the
Company changed its registered capital to RMB 3,245,103,948, and completed the industrial and commercial change registration on
November 3, 2017.
According to the Proposal on Early Redemption of ''Goertek Convertible Bonds No. 2'' reviewed and approved at the 13th meeting 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'' to redeem all the ''Goertek Convertible
Bonds No. 2'', at the price of the par value of the bonds plus the accrued interest for the current period. As of March 3, 2021, ''Goertek
Convertible Bonds No. 2'' was no longer traded and converted. After the above change, the Company changed its registered capital to
RMB 3,416,321,036, and completed the industrial and commercial change registration on June 22, 2021.
The Company's initial grant of certain stock options under the 2021 Stock Option Incentive Plan entered its first exercise period on
June 24, 2022. Due to employees' exercise of the right, the Company issued 4,082,164 Class A Shares to the incentive targets. The
share capital of the Company has been changed to RMB 3,420,403,200.
The registered address of the Company headquarters: 268 Dongfang Road, Weifang Hi-Tech Industrial Development Zone.
The Company and its subsidiaries (collectively, ''the Group'') are mainly engaged in the business of electronic components. The main
business of the Group is categorized into the industry of the manufacturing 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 smart earphones, virtual reality (VR)/augmented reality (AR) products,
smart wearable devices, gaming console and accessories, and smart home products.
These financial statements have been approved by the Board of directors of the Company on April 17, 2023.
As of December 31, 2022, the Group has included a total of 57 subsidiaries into its scope of consolidation, and for details, please refer
to Note IX “Equity in Other Entities”. In terms of consolidated scope, the Group in the current period gained 8 subsidiaries and disposed
of 2 subsidiaries compared with the previous year. For details, please refer to Note VIII "Changes in the Scope of Consolidation".
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Goertek Inc. Annual Report 2022
IV. Basis for Preparing the Financial Statement
1. Basis for the preparation
The Group has prepared the financial statements on a going concern basis, based on the actual transactions and matters in accordance
with The Accounting Standards for Business Enterprises - Basic Standards (issued by Order No. 33 of the Ministry of Finance and
amended by Order No. 76 of the Ministry of Finance) issued by the Ministry of Finance, 42 specific accounting standards, application
guidelines of accounting standards for business enterprises, explanations on the accounting standards for business enterprises and other
related regulations (hereinafter collectively referred to as "Accounting Standards for Business Enterprises") issued and amended on or
after 15 February, 2006, and Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No. 15 -
General Provisions on Financial Reports (2014 Revision) issued by CSRC.
According to relevant provisions in the Accounting Standards for Business Enterprises, the accounting calculation of the Group was
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 sales cost
at fair value, or the original book value at the time when the hold-for-sale conditions were met. In case of asset impairment, the
appropriate 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 financial statements
were prepared on a going concern basis.
V. Significant Accounting Policies and Accounting Estimates
Notes to specific accounting policies and accounting estimates:
The Group has formulated several specific accounting policies and accounting estimates in respect of the revenue recognition, research
and development costs and other transactions and matters, according to the provisions of relevant Accounting Standards for Business
Enterprises on the basis of the actual production and operation characteristics. For details, please refer to the descriptions in “32.
Revenue” and “24(2). Accounting policy for internal research and development costs” of Note V. For explanation on the major
accounting judgments and estimates made by the management, please refer to “37. Other important accounting policies and accounting
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 for
Business Enterprises, and give a true and complete view of the financial status of the Company and the Group as at December 31, 2022,
as well as the business performance, and cash flows and other relevant information for the year 2022. In addition, the financial
statements of the Company and the Group comply in all material aspects with the requirements concerning disclosure of the financial
statements and the notes specified in Preparation Rules for Information Disclosure by Companies Offering Securities to the Public No.
15 - General Provisions on Financial Reports (2014 Revision) by CSRC.
2. Accounting period
The accounting period of the Group is divided by annual accounting period and interim accounting period. Interim accounting period
means a reporting period that is shorter than a complete accounting year. The Company adopts the calendar year as its accounting year,
namely January 1 to December 31 of each year.
3. Business cycle
The normal business cycle means the period from the Group’s purchase of the assets for processing to realization of cash or cash
equivalents. The Group takes 12 months as a business cycle and adopts the business cycle as liquidity classification standard for assets
and liabilities.
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Goertek Inc. Annual Report 2022
4. Functional currency
RMB is the currency in the main economic environment in which the Company and its domestic subsidiaries are operated, and the
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 FUND LP and
Goertek Microelectronics Holdings Co., Ltd. take USD as their functional currency, and all other overseas subsidiaries of the Company
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 control
Business consolidation means the transaction or matter in which two or more separate enterprises are consolidated into one reporting
entity. Business consolidation is divided into business consolidation of enterprises under common control and business consolidation
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 are controlled by
the same party or parties before and after the consolidation, and such control is not temporary. In the business consolidation of
enterprises under common control, the party which acquires the control of other enterprises in the business consolidation is the
consolidating party and the other enterprises in the business consolidation are the consolidated parties. Business consolidation 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 on business
consolidation date. The difference between the book value of the net assets acquired by the consolidating party and the book value of
the consideration paid for the consolidation (or total par value of the shares issued) is adjusted to capital surplus (share capital
premiums). Adjustments shall be made to undistributed profits in the event that the capital surplus (share capital premiums) are not
sufficient for write-down.
Any direct costs incurred by the consolidating party as a result of the business consolidation are recognized in the profit or loss for
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 are not
controlled by the same party or parties before and after the business consolidation. In the business consolidation of enterprises not
under common control, the party which acquires the control of other enterprises in the business consolidation on the acquisition date
is the consolidating party and the other enterprises in the business consolidation are the acquired parties. Acquisition date is the date
on which the acquiring party actually acquires the control of the acquired parties.
In the business consolidation of enterprises not under common control, the cost of consolidation includes the fair value of assets paid,
liabilities incurred or assumed and equity securities issued by the acquiring party in exchange for the control of the acquired parties on
the acquisition date, the audit, legal service, assessment, consulting and other intermediate fees incurred for business consolidation of
enterprises, and other management fees, which are recognized in the profit or loss for the current period when incurred. The costs of
the acquiring party for issuing equity or debt securities as part of the business consideration for the business consolidation are included
in the initially recognized amount of these equity or debt securities. The contingent business consideration shall be included in the
consolidation cost at its fair value on the acquisition date, and the goodwill shall be adjusted and combined accordingly if the contingent
consideration needs to be adjusted when new or further evidences arise in connection with the circumstances existing on the acquisition
date within 12 months after the acquisition date. The acquisition cost incurred by the acquiring party and the identifiable net assets
acquired in the business consolidation shall be measured at the fair value on the acquisition date. If the consolidation cost is higher
than the fair value of the identifiable net assets acquired from the acquired parties on the acquisition date, the difference thereof shall
be recognized as the goodwill. If the consolidation cost is lower than the fair value of 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, the consolidation cost is still lower than the fair value of
the identifiable net assets acquired from the acquired parties in the business consolidation, 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 to meet
the conditions for recognition of the deferred tax assets on the acquisition date, and if new or further information is obtained within 12
months after the acquisition date, showing that relevant circumstances on the acquisition date have already existed and it is expected
that the economic benefits brought about by the deductible temporary difference of the acquiring party on the acquisition date may be
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Goertek Inc. Annual Report 2022
realized, relevant deferred tax assets shall be recognized and the goodwill shall be reduced. If the goodwill is insufficient for write-
down, the difference will be recognized in the profit or loss for current period. In addition to the above condition, the deferred tax
assets recognized in connection with the consolidation of enterprises shall be recognized in the profit or loss for current period.
If the business consolidation of enterprises not under common control is realized step by step through multiple transactions, whether
such transactions fall within a “package deal” shall be judged according to the standards for judgment of “package deal” in the Notice
by the Ministry of Finance of Issuing the Interpretation No. 5 of the Accounting Standards for Business Enterprises (Finance and
Accounting [2012] No. 19) and Article 51 of the Accounting Standards for Business Enterprises No. 33 - Consolidated Financial
Statements (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 accounting
treatment 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 the
acquisition date and the increased investment cost on the acquisition date shall be taken as the initial investment cost of such investment.
If other comprehensive income is involved in the equity of the acquired parties held before the acquisition date, the accounting treatment
of other comprehensive incomes while disposing such investment, shall be conducted on the same basis as the direct 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 at the
fair value of such equity on the acquisition date, and the difference between the fair value and its book value shall be recognized in
investment income in current period. If other comprehensive income is involved in the equity of the acquired parties held before the
acquisition date, the accounting treatment of other comprehensive incomes related, shall be conducted on the same basis as the direct
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 means that the
Group enjoys variable returns through its power in the invested parties and its participation in relevant activities of the invested parties,
and is able to influence the amount of such returns by applying its power in the invested parties. The Company and all its 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 relevant elements 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 and actual
control over the production and operation decisions of the subsidiaries. It shall cease to do so as of the date when the actual control is
lost. For the disposal subsidiaries, the business performance and cash flows prior to the disposal date have been appropriately included
in the consolidated income statement and consolidated statement of cash flows. The opening balance of the consolidated balance sheets
shall not be adjusted for the subsidiaries disposed in current period. For the subsidiaries added through the consolidation of enterprises
not under common control, the business performance and cash flows have been appropriately included in the consolidated income
statement and consolidated cash flow statement after acquisition date. The opening balance and comparative figures of consolidated
financial statements shall not be adjusted. For the subsidiaries added during consolidation of enterprises 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 and consolidated 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 are different from
those of the Company, the financial statements of the subsidiaries shall be adjusted based on the accounting policies and accounting
periods of the Company. The individual financial statements of the subsidiaries acquired from consolidation of enterprises 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 the
consolidated financial statements.
The shareholders' equity and current net profits or losses of the subsidiaries which are not owned by the Company shall be separately
listed under the shareholders' equity and net profit in the consolidated financial statements as minority interest and minority interests.
These current profits or losses of the subsidiaries which are attributable to the minority interest shall be presented as “minority interests”
under the net profit of the consolidated financial statements. If the losses of the subsidiaries attributed to the minority shareholders are
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Goertek Inc. Annual Report 2022
more than the shareholders’ equity owned by the minority shareholders in such subsidiaries at the beginning 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, the remaining
equity shall be re-measured at fair value on the date when control is lost. The difference between the sum of consideration received
from disposal of equity and the fair value of the remaining equity, and the Company’s share of the previous subsidiaries’ net assets
calculated at the previous shareholding proportion from the acquisition date, shall be recognized in investment income in the period
when control is lost. Other comprehensive income related to the equity investment of the previous subsidiaries shall be conducted 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 previous subsidiary, the remaining part
shall be converted into investment income for current period). Thereafter, such remaining equity shall be subject to subsequent
measurement according to the Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investments or Accounting
Standards for Business Enterprises No. 22 - Confirmation and Measurement of Financial Instruments and other relevant regulations.
For details, please refer to “18. Long-term equity investments” of Note V or “9. Financial instruments” of Note V.
If the Group disposes of the equity investment of the subsidiaries step by step through multiple transactions until it loses the control
thereof, it is necessary to determine whether such transactions fall within "a package deal". The multiple transactions shall be taken as
"package deal" for accounting treatment, if the terms, conditions and economic impacts of the transactions undertaken to dispose 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 be achieved only when these transactions when
taken as a whole; ③ one transaction depends on at least one of the other transactions; ④ one transaction is not economical on its own,
but it is economical when considered together with other transactions. If they do not fall within "package deal", each of them shall be
subject to accounting treatment according to the principles applicable to ''Partial disposal of the long-term equity investments in the
subsidiaries without losing control'' (for details, please refer to (2) ④ of 18 of Note V) and ''Loss of control of the previous subsidiaries
due to disposal of some equity investments or for any other reasons'', as appropriate. If the transactions taken to dispose of the equity
investment in the subsidiaries until loss of control are recognized as “package deal”, these transactions 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 a result of disposal of investment, shall be
recognized in other comprehensive income in the consolidated financial statements, and be included 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 into known 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 spot exchange
rate prevailing at the date of the transaction (it means, in most cases, the central parity of the foreign exchange rate announced by the
People's Bank of China on that day; the same hereinafter). However, a foreign currency exchange transaction or other foreign currency
exchange involved transaction of the Group is translated into the functional currency using the actual exchange rate.
(2) Translation method of monetary items denominated in foreign currencies and non-monetary items denominated in foreign
currencies
The foreign currency monetary items on the balance sheet date are 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 for the exchange difference of the
principal and interest of foreign currency special loans related to the acquisition and construction of assets eligible for capitalization.
Non-monetary items denominated in foreign currency that are measured at historical cost shall still be valued in the functional currency
and converted at the spot exchange rate as of the transaction date. Non-monetary items denominated in foreign currency that are
measured at fair value are converted by using the exchange rate at the date when fair value is determined and the difference between
the converted functional currency amount and the prior amount in functional currency is recorded as profit or loss arising from 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
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The foreign currency financial statements of overseas operations shall be converted into Chinese currency statements in accordance
with the following methods: The assets and liabilities items in the balance sheet are translated at the spot exchange rate on the balance
sheet date; except for "undistributed profits", other items of shareholder's equity are converted at the spot exchange rate at the time of
occurrence. Revenues and expenses in the profit statement are translated using the average exchange rates prevailing in the period of
the transactions. Undistributed profits in the beginning of the year are the undistributed profits at the end of the prior year as translated;
undistributed profits at the end of the period are calculated and presented according to the translated profit distributions; exchange
differences from translation between translated assets and translated liabilities and equities are recognized in other comprehensive
income as exchange differences from translation. When the Group disposes of, and loses the control over, an overseas operation,
exchange differences from translation which are presented in “equity” of the balance sheet and related to the overseas operation are,
all or based on the disposal proportion, transferred to the profit or loss of the period of disposal.
Cash flows denominated in foreign currencies and cash flows of overseas subsidiaries are translated using the average exchange rates
prevailing in the period of the cash flows. Any impact of exchange rate changes on cash is presented as a separate adjusting item 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 the prior
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 a disposal
of partial equity investments or any other reason, exchange differences which are presented in “shareholder’s equity/owner’s equity”
of the balance sheet, related to the overseas operation and attributable to the parent company are all transferred to the profit or loss 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 a disposal of
partial equity investments or any other reason, exchange differences which are related to that partial disposal are attributed to minority
interest 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 to the 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 the
consolidated financial statements, exchange differences from the exchange rate changes are recognized in other comprehensive income
as “exchange differences from translation”, and when the overseas operation is disposed, are transferred to the profit or loss of 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 other comprehensive
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 value through profit
and loss, the related transaction costs shall be included directly into current profits and losses. For the financial assets or financial
liabilities of other categories, the related transaction costs shall be included in the initially recognized amount. For the accounts
receivable or notes receivable arising from the sale of products or the provision of labor services, which do not include or consider
major financing components, the amount of consideration that the Group is expected to be entitled to is taken as the initially recognized
amount.
① Financial assets measured at amortized cost
The Group’s business model for managing financial assets is aimed to collect contractual cash flow, and the contractual cash flow
characteristics of such financial assets are consistent with the basic lending arrangement, i.e., the cash flow generated on a specific date
is only the payment of principal and interest based on the amount of outstanding principal. For such financial assets, the Group shall
perform subsequent measurements at the amortized cost by effective interest method. The gains or losses arising from amortization 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 sell it, and
the characteristics of contractual cash flow of this type of financial assets shall be consistent with the basic lending arrangement. The
Group measures these financial assets at fair value and the changes thereof shall be included in other comprehensive income, but the
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impairment losses or gains, exchange gains and losses and interest income calculated by the effective interest 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 at fair
value and the changes thereof shall be included in other comprehensive income. The Group will include the relevant dividend income
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 comprehensive income shall
be transferred out of other comprehensive income and transferred to the undistributed profits, other than being included in current
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 value through
other comprehensive income as mentioned above, are classified by the Group into those measured at fair value through profit and loss.
In addition, at initial recognition, part of the financial assets can be recognized by the Group as financial assets measured at fair value
through profit and loss, to eliminate or significantly reduce accounting mismatch. The financial assets are subsequently measured 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 other financial
liabilities. For the financial liabilities at fair value through profit and loss, the related transaction costs shall be included directly in
current profits and losses. For other financial liabilities, the related transaction costs shall be included in the initially recognized amount.
① Financial liabilities at fair value through profit and loss
The financial liabilities at fair value through profit and loss shall include financial liabilities held for trading (including derivatives
falling into the category of financial liabilities) and financial liabilities designated as those measured at fair value through profit or loss
at initial recognition.
Financial liabilities held for trading (including derivatives falling into the category of financial liabilities) shall be subsequently
measured at fair value. Except for hedging accounting, changes in fair value shall be included in current profits and losses.
The amount of change in the fair value of a financial liability which is designated as those measured at fair value through profit or loss
due to change in the Group’s own credit risks shall be included in other comprehensive income. Upon the termination of recognition
of such liability, the accumulative change in its fair value caused by the change of its own credit risk included in other comprehensive
income is transferred to undistributed profits. 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’s own 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 for derecognition
or continue to relate to the transferred financial assets and financial guarantee contracts shall be classified as financial liabilities
measured at amortized cost, which shall be subsequently measured at amortized cost, and the gains or losses arising from derecognition
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; ②The
financial asset has been transferred and almost all risks and rewards in the ownership of the financial asset have been transferred to the
transferee; or ③ The financial asset has been transferred and the enterprise has neither transferred nor retained almost 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 asset and if
the enterprise does not waive its control over the financial asset, it shall, according to the extent of its continuous involvement in the
transferred financial asset, recognize the relevant financial asset and recognize the relevant liabilities accordingly. The extent of
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 of the
transferred financial asset and the sum of the transfer consideration received and the change in fair value originally recognized in other
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 financial assets is
apportioned between the derecognized part and the non-derecognized part according to their respective relative fair values, and the
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difference between the sum of the transfer consideration received and the change in fair value originally recognized in other
comprehensive income and apportioned to the de-recognition component and the aforesaid attributed carrying value will be recognized
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 the risks and
rewards related to the ownership of the financial asset have been transferred. If all the risks and rewards related to the ownership of the
financial asset have been transferred to the transferee, the Group shall de-recognize the financial asset; If all the risks and rewards
related to the ownership of the financial asset have been retained, the Group shall not de-recognize the financial asset. 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 paragraphs shall apply.
(4) Derecognition of financial liabilities
When the current obligations of a financial liability (or part of it) have been discharged, the financial liability (or that part of the
financial liability) shall be de-recognized by the Group accordingly. When the Group (borrower) signs an agreement with a lender to
replace a financial liability with a new one, in case of substantially different terms of contract between the new one and the original
one, 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 new
financial liability shall be recognized in accordance with the modified terms.
If all (or a part of) the financial liability is de-recognized, the difference between the carrying value allocated to the derecognized part
and the consideration paid (including the transferred non-cash assets or the liabilities assumed) is included in current 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 the time
being, and the Group plans to settle on a netting basis or capitalize financial assets and serve financial liabilities, any net amount from
netting of financial assets and financial liabilities shall be included in the balance sheet. Otherwise financial assets and financial
liabilities shall be included separately in the balance sheet and shall not offset each other.
(6) Method of determining the fair value of financial assets and financial liabilities
Fair value refers to the price that market participants can receive by selling an asset or need to pay by transferring a liability in the
orderly transactions on the measurement date. The fair value of a financial instrument in an active market is determined by the Group
at the price quoted in the active market. The quotation in an active market refers to the price that is easily acquired from exchanges,
brokers, industry associations, pricing service agencies, and the like on a regular basis and represents the actual market transactions in
fair trade. If there is no financial instrument in an active market, its fair value shall be determined by the Group via valuation techniques.
Valuation techniques include looking into the prices used in recent market transactions by parties who refer to familiar situations and
trade voluntarily and the current fair value of other financial instruments which are essentially the same, as well as using the discounted
cash flow method, the option pricing model and the like. During valuation, the Group shall adopt the valuation 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 transactions of related assets or liabilities, and
give priority to the relevant observable input values as much as possible. The unobservable input values 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 a change
to equity. Transaction costs of an equity transaction are accounted for as a deduction from equity. The Group does not recognize
changes in the fair value of equity instruments.
If the Group's equity instruments distribute dividends (covering "interest" incurred by instruments classified as equity instruments)
during the existence thereof, the dividends shall be treated as profit distribution.
10. Impairment of financial assets
The financial assets for which the Group needs to recognize the impairment losses are financial assets measured at amortized cost,
which mainly include notes receivable, accounts receivable, other receivables, contract assets, and so on.
(1) Method for recognizing provision for impairment
Based on the expected credit loss, the Group shall make provision for impairment of the aforementioned items by its applicable
measurement method (general method or simplified method) of expected credit loss and recognize the credit impairment losses.
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Credit loss means the difference between all contractual cash flows receivable by the Group in accordance with the contract and all
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 effective interest rate
adjusted by credit of such financial assets.
According to the general methods to measure expected credit losses, the Group evaluates whether the credit risk of the financial assets
(including other applicable items; the same hereinafter) has increased significantly since the initial recognition at each balance sheet
date. If the credit risk of the financial instrument has increased significantly since the initial recognition, the Group measures its loss
allowance according to the amount equivalent to the expected credit loss of the financial instrument over its expected lifetime; if the
credit risk has not increased significantly since initial recognition, the Group measures its loss allowance according to the amount
equivalent to the expected credit loss of the financial instrument in the next 12 months. When assessing expected credit loss, the Group
gives consideration to all reasonable and well-founded information, including forward-looking information.
For financial instruments with relatively low credit risks on the balance sheet date, the Group assumes that their credit risks have not
increased significantly since initial recognition, and measures loss allowance based on the expected credit loss within the next 12
months.
(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 is significantly
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 recognition by estimating
the changes in lifetime risk of default occurring based on the changes in 12-month risk of default occurring as a reasonable.
(3) Grouping method for assessing the expected credit risks
The Group carries out separate credit risk evaluation for financial assets with significantly different credit risks, including receivables
in dispute with the other party or involving litigation or arbitration; accounts receivable where there are obvious signs that 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 into different
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 credit loss is
greater than the carrying value of its current provision for impairment, the difference shall be recognized as impairment loss; if it 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 expected credit losses of various financial assets
① Notes receivable
For note receivable, the Group measures loss allowance according to the amount equivalent to the expected credit loss over the lifetime.
Depending on their credit risk characteristics, notes receivable are classified into different groups:
Items Basis for determining groups
Bank acceptance notes The accepter is a bank with low credit risk
Commercial acceptance notes By accepter’s credit risk (the same as that of accounts receivable)
② Accounts receivable
For accounts receivable not containing significant financing components, the Group measures loss allowance according to the amount
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 is classified into different groups:
Items Basis for determining groups
Except for the receivables for which the loss allowance of impairment has been calculated separately, the Group
Accounts
shall determine, through present situation analysis, the proportion of allowance for bad debt based on the
receivable
expected credit loss rate of identical or similar receivables in previous years with similar credit risk
aging group
characteristics classified by aging
Related party The parent and subsidiary companies included in the consolidated financial statements are divided into groups
group according to equity relationship.
③ Other receivables and factoring receivables
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The Group measures impairment losses based on whether the credit risk of other receivables and factoring receivables has increased
significantly since initial recognition, using an amount equivalent to expected credit loss within the next 12 months or entire duration.
11. Notes receivable
For further details, please see this Note V. 9. “Financial Instruments” and 10. “Impairment of Financial Assets”.
12. Accounts receivable
For further details, please see this Note V. 9. “Financial Instruments” and 10. “Impairment of Financial Assets”.
13. Financing receivables
Notes receivable and accounts receivable which are classified as measured at fair value through other comprehensive income are
presented under “financing receivables” if they have original maturity up to one year (including one year) or under other debt
investments if they have original maturity more than one year. For relevant accounting policies, please see Note V. 9. ''Financial
Instrument'' and 10. ''Impairment of Financial Assets''.
14. Other receivables
Methods for determining and accounting the expected credit losses of 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. When
inventory 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 of completion, the
estimated selling expense and related taxes. In determining the net realizable value of inventory, based on obtained evidence, 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 value is lower
than its cost, the Group will make provision for inventory depreciation. The provision for decline in the value of inventories is generally
made at the difference between an inventory item’s cost and its net realizable value. For the inventory with a large quantity and
relatively low unit price, the inventory depreciation allowance is accrued based on the inventory category; for inventories associated
with product series manufactured and sold in the same area, with the same or similar end use or purpose, and are difficult to be measured
separately from other items, the depreciation allowances are consolidated and accrued. For raw materials with a large quantity and low
unit price, the provision of inventory depreciation is generally made according to the time the inventory has been kept.
After the provision of inventory depreciation is made, if the original trigger for inventory write-down has disappeared so that the net
realizable value of the inventory is higher than the carrying value, the amount of provision of inventory depreciation shall be reversed,
and the reversed amount shall be recognized in current profits and losses.
(4) The inventory system is a perpetual inventory system.
(5) Amortization method of revolving materials
The Group’s revolving materials include low-value consumables and packaging materials. Large revolving materials are amortized at
the time of receipt over months of the expected service life. Other low-value consumables are amortized at the time of receipt using
the one-off amortization method. Packaging materials are amortized at the time of receipt using the one-off amortization method.
16. Contract assets
The Group records the right where the customer has not paid the contract consideration but the Group has performed its contract
obligation and the Group is not prevented from being unconditionally paid by the customer (depending on the lapse of time only) as
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contract assets in the balance sheet. Contract assets and contract liabilities under the same contract are listed on a net basis. Contract
assets and contract liabilities under different contracts will not be offset.
Please refer to Note V. 10. "Impairment of Financial Assets" for details of the method for determining and accounting 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 as the
contract acquisition cost. However, if the amortization period for the asset does not exceed one year, the asset shall be recorded in
current profits and losses at the time of occurrence.
A cost incurred for performing a contract which does not fall within the regulated scope of accounting standards for business enterprises
other than Accounting Standards for Business Enterprises No. 14 - Income (revised in 2017) shall be recognized as an asset 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 the resources of the Group
for fulfilling its obligations in the future; and ③ such cost is expected to be recoverable.
The assets related to contract costs are amortized on the same basis as the revenue recognition of goods related to the assets, and are
recorded in the current profits and losses.
18. Long-term equity investments
Long-term equity investments in this part refer to the long-term equity investments through which the Group has control, joint control
or significant influence over investee. The long-term equity investments through which the Group does not have control, joint control
or significant influence over investee, is taken as a financial asset at fair value recorded in current profits and losses. If it is non-trading,
the Group can choose to designate it as a financial asset at fair value recorded in other comprehensive income at initial recognition.
For details about the relevant accounting policy, please see this Note V. 9. “Financial Instrument”.
Joint control refers to the Group’s common control of an arrangement in accordance with relevant agreement, and the relevant activities
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 operational policies, 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 value of
the stakeholders’ equity of the merged party in the consolidated financial statements of the final controlling party is regarded as the
initial investment cost of long-term equity investments on the combination date. If there is a difference between the initial investment
cost of long-term equity investments and the cash paid, non-cash assets transferred, and carrying value of liabilities assumed, the capital
surplus shall be adjusted. Where the capital surplus is insufficient to absorb the difference, undistributed profits shall be adjusted. The
investments cost which adopts the equity securities issued as the consideration should be adopted as the initial investments cost of the
long-term equity investments according to the proportion of the carrying value of the stakeholders’ equity of the merged party in the
consolidated financial statements of the final controlling party, and adjust the capital surplus by the difference between the initial
investments cost of long-term equity investments and the amount of issued stock’s face value (regarded as share capital). If the capital
surplus is insufficient to absorb the difference, undistributed profits should be adjusted. If the equity of the acquiree under the same
control is acquired step by step through multiple transactions leading to a merger of enterprises under the same control, the transactions
shall be confirmed whether they belong to a “package transaction”: If they belong to a “package transaction”, all transactions shall be
treated as one transaction over which the acquiree has control. If it is not a “package transaction”, the Group regards the initial cost of
the long-term equity investments as the proportion of the shareholders' equity of the acquired enterprise to the carrying amount in the
consolidated financial statements of the final controller at the date of combination. If there is a difference between the initial investments
cost of long-term equity investments on the date of combination and the sum of the carrying value of the long-term equity investments
before the merger plus the carrying value of the new share payment consideration on the date of combination, the capital surplus shall
be adjusted. Where the capital surplus is insufficient to absorb the difference, undistributed profits shall be adjusted. If the equity
investment held before the combination date is measured using the equity method or recorded as a financial asset at fair value in other
comprehensive income. The other comprehensive income recognized as a result will not be accounted temporarily.
For the acquisition of long-term equity investments involving enterprises under common control, the Group regards the initial cost 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 through multiple
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transactions leading to a merger of enterprises under different control, the transactions shall be confirmed whether they belong to a
“package transaction”: If they belong to a “package transaction”, all transactions shall be treated as one transaction over which the
acquiree has control. If it is not a “package transaction”, the sum of the carrying value of the original equity investments plus the new
investments cost is regarded as the initial investments cost of long-term equity investments calculated by the cost method. If the
previous equity is measured using the equity method, the relevant other comprehensive income will not be accounted temporarily.
Acquisition-related costs including auditing fees, legal services fees, valuation advice fees and other relevant management fees are
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 such cost is
determined at the amount of cash paid by the Group, the fair value of the equity securities issued by the Group, the value agreed in an
investment 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 the acquisition of the long-term
equity investments are also included in the investment cost. If additional investments addition has a significant influence over investee,
or jointly control other than the control over investee, the cost of long-term equity investments shall be the sum of the fair value of the
original equity investments determined according to Accounting Standards for Business Enterprises No. 22 - Recognition and
Measurement of Financial Instruments and the cost of the additional investment.
(2) Method of subsequent measurement and recognition of profits and losses
The long-term equity investments through which the Group has joint control (except for joint operation) or significant influence over
investee shall be calculated by the equity method. The Group's financial statements use the cost method to calculate long-term equity
investments that constitutes control over invested entities.
① Long-term equity investments calculated by cost method
Under the cost method, a long-term equity investment is measured at initial investments cost. Increasing or reducing investments will
adjust the cost of long-term equity investments accordingly. Except for actual price paid when the investment is obtained or the cash
dividends or profits that are included in the consideration that has been declared but not yet disbursed, the current investment income
shall be recognized according to the cash dividends or profits declared by the invested entity.
② Long-term equity investments accounted by equity method
When the initial investments cost of long-term equity investments accounted under equity method is greater than the investments, the
difference in the fair value share of the identifiable net assets of the invested entity is enjoyed, without adjusting the initial investments
cost of long-term equity investments; when the initial investments cost is less than the investments, the difference in the fair value
share of the identifiable net assets of the invested entity is included in the current profits and losses, and the cost of long-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 realized by the
invested entity, the investments income and other comprehensive income shall be recognized respectively, and the book value of the
long-term equity investments shall be adjusted; the book value of the long-term equity investments is reduced correspondingly in
accordance with the portion of the profits or cash dividends declared and distributed by the invested entity; for changes in owner’s
equity other than net profit and loss, other comprehensive income and profit distribution of the invested entity, the book value of long-
term equity investments shall be adjusted and included in capital surplus. The share of net profit and loss of the invested entity shall be
recognized, based on the fair value of various identifiable assets of the invested entity when the investment is made, after adjustment
of the net profit of the invested entity. When the accounting policy and accounting period adopted by the invested entity are inconsistent
with those of the Group, the investment income and other comprehensive income shall be recognized based on the adjusted 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, unrealized profits or losses resulting
from the transactions are recognized as investment income or loss to the extent that those attributable to the Group's equity interest are
eliminated. However, unrealized losses resulting from the Group's transactions with its invested entity in respect of impairment losses
on the transferred assets should not be eliminated. If the asset invested by the Group to its associates and joint ventures constitutes a
business, to the extent that the investor realizes long-term equity investments other than control, the fair value of the invested business
shall be the initial investments cost of the additional long-term equity investments, and the difference between the initial investments
cost and the carrying value of the invested business shall be recorded in the profit or loss of the current period. If the asset sold by the
Group to its associates and joint ventures constitutes a business, the difference between the consideration received and the carrying
value of the invested business shall be recorded in the profit or loss of the current period. If the asset purchased by the Group from its
associates or joint ventures constitutes a business, the accounting shall be made pursuant to the Accounting Standards for Business
Enterprises No. 20 - Business Combination shall apply, the gain or loss from the transaction shall be fully recognized.
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The Group de-recognizes its share of net losses of the invested entity after the carrying amount of the long-term equity investments
together with any long-term interests that substantially constitute part of its net investments in the invested entity shall be written down
to zero. In addition, if the Group has the obligation to bear additional losses to the invested entity, the provisions 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 its share of the profits exceeds the share
of losses previously not recognized.
③ Acquisition of minority interest
When preparing consolidated financial statements, if there is a difference between the new long-term equity investments acquired as 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 surplus shall be adjusted. Where capital surplus is insufficient to offset
the difference, the undistributed profits are adjusted.
④ Long-term equity investments disposal
In consolidated financial statements, where a parent company partially disposes of a long-term equity investment in a subsidiary without
losing the control over it, the difference between the disposing price and the net assets of the subsidiary obtained from the disposal of
the long-term equity investments shall be recognized in the shareholder's equity. If it's partial disposal by a parent company of a long-
term equity investment in a subsidiary and the control over the subsidiary is lost, the accounting policy stipulated in this Note V. 6. (2)
"Method for Preparing the Consolidated Financial Statements" shall apply.
For disposal of long-term equity investments in other situations, the difference between the disposed equity’s book value and the actual
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 for long-term equity investments,
other comprehensive income previously recorded as shareholders' equity is disposed in proportion, subject to the accounting treatment
applicable to the assets or liabilities related to direct disposal of the invested entity. The equity recognized by the Group, other than the
change of the net profits and loss, other comprehensive income and profit distribution of the invested entity, is transferred to current
profits and losses in proportion.
When the Group reduces its ownership interest but the Group continues to use the cost method for long-term equity investments, for
the other comprehensive income recognized by the Group using equity method prior to the control over the investee or under financial
instrument recognition and measurement standard, other comprehensive income previously recorded as shareholders’ equity is subject
to the accounting treatment applicable to the assets or liabilities related to direct disposal of the invested entity and is transferred to
current profits and losses in proportion. Then the other changes in shareholders’ equity recognized by the Group using equity method,
not arising from the change of the net profits and loss, other comprehensive income or profit distribution of the invested entity, are
reclassified to profit and loss in proportion.
If the Group loses its control over the invested entity due to the disposal of a portion of an equity investment, the equity method is
adopted in the preparation of individual financial statements when the remaining equity allows the Group to exercise joint control or
hold significant influence on the invested entity, and the remaining equity after disposal is regarded as being adjusted by the equity
method at the time of acquisition; if the remaining equity after disposal does not allow the Group to exercise joint control or hold
significant influence on the invested entity, it is calculated in accordance with the relevant provisions of financial instrument recognition
and measurement standards, and the difference between the fair value and the book value on the day when the control is lost is recorded
in current profits and losses. If other comprehensive income recognized, using the equity method or under the standards for recognition
and measurement of financial instruments before the Group obtains the control over the invested entity, is subject to the accounting
treatment applicable to the assets or liabilities related to direct disposal of the invested entity when the control over the invested entity
is lost, changes in the shareholders’ equity of the net assets of the invested entity recognized using the equity method, except for net
profits and losses, other comprehensive income and profit distributions, shall be transferred to current profits and losses when the
control over the invested entity is lost. Other comprehensive income and other shareholders’ equity are transferred in proportion when
the remaining equity after disposal is calculated by the equity method. If the remaining equity after disposal is calculated in accordance
with the standards for recognition and measurement of financial instruments, other comprehensive income and other shareholders’
equity are transferred in full.
If joint control or significant influence on the invested entity is lost by the Group due to the disposal of some equity investments, the
remaining equity after disposal is calculated according to the financial instrument recognition and measurement standards. The
difference between the fair value and the book value on the day when joint control or significant influence is lost is recorded in current
profits and losses. Other comprehensive income of the equity investment previously recognized using the equity method is subject to
the accounting treatment applicable to the assets or liabilities related to direct disposal of the invested entity when the Group stops
using the equity method. Shareholders’ equity recognized by the Group, other than the change of the net profits and loss, other
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comprehensive income and profit distribution of the invested entity, is reclassified to profit and losses fully when the Group stops using
the equity method.
The equity investments in the subsidiary is disposed of step by step by the Group through multiple transactions until the control is lost.
The aforementioned transactions, if belong to package transactions, are disposed as one transaction for disposal of the equity
investments of the subsidiary and loss of control. The difference between the price of each disposal before the control is lost and the
carrying value of long-term equity investments related to the disposed equity are recorded in other comprehensive income, and then
transferred to the profit or loss of the current period when the control is lost.
19. Investment properties
Measurement of investment properties
Measurement by cost method
Depreciation or amortization method
Investment properties mean the properties held for the purpose of rent earning or capital appreciation, or both. It includes the land use
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 properties, 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 the intention
of holding will not change in the short term.
Investment properties are initially measured at cost. Subsequent expenses related to investment properties shall, if economic profits
related to the property are likely to be gained and its costs can be measured reliably, be recorded as the cost of investment properties.
Other subsequent expenditures are recorded in the current profits and losses when incurred.
The Group adopts the cost model for subsequent measurement of investment properties. The investment properties are depreciated or
amortized in accordance with policies consistent with building or land use rights.
For method of impairment test and method of provision for impairment of investment properties, please see this Note V. 25.
“Impairment of Long-term Assets”.
When self-use properties or inventories are converted to investment properties, or investment properties are converted to self-use
properties, the value after the conversion shall be recognized at the carrying value before the conversion.
When investment properties are disposed or permanently withdrawn from use and is not expected to obtain economic benefits from its
disposal, the investment properties shall be de-recognized. The disposal income from the sale, transfer, abandonment or destruction of
investment properties less its carrying value and relevant taxes shall be recognized in current losses and profits.
20. Fixed assets
(1) Recognition criteria
Fixed assets mean the tangible assets held with a service life exceeding one fiscal year for the production of goods, provision of labor
services, leasing or management. Fixed assets may be recognized when they meet the following conditions: Economic benefits relating
to the fixed asset are likely to be gained by the Group, and the cost of the fixed asset can be measured reliably. Fixed assets are 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
Straight-line method 5 years 5%-10% 18%-19%
equipment
(3) Recognition basis, valuation and depreciation method of fixed assets leased by financing
See Note 35. “Lease” for details
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21. Construction in progress
The cost of construction in progress is determined at the actual construction expense, including various construction expenditures
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 working condition 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 exchange differences due
to foreign currency borrowing, etc. Borrowing costs that can be directly attributable to the acquisition, construction or production of
assets eligible for capitalization shall be capitalized when the asset expenditure has been incurred, the borrowing cost has been incurred,
and the acquisition, construction or production necessary to make the asset reach the predetermined conditions for use or sale has
started, and the capitalization shall discontinue when the constructed or produced assets eligible for capitalization reach the
predetermined conditions for use or sale. The remaining borrowing costs are recognized as costs at the time of occurrence.
The amount to be capitalized is the actual interest expense incurred on the specific borrowings less any bank interest earned from
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 the excess amounts
of cumulative expenditures on the asset over and above the amounts of the specific borrowings. Capitalization rate is calculated 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 fully capitalized,
and exchange differences arising from general borrowings in a foreign currency shall be recognized in profits and losses.
Assets eligible for capitalization refer to fixed assets, investment properties, inventories and other assets that need to go through quite
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 production and
continues over 3 months, the capitalization of borrowing costs shall cease and shall not restart until the acquisition, construction or
production of such assets resume.
23. Right-of-use assets
See Note 35. “Lease” for details
24. Intangible assets
(1) Valuation method, service life and impairment test
Intangible assets mean the identifiable non-monetary assets owned or controlled by the Group without physical substance.
The intangible assets shall be initially measured at cost. Expenses related to the intangible assets are recognized in the cost of intangible
assets when it is likely that the associated economic benefits will be gained by the Group and the associated costs can be measured
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 cost from
buildings such as self-built factory, etc. are recognized as intangible assets and fixed assets, respectively. In the case of purchased
buildings, related costs are shared between the cost of land use rights and the cost of buildings. The related costs that cannot be allocated
reasonably are recognized as fixed assets.
When intangible assets with a finite useful life are available for use, their original cost is amortized over their estimated useful life
using the straight-line method. Intangible assets with uncertain service life shall not be amortized.
For intangible assets with a finite useful life, the Group reviews their useful life and amortization method at the end of the period, and
accounts for any change as a change in an accounting estimate. For intangible assets with uncertain service life, the Group reviews
their useful life. If it is evident that the duration of associated economic benefits is predictable, the useful life is estimated and the asset
is amortized pursuant to amortization policies for intangible assets with finite useful life.
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(2) Accounting policy for internal research and development costs
The expenditure for research and development projects in the Group is divided into research phase expenditure and development phase
expenditure.
The classification into the expenditure in the research phase or the expenditure in the development phase in relation to internal R&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 acquire and
understand new scientific or technical knowledge. The research is the preparation in documents and other aspects for further
development. It is very uncertain whether the completed research will move onto the development phase and whether the development
will lead to the emergence of an intangible asset. Therefore, the Group includes the expenditures in the research phase in 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 other
knowledge 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 or
technology have been established. Thus, the Group recognizes the expenditures in development phase eligible for capitalization as
intangible assets. Gross expenditures incurred in the period from the point when the conditions for capitalization are satisfied to the
point when intangible assets are ready for the intended purpose are capitalized. No adjustment will be made further for any expenditure
that has been included in expense and recognized in profit or loss before the same intangible assets have met the conditions for
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 The ways in which intangible assets generate economic benefits, including the proof that there is a market for the product produced
using the intangible assets or for the intangible assets. Where the intangible assets are used internally, their usefulness shall be proved;
④ Having sufficient technical, financial and other resources to complete the development of the intangible assets, and having the
ability to use or sell the intangible asset;
⑤ Expenditures attributable to the development phase of the intangible assets can be measured reliably.
If it is impossible to distinguish between expenditures in the research phase and expenditures in the development phase, the R&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,
investment properties measured at cost, and long-term equity investments in subsidiaries, associates and joint ventures, the Group
assesses whether there is an indication of impairment at the date of balance sheet. If there is such an indication, the Group estimates
the recoverable amount and carries out an impairment test. An impairment test shall be conducted every year for intangible assets with
uncertain goodwill and service life and those have not yet reached the usable state, regardless of whether there are signs of impairment.
If the impairment test results show that the recoverable amount of an asset is lower than its book value, the provision for impairment
is accrued according to the difference and is recorded in the impairment loss. The recoverable amount is the higher of the net 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 sales contract, if
there is an active market for the asset, the best information available is used as a basis to estimate the fair value of the asset. Disposal
expenses include legal fees, taxes and transportation fees related to the disposal of an asset, and direct expenses incurred to make the
asset salable. The present value of expected future cash flows of an asset is measured by applying an appropriate discount rate to the
expected future cash flows generated during the continuous use of the asset at the time of final disposal. The asset impairment provision
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is calculated and recognized on the basis of individual assets. In the case of difficulty in estimating the recoverable amount of an
individual asset, the recoverable amount of the asset group to which the individual asset belong 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 business combinations is
allocated to relevant asset groups or asset group portfolios. If the test results show that the recoverable amount of asset groups or asset
group portfolio containing allocated goodwill is lower than its book value, the corresponding impairment loss shall be recognized. The
amount of impairment loss shall firstly be deducted from the carrying amount of goodwill embodied in the asset groups or asset group
portfolios, then be deducted from the carrying amounts of other assets based on the proportions of their carrying 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 prepaid expenses
Long-term prepaid expenses refer to expenses that have already incurred but should be borne by the current and future instalments for
a period of more than one year. Long-term prepaid expenses shall be amortized according to the straight-line method within the
estimated period of benefit.
27. Contract liabilities
Contract liabilities are defined as the Group's obligation to transfer goods to a customer for received or receivable consideration from
the customer. The Group presents as contract liabilities, at the earlier time point of actual payment by a customer or the payment due,
if the Group has paid the contract consideration or the Group has acquired the right to collect unconditionally before the goods are
transferred by the Group to the customer. Contract assets and contract liabilities under the same contract are listed on a net basis.
Contract assets and contract liabilities under different contracts will not be offset.
28. Employee remuneration
(1) Accounting treatment of short-term remuneration
Short-term employee benefits include employee wages or salaries, bonuses, allowances and subsidies, employee welfare fees, medical
insurance contributions, maternity insurance contributions and work injury insurance contributions, housing provident fund
contributions, union running costs and employee education costs, and non-monetary benefits. During the accounting period when the
employees provide services for the Group, the short-term remuneration actually incurred is recognized as a liability and recorded in
the current profits and losses or related asset costs. The non-monetary welfare in short-term remuneration should be measured at fair
value.
(2) Accounting treatment of post-employment benefits
Post-employment benefit mainly covers basic pension insurance and unemployment insurance. Most of post-employment benefit plans
are mainly defined benefit plans. The defined benefit plans of the Group are basic pension insurance and unemployment insurance, 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 proposed compensation
for encouraging the employee to accept the redundancies voluntarily, if the Group cannot unilaterally withdraw the termination benefits
provided by the termination of labor relations plan or reduction proposal, and the Group recognizes the costs related to the
reorganization involving the payment of the termination benefits (whichever comes first), the employee remuneration liabilities arising
from the termination benefits are recognized and recorded in the current profits and losses. However, termination benefits which are
expected not to be fully paid within twelve months after the end of the annual reporting period are accounted for as other long-term
employee remuneration.
Internal employee retirement programs are accounted for, using the above method applicable to termination benefits. The Group
recognizes in the profit or loss of the current period (termination benefits) employee salaries and contributions to the employee's social
insurance covered by its internal retirement program from the day when the employees stop their services until their statutory retirement
dates, when the conditions for provisions are satisfied.
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(4) Accounting treatment of other long-term employee benefits
If other long-term employee benefit provided by the Group for its employees constitutes the defined contribution plan, the accounting
treatment for the defined contribution plan applies. In any other circumstance, the accounting treatment for the defined benefit plan
applies.
29. Lease liabilities
For recognition methods and accounting of lease liabilities, please see this Note V. 35. “Lease”.
30. Provisions
Obligation relating to a contingent are recognized as provisions when they meet the following conditions: (1) the Group has a present
obligation related to a contingency; (2) it is probable that an outflow of economic benefits will be required to settle the obligation; and
(3) the amount of the obligation can be measured reliably.
Provisions are measured against the best estimate of the consideration required to settle the present obligation at the balance sheet date,
taking into account factors pertaining to a contingency such as the risks, uncertainties and time value of money.
If all or part of the expenses required to settle the provisions are expected to be compensated by a third party, the amount of
compensation is recognized separately as an asset when it is basically recognized that it can be received, and the recognized
compensation amount doesn’t exceed the book value of the provision.
31. Share-based payment
(1) Accounting treatment of share-based payment
Share-based payment is a transaction where equity instruments are granted or equity instrument-based liabilities are assumed for the
consideration of the services provided by employees or other parties. Share-based payment is classified into cash-settled share-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 the fair
value of equity instruments on the date of grant to the employees. In the case that the right can be exercised after the completion of
services in the waiting period or satisfaction of stipulated performance conditions, the fair value amount shall, on the basis of the best
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 or expense
on the grant date, and the capital surplus is increased accordingly.
On each balance sheet date during the waiting period, the Group makes the best estimate based on the latest available follow-up
information such as changes in the number of employees with vested rights, and revises the estimated number of equity instruments
with vesting. The impact of the above estimation is recorded in the cost or expense of the current period, and the capital surplus adjusted
accordingly.
Equity-settled share-based payments made for the consideration of the services provided by other parties shall, if the fair value of the
services can be measured reliably, is measured at fair value at the date of acquisition, and if the fair value of the services cannot be
measured reliably but the fair value of the equity instruments can be measured reliably, is measured at fair value at the date of
acquisition. They are recorded in the cost or expense, and the shareholder’s equity is increased accordingly.
② Cash-settled share-based payment
Cash-settled share-based payment shall be measured according to the fair value of liabilities determined on the basis of shares or other
equity instruments undertaken by the Group. In the case that the right is exercised immediately after the grant, it is recorded in relevant
cost or expense, and the liability is increased accordingly. If the right is exercised only after the completion of services in the waiting
period and satisfaction of stipulated performance conditions, on each balance sheet date within the waiting period, based on the best
estimate of the vesting condition and according to the fair value of the liabilities assumed by the Group, the services acquired in 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 be re-measured,
and the changes shall be recorded in the current profits and losses.
(2) Accounting treatment related to modification and termination of share-based payment plan
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When the Group modifies the share-based payment plan, if the fair value of the granted equity instruments is increased by modification,
the increase of the services acquired shall be recognized according to the increase of the fair value of the equity instruments. The
increase of fair value of equity instruments refers to the difference between the fair values of equity instruments before and after
modification on the modification date. If the total fair value of share-based payment is reduced by modification or other ways that are
unfavorable to employees, the accounting treatment of the acquired services will continue, as if the change never happened unless the
Group cancels some or all of the granted equity instruments.
During the waiting period, if the granted equity instruments are canceled, the Group will treat the cancellation of the granted equity
instruments as accelerated exercise, and immediately record the amount to be recognized in the remaining waiting period into the
current profits and losses, and recognize the capital surplus 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 equity instruments.
32. Revenue
Accounting policies adopted for revenue recognition and measurement
(1) Principles of revenue recognition
If a contract between the Group and a customer meets the following conditions, revenue is recognized when the customer obtains the
control over the goods: the parties to the contract have approved the contract and pledged to perform their obligations; the contract
defines the rights and obligations of the parties about transfer of the goods or provision of the services; the contract contains payment
terms about the proposed transferred goods; the contract has commercial substance, which means that the performance of the contract
would change the risks, time distribution or amount of the future cash flows of the Group; and the consideration to which the 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 goods
committed by the individual performance obligations. The trading price is determined by taking into account of the influence of variable
consideration, major financing components in the contract, non-cash consideration, consideration payable to customers and other
factors.
If each individual performance obligation under the contract meets any of the following conditions, the Group will, according to the
progress of performance in the relevant performance period, recognize the part of trading price apportioned to the individual
performance obligation as a revenue: the customer obtains and consumes economic benefits from the performance by the Group at the
time of performance; the customer has control over the goods in production during the performance by the Group; the goods produced
during the performance by the Group have irreplaceable use, and the Group is entitled to be paid for the completed part of the obligation
up to now in the entire contract period. The performance schedule is determined by output method or input method according to the
nature of the goods transferred. If the performance schedule cannot be reasonably determined and the incurred costs of the Group are
expected to be compensated, the revenue is recognized according to the amount of the incurred costs until the performance 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 the customer obtains the
control over the goods, the Group considers the following indications: the Group enjoys the current right to be paid 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 physically to the customer, and the
customer has possessed the goods in kind; the Group has passed on to the customer major risks and rewards of the ownership of the
goods, and the customer has received the major risks and rewards of the ownership of the goods; the customer has accepted the goods;
and any other indication that the customer has obtained the control over the goods.
(2) Specific methods for revenue recognition
① Domestic sales
A. General sales mode
The Group arranges production according to a sales contract or order with a customer; upon shipment from the warehouse, the products
are transported and delivered to the place of delivery designated by the customer; the customer’s warehousing employee checks the
quantity of the products and also carries out a spot check for the quality of the products; after the quantity and quality are accepted, the
employee will sign and stamp on the receipt for confirmation. The revenue is recognized when the Group obtains the signed and
stamped receipt or when the Group obtains the signed and stamped receipt and makes a reconciliation with the customer.
B. VMI sales mode
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The Group arranges production according to a sales contract or order with the customer; upon shipment from the warehouse, the
products will be transported and delivered to the delivery place designated by the customer; the customer's warehouse personnel checks
the quantity of the products and also carries out a spot check for the quality of the products; after the quantity and quality are accepted,
the warehouse personnel will sign and stamp on the receipt for confirmation. Sales revenue will be recognized based on the actual
receipt of goods by the customer and reconciliation with the customer.
② Overseas sales
A. General sales mode
The Group arranges production according to a sales contract or order with a customer; the export delivery is made through customs
clearance after the products are verified as qualified through inspection; for the purpose of delivering the products, the revenue is
recognized at the time of control transfer depending on specific terms of trade.
B. VMI sales mode
The Group arranges production according to a sales contract or order with a customer; the export is made through customs clearance
after the products are verified as qualified through inspection; after the Group completes export declaration formalities and obtains an
export declaration form, and the products are transported to the place designated by the customer, the revenue is recognized 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 of charge,
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-related government subsidies refer
to the government subsidies obtained by the Group and used for acquiring or forming long-term assets by other means. Other
government subsidies are defined as government subsidies related to income. If no target of grants is specified in government
documents, government subsidies are classified into government subsidies related to assets and government subsidies related to income
as follows: (1) if the government document stipulates grants for a defined project, the grants will be divided according to the proportion
of expenditures transformed into assets and expenditures recorded in expenses in the budget of the defined project, and the proportion
will be reviewed at each balance sheet date and be changed if necessary; and (2) if the government document contains general statement
on the purpose of grants, other than a defined project, the grants will be treated as government subsidies related to income. Government
subsidies in the form of monetary assets shall be measured at the amount received or receivable. Government subsidies in the form of
non-monetary assets shall be measured at fair value. If the fair value cannot be reliably acquired, the government subsidies shall be
measured at nominal amount. Government subsidies measured at nominal 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 received amounts.
However, at the end of the period, the subsidy shall be measured according to the amount receivable when there is conclusive evidence
that it can meet the relevant conditions stipulated by the financial support policy and is expected to receive financial support funds. A
government subsidy measured at the amount receivable shall meet the following conditions: (1) the amount of grant receivable has
been confirmed in a governmental document or can be reasonably estimated according to any officially 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 officially released and proactively disclosed
by local fiscal authority according to the Government Information Disclosure Regulations, and the measures are inclusive (applicable
to any eligible enterprise), other than for specific enterprises; (3) the relevant grant approval document 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 be met 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 in stages
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 are recorded in
current profits and losses during the period when the related costs or losses are recognized; those received as compensation for related
costs or losses incurred are directly included in current profits and losses.
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If a government subsidy contains an asset-related component and an income-related component, the two components are subject to
separate accounting treatment. If it is difficult to distinguish them, the subsidy shall be classified as income-related government
subsidies.
Government subsidies related to the daily operating activities of the Group shall be recorded in other income according to the nature
of operating business. Government subsidies unrelated to the daily activities are recorded in non-operating income.
Where any recognized government subsidy needs to be returned, in the case of related deferred income balance, the carrying amount
of the deferred income balance shall be written down, and any excess shall be recognized in the profit or loss of the current period. 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 amount expected
to be paid (or returned) according to the requirements of tax laws. The taxable income as basis for the current income tax expense is
calculated after appropriate adjustment is made to the pre-tax accounting profit of the year according to the requirements of tax laws.
(2) Deferred tax assets and liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and their tax bases, or between the carrying
amounts of those items that are not recognized as assets or liabilities and of which the tax bases can be determined according to 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 liability arising
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 with investments
in subsidiaries, associates and joint ventures, if the Group is able to control the timing of the reversal of the temporary difference and
it is probable that the temporary difference will not reverse in the foreseeable future, no deferred tax liability is recognized. Except for
the above exceptions, the Group recognizes deferred tax liabilities arising from all other taxable temporary differences.
For temporary differences associated with the initial recognition of an asset or liability arising from a transaction (not a business
combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred
tax assets are recognized. In addition, for the deductible temporary differences associated with investments in subsidiaries, associates
and joint ventures, the corresponding deferred tax assets shall not be recognized if it is not probable that the temporary difference will
reverse in the foreseeable future, or if it is not probable that taxable profits will be available in the future against which the deductible
temporary difference can be utilized. For the above exceptions, deferred tax assets for deductible temporary differences are recognized
by the Group to the extent that it is probable that taxable profits will be available against which the deductible temporary differences
can be utilized.
For deductible losses and tax credits that can be carried forward to later years, the corresponding deferred tax assets are recognized to
the extent that the future taxable income that can be used to offset the deductible losses and tax credits is likely to be obtained.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates, according to tax laws, that are expected to 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 sufficient taxable
income in the future to offset against the profits arising from deferred tax assets, the carrying amount of the deferred tax assets shall be
written down. When it is probable that sufficient taxable income will be available, such written-down amount shall be subsequently
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 comprehensive income or
directly recorded in shareholders’ equity are recorded in other comprehensive income or shareholders’ equity, and that deferred taxes
arising from business combinations adjust the carrying amount of goodwill, all other current income taxes and deferred 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 settle liabilities
simultaneously, the current income tax assets and current income tax liabilities of the Group are offset and presented as net amount.
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When there is a legal right to settle current income tax assets and current income tax liabilities on a net basis, and the deferred tax
assets and deferred tax liabilities are related to the income tax levied by the same tax administration department on the same tax payer
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 same time, 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 new leasing
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 new leasing
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 or change,
whether the contract is a lease or contains a lease. Except for changes in the terms and conditions of the contract, the Group will 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 lease
commencement date. The lease commencement date refers to the day from which the lessor offers the leased asset to the Group for its
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 enjoyed if 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 on which it is
located or restoring the underlying asset to the condition required by the terms of the lease.
The Group calculates the right-of-use assets for depreciation with reference to the provisions of Accounting Standards for Business
Enterprises No. 4 - Fixed Assets concerning depreciation. If the Group can reasonably determine that it will obtain the ownership of
leased 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, the right-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 recognized impairment 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 the lease liabilities at the lease commencement
date according to the present value of the lease payment not made as of that date. When measuring the present value of a lease payment,
the Group uses the interest rate implicit in the lease as the discount rate, and adopts the incremental borrowing rate as the discount 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 the lease term,
including:
A. The fixed amount and substantial fixed amount less the relative amount of any lease incentives enjoyed if there are lease incentives;
B. The index or rate based variable amount which is determined at the time of initial measurement according to the index or rate
prevailing at the lease commencement date;
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C. The exercise price of the call option when the Group reasonably decides to exercise the call option;
D. The payment for exercising the option to terminate the lease, provided that it is reflected in the lease period that the Group will
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 the current
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 lease term 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 the lease liabilities and adjust the right-of-use assets if:
A. In the case of any change to the lease term or the result of evaluation on the call option, the lease liabilities will be re-measured by
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 for calculating
the lease payment, the Group will re-measure the lease liabilities according to the changed lease payment and the present value
calculated from the original discounting rate.
③ Short-term leases and leases of low-value assets
For short-term leases and leases for low-value assets of buildings, transport vehicles, machinery equipment and office equipment, the
Group chooses not to recognize right-of-use assets or lease liabilities. The short-term lease refers to the lease that does not contain the
call option and has a lease period of no more than 12 months from the lease commencement date. The lease for low-value assets refers
to the lease under which individual lease asset has a low value if it is brand new. In each period within the lease term, the Group records
the lease payments of short-term leases and leases for low-value assets into the profit or loss of the current 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 contract change.
If a lease change is not treated as an independent lease, at the effective date of the lease change, the Group will re-apportion the changed
contract price, re-determine the lease term, and re-measure the lease liabilities according to the changed lease payment and the 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 the right-of-use
assets accordingly, and record the gain or loss from the terminated or partially terminated lease in the profit or loss of the current period.
If any other lease change triggers the re-measurement of the lease liabilities, the Group will adjust the carrying value of the right-of-
use assets accordingly.
(2) The Group as lessor
① Division of a lease
If a contract contains the lease component and the non-lease component, the Group will apportion the contract consideration according
to the provisions of Accounting Standards for Business Enterprises No. 14 - Revenue concerning the apportionment of trading price.
And the basis for apportionment is the respective prices of the lease component and the non-lease component.
② Classification of a lease
A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. Leases which are not
financing leases are defined as operating leases.
A. The Group as lessor under operating leases
The Group adopts the straight-line method in each period of the lease term, and recognizes the lease receipts arising from operating
leases in rental income. The initial direct expenses related to an operating lease incurred by the Group are capitalized when incurred,
apportioned during the lease term on the same recognition basis as rental income, and recorded in the current profit and loss by
installments.
The variable lease payment received by the Group under an operating lease not included in the lease receipt is recorded in the profit or
loss of the current period at the time of actual occurrence.
B. The Group as lessor under financial leases
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At the lease commencement date, the Group measures the carrying value of the financing lease receivable as net lease investment, and
de-recognizes the financing lease asset. The net lease investment is the sum of the unsecured residual value and the present 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 the lease term,
including:
(A). The fixed amount and substantial fixed amount paid by the lessee less the relative amount of any lease incentives received;
(B). The lessee's index or rate based variable amount which is determined at the time of initial measurement according to the index 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 lease period
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 third party 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, be included
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 periodic interest
rate.
③ Sublease
The Group as the sub-lessor considers the original lease and the sublease as two independent contracts. The Group classifies the
sublease according to the right-of-use assets arising from the original lease, other than the underlying asset of the original lease.
④ Change of lease
If an operating lease changes, the Group will, from the effective date of the change, considers the change as a new lease, and the lease
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 contract change.
If a financing lease change is not treated as an independent lease, the Group will treat the changed lease as follows:
A. Assuming that the change takes effect at the lease commencement date, and the lease is classified as an operating lease, the Group
will, from the effective date of the lease change, consider the change as a new lease and the net lease investment prior to the effective
date of the lease commencement as the carrying value of the leased asset;
B. Assuming that the change takes effect on the lease commencement date, and the lease is classified as a financing lease, the Group
will conduct accounting in accordance with the provisions of Accounting Standards for Business Enterprises No. 22 - Recognition and
Measurement of Financial Instruments concerning the modification or re-negotiation of contract.
36. Specific reserve
According to the relevant regulations of the Ministry of Finance and the Ministry of Emergency Management, the Group accrues
specific reserve for production safety. The specific reserve is mainly used for safety expenditure in the process of production and
operation.
The provision for specific reserve is recognized as relevant cost or profit or loss for the current period, and it is also included in specific
reserve. The specific reserve is written down when withdrawal of safety fund is of expense expenditure. If it is capital expenditure, the
expenditure incurred is recorded in construction in progress and recognized as fixed assets when the project is completed and is ready
for the intended use, and meanwhile, specific reserve is written down at the cost of the fixed assets and accumulated depreciation is
recognized at the same amount. Consequently, such fixed assets are not depreciated in subsequent periods.
37. Other important accounting policies and accounting estimates
While using accounting policies, due to the uncertainty in operating activities, the Group needs to make judgment, estimates and
assumptions on the carrying value of accounts which cannot be measured accurately. The judgment, estimates and assumptions are
made based on the historical experience of the Group’s management and other factors that are considered to be relevant. The judgments,
estimates and assumptions would affect the reported amounts of incomes, expenses, assets and liabilities, as well as the disclosure of
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contingent liabilities at the balance sheet date. However, the actual results from the uncertainty in the estimates may differ from the
current estimates made by the Group’s management, subject to further significant adjustments to the carrying amounts of the affected
assets or liabilities.
The above judgments, estimates and assumptions will be reviewed periodically by the Group on the going-concern basis. If a change
in accounting estimates only affects the period in which the change occurs, the affected amount will be recognized in the period in
which the change occurs. If the change affects both the period in which the change occurs and future periods, the affected amount 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 on the
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 accounting judgments and
estimates: identification of customer contracts; estimation of the recoverability of the considerations enjoyed due to the transfer of
goods to customers; identification of performance obligations in contracts; estimation of the variable consideration in a contract and
the amount of accumulated recognized income that is unlikely to be significantly reversed when the relevant uncertainty is eliminated;
whether there is material financing component in a contract; estimation of separate selling prices of individual performance obligations
in a contract; determination on whether the performance obligation shall be performed in a time span or at a point of time; and
determination of performance progress.
The Group makes judgments based on historical experience and practices, and major changes in judgments and estimates would have
impact (and even significant impact) on the change of operating income, operating cost, and profit and loss during the current or future
periods.
(2) Lease
① Identification of a lease
While identifying that a contract is or contains a lease, the Group needs to assess whether there is an identified asset and the customer
has the right to use the asset for a certain period. During assessment, the Groups shall consider the nature or substantial replacement of
the asset, and whether the customer has the right to obtain almost all economic benefits arising from the use of the asset 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 management needs
to make appropriate analysis and judgment on whether all risks and rewards related to the ownership of leased assets have been
substantially transferred to the lessee.
③ Lease liabilities
The Group, as a lessee, initially measures the lease liabilities at the present value of lease payments that are unpaid at the lease
commencement date. For measuring the present value of the lease payment, the Group estimates the discounting rate in use and the
lease term of the lease contract with an option of renewal or termination. For assessing the lease term, the Group considers all the facts
and circumstances related to the economic benefits brought by the exercise of the option by the Group, including expected changes in
the facts and circumstances from the lease commencement date to the option exercise date. Different judgments and estimates would
affect the recognition of lease liabilities and right-of-use assets and further affect the profit or loss of subsequent periods.
(3) Impairment of financial assets
The Group assesses impairments of financial instruments using the expected credit loss model, where the Group is required to make
significant judgments and estimates, as well as consider all reasonable and evidence-based information, including forward-looking
information. In making the judgments and estimates, the Group predicts expected changes in debtor's credit risk based 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 realizable value. For
the inventories with cost higher than net realizable value as well as obsolete and unsalable inventories, the Group calculates provisions
for the impairment of inventories. The inventories are impaired to their net reliable value, depending on the assessment of salability of
inventories and their net realizable value. To identify inventory impairment, the management is required to make judgments and
estimates after obtaining conclusive evidence, as well as considering the purpose of inventories held, the impact of events occurring
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after the balance sheet date and other factors. Any difference between actual results and prior estimates will, in the period when relevant
estimates are changed, affect the carrying amount of inventories and the provision for inventory impairment or reversal thereof.
(5) Fair value of financial instruments
If there is no financial instrument in an active trading market, its fair value is determined by the Group through various valuation
methods. The valuation techniques include disclosed cash flow modeling, etc. In the valuation process, the Group needs to estimate
future cash flow, credit risk, market volatility and correlation, etc. and choose an appropriate discounting rate. These relevant
assumptions are uncertain, and their changes would affect the fair value of financial instruments. For equity instrument investments or
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 indication of
impairment. For intangible assets with an uncertain service life, the impairment test will be carried out annually and when there is an
indication of impairment. The impairment test will be carried out for non-current assets other than financial assets, when there is an
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 fair value 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 similar assets 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 calculating present
value of the asset (or a group of assets) in estimation of present value of future cash flows. When estimating the recoverable amount,
the Group uses all relevant information available, including the output, selling price and related operating costs predicted on the 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 of an
asset group or group portfolio to which goodwill has been allocated. When estimating the present value of future cash flows, the Group
needs to predict cash flows generating from an asset group or group portfolio in the future, and chooses an appropriate discount rate to
determine the present value of future cash flows.
(7) Depreciation and amortization
The Group depreciates and amortizes investment properties, fixed assets and intangible assets over their respective service life, using
the straight-line method, with their respective residual value taken into account. The Group periodically reviews the service life of
assets to determine the amounts of depreciation and amortization expenses for each reporting period. The service life is determined by
the Group based on its historic experience acquired on similar assets and expected technical developments. For significant changes in
prior estimates, depreciation and amortization expenses will be adjusted in the coming periods.
(8) Development costs
When determining capitalized amounts, the Group’s management needs to assume estimated future cash flows, appropriate discount
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 and good
prospects, and the market reaction to the products produced with these intangible assets also supports the management’s pre-estimated
income arising from the project. However, the increasing competition makes the management reconsider the assumptions about market
share and estimated gross profits of the products. After a thorough review, the Group’s management believes that the carrying value
of intellectual properties can be fully recovered notwithstanding a lowered rate of return of the products. The Group will continue to
keep close attention on relevant developments. Once there is an indication that it is necessary to adjust 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 tax assets for
all unused tax losses. In this case, the Group’s management shall make important judgments to estimate the time and amount of future
taxable profits and, by taking into account of its tax plan, to determine the amount of deferred tax assets that should be recognized.
(10) Income tax
In normal operating activities of the Group, there are some transactions with certain uncertainties in final tax treatment and calculation.
Tax deductible expenses for some items are subject to review and approval by tax authority. Any difference between final results and
initially estimated amounts due to these tax matters exerts impact on income taxes and deferred taxes of the period when the final
results are determined.
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38. Changes in important accounting policies and accounting estimates
(1) Important changes in accounting policy
Applicable Not applicable
Contents and causes of changes in
Approval procedure Notes
accounting policy
1. Changes in national policy
requirements; 2. The Company held the
On December 30, 2021, the Ministry of
4th meeting of the 6th Board of Directors
Finance issued the Notice on Issuing the
and the 4th meeting of the 6th Board of
Interpretation No. 15 of the Accounting
Supervisors on April 17, 2023, reviewed
Standards for Business Enterprises
and approved the Proposal on Changes in
(Finance and Accounting [2021] No. 35);
Accounting Policy. The independent
on November 30, 2022, it issued the
directors expressed their independent The above changes in accounting policy
Notice on Issuing the Interpretation No. 16
opinions on this matter. In accordance have no significant impact on the financial
of the Accounting Standards for Business
with relevant provisions of Rules statements of the Group and the Company.
Enterprises (Finance and Accounting
Governing the Listing of Shares on
[2022] No. 31). In accordance with the
Shenzhen Stock Exchange and Articles of
above provisions, the Company will make
Association, this issue of changes in
corresponding changes to the original
accounting policy was submitted to the
accounting policies and implement them
Board of Directors to review and approve,
on the prescribed starting date.
without the need of the submission to the
Shareholders' Meeting.
(2) Changes in important accounting estimates
Applicable Not applicable
39. Others
None
VI. Taxable Items
1. Main tax types and rates
Tax types Taxation basis Tax rate
Output taxes on taxable income shall be calculated at the
rate of 13%, 9% and 6%, and value added taxes are
VAT calculated and paid according to the difference resulting 13%, 9%, 6%
from the deduction of the allowed deductible input tax in
the period.
City maintenance and
7% and 5% of actually-paid turnover tax 7%、5%
construction tax
15% or 25%, for overseas subsidiaries, the tax shall be paid
Enterprise income tax according to the statutory tax rate of the country or region 25%、15%
where it is located.
Education surcharge 3% of the amount of actually-paid turnover tax 3%
Local education
2% of the amount of actually-paid turnover tax 2%
surcharges
Disclose the specific information in the case of tax payers with different tax rates of enterprise income tax
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Goertek Inc. Annual Report 2022
Name of taxpayer Rate of income tax
Goertek Inc. 15%
Weifang Goertek Electronics Co., Ltd. 15%
Goertek Microelectronics Inc. 15%
Qingdao Goertek Microelectronics Research Institute Co., Ltd. 25%
Qingdao Goertek Intelligent Sensor Co., Ltd. 15%
Weifang Goertek Microelectronics Co., Ltd. 15%
Rongcheng Goertek Microelectronics Co., Ltd. 15%
Beijing Goertek Microelectronics Co., Ltd. 2.5%
Shenzhen Goertek Microelectronics Co., Ltd. 25%
Wuxi Goertek Microelectronics Co., Ltd. 25%
Shanghai Goertek Microelectronics Co., Ltd. 25%
Goertek Microelectronics Holdings Co., Ltd. 16.5%
Goertek Microelectronics (Hong Kong) Co., Ltd. 16.5%
The federal tax rate for enterprise income tax is 21%, and the
GOERTEK MICROELECTRONICS CORPORATION
local enterprise income tax rate in California is 8.84%.
Corporation tax: Tax rate shall be 10% if the income is less than
KRW 200 million; 20% if the income is KRW 200 million-20
GOERTEK MICROELECTRONICS KOREA CO., LTD. billion; 22% if the income is KRW 20 billion-300 billion; and
25% if the income is more than KRW 300 billion.
local corporation tax: 10% of taxable income
Goertek Microelectronics Vietnam Company Limited 20%
Weifang Goertek Trading Co., Ltd. 25%
Yishui Goertek Electronics Co., Ltd. 25%
Yili Precision Manufacturing Co., Ltd. 15%
Weifang Goertek Communication Technology Co., Ltd. 25%
Goertek Optical Technology Co., Ltd 15%
Goertek Technology Co., Ltd. 15%
Beijing Goertek Technology Co., Ltd. 15%
Qingdao Goertek Acoustics Technology Co., Ltd. 25%
Shenzhen Goertek Technology Co., Ltd. 15%
Shanghai Goertek Technology Co., Ltd. 25%
Nanjing Goertek Technology Co., Ltd. 25%
Weifang Lokomo Precision Industry Co., Ltd. 15%
Goertek Investment Co., Ltd. 25%
Beijing Goertek Investment Management Co., Ltd. 25%
Olive Smart Hardware Investment Center LP --
Dongguan JoyForce Precision Manufacturing Co., Ltd. 15%
Goertek Intelligence Technology Co., Ltd. 15%
Rongcheng Goertek Technology Co., Ltd. 25%
Qingdao Goertek Commercial Factoring Co., Ltd. 25%
Kunshan Goertek Electronics Co., Ltd 15%
Nanning Goertek Electronics Co., Ltd 25%
Nanning Goertek Trading Co., Ltd. 25%
Xi’an Goertek Electronic Technology Co., Ltd. 15%
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Goertek Inc. Annual Report 2022
Yishui TECO Electronic Technology Co., Ltd. 25%
Goertek Optical Technology (Qingdao) Co., Ltd 25%
Goertek Optical Technology (Shanghai) Co., Ltd 25%
Qingdao Resonance Phase I Venture Capital Fund Partnership
--
(Limited Partnership)
Weifang Goertek Electronics Co., Ltd. 25%
Qingdao Goertek Horizons Technology Co., Ltd 25%
Weifang High-tech Zone Goertek Education Center 25%
Goertek Vina Co., Ltd 20%
Corporation tax: Tax rate shall be 10% if the income is less than
KRW 200 million; 20% if the income is KRW 200 million-20
Goertek Technology Korea Co., Ltd. billion; 22% if the income is KRW 20 billion-300 billion; and
25% if the income is more than KRW 300 billion.
local corporation tax: 10% of taxable income
The tax rate of 8.25% is applied to the taxable profit which does
Goertek (HongKong) Co.,Limited not exceed HKD 2,000,000, and the tax rate of 16.5% is applied
to the part of taxable profit which exceeds HKD 2,000,000.
Goertek Technology Vina Company Limited 20%
Goertek Precision Industry Vietnam Company Limited 20%
GoerTek Audio Technologies Aps 22%
Goertek Seiki Technology Co., Ltd. 38%
Optimas Capital Partners Fund LP --
The federal tax rate for enterprise income tax is 21%, and the
Goertek Electronics, Inc.
local enterprise income tax rate in California is 8.84%.
Goertek Technology Taiwan Co., Ltd. 20%
Goertek Technology Japan Co., Ltd. 38%
Goertek Technology (Hong Kong) Co.,Limited 16.5%
Other explanations:
Shanghai Ganyuzhi Technology Co., Ltd. changed its name to Shanghai Goertek Microelectronics Co., Ltd. on November 3, 2022.
2. Tax incentives
(1) According to the Reply on the Filings of the First Batch of High-Tech Enterprises in Shandong Province in 2020 issued by the
Office of Leading Group for the Recognition and Management of National High-Tech Enterprises, the Company and its subsidiaries,
Weifang Goertek Electronics Co., Ltd. and Weifang Goertek Microelectronics Co., Ltd., have been recognized as high-tech enterprises
for a 3-year validity period, and their preferential period for enterprise income tax is from January 1, 2020 to December 31, 2022. The
enterprise income tax rate of 15% applied to the Company and its subsidiaries, Weifang Goertek Electronics Co., Ltd. and Weifang
Goertek Microelectronics Co., Ltd., for year 2022.
(2) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Qingdao in 2022, issued by the Office of
Leading Group for the Recognition and Management of National High-Tech Enterprises on January 6, 2023, Goertek Microelectronics
Inc., has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferential period for enterprise income tax
is from January 1, 2022 to December 31, 2024. The enterprise income tax rate of 15% applied to Goertek Microelectronics Inc. for
year 2022.
(3) According to the Reply on the Filings of High-Tech Enterprises in Qingdao City in 2020, issued by the Office of Leading Group
for the Recognition and Management of National High-Tech Enterprises on January 15, 2021, a subsidiary, Qingdao Goertek Intelligent
Sensor Co., Ltd., has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferential period for enterprise
income tax is from January 1, 2020 to December 31, 2022. The enterprise income tax rate of 15% applied to the subsidiary, Qingdao
Goertek Intelligent Sensor Co., Ltd., for year 2022.
148
Goertek Inc. Annual Report 2022
(4) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Shandong Province in 2022, issued by the
Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on January 4, 2023, two subsidiaries,
Rongcheng Goertek Microelectronics Co., Ltd. and Yili Precision Manufacturing Co., Ltd., have been recognized as a high-tech
enterprise for a validity period of 3 years, and the preferential period for enterprise income tax is from January 1, 2022 to December
31, 2024. The enterprise income tax rate of 15% applied to Rongcheng Goertek Microelectronics Co., Ltd. and Yili Precision
Manufacturing Co., Ltd. for year 2022.
(5) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Shandong Province in 2021 issued by the
Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on January 4, 2022, a subsidiary,
Goertek Optical Technology Co., Ltd, has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferential
period for enterprise income tax is from January 1, 2021 to December 31, 2023. The enterprise income tax rate of 15% applied to the
subsidiary, Goertek Optical Technology Co., Ltd, for year 2022.
(6) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Qingdao in 2022 issued by the Office of
Leading Group for the Recognition and Management of National High-Tech Enterprises on December 14, 2022, Goertek Technology
Co., Ltd., has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferential period for enterprise income
tax is from January 1, 2022 to December 31, 2024. The enterprise income tax rate of 15% applied to the subsidiary, Goertek Technology
Co., Ltd., for year 2022.
(7) According to the Reply on the Filings of the Third Batch of High-Tech Enterprises in Beijing City in 2020 (GKHZ [2021] No.37),
issued by the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on January 22, 2021,
a subsidiary, Beijing Goertek Technology Co., Ltd., has been recognized as a high-tech enterprise for a validity period of 3 years, and
its preferential period for enterprise income tax is from January 1, 2020 to December 31, 2022. The enterprise income tax rate of 15%
applies to the subsidiary, Beijing Goertek Technology Co., Ltd., for year 2022.
(8) According to the Announcement on Filing the First Batch of High-Tech Enterprises in Shenzhen in 2022 issued by the Office of
Leading Group for the Recognition and Management of National High-Tech Enterprises on December 19, 2022, a subsidiary, Shenzhen
Goertek Technology Co., Ltd., has been recognized as a high-tech enterprise for a validity period of 3 years, and its preferential period
for enterprise income tax is from January 1, 2022 to December 31, 2024. The enterprise income tax rate of 15% applied to the subsidiary,
Shenzhen Goertek Technology Co., Ltd., for year 2022.
(9) According to the Notice on Publishing a List of the Second Batch of High-Tech Enterprises to be Recognized in Shandong Province
in 2020 issued by the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on December
8, 2020, Weifang Lokomo Precision Industry Co., Ltd., a subsidiary of the Company, has been recognized as a high-tech enterprise for
a validity period of 3 years, and its preferential period for enterprise income tax is from January 1, 2020 to December 31, 2022. The
enterprise income tax rate of 15% applied to the subsidiary, Weifang Lokomo Precision Industry Co., Ltd. for year 2022.
(10) According to the Notice on Publishing the Filings of the Second Batch of High-Tech Enterprises in Guangdong Province in 2021
issued by the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on December 20, 2021,
Dongguan JoyForce Precision Manufacturing Co., Ltd., a subsidiary of the Company, has been recognized as a high-tech enterprise
for a validity period of 3 years, and its preferential period for enterprise income tax is from January 1, 2021 to December 31, 2023. The
enterprise income tax rate of 15% applies to the subsidiary, Dongguan JoyForce Precision Manufacturing Co., Ltd. for year 2022.
(11) According to the Announcement on Filing the Second Batch of High-Tech Enterprises in Guangdong Province in 2022 issued by
the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on December 22, 2022, Goertek
Intelligence Technology Co., Ltd., a subsidiary of the Company, has been recognized as a high-tech enterprise for a validity period of
3 years, and its preferential period for enterprise income tax is from January 1, 2022 to December 31, 2024. The enterprise income tax
rate of 15% applied to the subsidiary, Goertek Intelligence Technology Co., Ltd., for year 2022.
(12) According to the Notice on Publishing a List of the Second Batch of Proposed Recognized High-Tech Enterprises in Jiangsu
Province in 2021 issued by the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on
November 30, 2021, Kunshan Goertek Electronics Co., Ltd, a subsidiary of the Company, has been recognized as a high-tech enterprise
for a validity period of 3 years, and its preferential period for enterprise income tax is from January 1, 2021 to December 31, 2023. The
enterprise income tax rate of 15% applied to the subsidiary, Kunshan Goertek Electronics Co., Ltd, for year 2022.
(13) According to the Reply on the Filings of the First Batch of High-Tech Enterprises in Shaanxi Province in 2022 (GKHZ [2022]
No. 170) issued by the Office of Leading Group for the Recognition and Management of National High-Tech Enterprises on November
14, 2022, Xi’an Goertek Electronic Technology Co., Ltd., a subsidiary of the Company, has been recognized as a high-tech enterprise
for a validity period of 3 years, and its preferential period for enterprise income tax is from January 1, 2022 to December 31, 2024. The
enterprise income tax rate of 15% applied to the subsidiary, Xi’an Goertek Electronic Technology Co., Ltd., for year 2022.
149
Goertek Inc. Annual Report 2022
(14) Goertek (HongKong) Co.,Limited is an entity eligible for the two-tier profit tax system. The tax rate of 8.25% is applied to the
taxable profit which does not exceed HKD 2,000,000, and the tax rate of 16.5% is applied to the part of taxable profit which exceeds
HKD 2,000,000.
(15) According to the Announcement of the Ministry of Finance and the State Taxation Administration on Implementing the
Preferential Income Tax Policies for Micro and Small Enterprises and Individual Industrial and Commercial Households
(Announcement No.12/2021 of the Ministry of Finance and the State Taxation Administration) and the Announcement of the State
Taxation Administration on Matters Concerning the Implementation of Preferential Income Tax Policies Supporting the Development
of Small Low-Profit Enterprises and Individual Industrial and Commercial Households (Announcement No.8/2021 of the State
Taxation Administration), from January 1, 2021 to December 31, 2022, for small and low-profit enterprises, the portion of annual
taxable income not exceeding 1 million yuan shall be included in the taxable income at a rate of 12.5%, and enterprise income tax will
be levied at the rate of 20%. The above preferential tax policies are applicable to the subsidiary, Beijing Goertek Microelectronics Co.,
Ltd., and enterprise income tax is levied at the actual tax rate of 2.5% in 2022.
(16) According to the laws of Vietnam, GOERTEK MICROELECTRONICS VIETNAM COMPANY LIMITED, a subsidiary of the
Company, enjoys tax exemption for 4 years and a 50% reduction of payable tax amounts for 9 subsequent years. The preferential CIT
rate is 10% for 15 years from the first year of income generation. At the same time, starting from the first profitable year (after making
up for the losses of previous years), the first to fourth years are exempt from corporate income tax, and the fifth to thirteenth years are
subject to a 50% reduction in corporate income tax. If the enterprise has no taxable profit within three years from the start of tax
incentive activities, the tax holiday and tax reduction period will be calculated from the fourth year of operation. The subsidiary is
exempt from corporate income tax in 2022.
3. Others
None
VII. Notes to consolidated financial statements
1. Cash at bank and on hand
Unit: RMB
Item Closing balance Opening balance
Cash on hand 33,671.21 160,703.83
Bank deposits 11,290,088,881.75 9,137,740,198.21
Other monetary capital 1,392,748,538.84 910,620,794.05
Total 12,682,871,091.80 10,048,521,696.09
Including: Total amounts deposited
1,370,158,074.20 1,091,856,806.03
abroad
The total funds restricted by
1,392,748,538.84 910,620,794.05
mortgage, pledge or freeze are as follows:
Other explanations:
Other monetary funds at the end of the period mainly involve notes, bonds and L/C margins.
2. Financial assets held for trading
Unit: RMB
Item Closing balance Opening balance
Financial assets at fair value through profit
338,662,097.66 119,267,279.02
and loss
Including:
Investments in equity instruments 152,722,198.06 98,804,286.66
Derivative financial assets 185,939,899.60 20,462,992.36
Total 338,662,097.66 119,267,279.02
150
Goertek Inc. Annual Report 2022
3. Notes receivable
(1) Notes receivable listed by classification
Unit: RMB
Item Closing balance Opening balance
Bank acceptance notes 25,847,492.24 48,384,771.72
Commercial acceptance notes 1,709,928.75
Total 25,847,492.24 50,094,700.47
Unit: RMB
Closing balance Opening balance
Book balance Bad-debt provision Book balance Bad-debt provision
Category
Proportion Book value Proportion Book value
Amount Proportion Amount Amount Proportion Amount
of accrual of accrual
Notes
receivable
with bad debt 25,847,492.24 100.00% 25,847,492.24 50,094,700.47 100.00% 50,094,700.47
reserves by
group
Including:
Bank
acceptance 25,847,492.24 100.00% 25,847,492.24 48,384,771.72 96.59% 48,384,771.72
notes
Commercial
acceptance 1,709,928.75 3.41% 1,709,928.75
notes
Total 25,847,492.24 100.00% 25,847,492.24 50,094,700.47 100.00% 50,094,700.47
If the provision for bad debts on notes receivable is based on the general model of expected credit losses, please disclose information
about the provision for bad debts by referring to the disclosure of other receivables:
Applicable Not applicable
(2) Accrual, recovery or return of bad debt reserve in current period
None
(3) Notes receivable pledged at the end of the period
Unit: RMB
Item Amount pledged at the end of the period
Bank acceptance notes 5,848,815.01
Total 5,848,815.01
Other explanations:
A note pledge is a splitting of a large denomination note into multiple banker's acceptance bills in small denomination.
(4) Notes receivable endorsed or discounted by the Group at the end of the period and not yet due on the
balance sheet date
Unit: RMB
Amount derecognized at the end of the Amount not derecognized at the end of the
Item
period period
Bank acceptance notes 2,371,001.15
Total 2,371,001.15
151
Goertek Inc. Annual Report 2022
(5) Notes that have been transferred to accounts receivable by the Group at the end of the period due to the
non-performance of the contract of the drawer
None
(6) Notes receivable actually written off in the current period
None
152
Goertek Inc. Annual Report 2022
4. Accounts receivable
(1) Accounts receivable disclosed by classification
Unit: RMB
Closing balance Opening balance
Book balance Bad-debt provision Book balance Bad-debt provision
Category
Proportion Book value Proportion Book value
Amount Proportion Amount Amount Proportion Amount
of accrual of accrual
Accounts
receivable
with bad 14,545,194,129.78 100.00% 149,013,346.85 1.02% 14,396,180,782.93 12,025,540,710.73 100.00% 126,326,184.81 1.05% 11,899,214,525.92
debts reserves
by group
Including:
Accounts
receivable 14,310,390,851.16 98.39% 147,839,330.46 1.03% 14,162,551,520.70 11,857,375,456.09 98.60% 125,485,358.54 1.06% 11,731,890,097.55
aging group
Portfolio of
factoring 234,803,278.62 1.61% 1,174,016.39 0.50% 233,629,262.23 168,165,254.64 1.40% 840,826.27 0.50% 167,324,428.37
receivables
Total 14,545,194,129.78 100.00% 149,013,346.85 1.02% 14,396,180,782.93 12,025,540,710.73 100.00% 126,326,184.81 1.05% 11,899,214,525.92
Bad debt reserves on a group basis: Accounts receivable aging group
Unit: RMB
Closing balance
Name
Book balance Bad-debt provision Proportion of accrual
Within 1 year 14,298,053,717.77 142,980,537.18 1.00%
1 to 2 years 10,227,450.14 3,068,235.02 30.00%
2 to 3 years 638,249.98 319,124.99 50.00%
Over 3 years 1,471,433.27 1,471,433.27 100.00%
Total 14,310,390,851.16 147,839,330.46
Description for basis of determining the group:
For further details, please see Note V. 10. ''Impairment of financial assets''.
153
Goertek Inc. Annual Report 2022
Provision for bad debts by group: portfolio of factoring receivables
Unit: RMB
Closing balance
Name
Book balance Bad-debt provision Proportion of accrual
Undue 234,803,278.62 1,174,016.39 0.50%
Overdue 1-90 days
Overdue 91-180 days
Overdue 181-360 days
Overdue more than 360 days
Total 234,803,278.62 1,174,016.39
Description for basis of determining the group:
For further details, please see Note V. 10. ''Impairment of financial assets''.
If the provision for bad debts on accounts receivable is based on the general model of expected credit losses, please disclose
information about the provision for bad debts by referring to the disclosure of other receivables:
Applicable Not applicable
Disclosed by age of accounts receivable
Unit: RMB
Aging Book balance
Within 1 year (including 1 year) 14,532,856,996.39
1 to 2 years 10,227,450.14
2 to 3 years 638,249.98
Over 3 years 1,471,433.27
3 to 4 years 1,397,650.48
4 to 5 years 0.00
Over 5 years 73,782.79
Total 14,545,194,129.78
(2) Accrual, recovery or return of bad debt reserve in current period
Provision for bad debts of the current period:
Unit: RMB
Changes in amount of the current period
Category Opening balance Withdrawal or Closing balance
Accrual Write-off Other
write-back
Accounts
receivable with
bad debts 126,326,184.81 16,834,146.02 -5,853,016.02 149,013,346.85
reserves by
group
Total 126,326,184.81 16,834,146.02 -5,853,016.02 149,013,346.85
Among them, significant information of bad debt reserves withdrawn or written back in the current period:
None
Other explanations:
Bad debt provision for factoring receivables accrued, reversed or recovered during the period
154
Goertek Inc. Annual Report 2022
First stage Second stage Third stage
Expected credit loss Expected credit loss
Bad-debt provision Expected credit loss Total
for the entire duration for the entire duration
over the next 12
(credit impairment (credit impairment has
months
not occurred) occurred)
Balance at the end of the
840,826.27 840,826.27
previous year
In the current period, the
balance at the end of the
previous year:
- Transferred to second stage
- Transferred to third stage
- Reversed to second stage
- Reversed to first stage
Accrual in the current period 333,190.12 333,190.12
Current reverse
Current resale
Amount written off in the
current period
Other changes
Closing balance 1,174,016.39 1,174,016.39
(3) Accounts receivable actually written off in current period
None
(4) Accounts receivable of the 5 highest closing balance by debtor
Unit: RMB
Closing balance of accounts Proportion of total closing Closing balance of bad debt
Company name
receivable balance of accounts receivable provision
Customer 1 6,320,677,712.98 43.46% 63,206,777.13
Customer 2 1,852,535,914.15 12.74% 18,525,359.14
Customer 3 882,328,281.57 6.07% 8,823,282.81
Customer 4 868,620,745.78 5.97% 8,686,207.46
Customer 5 835,789,178.64 5.74% 8,357,891.79
Total 10,759,951,833.12 73.98%
(5) Amount of assets and liabilities formed by transferring accounts receivable and continuing to be
involved
None
(6) Accounts receivable derecognized due to transfer of financial assets
Unit: RMB
155
Goertek Inc. Annual Report 2022
Gains or losses related
Transfer method of financial assets Amount of accounts receivable recognized at the end of the period
to derecognition
Buyout factoring 5,303,127,647.05 -23,037,232.06
5. Financing receivables
Unit: RMB
Item Closing balance Opening balance
Notes receivable 22,375,874.12 14,575,230.24
Total 22,375,874.12 14,575,230.24
Changes in the current period of financing receivables and changes in fair value
Applicable Not applicable
If the provision for impairment of financing receivables is accrued according to the general model of expected credit loss, please
refer to the disclosure methods for other receivables when disclosing information related to provision for impairment:
Applicable Not applicable
6. Advances to suppliers
(1) Presentation of advances to suppliers by aging
Unit: RMB
Closing balance Opening balance
Aging
Amount Proportion Amount Proportion
Within 1 year 50,645,746.34 99.98% 85,353,901.12 87.50%
1 to 2 years 10,407.09 0.02% 12,190,916.86 12.50%
Total 50,656,153.43 97,544,817.98
Explanation of reasons why advances to suppliers aged more than 1 year with significant amount are not settled in time:
None
(2) Advance payment in the five highest closing balance by seller
Book balance Percentage of total balance of
Company name
(RMB) prepayment (%)
Company 1 7,987,275.00 15.77
Company 2 6,666,720.00 13.16
Company 3 5,847,378.37 11.54
Company 4 3,869,299.47 7.64
Company 5 2,306,248.20 4.55
Total 26,676,921.04 52.66
7. Other receivables
Unit: RMB
Item Closing balance Opening balance
Other receivables 96,442,803.18 374,669,355.98
Total 96,442,803.18 374,669,355.98
156
Goertek Inc. Annual Report 2022
(1) Interest receivable
None
(2) Dividends receivable
None
(3) Other receivables
1) Classification of other receivables by nature of payment
Unit: RMB
Nature of payment Closing book balance Opening book balance
Tax refund for export receivable 1,541,663.86 107,739,537.40
Security deposit 56,247,217.13 90,839,988.55
Current account 9,261,136.47 164,646,290.05
Withholding and remitting social
53,852,019.34 39,293,343.86
insurance and housing provident fund
Other 572,915.09 815,580.66
Total 121,474,951.89 403,334,740.52
2) Provision for bad debts
Unit: RMB
First stage Second stage Third stage
Expected credit loss for the Expected credit loss for the
Bad-debt provision Expected credit loss Total
entire duration (credit entire duration (credit
over the next 12 months
impairment not occurred) impairment has occurred)
Balance as of January 1,
28,665,384.54 28,665,384.54
2022:
Balance as of January 1,
2022 in the current
period
- Transferred to third
-894,232.57 894,232.57
stage
Accrual in the current
-3,024,992.01 411,441.91 -2,613,550.10
period
Amount written off in
970,882.57 970,882.57
the current period
Other changes 48,803.16 48,803.16
Balance as of December
24,697,356.80 334,791.91 25,032,148.71
31, 2022:
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) 84,047,670.81
1 to 2 years 10,851,113.92
157
Goertek Inc. Annual Report 2022
2 to 3 years 11,279,658.86
Over 3 years 15,296,508.30
3 to 4 years 3,010,094.34
4 to 5 years 6,358,648.54
Over 5 years 5,927,765.42
Total 121,474,951.89
3) Accrual, recovery or return of bad debt reserve in current period
Provision for bad debts of the current period:
Unit: RMB
Changes in amount of the current period
Category Opening balance Withdrawal or Closing balance
Accrual Write-off Other
write-back
Accounts
receivable with
bad debts 28,665,384.54 -2,613,550.10 970,882.57 48,803.16 25,032,148.71
reserves by
group
Total 28,665,384.54 -2,613,550.10 970,882.57 48,803.16 25,032,148.71
Among them, significant amount in bad debt reserves written back or withdrawn in the current period:
None
4) Other receivables actually written off in the current period
Unit: RMB
Item Written off amount
Other receivables actually written off 970,882.57
Among them, write-off of other significant receivables:
None
5) Other receivables of the 5 highest closing balance by debtor
Unit: RMB
Ratio in the total
Closing balance of
Company name Nature of payment Closing balance Aging closing balance of
bad debt provision
other receivables
Withholding and
remitting social
1 insurance and 53,852,019.34 Within 1 year 44.34% 538,520.19
housing provident
fund
2 Security deposit 6,634,710.00 Over 3 years 5.46% 6,634,710.00
3 Earnest money 6,522,194.38 Over 3 years 5.37% 6,522,194.38
4 Security deposit 6,213,130.31 2-3 years 5.11% 3,106,565.16
Within 1 year, 1-2
5 Earnest money 6,000,000.00 4.94% 930,000.00
years
Total 79,222,054.03 65.22% 17,731,989.73
158
Goertek Inc. Annual Report 2022
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 involved
None
8. Inventories
Whether the Company needs to comply with disclosure requirements of real estate industry
No
(1) Inventory classification
Unit: RMB
Closing balance Opening balance
Inventory
Inventory falling falling price
price reserves or reserves or
Item provision for provision for
Book balance Book value Book balance Book value
impairment of impairment of
contract contract
performance cost performance
cost
Raw
6,446,001,906.31 258,676,409.56 6,187,325,496.75 5,166,920,234.13 110,350,236.94 5,056,569,997.19
materials
Products
2,676,387,256.76 565,750,473.85 2,110,636,782.91 2,315,184,723.77 59,814,311.48 2,255,370,412.29
in process
Goods in
8,733,573,211.28 246,557,267.39 8,487,015,943.89 4,408,510,122.04 59,150,749.51 4,349,359,372.53
stock
Revolving
563,692,521.03 563,692,521.03 421,008,703.37 421,008,703.37
materials
Total 18,419,654,895.38 1,070,984,150.80 17,348,670,744.58 12,311,623,783.31 229,315,297.93 12,082,308,485.38
(2) Inventory falling price reserves or provision for impairment of contract performance cost
Unit: RMB
Increased amount in the
Decreased amount in the current period
current period
Item Opening balance Closing balance
Write-back or
Accrual Other Other
resale
Raw materials 110,350,236.94 349,831,755.11 201,853,198.93 -347,616.44 258,676,409.56
Products in
59,814,311.48 601,865,519.43 97,356,053.87 -1,426,696.81 565,750,473.85
process
Goods in stock 59,150,749.51 251,582,163.71 68,213,059.58 -4,037,413.75 246,557,267.39
Total 229,315,297.93 1,203,279,438.25 367,422,312.38 -5,811,727.00 1,070,984,150.80
159
Goertek Inc. Annual Report 2022
(3) Explanation of the closing balance of inventory containing the capitalized amount of borrowing costs
None
(4) Explanation of amortization amount of contract performance cost in current period
None
9. Current portion of non-current assets
Unit: RMB
Item Closing balance Opening balance
Current portion of non-current assets 70,302,566.25
Total 70,302,566.25
Significant debt investments/other debt investments
None
10. Other current assets
Unit: RMB
Item Closing balance Opening balance
Input tax retained for VAT 288,229,492.06 326,273,163.10
Input tax to be verified and to be deducted 74,879,772.45 129,974,831.71
Advance payment of enterprise income tax 152,235,755.00 6,833,590.83
Other 15,646,416.05 12,690,641.96
Total 530,991,435.56 475,772,227.60
11. Long-term equity investments
Unit: RMB
Increase or decrease in the current period
Opening Recognized Closing Closing
Other Cash Provision
Invested balance investment Other balance balance of
Investment Investment comprehensive dividends for
entity (book gain and loss changes Other (book impairment
addition reduction income or profits impairment
value) under equity in equity value) provision
adjustments declared reserve
method
I. Joint Venture
II. Affiliated enterprises
AKM
-
Industrial 318,147,44 325,487,19 4,520,134
9,868,272.14 -15,493,341.86 17,484,
Company 3.07 9.68 .39
960.72
Limited
Qingdao
Virtual
39,212,455 - 38,076,72
Reality
.60 1,135,734.37 1.23
Institute
Co., Ltd.
Enkris -
80,042,305 50,000,000 130,626,7
Semicondu 1,260,535.68 676,054.1
.24 .00 86.73
ctor Inc. 9
Beijing
Uphoton 200,000,00 - 192,305,1
Technolog 0.00 7,694,836.13 63.87
y Co., Ltd.
160
Goertek Inc. Annual Report 2022
- -
437,402,20 250,000,00 325,487,19 4,520,134 361,008,6
Sub-total 2,298,237.32 -15,493,341.86 676,054.1 17,484,
3.91 0.00 9.68 .39 71.83
9 960.72
- -
437,402,20 250,000,00 325,487,19 4,520,134 361,008,6
Total 2,298,237.32 -15,493,341.86 676,054.1 17,484,
3.91 0.00 9.68 .39 71.83
9 960.72
12. Investments in other equity instruments
Unit: RMB
Item Closing balance Opening balance
Investment projects of the Fund Company 399,417,490.79 318,163,764.54
Mobvoi Inc. 139,292,000.00 127,514,000.00
Shenzhen New Radio Technology Co.,
20,000,000.00 20,000,000.00
Ltd.
Nanjing Xinshijie Microelectronics
50,000,000.00
Technology Co., Ltd.
KOLMOSTAR (CAYMAN) LIMITED 34,823,000.00
EMPOWER SEMICONDUCTOR, INC. 55,716,771.45
Total 699,249,262.24 465,677,764.54
Disclose investments in non-trading equity instruments of the period by item
Unit: RMB
Reasons for
Reasons for
other
Amount of other designation of
Dividend Accum comprehensive
Accumulative comprehensive financial assets at fair
Name of project income ulative income
gains income transferred to value through other
recognized losses transferred to
undistributed profits comprehensive
undistributed
income
profits
Investment projects Non-trading equity Disposal of
63,867,720.18 54,204,866.03
of the Fund Company instrument equity
Non-trading equity
Mobvoi Inc.
instrument
Shenzhen New Radio Non-trading equity
Technology Co., Ltd. instrument
Nanjing Xinshijie
Non-trading equity
Microelectronics
instrument
Technology Co., Ltd.
KOLMOSTAR
Non-trading equity
(CAYMAN)
instrument
LIMITED
EMPOWER
Non-trading equity
SEMICONDUCTOR
instrument
, INC.
Total 63,867,720.18 54,204,866.03
Other explanations:
The accumulative gain from the disposal of the equity held by the fund company is RMB 93,489,685.96, of which RMB 54,204,866.03
is transferred to undistributed profits, and equity attributable to other partners of the fund company is RMB 39,284,819.93.
161
Goertek Inc. Annual Report 2022
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 318,661,575.31 201,430,042.13
profits and losses
Total 318,661,575.31 201,430,042.13
14. Fixed assets
Unit: RMB
Item Closing balance Opening balance
Fixed assets 21,459,756,268.25 18,123,352,480.76
Total 21,459,756,268.25 18,123,352,480.76
(1) Overview of fixed assets
Unit: RMB
Houses and Production Transportation
Item Test equipment Office equipment Total
buildings equipment equipment
I. Original book
value:
1. Opening 14,760,235,631.6 26,590,154,930.0
8,908,580,031.83 2,270,622,048.27 627,324,825.83 23,392,392.51
balance 0 4
2. Amount
increased in 954,037,962.29 5,342,238,805.29 653,888,026.10 143,902,249.49 1,442,342.86 7,095,509,386.03
current period
(1) Purchase 28,931,306.90 1,738,835,094.71 232,984,667.73 135,329,066.20 1,376,826.86 2,137,456,962.40
(2) Transfer from
construction in 822,311,194.19 3,484,350,588.69 407,795,051.27 4,334,451.45 4,718,791,285.60
progress
(3) Increase in
business
combinations
(4) Impact of
difference from
translation of 49,073,587.67 118,860,328.51 13,108,307.10 4,238,731.84 65,516.00 185,346,471.12
statements in
foreign currency
(5) Provisional
estimate 53,721,873.53 192,793.38 53,914,666.91
adjustment
3. Amount
decreased in 15,780,124.16 600,452,131.25 229,656,360.99 41,007,602.48 518,730.34 887,414,949.22
current period
(1) Disposal or
59,825.50 483,700,868.86 99,169,031.48 40,998,358.50 518,730.34 624,446,814.68
scrapping
(2) Transfer to
construction in 116,400,876.14 130,487,329.51 246,888,205.65
progress
162
Goertek Inc. Annual Report 2022
(3) Provisional
estimate 15,720,298.66 350,386.25 16,070,684.91
adjustment
(4) Others -
disposal of 9,243.98 9,243.98
subsidiaries
4. Closing 19,502,022,305.6 32,798,249,366.8
9,846,837,869.96 2,694,853,713.38 730,219,472.84 24,316,005.03
balance 4 5
II. Accumulated
depreciation
1. Opening
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
balance
2. Amount
increased in 307,373,203.80 2,055,865,192.39 297,801,645.96 104,812,884.43 1,818,061.66 2,767,670,988.24
current period
(1) Accrual 304,074,483.41 2,033,456,070.43 295,499,133.96 102,518,087.30 1,806,379.33 2,737,354,154.43
(2) Impact of
difference from
translation of 3,298,720.39 22,409,121.96 2,302,512.00 2,294,797.13 11,682.33 30,316,833.81
statements in
foreign currency
3. Amount
decreased in 28,416.95 343,711,613.31 107,419,493.15 23,829,173.94 456,563.23 475,445,260.58
current period
(1) Disposal or
28,416.95 325,835,508.12 66,818,768.54 23,828,640.60 456,563.23 416,967,897.44
scrapping
(2) Transfer to
construction in 17,876,105.19 40,600,724.61 58,476,829.80
progress
(3) Others -
disposal of 533.34 533.34
subsidiaries
4. Closing 10,759,028,176.9
1,629,850,461.15 7,682,942,786.21 1,022,137,288.30 406,250,135.41 17,847,505.87
balance 4
III. Impairment
provision
1. Opening
balance
2. Amount
increased in 568,248,570.99 8,918,010.08 2,298,340.59 579,464,921.66
current period
(1) Accrual 568,248,570.99 8,918,010.08 2,298,340.59 579,464,921.66
3. Amount
decreased in
current period
(1) Disposal or
scrapping
4. Closing
568,248,570.99 8,918,010.08 2,298,340.59 579,464,921.66
balance
163
Goertek Inc. Annual Report 2022
IV. Book value
1. Book
value at the end 11,250,830,948.4 21,459,756,268.2
8,216,987,408.81 1,663,798,415.00 321,670,996.84 6,468,499.16
of the reporting 4 5
period
2. Opening 18,123,352,480.7
7,586,074,357.53 8,789,446,424.47 1,438,866,912.78 302,058,400.91 6,906,385.07
book value 6
(2) Fixed assets temporarily idle
Unit: RMB
Accumulated Depreciation
Item Original book value Book value Notes
depreciation reserves
Houses and
510,898,895.26 83,167,961.06 427,730,934.20
buildings
Production
2,851,846,929.06 195,002,843.55 568,248,570.99 2,088,595,514.52
equipment
Test equipment 81,518,296.69 16,004,787.81 8,918,010.08 56,595,498.80
Office equipment 37,679,813.88 11,594,110.80 2,298,340.59 23,787,362.49
Total 3,481,943,934.89 305,769,703.22 579,464,921.66 2,596,709,310.01
(3) Fixed assets leased out through operating leases
Unit: RMB
Item Book value at the end of the reporting period
Houses and buildings 320,815,654.11
Production equipment and other equipment 324,777,276.11
Total 645,592,930.22
(4) Overview of the fixed assets for which certificates of title to be obtained
Unit: RMB
Reasons for not obtaining the certificate of
Item Book value
title
Property rights certificate under
9# Factory building 144,927,930.97
processing
Property rights certificate under
55# Factory building 89,166,685.42
processing
Property rights certificate under
56# Factory building 88,849,225.81
processing
Property rights certificate under
52# Apartment 185,265,107.54
processing
Property rights certificate under
23# Apartment 2,597,183.74
processing
Property rights certificate under
E area carport 42,025,112.90
processing
Total 552,831,246.38
(5) Liquidation of fixed assets
None
164
Goertek Inc. Annual Report 2022
15. Construction in progress
Unit: RMB
Item Closing balance Opening balance
Construction in progress 2,276,965,736.33 2,127,055,853.77
Construction materials 147,478,039.00
Total 2,424,443,775.33 2,127,055,853.77
(1) Overview of construction in progress
Unit: RMB
Closing balance Opening balance
Item Depreciatio Depreciatio
Book balance Book value Book balance Book value
n reserves n reserves
Unaccepted
530,677,599.03 530,677,599.03 705,426,549.35 705,426,549.35
equipment
2# Office
287,041,263.11 287,041,263.11 160,023,622.42 160,023,622.42
building
Self-made
239,378,426.17 239,378,426.17 453,794,330.67 453,794,330.67
equipment
Sporadic projects 183,389,745.14 183,389,745.14 155,430,727.09 155,430,727.09
63# Factory
158,512,473.50 158,512,473.50 38,623,187.09 38,623,187.09
building
Infrastructure
147,355,671.17 147,355,671.17 1,614,213.25 1,614,213.25
construction
39# Factory
111,488,614.81 111,488,614.81 106,641,302.22 106,641,302.22
building
72# Factory
78,813,471.88 78,813,471.88 12,277,054.11 12,277,054.11
building
74# Factory
64,820,307.60 64,820,307.60 17,779,539.88 17,779,539.88
building
64# Factory
59,007,078.74 59,007,078.74 8,103,133.65 8,103,133.65
building
75# Factory
57,780,367.36 57,780,367.36 15,726,428.05 15,726,428.05
building
76# Factory
54,322,988.22 54,322,988.22 22,751,748.04 22,751,748.04
building
65# Factory
37,794,076.56 37,794,076.56 4,363,631.55 4,363,631.55
building
66# Factory
37,772,311.18 37,772,311.18 4,361,621.04 4,361,621.04
building
67# Factory
36,939,485.41 36,939,485.41 12,688,314.15 12,688,314.15
building
68# Factory
34,968,643.25 34,968,643.25 13,063,930.16 13,063,930.16
building
69# Factory
34,606,945.61 34,606,945.61 13,084,558.18 13,084,558.18
building
73# Factory
34,217,551.92 34,217,551.92 18,061,783.67 18,061,783.67
building
165
Goertek Inc. Annual Report 2022
77# Factory
26,720,487.51 26,720,487.51
building
70# Factory
21,058,712.36 21,058,712.36 6,883,803.12 6,883,803.12
building
71# Factory
18,649,051.46 18,649,051.46 5,376,869.24 5,376,869.24
building
Reconstruction
and expansion of 10,924,075.53 10,924,075.53
factory buildings
80# Factory
5,762,284.64 5,762,284.64
building
78# Factory
4,873,511.68 4,873,511.68
building
79# Factory
90,592.49 90,592.49
building
52# Factory
77,142,513.20 77,142,513.20
building
46# Factory
56,866,174.61 56,866,174.61
building
38# Factory
27,185,507.14 27,185,507.14
building
37# Factory
65,991,667.31 65,991,667.31
building
47# Factory
8,653,090.45 8,653,090.45
building
49# Factory
10,804,751.93 10,804,751.93
building
43# Factory
17,137,354.45 17,137,354.45
building
48# Factory
9,111,894.09 9,111,894.09
building
42# Factory
78,086,553.66 78,086,553.66
building
Total 2,276,965,736.33 2,276,965,736.33 2,127,055,853.77 2,127,055,853.77
(2) Increase or decrease of significant construction in progress in current period
Unit: RMB
Includin
g:
Amount Accumula
Increased Other Proportion Amount
transferred ted Interest
amount in amount of total of Source
Name of Budget Opening to fixed Closing Project amount of capitalization
the decreased project interest of
project amount balance assets in balance progress interest rate for
current in current input to capitaliz funds
current capitalizat current period
period period budget ation in
period ion
current
period
-
Unaccepted 705,426,5 1,721,559, 1,900,211,0 530,677,
3,902,462 Other
equipment 49.35 636.32 48.64 599.03
.00
2# Office 357,080, 160,023,6 127,017,6 287,041, 80.39% 90% Other
166
Goertek Inc. Annual Report 2022
building 000.00 22.42 40.69 263.11
Self-made 453,794,3 1,781,853, 1,996,269,0 239,378,
Other
equipment 30.67 138.27 42.77 426.17
Sporadic 155,430,7 304,476,8 106,291,620 170,226,2 183,389,
Other
projects 27.09 42.17 .80 03.32 745.14
63# Factory 172,939, 38,623,18 119,889,2 158,512,
91.66% 95% Other
building 700.00 7.09 86.41 473.50
Infrastructu
1,614,213. 177,455,5 31,714,061. 147,355,
re Other
25 19.34 42 671.17
construction
39# Factory 133,327, 106,641,3 4,847,312. 111,488,
83.62% 85% Other
building 700.00 02.22 59 614.81
-
72# Factory 92,834,0 12,277,05 63,863,68 78,813,4
2,672,737 84.90% 75% Other
building 00.00 4.11 0.13 71.88
.64
-
74# Factory 67,737,0 17,779,53 44,908,35 64,820,3
2,132,415 95.69% 85% Other
building 00.00 9.88 2.41 07.60
.31
64# Factory 77,500,0 8,103,133. 50,903,94 59,007,0
76.14% 90% Other
building 00.00 65 5.09 78.74
-
75# Factory 59,965,0 15,726,42 40,156,28 57,780,3
1,897,657 96.36% 85% Other
building 00.00 8.05 1.49 67.36
.82
-
76# Factory 56,401,0 22,751,74 29,580,86 54,322,9
1,990,376 96.32% 95% Other
building 00.00 8.04 3.46 88.22
.72
65# Factory 90,000,0 4,363,631. 33,430,44 37,794,0
41.99% 43% Other
building 00.00 55 5.01 76.56
66# Factory 90,000,0 4,361,621. 33,410,69 37,772,3
41.97% 43% Other
building 00.00 04 0.14 11.18
-
67# Factory 39,464,0 12,688,31 22,969,77 36,939,4
1,281,396 93.60% 85% Other
building 00.00 4.15 4.41 85.41
.85
-
68# Factory 40,951,0 13,063,93 20,664,42 34,968,6
1,240,284 85.39% 85% Other
building 00.00 0.16 9.06 43.25
.03
-
69# Factory 41,006,0 13,084,55 20,290,89 34,606,9
1,231,488 84.39% 83% Other
building 00.00 8.18 9.38 45.61
.05
-
73# Factory 51,949,0 18,061,78 14,805,45 34,217,5
1,350,316 65.87% 70% Other
building 00.00 3.67 1.98 51.92
.27
77# Factory 36,041,4 26,720,48 26,720,4
74.14% 90% Other
building 84.00 7.51 87.51
-
70# Factory 25,857,0 6,883,803. 13,453,45 21,058,7
721,454.4 81.44% 85% Other
building 00.00 12 4.81 12.36
3
-
71# Factory 19,454,0 5,376,869. 12,973,74 18,649,0
298,440.6 95.86% 85% Other
building 00.00 24 1.55 51.46
7
Reconstruct
ion and
82,160,27 71,236,202. 10,924,0
expansion Other
8.33 80 75.53
of factory
buildings
167
Goertek Inc. Annual Report 2022
80# Factory 187,000, 5,762,284. 5,762,28
3.08% 3% Other
building 000.00 64 4.64
78# Factory 155,382, 4,873,511. 4,873,51
3.14% 2% Other
building 125.40 68 1.68
79# Factory 330,260, 90,592.4
90,592.49 0.03% Other
building 781.60 9
52# Factory 204,098, 77,142,51 108,612,7 185,755,295
91.01% 100% Other
building 200.00 3.20 81.92 .12
46# Factory 94,000,0 56,866,17 62,049,63 118,915,808
126.51% 100% Other
building 00.00 4.61 4.16 .77
38# Factory 62,493,2 27,185,50 38,231,13 65,416,645.
104.68% 100% Other
building 72.60 7.14 8.08 22
37# Factory 99,990,0 65,991,66 31,150,04 97,141,713.
97.15% 100% Other
building 00.00 7.31 5.73 04
47# Factory 24,500,0 8,653,090. 17,771,28 26,424,375.
107.85% 100% Other
building 00.00 45 4.55 00
49# Factory 32,000,0 10,804,75 6,021,972. 16,826,724.
52.58% 100% Other
building 00.00 1.93 30 23
43# Factory 18,670,0 17,137,35 592,457.5 17,729,812.
94.96% 100% Other
building 00.00 4.45 9 04
-
48# Factory 9,200,00 9,111,894. 6,748,078.3
2,363,815. 73.35% 100% Other
building 0.00 09 8
71
42# Factory 82,826,8 78,086,55 78,110,857.
24,303.71 94.31% 100% Other
building 67.00 3.66 37
2,752,92 2,127,055, 5,020,208, 4,718,791,2 151,507,1 2,276,96
Total
8,130.60 853.77 341.69 85.60 73.53 5,736.33
(3) Provision for impairment of construction in progress in current period
None
(4) Construction materials
Unit: RMB
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Construction
147,478,039.00 147,478,039.00
materials
Total 147,478,039.00 147,478,039.00
16. Right-of-use assets
Unit: RMB
Item Houses and buildings Total
I. Original book value
1. Opening balance 441,665,247.28 441,665,247.28
2. Amount increased in current period 396,364,758.73 396,364,758.73
(1) New leases in the current period 387,332,676.00 387,332,676.00
(2) Impact of difference from translation
9,032,082.73 9,032,082.73
of statements in foreign currency
3. Amount decreased in current 42,555,571.38 42,555,571.38
168
Goertek Inc. Annual Report 2022
period
(1) Disposal 42,555,571.38 42,555,571.38
4. Closing balance 795,474,434.63 795,474,434.63
II. Accumulated depreciation
1. Opening balance 110,868,726.62 110,868,726.62
2. Amount increased in current period 135,485,658.48 135,485,658.48
(1) Accrual 132,043,964.75 132,043,964.75
(2) Impact of difference from
translation of statements in foreign 3,441,693.73 3,441,693.73
currency
3. Amount decreased in current
31,055,873.20 31,055,873.20
period
(1) Disposal 31,055,873.20 31,055,873.20
4. Closing balance 215,298,511.90 215,298,511.90
III. Impairment provision
1. Opening balance
2. Amount increased in current period
(1) Accrual
3. Amount decreased in current
period
(1) Disposal
4. Closing balance
IV. Book value
1. Book value at the end of the
580,175,922.73 580,175,922.73
reporting period
2. Opening book value 330,796,520.66 330,796,520.66
17. Intangible assets
(1) Overview of intangible assets
Unit: RMB
Non-patent
Item Land-use right Patent right Other Total
technology
I. Original book
value
1. Opening
1,439,499,400.79 8,964,410.00 3,305,496,457.05 235,180,322.80 4,989,140,590.64
balance
2. Amount
increased in current 132,428,026.82 479,056,102.14 36,282,298.76 647,766,427.72
period
(1) Purchase 116,914,980.00 36,367,588.82 153,282,568.82
(2) Internal R&D 479,056,102.14 479,056,102.14
(3) Increase in
business
combinations
(4) Impact of
15,513,046.82 -85,290.06 15,427,756.76
difference from
169
Goertek Inc. Annual Report 2022
translation of
statements in
foreign currency
3. Amount
decreased in current 218,038,817.46 218,038,817.46
period
(1) Disposal 216,021,931.15 216,021,931.15
(2) Others - disposal
2,016,886.31 2,016,886.31
of subsidiaries
4. Closing
1,571,927,427.61 8,964,410.00 3,566,513,741.73 271,462,621.56 5,418,868,200.90
balance
II. Accumulated
amortization
1. Opening
175,704,043.04 2,838,729.83 1,910,763,604.90 137,040,424.02 2,226,346,801.79
balance
2. Amount
increased in current 29,177,012.50 896,441.00 623,541,411.21 35,546,615.63 689,161,480.34
period
(1) Accrual 28,116,040.52 896,441.00 623,541,411.21 35,606,271.90 688,160,164.63
(2) Impact of
difference from
translation of 1,060,971.98 -59,656.27 1,001,315.71
statements in
foreign currency
3. Amount
decreased in current 217,433,751.91 217,433,751.91
period
(1) Disposal 216,021,931.15 216,021,931.15
(2) Others 1,411,820.76 1,411,820.76
4. Closing
204,881,055.54 3,735,170.83 2,316,871,264.20 172,587,039.65 2,698,074,530.22
balance
III. Impairment
provision
1. Opening
balance
2. Amount
increased in current
period
(1) Accrual
3. Amount
decreased in current
period
(1) Disposal
4. Closing
balance
IV. Book value
1. Book value
at the end of the 1,367,046,372.07 5,229,239.17 1,249,642,477.53 98,875,581.91 2,720,793,670.68
reporting period
170
Goertek Inc. Annual Report 2022
2. Opening
1,263,795,357.75 6,125,680.17 1,394,732,852.15 98,139,898.78 2,762,793,788.85
book value
At the end of this period, the proportion of intangible assets created through internal research and development of the Company to
the balance of intangible assets is 59.21%.
(2) Overview of land-use right without certificates of title
Unit: RMB
Reasons for not obtaining the certificate of
Item Book value
title
Property rights certificate under
Land use right 1 58,449,401.70
processing
Property rights certificate under
Land use right 2 58,270,720.00
processing
18. Development costs
Unit: RMB
Increased amount in the
Decreased amount in the current period
current period
Item Opening balance Closing balance
Internal Recognized as Transfer to current
Other
development costs intangible assets profit and loss
Self-developed
technologies for
242,956,092.44 5,198,312,190.48 479,056,102.14 4,601,034,068.87 361,178,111.91
electroacoustic
products
Total 242,956,092.44 5,198,312,190.48 479,056,102.14 4,601,034,068.87 361,178,111.91
19. Goodwill
(1) Original book value of goodwill
Unit: RMB
Decrease in the current
Increase in the current period
Name of the invested entity period
Opening balance Closing balance
or matter forming goodwill Formed by business
Other Disposal Other
combinations
Goertek Electronics, Inc. 1,743,540.56 1,743,540.56
Weifang Goertek
Communication 15,115,644.52 15,115,644.52
Technology Co., Ltd.
GoerTek
8,831,473.29 8,831,473.29
Audio Technologies Aps
Total 25,690,658.37 25,690,658.37
(2) Impairment provision for goodwill
Unit: RMB
Increase in the current Decrease in the
Name of the invested entity or matter Opening
period current period Closing balance
forming goodwill balance
Accrual Other Disposal Other
171
Goertek Inc. Annual Report 2022
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
As of December 31, 2021, the net value of goodwill was RMB 16,859,185.08, of which RMB 15,115,644.52 was related to the
acquisition of Weifang Goertek Communication Technology Co., Ltd. No goodwill impairment was recognized in the year, as the
recoverable amount of the relevant group of assets valued under the equity method was higher than its carrying value (including part
of carrying value of goodwill apportioned).
Explain the goodwill impairment test process, key parameters (such as the forecast period growth rate, stable period growth rate,
profit rate, discount rate, forecast period, etc. when the present value of the future cash flow is expected) and the recognition method
of goodwill impairment loss
None
Impact of goodwill impairment test
None
20. Long-term prepaid expenses
Unit: RMB
Increased amount in Amortized amount Other decreased
Item Opening balance Closing balance
the current period in the current period amount
Expenditure on
192,445,511.85 184,443,025.84 75,544,265.81 -2,093,031.38 303,437,303.26
house improvement
IT project service
4,439,272.89 28,477,398.48 5,832,519.69 27,084,151.68
fee
Design fee 350,431.01 7,872,669.14 1,435,531.03 6,787,569.12
Financing guarantee
1,767,500.00 1,515,000.00 252,500.00
fee
Bank commission
8,192,774.50 8,643,038.50 -450,264.00
and arrangement fee
Total 207,195,490.25 220,793,093.46 92,970,355.03 -2,543,295.38 337,561,524.06
21. Deferred tax assets/liabilities
(1) Deferred tax assets not offset
Unit: RMB
Closing balance Opening balance
Item Deductible temporary Deductible temporary
Deferred tax assets Deferred tax assets
difference difference
Provision for
1,714,479,986.93 259,912,213.28 286,270,259.14 45,253,703.58
impairment of assets
Unrealized profit from
1,106,784,542.91 182,217,984.94 1,058,642,169.31 161,021,024.99
internal transaction
Deductible loss 4,978,155,153.32 825,412,239.76 1,291,424,655.49 204,109,171.19
Government subsidies 303,540,279.67 47,040,683.06 299,191,717.99 46,916,190.75
Financial assets held for
trading - changes in fair 52,130,372.98 7,819,555.95
value of equity
172
Goertek Inc. Annual Report 2022
instrument
Changes in the fair value
of derivative financial 182,318,270.45 29,492,906.86 15,190,564.34 2,285,343.12
instruments
Temporary differences
42,335,704.66 6,350,355.70 46,297,192.22 6,944,578.83
of fixed assets
Expenses of share-based
75,231,226.39 11,284,683.96 190,629,395.67 28,594,409.35
payment
Total 8,454,975,537.31 1,369,530,623.51 3,187,645,954.16 495,124,421.81
(2) Deferred tax liabilities not offset
Unit: RMB
Closing balance Opening balance
Item Taxable temporary Taxable temporary
Deferred tax liabilities Deferred tax liabilities
difference difference
Asset appreciation after
re-evaluation following
the combination with an 4,126,637.34 1,031,659.32 4,338,259.81 1,084,564.94
enterprise under
different control
Changes in the fair value
of derivative financial 185,939,899.60 27,939,770.90 29,721,944.30 4,739,855.81
instruments
Difference in time point
for recognition of
5,039,047.50 1,259,761.87 5,581,895.45 1,395,473.86
interest income of
factoring business
Difference between the
book value of fixed 4,664,457,309.75 783,266,986.21 2,536,133,275.63 380,419,991.34
assets and their tax bases
Financial assets held for
trading - changes in fair
17,469,694.02 2,620,454.10 15,290,023.02 2,293,503.45
value of equity
instrument
Total 4,877,032,588.21 816,118,632.40 2,591,065,398.21 389,933,389.40
(3) Deferred tax assets or liabilities presented in net amount after offsetting
Unit: RMB
Amount of deferred tax Amount of deferred tax
Closing balance of Opening balance of
assets and liabilities assets and liabilities
Item deferred tax assets or deferred tax assets or
mutually offset at the mutually offset at the
liabilities after offsetting liabilities after offsetting
end of the period beginning of the period
Deferred tax assets 1,369,530,623.51 495,124,421.81
Deferred tax liabilities 816,118,632.40 389,933,389.40
(4) Details of unrecognized deferred tax assets
Unit: RMB
Item Closing balance Opening balance
173
Goertek Inc. Annual Report 2022
Deductible temporary difference 108,002,751.78 98,037,802.83
Deductible loss 1,113,018,229.33 916,176,966.88
Government subsidies 8,950,659.40 3,972,247.35
Unrealized profit from internal transaction 228,644,722.04 198,600,822.88
Total 1,458,616,362.55 1,216,787,839.94
(5) Deductible loss of unrecognized deferred tax assets will expire in the following years
Unit: RMB
Year Closing balance Opening balance Notes
2022 9,008,881.10
2023 42,489,136.50 58,999,159.63
2024 55,578,667.67 77,929,325.94
2025 115,720,117.70 160,630,241.51
2026 129,251,092.62 172,308,560.69
2027 104,866,432.82 718,056.78
2028 44,300,430.49 37,679,003.68
2029 84,671,122.89 76,312,985.99
2030 131,354,916.79 125,931,259.51
2031 215,711,939.66 196,659,492.05
2032 189,074,372.19
Total 1,113,018,229.33 916,176,966.88
22. Other non-current assets
Unit: RMB
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Contract assets 119,469.27 1,194.69 118,274.58 119,469.27 1,194.69 118,274.58
Prepayment for
269,755,356.88 269,755,356.88 366,744,190.26 366,744,190.26
long-term assets
Input tax to be
deducted but
expected not to 17,036,311.11 17,036,311.11
be deducted
within one year
Large-
denomination
certificates of 655,000,458.30 655,000,458.30 122,540,194.44 122,540,194.44
deposit issued by
banks
Prepaid long-
term borrowings 101,102,677.91 101,102,677.91
financing costs
Equity
investment
8,461,633.81 8,461,633.81
transfer
receivable
174
Goertek Inc. Annual Report 2022
The portion due
within one year -70,303,760.94 -1,194.69 -70,302,566.25
(Note VII. 9)
Total 964,135,835.23 964,135,835.23 506,440,165.08 1,194.69 506,438,970.39
23. Short-term borrowings
(1) Types of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Secured borrowings 508,878,860.80 1,008,216,693.01
Credit borrowings 6,611,967,165.87 3,276,642,654.01
Total 7,120,846,026.67 4,284,859,347.02
Explanation of the types of short-term borrowings:
The year-end balance of guaranteed loan is RMB 508,878,860.80 (principal: RMB 507,522,000.00; interest: RMB 1,356,860.80). A
part of the principal, RMB 487,522,000.00, 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. Financial liabilities held for trading
Unit: RMB
Item Closing balance Opening balance
Financial liabilities held for trading 202,293,742.46 15,190,564.34
Including:
Derivative financial liabilities 202,293,742.46 15,190,564.34
Total 202,293,742.46 15,190,564.34
25. Notes payable
Unit: RMB
Type Closing balance Opening balance
Commercial acceptance notes 170,000,000.00
Bank acceptance notes 4,269,924,397.04 2,742,876,464.23
Domestic letter of credit 410,573,849.04
Total 4,850,498,246.08 2,742,876,464.23
The amount of notes payable due and unpaid at the end of this period is RMB 0.00.
26. Accounts Payable
(1) Presentation of accounts payable
Unit: RMB
Item Closing balance Opening balance
Material cost and others 23,460,996,615.58 16,391,404,094.29
Payment for equipment 1,794,480,008.06 1,663,151,657.69
Payment for construction projects 493,281,646.55 475,053,903.42
175
Goertek Inc. Annual Report 2022
Total 25,748,758,270.19 18,529,609,655.40
(2) Important accounts payable aged above 1 year
Unit: RMB
Item Closing balance Reasons for outstanding or carry-over
Payment for construction projects 12,117,672.27 Unsettled
Payment for construction projects 6,935,430.37 Unsettled
Payment for material 5,835,592.51 Unsettled
Payment for construction projects 4,690,057.47 Unsettled
Payment for construction projects 3,456,102.47 Unsettled
Payment for material 3,079,988.19 Unsettled
Payment for construction projects 2,767,116.22 Unsettled
Payment for equipment 2,743,629.95 Unsettled
Payment for construction projects 2,500,498.78 Unsettled
Payment for construction projects 2,250,000.00 Unsettled
Payment for material 2,172,999.02 Unsettled
Total 48,549,087.25
27. Contract liabilities
Unit: RMB
Item Closing balance Opening balance
Advance payment received for products 2,295,347,547.31 2,210,825,761.69
Total 2,295,347,547.31 2,210,825,761.69
Amount and causes of significant changes in book value during the reporting period
None
28. Employee benefits payable
(1) Presentation of employee benefits payable to employees
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
I. Short-term payroll 1,066,570,159.63 8,623,115,311.57 8,690,667,606.34 999,017,864.86
II. Post-employment
benefits—defined 710,631,079.84 710,631,079.84
contribution plans
II. Dismission welfare 59,659,156.13 19,105,242.60 40,553,913.53
Total 1,066,570,159.63 9,393,405,547.54 9,420,403,928.78 1,039,571,778.39
(2) Presentation of short-term payroll
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
1. Salaries, bonuses,
1,054,909,054.85 7,549,129,018.00 7,620,021,779.44 984,016,293.41
allowances and subsidies
2. Employee welfare fee 458,239,229.72 458,239,229.72
176
Goertek Inc. Annual Report 2022
3. Social insurance
337,929,585.44 337,817,349.72 112,235.72
premium
Incl.: Medical
317,618,738.11 317,541,288.91 77,449.20
insurance premium
Work injury
18,650,439.40 18,650,439.40
insurance premium
Maternity
1,660,407.93 1,625,621.41 34,786.52
insurance premium
4. Housing provident fund 259,098,144.56 259,098,144.56
5. Labor union expenditure
and employee education 11,661,104.78 18,719,333.85 15,491,102.90 14,889,335.73
expenses
Total 1,066,570,159.63 8,623,115,311.57 8,690,667,606.34 999,017,864.86
(3) Presentation of defined contribution plans
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
1. Basic endowment
684,904,874.52 684,904,874.52
insurance premium
2. Unemployment
25,726,205.32 25,726,205.32
insurance premium
Total 710,631,079.84 710,631,079.84
Other explanations:
The Group contributes to mandatory pension program and unemployment benefit programs established by government authority. Under
these programs, the Group makes monthly contributions to these programs at certain percentages according to the social insurance
contribution base for 2022. Except the above monthly contributions, the Group is not under other payment obligations. 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 38,043,970.81 35,791,727.76
Enterprise income tax 174,981,926.24 254,141,624.62
Personal income tax 11,883,118.28 9,980,898.05
City maintenance and construction tax 10,809,326.00 19,989,711.74
Education surcharge 3,269,592.35 8,056,604.31
Local education surcharges 3,106,645.36 5,766,024.57
Housing property tax 19,768,868.36 16,792,720.42
Land use tax 2,934,841.41 2,926,628.84
Stamp duties tax 20,091,251.59 3,141,644.18
Water resource tax 48.00 20.00
Environmental protection tax 22,179.18 5,024.73
Withholding taxes 17,371.06
Total 284,911,767.58 356,610,000.28
177
Goertek Inc. Annual Report 2022
30. Other payables
Unit: RMB
Item Closing balance Opening balance
Other payables 78,974,306.79 80,187,733.17
Total 78,974,306.79 80,187,733.17
(1) Interest payable
None
(2) Dividends payable
None
(3) Other payables
1) Presentation of other payables by nature of payment
Unit: RMB
Item Closing balance Opening balance
Current accounts payable 19,961,968.64 30,175,265.11
Employee benefits payable 3,334,897.96 4,246,920.21
Deposit payable 46,944,671.46 44,029,093.10
Various security deposits payable 8,732,768.73 1,736,454.75
Total 78,974,306.79 80,187,733.17
2) Other important payables aged above 1 year
None
31. Current portion of non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Long-term borrowings due within one
992,791,555.56 400,000,000.00
year (Note VII, 33)
Lease liabilities due within one year
102,826,772.18 101,408,170.04
(Notes VII, 34)
Total 1,095,618,327.74 501,408,170.04
32. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
Notes receivable endorsed, undue and not
1,709,928.75
de-recognized
VAT payable—tax on items to be resold 4,252,178.60 13,134,430.26
Total 4,252,178.60 14,844,359.01
Change in short-term debentures payable:
None
178
Goertek Inc. Annual Report 2022
33. Long-term borrowings
(1) Types of long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Secured borrowings 1,100,982,361.11 1,613,294,229.18
Credit borrowings 2,097,809,194.45 990,921,555.56
Long-term borrowings due within one
-992,791,555.56 -400,000,000.00
year (Note VII, 31)
Total 2,206,000,000.00 2,204,215,784.74
Description of types of long-term borrowings:
The year-end balance of guaranteed loan is RMB 1,100,982,361.11, consisting of RMB 1,100,000,000.00 of principal and RMB
982,361.11 of interest. The borrowing is secured by a guarantee provided by Goertek Group Co., Ltd.
Other explanations, including interest rate range:
The interest rate range for long-term borrowings is 2.65%-3.7% on Dec. 31, 2022. (2.7%-3.7% on December 31, 2021).
34. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Lease payment 639,092,280.68 327,964,908.57
Unrecognized financing fees -65,561,000.75 -16,346,783.13
Lease liabilities due within one year
-102,826,772.18 -101,408,170.04
(Notes VII, 31)
Total 470,704,507.75 210,209,955.40
35. Deferred income
Unit: RMB
Increase in the Decrease in the
Item Opening balance Closing balance Cause of formation
current period current period
Government
540,321,080.65 158,061,363.10 166,008,299.37 532,374,144.38
subsidies
Total 540,321,080.65 158,061,363.10 166,008,299.37 532,374,144.38 --
Items involving government subsidies:
Unit: RMB
Amount
Amount of included in Amount
Amount of
new non- included in Asset-
Liability Opening cost offset in Other Closing
subsidies in operating other income related/incom
item balance current changes balance
current revenue of in current e-related
period
period the current period
period
Special
funding for
corporate
500,221,040.0 55,206,363.1 61,526,672.7 493,900,730.
innovation, Asset-related
5 0 1 44
technical
transformat
ion and
179
Goertek Inc. Annual Report 2022
industrial
upgrading
Awards and
subsidies
38,473,413.9
for public 40,100,040.60 1,626,626.66 Asset-related
4
leasehold
houses
Subsidies
for R&D 102,855,000. 102,855,000. Income-
projects, 00 00 related
etc.
540,321,080.6 158,061,363. 166,008,299. 532,374,144.
Total
5 10 37 38
36. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Equity of other partners of the fund
172,261,037.39
company
Total 172,261,037.39
37. Share capital
Unit: RMB
Increase or decrease in the change (+, -)
Opening balance Bonus Transferred Closing balance
New shares Other Sub-total
shares from reserves
Total shares 3,416,321,036.00 4,082,164.00 4,082,164.00 3,420,403,200.00
Other explanations:
(1) The Company's initial grant of certain stock options under the 2021 Stock Option Incentive Plan entered its first exercise period on
June 24, 2022. Due to employees' exercise of the right, the Company issued 4,082,164 Class A Shares to the incentive targets. The
share capital of the Company has been changed to RMB 3,420,403,200.
(2) As of December 31, 2022, the 93,500,000 shares of the Company held by the controlling shareholders and their persons acting in
concert have been pledged, representing 2.73% of total shares of the Company. Specifically:
Mr. Jiang Long, a shareholder of the Company, pledged his 93,500,000 shares of the Company. Among them, 16,500,000 shares are
pledged to China Merchants Securities Asset Management Co., Ltd., and the pledge period is from November 1, 2022 to June 13, 2023;
33,000,000 shares are pledged to China Merchants Securities Asset Management Co., Ltd., and the pledge period is from June 13, 2022
to June 13, 2023; 16,000,000 shares are pledged to Zhongtai Securities (Shanghai) Co., Ltd., and the pledge period is from November
1, 2022 to June 13, 2023; 28,000,000 shares are pledged to Zhongtai Securities (Shanghai) Co., Ltd., and the pledge period is from
June 13, 2022 to June 13, 2023.
38. Capital surplus
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
Capital premium (Share
8,673,556,974.68 771,293,555.91 9,444,850,530.59
capital premium)
Other capital surplus 804,549,219.62 648,749,842.09 617,490,341.27 835,808,720.44
Total 9,478,106,194.30 1,420,043,398.00 617,490,341.27 10,280,659,251.03
180
Goertek Inc. Annual Report 2022
Other explanations, including the increase and decrease in the current period and explanation of reasons for changes:
(1) Capital surplus: Share capital premium increased by RMB 771,293,555.91 this year. Reasons: a. The initial grant of stock options
under the 2021 Stock Option Incentive Plan has entered the first exercise period, and the additional issuance of shares increased the
capital surplus by RMB 114,831,273.32; b. As the employee stock ownership plan has reached the release stage and the initial grant of
the 2021 stock options has entered the first exercise period. For this batch, other capital surplus of RMB 561,573,669.78 recognized
during the waiting period is transferred to share capital premium; c. Premium contribution by minority shareholders of the subsidiary
Goertek Optical Technology Co., Ltd increased the capital surplus by RMB 94,888,612.81.
(2) Capital surplus: Other capital surplus increased by RMB 648,749,842.09 this year, all of which were formed by share-based
payment. For details, please refer to Note XIII, Share-based Payment 1. The overall situation of share-based payment.
(3) Capital surplus: Other capital surplus decreased by RMB 617,490,341.27 this year. Reasons: a. As the employee stock ownership
plan has reached the release stage and the initial grant of the 2021 stock options has entered the first exercise period, a capital surplus
of RMB 561,573,669.78 is transferred to share capital premium; b. Under the equity method, changes in other shareholders’ equity in
the investment unit resulted in a decrease of RMB 55,916,671.49.
39. Treasury stock
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
Shares of the Company
repurchased for employee
2,291,973,146.75 2,291,973,146.75
stock programs or equity
incentives
Total 2,291,973,146.75 2,291,973,146.75
Other explanations, including the increase and decrease in the current period and explanation of reasons for changes:
As of December 31, 2022, there were cumulatively 74,265,451 treasury stock, representing 2.17% of the total share capital of the
Company.
40. Other comprehensive income
Unit: RMB
2022
Less: Less:
Recorded in Recorded in
other other
Amount comprehensive comprehensive
Less: Attributed
Opening incurred before income for the income for the Amount after tax Closing
Item Income after tax to
balance income tax in previous previous attributable to the balance
tax minority
the current period and period and parent company
expenses shareholders
period transferred in transferred in
profit or loss undistributed
for the current profits for the
period current period
I. Other
comprehensive
income that
cannot be
46,931,445.38 96,344,086.62 93,489,685.96 2,195,604.99 658,795.67 49,127,050.37
subsequently
reclassified
into profit and
loss
Changes
in the fair
46,931,445.38 96,344,086.62 93,489,685.96 2,195,604.99 658,795.67 49,127,050.37
value of
investments in
181
Goertek Inc. Annual Report 2022
other equity
instruments
II. Other
comprehensive
income that
-
will be 244,763,633.22 11,857,998.44 220,328,498.94 12,577,135.84 73,250,283.99
147,078,214.95
reclassified
into profit or
loss
Including:
other
comprehensive
income that
can be
27,351,340.30 -15,493,341.86 11,857,998.44 -27,351,340.30
converted into
gains and
losses under
the equity
method
Difference
from
translation of
-
financial 260,256,975.08 247,679,839.24 12,577,135.84 73,250,283.99
174,429,555.25
statements in
foreign
currency
Total other
-
comprehensive 341,107,719.84 11,857,998.44 93,489,685.96 222,524,103.93 13,235,931.51 122,377,334.36
100,146,769.57
incomes
Other explanations, including the adjustment of the effective part of cash flow hedging gains and losses into the initially recognized
amount of the hedged item:
(1) Other comprehensive income that cannot be subsequently reclassified into profit and loss: Under the item of changes in the fair
value of investments in other equity instruments, RMB 658,795.67 is attributable to minority shareholders after tax, which is the equity
of other partners of the fund company. The statement is presented in other non-current liabilities.
(2) Other comprehensive income that will be reclassified into profit or loss: Under the item of difference from translation of financial
statements in foreign currency, RMB 12,577,135.84 is attributable to minority shareholders after tax. Of which, RMB 10,012,201.30
is the equity of other partners of the fund company. The statement is presented in other non-current liabilities.
41. Surplus reserve
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
Statutory surplus reserve 1,446,536,121.51 1,446,536,121.51
Total 1,446,536,121.51 1,446,536,121.51
Explanation of surplus reserve, including the increase and decrease in the current period and explanation of reasons for changes:
According to the Company Law and the Articles of Association, the Company allocates 10% of net profits to the statutory surplus
reserve. The Company does not need to allocate further amounts if the cumulative amount of the statutory surplus reserve reaches more
than 50% of the registered capital.
The Company may extract any surplus reserve after extracting the statutory surplus reserve. Any surplus reserve may be used to cover
the losses of previous years or increase the share capital after approval.
182
Goertek Inc. Annual Report 2022
42. General risk reserve
Balance at the end of the Increase in the current Decrease in the current Closing
Items
previous year period period balance
Reserve for risks in financing 6,081,200.
6,081,200.00
factoring business 00
Other explanations:
According to the Notice by the General Office of the China Banking and Insurance Regulatory Commission of Strengthening the
Supervision and Administration of Commercial Factoring Enterprises (YBJBF [2019] No. 205), the Group allocates 1% of the closing
balance of financing factoring business to the provision for risks.
43. Undistributed profits
Unit: RMB
Item 2022 2021
Undistributed profits at the end of last period
15,372,823,358.48 11,500,277,791.35
before adjustment
Undistributed profits at the beginning of the
15,372,823,358.48 11,500,277,791.35
period after adjustment
Plus: net profit attributable to the owner of
1,749,181,131.83 4,274,702,999.38
the parent company in the current period
Less: Withdrawal of statutory surplus reserve 75,858,016.34
Common stock dividends payable 668,411,117.00 499,658,337.75
Add: Disposal of investments in other equity
54,204,866.03 173,358,921.84
instruments
Undistributed profits at the end of the period 16,507,798,239.34 15,372,823,358.48
Details of the adjustment of the undistributed profits at the beginning of the period:
1) The undistributed profits affected by the retroactive adjustment in accordance with Accounting Standards for Business Enterprises
and the related new regulations at the beginning of the period is RMB 0.00.
2) The undistributed profits affected by the changes in accounting policy at the beginning of the period is RMB 0.00.
3) The undistributed profits affected by the correction of major accounting errors at the beginning of the period is RMB 0.00.
4) The undistributed profits affected by the change of combination scope caused by the common control at the beginning of the
period is RMB 0.00.
5) The undistributed profits affected by other adjustments at the beginning of the period is RMB 0.00.
44. Operating revenue and operating cost
Unit: RMB
2022 2021
Item
Income Cost Income Cost
Main business 102,966,939,788.80 91,509,198,680.69 76,946,324,805.73 66,054,072,404.35
Other business 1,927,384,373.46 1,724,277,862.59 1,275,093,812.29 1,113,594,255.31
Total 104,894,324,162.26 93,233,476,543.28 78,221,418,618.02 67,167,666,659.66
Whether the lower of the audited net profit before and the audited net profit after deducting non-recurring profits and losses is
negative
Yes No
Revenue related information:
Unit: RMB
Classification of contracts Division 1 Total
183
Goertek Inc. Annual Report 2022
Product types
Including:
Precision components 14,003,616,502.68 14,003,616,502.68
Smart audio device 25,880,868,282.31 25,880,868,282.31
Smart hardware 63,082,455,003.81 63,082,455,003.81
Other business income 1,927,384,373.46 1,927,384,373.46
By business regions
Including:
Domestic 9,182,257,334.82 9,182,257,334.82
Overseas 95,712,066,827.44 95,712,066,827.44
By sales channel
Including:
Direct selling 104,414,898,362.49 104,414,898,362.49
Distribution 479,425,799.77 479,425,799.77
Total 104,894,324,162.26 104,894,324,162.26
Information about performance obligations:
None
Information about the trading price apportioned to remaining performance obligations:
None
45. Taxes and surcharges
Unit: RMB
Item 2022 2021
City maintenance and construction tax 66,516,485.50 66,914,986.17
Education surcharge 20,113,757.39 25,069,506.18
Housing property tax 72,739,156.82 62,157,864.15
Land use tax 12,404,902.13 4,928,054.01
Vehicle and vessel use tax 50,823.89 52,964.86
Stamp duties tax 75,852,578.16 45,106,860.23
Local education surcharges 19,015,218.97 17,398,626.51
Local water conservancy construction
160,251.76 220,917.98
fund
Water resource tax 230.00 15,694.00
Environmental protection tax 77,095.67 26,511.41
Total 266,930,500.29 221,891,985.50
46. Selling expenses
Unit: RMB
Item 2022 2021
Employee remuneration 377,301,268.94 269,460,139.20
Share-based apportioned payment 44,473,697.53 63,634,538.59
Rental fees 5,212,260.22 4,474,361.06
Sales commission 19,599,978.50 13,450,128.71
184
Goertek Inc. Annual Report 2022
Insurance expenses 17,874,354.85 21,984,424.28
Entertainment expenses 15,172,602.51 12,782,841.89
Travel expenses 16,715,766.24 11,173,815.95
Office expenses 21,541,427.80 14,724,830.06
Depreciation cost 14,823,196.77 14,204,718.91
Other expenses 15,584,288.69 18,980,178.43
Total 548,298,842.05 444,869,977.08
47. General and administrative expenses
Unit: RMB
Item 2022 2021
Employee remuneration 1,167,274,863.96 917,532,446.14
Share-based apportioned payment 465,535,747.22 495,415,756.61
Office expenses 165,198,225.61 110,998,813.33
Consulting fees 54,679,471.16 50,040,642.58
Depreciation cost 99,094,366.24 113,225,494.49
Amortization of intangible assets 59,414,772.34 49,984,739.09
Recruitment and training fees 49,182,108.76 36,270,849.32
Rental fees 13,335,129.18 7,451,592.83
Entertainment expenses 27,173,035.83 17,746,437.84
Travel expenses 29,354,745.57 21,380,866.38
Security expenses 40,398,042.61 22,040,105.21
Property insurance 8,548,266.15 9,898,802.88
Other expenses 115,316,870.83 99,671,226.62
Total 2,294,505,645.46 1,951,657,773.32
48. Research and development expenses
Unit: RMB
Item 2022 2021
Employee remuneration 2,210,936,970.20 1,816,259,331.16
Direct input cost 1,822,282,210.46 1,321,811,155.22
Amortization of intangible assets 628,118,767.01 534,352,849.63
Depreciation cost 165,357,575.09 115,335,756.86
Share-based apportioned payment 126,807,377.90 237,184,411.36
Design fees 33,121,202.94 15,289,807.24
Other expenses 239,901,051.39 129,840,970.63
Total 5,226,525,154.99 4,170,074,282.10
49. Financial expenses
Unit: RMB
Item 2022 2021
Interest expense 303,539,076.90 213,431,869.57
Less: Interest income 189,356,256.02 91,492,632.72
Less: Amount of interest capitalized 3,809,576.72
Exchange gains and losses -21,268,273.24 27,313,452.95
185
Goertek Inc. Annual Report 2022
Item 2022 2021
Less: Amount of foreign exchange
gain/loss capitalized
Other 56,208,534.10 21,656,869.28
Total 149,123,081.74 167,099,982.36
50. Other income
Unit: RMB
Sources of other income 2022 2021
Government subsidies 351,383,799.43 464,119,437.91
Tax benefit included 15,097,894.50 1,044,485.08
Return of individual tax handling fee 6,724,169.25 1,558,878.12
Total 373,205,863.18 466,722,801.11
51. Investment income
Unit: RMB
Item 2022 2021
Return on long-term equity investments
2,298,237.32 23,111,753.41
measured by the equity method
Investments income from disposal of long-term
287,784,190.15 6,872,916.88
equity investments
Investment income from disposal of financial
-309,999,635.90 425,908,909.46
assets held for trading
Investment income from products such as
20,466,167.48 20,903,469.99
certificates of deposit
Profits or losses arising from derecognised
-23,037,232.06 -7,852,608.05
financial assets at amortised cost
Discount losses of financing receivables that
-13,755,696.61
meet the conditions for derecognition
Other 295,443.10
Total -36,243,969.62 469,239,884.79
52. Gains on changes in fair value
Unit: RMB
Sources of gains on changes in fair value 2022 2021
Financial assets held for trading 98,748,584.12 -41,409,120.87
Including: Gains on changes in fair
value due to derivative financial 164,830,672.72 -104,999,182.31
instruments
Financial liabilities held for trading -171,961,305.71 -8,763,505.06
Other non-current financial assets 16,131,386.62 1,324,000.00
Total -57,081,334.97 -48,848,625.93
53. Credit impairment losses
Unit: RMB
Item 2022 2021
186
Goertek Inc. Annual Report 2022
Credit impairment losses on bad debts of
2,613,550.10 -10,478,144.68
other receivables
Credit impairment losses on bad debts of
-16,834,146.02 -19,215,532.99
accounts receivable
Total -14,220,595.92 -29,693,677.67
54. Asset impairment losses
Unit: RMB
Item 2022 2021
I. Loss on bad debts
II. Loss of inventory falling price and
impairment loss of contract performance -1,203,279,438.25 -241,076,190.54
cost
III. Impairment loss of long-term equity
investments
IV. Impairment loss of investment
properties
V. Fixed assets impairment losses -579,464,921.66
VI. Impairment loss from construction
materials
VII. Impairment loss of construction in
progress
VIII. Impairment loss of bearer biological
assets
IX. Impairment loss of oil and gas assets
X. Impairment loss of intangible assets
XI. Impairment loss of goodwill
XII. Impairment loss of contract assets 684.09
XIII. Others
Total -1,782,744,359.91 -241,075,506.45
55. Gains on disposal of assets
Unit: RMB
Source of income from disposal of assets 2022 2021
Gains on disposal of fixed assets -47,534,013.23 -31,557,333.48
Income from disposal of intangible assets -7,866.28
Income from disposal of right-of-use
-364,926.50 385,373.77
assets
Total -47,898,939.73 -31,179,825.99
56. Non-operating income
Unit: RMB
Amount recorded in current
Item 2022 2021
non-recurring profits and losses
Gains from damage and
liquidation of non-current 464,291.05 50,066.59 464,291.05
assets
187
Goertek Inc. Annual Report 2022
Other 21,013,169.39 22,394,671.59 21,013,169.39
Total 21,477,460.44 22,444,738.18 21,477,460.44
Government subsidies included in current profit and loss:
None
Other explanations:
Non-operating income: The others are mainly unpayable amounts and liquidated damages, etc.
57. Non-operating expenses
Unit: RMB
Amount recorded in current non-
Item 2022 2021
recurring profits and losses
Donation given 4,251,201.32 2,304,955.25 4,251,201.32
Losses from damage and
liquidation of non-current 117,427,303.86 91,018,949.18 117,427,303.86
assets
Other 1,051,865.31 6,535,044.63 1,051,865.31
Total 122,730,370.49 99,858,949.06 122,730,370.49
58. Income tax expenses
(1) Income tax expense statement
Unit: RMB
Item 2022 2021
Current income tax expenses 164,522,364.79 451,539,809.11
Deferred income tax expenses -446,312,602.15 -152,697,496.47
Total -281,790,237.36 298,842,312.64
(2) Adjustment process of accounting profit and income tax expenses
Unit: RMB
Item 2022
Total profit 1,509,228,147.43
Income tax expense calculated at statutory/applicable tax rate 226,384,222.11
Impact of different tax rates applied to subsidiaries -189,362,810.30
Impact of adjusting income tax in previous periods 5,094,761.83
Impact of non-taxable income -47,193,013.18
Impact of non-deductible costs, expenses and losses 9,644,530.80
Impact of deductible loss of unrecognized deferred tax assets in previous
-24,531,504.83
period
Impact of deductible temporary differences or deductible losses of
59,052,399.11
unrecognized deferred tax assets in current period
Changes in balance of beginning deferred tax assets/liabilities due to tax rate
11,813,185.71
adjustment
Impact of the weighted deduction of research and development expenses -386,478,046.71
The impact of weighted deduction of depreciation of fixed assets for high-tech
-37,683,420.89
enterprises
Impact of share-based payment 91,469,458.99
188
Goertek Inc. Annual Report 2022
Income tax expenses -281,790,237.36
59. Other comprehensive income
For details, see Note VII. 40. Other comprehensive income.
60. Cash flow statement items
(1) Cash received relating to other operating activities
Unit: RMB
Item 2022 2021
Government subsidies 343,436,863.16 465,518,187.04
Current account 1,258,014,604.41 3,315,066,295.04
Interest income 183,221,677.04 79,467,922.20
Other 139,368,250.38 156,626,681.14
Total 1,924,041,394.99 4,016,679,085.42
(2) Cash paid relating to other operating activities
Unit: RMB
Item 2022 2021
Research and development expenses 2,084,157,358.43 1,462,687,665.98
Current account 1,129,587,037.65 3,404,842,851.48
Office expenses 186,739,653.41 125,723,643.39
Rental fees 18,547,389.40 11,925,953.89
Consulting fees 54,679,471.16 50,040,642.58
Entertainment expenses 42,345,638.34 30,529,279.73
Travel expenses 46,070,511.81 32,554,682.33
Insurance expenses 26,422,621.00 31,883,227.16
Sales commission 19,599,978.50 13,450,128.71
Other 239,051,045.79 255,037,716.46
Total 3,847,200,705.49 5,418,675,791.71
(3) Cash received relating to other investing activities
Unit: RMB
Item 2022 2021
Unexpired option premium received 21,653,530.71 9,258,951.92
Total 21,653,530.71 9,258,951.92
(4) Cash paid relating to other investing activities
Unit: RMB
Item 2022 2021
Net cash paid for disposal of subsidiaries
10,363,395.50
and other business units
Total 10,363,395.50
189
Goertek Inc. Annual Report 2022
(5) Cash received relating to other financing activities
Unit: RMB
Item 2022 2021
Various securities in other currencies
2,601,999,441.96 1,380,340,710.98
recovered
Interest income on raised funds 6,134,578.99 12,024,710.52
Contributions from other partners of the
75,765,967.07
fund company
Subscription of employee stock ownership
110,000,000.00
plan
Borrowing of accounts receivable
5,000,000.00
factoring
Total 2,683,899,988.02 1,507,365,421.50
(6) Cash paid relating to other financing activities
Unit: RMB
Item 2022 2021
Various security deposit payments for
3,078,483,092.56 1,416,013,727.89
other monetary capital
Rental fees payment 128,750,261.16 102,991,821.74
Financing expense paid with borrowings 103,495,260.30
Listing expense of the Goertek
4,263,871.42 8,983,655.49
Microelectronics subsidiary
Repurchase of treasury stock 1,999,998,595.63
Buy-out factoring fee 7,852,608.05
Intermediary fee of issuance of bonds 1,940,000.00
Total 3,314,992,485.44 3,537,780,408.80
61. Supplementary information for cash flow statement
(1) Supplementary information for cash flow statement
Unit: RMB
Supplementary information Amount of current period Amount in previous period
1. Reconciliation of net profit to cash flow
from operating activities
Net profit 1,791,018,384.79 4,307,066,484.34
Add: Provision for impairment of assets 1,782,744,359.91 241,075,506.45
Credit impairment losses 14,220,595.92 29,693,677.67
Depreciation of fixed assets,
depletion of oil and gas assets and 2,737,354,154.43 2,117,567,273.70
depreciation of bearer biological assets
Depreciation of right-of-use assets 132,043,964.75 122,484,411.95
Amortization of intangible assets 688,160,164.63 588,754,476.68
Long-term prepaid expenses 92,970,355.03 89,042,424.24
Losses on disposal of fixed assets,
47,898,939.73 31,179,825.99
intangible assets and other long-term
190
Goertek Inc. Annual Report 2022
assets (Use "-" for gain)
Loss on retirement of fixed assets
116,963,012.81 90,968,882.59
(Use "-" for gain)
Loss on changes in fair value (Use
57,081,334.97 48,848,625.93
"-" for gain)
Financial expenses (Use "-" for
-67,001,475.56 214,683,875.67
gain)
Investment loss (Use "-" for gain) -548,959.05 -469,239,884.79
Decrease in deferred tax assets
-874,406,201.70 -219,564,976.07
(Use "-" for gain)
Increase in deferred tax liabilities
426,185,243.00 66,867,479.60
(Use "-" for decrease)
Decrease in inventory (Use "-" for
-6,108,031,112.07 -3,013,184,423.74
increase)
Decrease of operating receivable
-2,061,081,561.57 -1,591,304,230.95
items (Use "-" for increase)
Increase in operational payables
8,882,166,156.12 5,072,167,615.36
(Use "-" for decrease)
Other 659,376,008.54 871,368,483.26
Net cash flow from operating
8,317,113,364.68 8,598,475,527.88
activities
2. Significant investing and financing
activities that do not involve cash receipts
and payments:
Debts transferred to capital
Convertible corporate bonds due within
one year
Fixed assets under finance lease
3. Net changes in cash and cash
equivalents:
Closing balance of cash 10,799,993,468.81 9,137,900,902.04
Less: Opening balance of cash 9,137,900,902.04 6,913,191,984.54
Add: Closing balance of cash
equivalents
Less: Opening balance of cash
equivalents
Net increase in cash and cash
1,662,092,566.77 2,224,708,917.50
equivalents
(2) Net cash paid for the acquisition of subsidiaries in the current period
None
(3) Net amount of cash received for disposal of subsidiaries in the current period
Unit: RMB
Amount
Cash or cash equivalents received in the current period from the
1,487,700.00
disposal of subsidiaries
191
Goertek Inc. Annual Report 2022
Including:
Shenzhen Mototek Smart Technology Co., Ltd. 1,397,700.00
Qingdao Resonance Venture Capital Management Co., Ltd. 90,000.00
Less: cash and cash equivalents held by the Company on the date
11,528,130.34
of loss of control
Including:
Shenzhen Mototek Smart Technology Co., Ltd. 1,074,734.84
Qingdao Resonance Venture Capital Management Co., Ltd. 10,453,395.50
Including:
Net cash received on disposal of subsidiaries -10,040,430.34
Other explanations:
The net amount of cash received from the disposal of subsidiaries is RMB -10,040,430.34. As shown in the statement, net cash received
from disposal of subsidiaries and other business units is RMB 322,965.16, and cash received relating to other investing activities is
RMB 10,363,395.50.
(4) Composition of cash and cash equivalents
Unit: RMB
Item Closing balance Opening balance
I. Cash 10,799,993,468.81 9,137,900,902.04
Including: Cash on hand 33,671.21 160,703.83
Bank deposits that can be used for
10,799,959,797.60 9,137,740,198.21
payment at any time
II. Cash equivalents
III. Closing balance of cash and cash
10,799,993,468.81 9,137,900,902.04
equivalents
62. Assets with restricted ownership or right to use
Unit: RMB
Book value at the end of the reporting
Item Reasons for restrictions
period
Cash at bank and on hand 1,392,748,538.84 Deposit for bills and borrowings
Notes receivable 5,848,815.01 Bill pledge and others
Current portion of non-current assets 70,184,291.67 When large-denomination certificates of
deposit is pledged to the bank, the bank
Other non-current assets 544,796,722.20 will issue financing guarantees, notes and
so on
Total 2,013,578,367.72
63. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
Closing foreign currency Closing converted RMB
Item Converted exchange rate
balance balance
Cash at bank and on hand 5,214,817,550.47
Including: USD 721,965,497.12 6.9646 5,028,200,901.24
192
Goertek Inc. Annual Report 2022
Closing foreign currency Closing converted RMB
Item Converted exchange rate
balance balance
EUR 405,195.97 7.4229 3,007,729.17
HKD 6,941,764.38 0.89327 6,200,869.87
JPY 286,096,106.00 0.052358 14,979,419.92
KRW 41,603,189.63 0.005523 229,774.42
NTD 12,940,036.00 0.227060 2,938,164.57
VDN 526,837,230,968.00 0.000295 155,416,983.14
DKK 3,850,242.00 0.998303 3,843,708.14
Accounts receivable 12,360,319,597.57
Including: USD 1,773,906,842.40 6.9646 12,354,551,594.58
EUR
HKD
JPY 14,403,528.61 0.052358 754,139.95
KRW 1,029,775.74 0.005523 5,687.45
NTD 8,572,715.01 0.227060 1,946,520.67
VDN 10,348,213,427.08 0.000295 3,052,722.96
DKK 8,947.14 0.998303 8,931.96
Other receivables 26,812,047.16
Including: USD 156,444.76 6.9646 1,089,575.18
JPY 153,881,253.00 0.052358 8,056,914.64
KRW 56,661,531.91 0.005523 312,941.64
NTD 3,339,993.00 0.227060 758,378.81
VDN 55,780,573,284.01 0.000295 16,455,269.12
DKK 139,204.00 0.998303 138,967.77
Short-term borrowings 2,820,642,774.42
Including: USD 390,366,793.00 6.9646 2,718,748,566.53
VDN 345,404,094,537.49 0.000295 101,894,207.89
Accounts payable 15,723,817,308.55
Including: USD 2,235,704,428.62 6.9646 15,570,787,063.57
EUR 213,478.00 7.4229 1,584,625.85
JPY 117,563,703.96 0.052358 6,155,400.41
KRW 116,634.40 0.005523 644.17
NTD 72,614.00 0.227060 16,487.73
VDN 492,451,141,765.14 0.000295 145,273,086.82
Other payables 10,948,533.09
Including: USD 347,299.40 6.9646 2,418,801.40
JPY 20,642,447.72 0.052358 1,080,797.28
KRW 3,582,778.82 0.005523 19,787.69
NTD 14,341,665.33 0.227060 3,256,418.53
VDN 12,024,034,599.82 0.000295 3,547,090.21
DKK 626,701.49 0.998303 625,637.98
Current portion of non-current
34,475,504.62
liabilities
Including: USD 560,377.09 6.9646 3,902,802.28
193
Goertek Inc. Annual Report 2022
Closing foreign currency Closing converted RMB
Item Converted exchange rate
balance balance
JPY 135,528,112.75 0.052358 7,095,980.93
VDN 79,582,106,482.23 0.000295 23,476,721.41
Lease liabilities 87,442,458.88
Including: USD 583,928.07 6.9646 4,066,825.44
JPY 187,325,864.03 0.052358 9,808,007.59
VDN 249,381,782,531.75 0.000295 73,567,625.85
(2) Explanation of overseas operating entities, including, the main overseas operating places, bookkeeping
base currency and selection basis for important overseas operating entities, and the reasons for changes in
bookkeeping base currency.
Applicable Not applicable
Main
Whether there is any
location of Accounting Accounting currency
Name of the important overseas operating entity change in the accounting
business currency selection basis
currency
operation
Legal currency of the
Goertek Vina Co., Ltd Vietnam VDN country where it is No
registered
Legal currency of the
Goertek Technology Vina Company Limited Vietnam VDN country where it is No
registered
Currency adopted in
Goertek (HongKong) Co.,Limited Hong Kong USD business receipts and No
payments
64. Government subsidies
(1) Basic information of government subsidies
Unit: RMB
Amount recorded in current
Type Amount Reported items
profits and losses
Income-related 185,375,500.06 Other income 185,375,500.06
Income-related 102,855,000.00 Deferred income 102,855,000.00
Asset-related 55,206,363.10 Deferred income 1,975,233.51
Total 343,436,863.16 290,205,733.57
(2) Refund of government subsidies
Applicable Not applicable
65. Others
None
194
Goertek Inc. Annual Report 2022
VIII. Change of combination scope
1. Business combination not under common control
None
2. Business combination under common control
None
3. Counter purchase
None
4. Disposal of subsidiaries
Whether there is a situation where a single disposal of investment in a subsidiary result in loss of control
Yes No
Unit: RMB
The
difference
The
between
amount of
the
other
disposal Determina
comprehe
price and tion
nsive
the share Gains or method
Percentag Book income
The basis of the net Fair value losses and main
e of value of related to
for assets of of equity arising assumptio
equity equity the
Equity Equity Equity Point of determini the remaining from ns of the
Name of remainin remaining original
disposal disposal disposal loss of ng the subsidiary on the remeasure fair value
subsidiary g on the on the subsidiary
price ratio method control point of at the date of ment of of the
date of date of equity
loss of consolidate loss of remaining remaining
loss of loss of investmen
control d financial control equity at equity on
control control t
statement fair value the date of
transferre
level loss of
d to
correspond control
investmen
ing to the
t profit
disposal of
and loss
the
investment
Shenzhen
Mototek
1,397,70 Equity November Transfer
Smart 100.00% 243,183.53
0.00 transfer 7, 2022 of control
Technology
Co., Ltd.
Qingdao
Resonance
Venture 2,295,00 Equity December Transfer -
51.00%
Capital 0.00 transfer 27, 2022 of control 466,685.97
Managemen
t Co., Ltd.
Whether there is any step-by-step disposal of investment in a subsidiary through multiple transactions and loss of control in the
current period
Yes No
5. Change of combination scope for other reasons
Explain the changes in the combination scope caused by other reasons (such as newly established subsidiaries, liquidation
195
Goertek Inc. Annual Report 2022
subsidiaries, etc.) and relevant information:
During the current period, the Company acquired 8 subsidiaries through establishment. They are respectively Goertek Optical
Technology (Qingdao) Co., Ltd, Goertek Optical Technology (Shanghai) Co., Ltd, Qingdao Resonance Venture Capital Management
Co., Ltd., Qingdao Resonance Phase I Venture Capital Fund Partnership (Limited Partnership), Weifang Goertek Electronics Co., Ltd.,
Qingdao Goertek Horizons Technology Co., Ltd, Weifang High-tech Zone Goertek Education Center and GOERTEK
MICROELECTRONICS VIETNAM COMPANY LIMITED.
6. Others
None
IX. Interests in other entities
1. Interests in subsidiaries
(1) Composition of the Group
Main location of Percentage
Name of Registration Acquisition
business Business nature
subsidiary place Direct Indirect method
operation
Business
Weifang Goertek combination
Electronics Co., Weifang Weifang Production 100.00% involving
Ltd. enterprises under
common control
Goertek
R&D, production
Microelectronics Qingdao Qingdao 85.90% Establishment
& sales
Inc.
Qingdao Goertek
Microelectronics
R&D, production
Research Qingdao Qingdao 85.90% Establishment
& sales
Institute Co.,
Ltd.
Qingdao Goertek
R&D, production
Intelligent Qingdao Qingdao 85.90% Establishment
& sales
Sensor Co., Ltd.
Business
Weifang Goertek combination not
R&D, production
Microelectronics Weifang Weifang 85.90% involving
& sales
Co., Ltd. enterprises under
common control
Rongcheng
Goertek R&D, production
Rongcheng Rongcheng 85.90% Establishment
Microelectronics & sales
Co., Ltd.
Beijing Goertek
Microelectronics Beijing Beijing Sales 85.90% Establishment
Co., Ltd.
Shenzhen
Goertek
Shenzhen Shenzhen R&D and sales 85.90% Establishment
Microelectronics
Co., Ltd.
196
Goertek Inc. Annual Report 2022
Wuxi Goertek
Microelectronics Wuxi Wuxi R&D 85.90% Establishment
Co., Ltd.
Shanghai
Goertek
Shanghai Shanghai R&D 85.90% Establishment
Microelectronics
Co., Ltd.
Goertek
Microelectronics
Hong Kong Hong Kong Investment 85.90% Establishment
Holdings Co.,
Ltd.
Goertek
Microelectronics
Hong Kong Hong Kong Trade 85.90% Establishment
(Hong Kong)
Co., Ltd.
GOERTEK
MICROELECT
USA USA R&D and sales 85.90% Establishment
RONICS
CORPORATION
Goertek
Microelectronics Korea Korea R&D and sales 85.90% Establishment
Korea Co., Ltd.
Goertek
Microelectronics
Production &
Vietnam Vietnam Vietnam 85.90% Establishment
sales
Company
Limited
Weifang Goertek Import and
Weifang Weifang 100.00% Establishment
Trading Co., Ltd. export trade
Yishui Goertek
Production &
Electronics Co., Yishui Yishui 100.00% Establishment
sales
Ltd.
Yili Precision
Production &
Manufacturing Weifang Weifang 100.00% Establishment
sales
Co., Ltd.
Business
Weifang Goertek
combination not
Communication Production &
Weifang Weifang 100.00% involving
Technology Co., sales
enterprises under
Ltd.
common control
Business
Goertek Optical combination not
Production &
Technology Co., Weifang Weifang 65.10% involving
sales
Ltd enterprises under
common control
Goertek
Technology Co., Qingdao Qingdao R&D 100.00% Establishment
Ltd.
Beijing Goertek Business
Technology Co., Beijing Beijing R&D 100.00% combination
Ltd. involving
197
Goertek Inc. Annual Report 2022
enterprises under
common control
Qingdao Goertek
Acoustics
Qingdao Qingdao R&D and trading 100.00% Establishment
Technology Co.,
Ltd.
Business
Shenzhen
combination
Goertek
Shenzhen Shenzhen R&D and design 100.00% involving
Technology Co.,
enterprises under
Ltd.
common control
Shanghai
Goertek
Shanghai Shanghai R&D 100.00% Establishment
Technology Co.,
Ltd.
Nanjing Goertek
Technology Co., Nanjing Nanjing R&D 100.00% Establishment
Ltd.
Business
Weifang Lokomo
combination
Precision Production &
Weifang Weifang 100.00% involving
Industry Co., sales
enterprises under
Ltd.
common control
Goertek
Investment Co., Shanghai Shanghai Investment 100.00% Establishment
Ltd.
Beijing Goertek
Investment Investment asset
Beijing Beijing 100.00% Establishment
Management management
Co., Ltd.
Olive Smart
Hardware Equity
Qingdao Qingdao 100.00% Establishment
Investment investment
Center LP
Dongguan
JoyForce
R&D, production
Precision Dongguan Dongguan 100.00% Establishment
& sales
Manufacturing
Co., Ltd.
Goertek
Intelligence R&D, production
Dongguan Dongguan 100.00% Establishment
Technology Co., & sales
Ltd.
Rongcheng
Goertek R&D, production
Rongcheng Rongcheng 100.00% Establishment
Technology Co., & sales
Ltd.
Qingdao Goertek
Commercial Commercial
Qingdao Qingdao 100.00% Establishment
Factoring Co., factoring
Ltd.
198
Goertek Inc. Annual Report 2022
Kunshan
Goertek
Kunshan Kunshan R&D 100.00% Establishment
Electronics Co.,
Ltd
Nanning Goertek
R&D, production
Electronics Co., Nanning Nanning 100.00% Establishment
& sales
Ltd
Nanning Goertek
Nanning Nanning Trade 100.00% Establishment
Trading Co., Ltd.
Xi’an Goertek
Electronic
Xi'an Xi'an R&D 100.00% Establishment
Technology Co.,
Ltd.
Yishui TECO
Electronic R&D, production
Yishui Yishui 100.00% Establishment
Technology Co., & sales
Ltd.
Goertek Optical
Technology R&D, production
Qingdao Qingdao 65.10% Establishment
(Qingdao) Co., & sales
Ltd
Goertek Optical
Technology R&D, production
Shanghai Shanghai 65.10% Establishment
(Shanghai) Co., & sales
Ltd
Qingdao
Resonance Phase
I Venture Capital
Qingdao Qingdao Investment 72.00% Establishment
Fund Partnership
(Limited
Partnership)
Weifang Goertek
Production &
Electronics Co., Weifang Weifang 100.00% Establishment
sales
Ltd.
Qingdao Goertek
Horizons Production &
Qingdao Qingdao 100.00% Establishment
Technology Co., sales
Ltd
Weifang High-
tech Zone Education and
Weifang Weifang 100.00% Establishment
Goertek training
Education Center
Goertek Vina Production &
Vietnam Vietnam 98.00% 2.00% Establishment
Co., Ltd sales
Goertek
Technology Korea Korea R&D and trading 100.00% Establishment
Korea Co., Ltd.
Goertek
(HongKong) Hong Kong Hong Kong Trade investment 100.00% Establishment
Co.,Limited
199
Goertek Inc. Annual Report 2022
Goertek
Technology Vina Production &
Vietnam Vietnam 100.00% Establishment
Company sales
Limited
Goertek
Precision
Production &
Industry Vietnam Vietnam Vietnam 100.00% Establishment
sales
Company
Limited
GoerTek Audio
Technologies Denmark Denmark Sales services 100.00% Establishment
Aps
Goertek Seiki
R&D, production
Technology Co., Japan Japan 100.00% Establishment
& sales
Ltd.
OPTIMAS
CAPITAL
Hong Kong Hong Kong Investment 76.92% Establishment
PARTNERS
FUND LP
Business
combination not
Goertek Electron
USA USA R&D and trading 100.00% involving
ics, Inc.
enterprises under
common control
Goertek
Technology Taiwan Taiwan Trade 100.00% Establishment
Taiwan Co., Ltd.
Goertek
Technology Japan Japan R&D and trading 100.00% Establishment
Japan Co., Ltd.
Goertek
Technology
Hong Kong Hong Kong Trade investment 100.00% Establishment
(Hong Kong)
Co.,Limited
Explanation of the shareholding ratio in subsidiaries different from the voting ratio:
The percentages of indirect shareholdings are equal to the sum of all the share proportions of entities within the Group which hold 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 but
not controlling the investee:
None
Basis for controlling important structured entities included in the combination scope:
None
Basis for determining whether a company is an agent or a principal:
None
(2) Important non-wholly-owned subsidiary
Unit: RMB
Gain or loss which Dividends declared and Balance of minority
Shareholding ratio of
Name of subsidiary belongs to minority distributed to minority interest at the end of the
minority shareholders
shareholders in the shareholders in the period
200
Goertek Inc. Annual Report 2022
current period current period
Goertek
14.10% 45,892,240.23 588,098,360.72
Microelectronics Inc.
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
Closing balance Opening balance
Name of Non- Non- Non- Non-
Current Total Current Total Current Total Current Total
subsidiary current current current current
assets assets liabilities liabilities assets assets liabilities liabilities
assets liabilities assets liabilities
Goertek
3,280,736 1,912,061 5,192,798, 719,627, 302,828, 1,022,456, 3,719,286, 1,449,333, 5,168,619, 1,116,518, 278,293, 1,394,811,
Microelectr
,543.83 ,705.04 248.87 589.92 445.93 035.85 194.06 493.18 687.24 234.62 567.19 801.81
onics Inc.
Unit: RMB
2022 2021
Cash flows Cash flows
Name of Total Total
Operating generated from Operating generated from
subsidiary Net profit comprehensive Net profit comprehensive
revenue operating revenue operating
income income
activities activities
Goertek
3,125,294,5 3,345,124,962. -
Microelectronics 325,529,492.08 343,719,098.17 694,417,027.98 329,435,281.13 326,211,317.42
45.15 51 174,770,880.10
Inc.
(4) Major restrictions on using the Group's assets and paying off the Group's debts
None
(5) Financial support or other support provided to structured entities included in consolidated financial statements
None
2. The share of owner's equity in the subsidiary has changed and still controls the transactions of the
subsidiary
(1) Explanation of changes in the share of shareholders’ equity in subsidiaries
In June 2022, Goertek Group Co., Ltd., Zhuoguang Tonghe Technology (Tianjin) Partnership (Limited Partnership), Zhuoguang
Hongda Technology (Tianjin) Partnership (Limited Partnership), Zhuoguang Jiacheng Technology (Tianjin) Partnership (Limited
Partnership), Zhuoguang Xiangrong Technology (Tianjin) Partnership (Limited Partnership), Jiang Bin, and Jiang Long increased the
capital of the subsidiary, Goertek Optical Technology Co., Ltd, by RMB 513.74 million. Of which, RMB 321.68 million was included
in the newly added registered capital, and the rest was included in the capital surplus. After the capital increase, the Company's
shareholding in Goertek Optical Technology Co., Ltd changed from 100.00% to 65.10%. As of the end of the period, Goertek Optical
Technology Co., Ltd had received a capital increase of RMB 274,153,071.55 from minority shareholders. The premium contribution
of minority shareholders increased the capital surplus by RMB 94,888,612.81.
(2) The impact of transactions on minority’ equity and the equity attributable to the parent company
Unit: RMB
Goertek Optical Technology Co., Ltd
Purchase cost/disposal consideration 274,153,071.55
—Cash 274,153,071.55
—Fair value of non-cash assets
201
Goertek Inc. Annual Report 2022
Total purchase cost/disposal consideration 274,153,071.55
Less: The net asset share of a subsidiary calculated according to
179,264,458.74
the proportion of the equity acquired/disposed
Difference 94,888,612.81
Including: Adjustment of capital surplus 94,888,612.81
Adjusted surplus reserve
Undistributed profits after adjustment
3. Rights and interests in joint venture arrangements and associated enterprises
(1) Important joint ventures and associated enterprises
None
(2) Main financial information of important joint ventures
None
(3) Main financial information of important associated enterprises
None
(4) Summary of financial information of unimportant joint ventures and associates
Unit: RMB
Closing balance/amount incurred in Opening balance/amount incurred in
current period previous period
Joint ventures:
The total of the following items calculated
according to the shareholding ratio
Associated enterprises:
Total book value of investment 361,008,671.83 437,402,203.91
The total of the following items calculated
according to the shareholding ratio
—Net profit 2,298,237.32 23,111,753.41
—Other comprehensive income -15,493,341.86 1,189,723.34
—Total comprehensive income -13,195,104.54 24,301,476.75
(5) Statement of important restrictions on the ability of joint ventures or associates to transfer capital to the
Company
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
202
Goertek Inc. Annual Report 2022
4. Important joint operation
None
5. Rights and interests in structured entities not included in consolidated financial statements
Explanation of structured entities not recorded in the consolidated financial statements:
None
6. Others
None
X. Risks related to financial instruments
The major financial instruments of the Group include equity investments, accounts receivable, borrowings and accounts payable, etc.
For details on the financial instruments, please see this Note VII. Relevant Items. Risks related to the financial instruments and the
Group’s risk management policy used for reducing these risks is stated as follows. The Group’s management manages and monitors
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 or shareholder’s
equity using sensitivity analysis techniques. As risk variables rarely change in isolation, and the correlation between any two of the
risk variables will have a great effect on the final impact amount of a certain risk variable, the following disclosures are 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 impact of risks
on the Group's operating results, and to maximize the interests of shareholders and other equity investors. Based on these risk
management 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 reliable
manner to control the risks within a limited scope.
1. Market risk
(1) Foreign exchange risk
Foreign exchange risk refers to the risk of loss due to exchange rate change. The Group’s exposure to foreign exchange mainly involves
US dollars. Except that the Company and its subsidiaries purchase and sell in USD, EUR, JPY, VND, DKK, HKD, NTD and KRW,
other main business of the Group is measured and settled in RMB. As of December 31, 2022, the foreign currency monetary items of
the Company are detailed in Note VII. 63. Except that the assets or liabilities, financial assets held for trading, financial liabilities held
for trading, some investments in other equity instruments, some other non-current financial assets, and some other non-current 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 the operating results of
the Group.
The Group closely monitors the impact of exchange rate changes on the Group's foreign exchange risks. The Company has large
volume of export sales, and needs to import some raw materials. Some equipment for research, development, production and testing
of the Company also needs to be purchased from abroad. The Company's export sales and imported raw materials are mainly settled in
USD. The depreciation of USD and the appreciation of RMB will reduce the procurement cost of imported raw materials, but adversely
affect the competitiveness of the Company's products in overseas markets. Considering the import of raw materials and export 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 possible reasonable changes in USD currency rate may have the following effects on
current profits and losses, as well as shareholders' equity:
Unit: RMB
203
Goertek Inc. Annual Report 2022
2022 2021
Change in exchange
Item Impact on Impact on
rate Impact on net profit Impact on net profit
shareholders' equity shareholders' equity
3% appreciation
USD -17,700,129.48 -20,864,011.13 74,152,124.92 71,951,894.19
against RMB
3% depreciation
USD 17,700,129.48 20,864,011.13 -74,152,124.92 -71,951,894.19
against RMB
(2) Interest rate risk - cash flow change risk
The Group's risk of cash flow changes of financial instruments arising from interest rate changes mainly involves floating rate bank
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 or expense;
For derivative financial instruments designated as hedge instruments, changes in market interest rates affect their fair value, and all
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 the discounted
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 possible reasonable changes in interest rates may
have the following effects on current profits and losses, as well as shareholders' equity:
Unit: RMB
2022 2021
Interest rate
Item Impact on Impact on
change Impact on net profit Impact on net profit
shareholders' equity shareholders' equity
Bank Float up by
-24,185,541.46 -24,185,541.46 -16,563,847.02 -16,563,847.02
borrowings 10%
Bank Float down by
24,185,541.46 24,185,541.46 16,563,847.02 16,563,847.02
borrowings 10%
(3) Other price risks
None
2. Credit risk
As of December 31, 2022, the maximum credit risk exposure that may cause the Group's financial loss resulted from the loss in the
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 implement other
monitoring procedures to ensure that necessary measures are taken to recover overdue claims. Additionally, the Company cooperates
with commercial insurance institutions to insure for high-risk customers, so as to reduce the risk of bad debts from credit sale. In
addition, the Group reviews the recovery of each individual receivable on each balance sheet date to ensure that adequate bad debt
provision is made for unrecoverable amounts. Therefore, the Group’s management believes that the credit risk undertaken by the Group
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 cash at bank and on hand are mainly deposited with financial institutions with good credit. The management
believes that there is no significant credit risk, and it is expected that the default of counterparty will not cause significant losses to the
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 the impairment
of the financial assets
None
204
Goertek Inc. Annual Report 2022
3. Liquidity risk
When managing liquidity risk, the Group maintains and monitors cash and cash equivalents the management deems sufficient to meet
the Group's business needs and reduce the impact of cash flow fluctuations. The management of the Group monitors the use of bank
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, 2022, the unused bank credit
line of the Group was RMB 31.583 billion (December 31, 2021: RMB 27.495 billion).
(II) Transfer of financial assets
1. The financial assets transferred but not derecognized
None
2. The financial assets transferred and derecognized
Items Amount recognized at the end of the period (RMB)
Notes receivable 2,371,001.15
(III) Offset of financial assets and financial liabilities
None
XI. Disclosure of fair value
1. The ending fair value of assets and liabilities measured at fair value
Unit: RMB
Fair value of closing
Item The first level of fair The second level of fair The third level of fair
Total
value measurement value measurement value measurement
I. Continuous fair value
-- -- -- --
measurement
(I) Financial assets held for
32,722,198.06 185,939,899.60 120,000,000.00 338,662,097.66
trading
1. Financial assets measured at
fair value through profit and 32,722,198.06 185,939,899.60 120,000,000.00 338,662,097.66
loss
(2) Equity instrument
32,722,198.06 120,000,000.00 152,722,198.06
investment
(3) Derivative financial assets 185,939,899.60 185,939,899.60
(II) Other debt investments 22,375,874.12 22,375,874.12
(III) Investments in other
699,249,262.24 699,249,262.24
equity instruments
(IV) Investment properties
(V) Biological assets
(VI) Other non-current
318,661,575.31 318,661,575.31
financial assets
Total assets consistently
32,722,198.06 185,939,899.60 1,160,286,711.67 1,378,948,809.33
measured at fair value
(VII) Financial liabilities held
202,293,742.46 202,293,742.46
for trading
Derivative financial
202,293,742.46 202,293,742.46
liabilities
(VIII) Financial liabilities
designated to be measured at
205
Goertek Inc. Annual Report 2022
fair value through profit and
loss
Total liabilities continuously
202,293,742.46 202,293,742.46
measured at fair value
II. Non-continuous fair value
-- -- -- --
measurement
2. Determination basis for the market price of continuous and non-continuous first-level fair value
measurement 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 listed companies
held by the Company.
3. Qualitative and quantitative information on the valuation techniques and important parameters used in
continuous 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 in
continuous 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 the net book
asset.
5. Adjustment information and sensitivity analysis of non-observable parameters between beginning and
closing 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 for
determining conversion time points in continuous fair value measurement items,
None
7. Changes in valuation techniques during the current period and reasons for changes
None
8. Fair value of financial assets and financial liabilities not measured at fair value
None
9. Others
None
XII. Related parties and related transactions
1. Information about the parent company of the Company
Proportion of voting
Shareholding ratio
Parent company rights of the
Registration place Business nature Registered capital of the Company to
name Company in the
the Company
Company
Goertek Group Co., Equity investment
Weifang RMB 100 million 14.84% 14.84%
Ltd. management, etc.
206
Goertek Inc. Annual Report 2022
Explanation of the parent company of the Company
The 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 joint
ventures or associated enterprises of the Company
4. Information on other related parties
Name of other related parties Relationship between other related parties and the Company
Jiang Bin Actual controller and board chairman of the Company
Hu Shuangmei Person acting in concert with the actual controller
Shanghai Goertek Robot Co., Ltd. Associate of the parent company
Weifang ShiXiang Real Estate Co., Ltd. Associate of the parent company
Weifang Goer Farm Co., Ltd. Business of the same actual controller
Weifang Goer Manor Trading Co., Ltd. Business of the same actual controller
Weifang Goer Manor food & Beverage Co., Ltd. Business of the same actual controller
Weifang Goer Property Service Co., Ltd. Business of the same actual controller
Weifang Point Hotel Management Co., Ltd. Business of the same actual controller
Weihai Goer Ecological Agriculture Co., Ltd. Business of the same actual controller
Dotcom Investment Co., Ltd. Enterprise controlled by an affiliated natural person
Beijing Bubble Lab Co., Ltd. Enterprise controlled by an affiliated natural person
Weifang Daozao Catering Company Co., Ltd. Business of the same actual controller
Weifang Goer Real Estate Co., Ltd. Business of the same actual controller
Weifang Dotcom Catering Management Co., Ltd. Enterprise controlled by an affiliated natural person
Qingdao Dotcom Catering Management Co., Ltd. Enterprise controlled by an affiliated natural person
BUAA Goertek (Weifang) Intelligent Robot Co., Ltd. Business of the same actual controller
Weifang Goer School Business of the same actual controller
Weifang High-Tech Zone Yasong Linju Kindergarten Business of the same actual controller
Weifang High-Tech Zone Goer Kindergarten Business of the same actual controller
Dynaudio (Shanghai) Co,.Ltd Enterprise controlled by an affiliated natural person
Dynaudio Holding A/S Enterprise controlled by an affiliated natural person
Beijing Xiaoniao Tingting Technology Co., Ltd Parent company's associate, de-registered on December 8, 2022
Qingdao Point Hotel Management Co., Ltd. Business of the same actual controller
Wemake (Weihai) Digital Creative Technology Co., Ltd. Business of the same actual controller
Wemake (Qingdao) Digital Creative Technology Co., Ltd. Business of the same actual controller
Weifang Hanzhi Enterprise Management Co., Ltd. Business of the same actual controller
Weihai Point Hotel Management Co., Ltd. Business of the same actual controller
Weifang Goerdyna Technology Co., Ltd. Enterprise controlled by an affiliated natural person
Shandong Goer Education Group Co., Ltd. Business of the same actual controller
Weifang Hanhui Enterprise Management Co., Ltd. Business of the same actual controller
Wemake (Beijing) Digital Creative Technology Co., Ltd. Business of the same actual controller
207
Goertek Inc. Annual Report 2022
Weifang Gudian Garden Floriculture Co., Ltd. Enterprise controlled by an affiliated natural person
Little Bird Co., Ltd Enterprise controlled by an affiliated natural person
Jiaxing Yuguang Opto-electronic Technology Co, Ltd. The subsidiary of a joint venture
Anqiu Wenge Vocational Training School Co., Ltd. Business of the same actual controller
An enterprise actually controlled by Mr. Liu Chengmin, the
Gongqingcheng Zhuiyuan Phase II Venture Capital Partnership
former director of the Company and a joint investor of
(Limited Partnership)
GravityXR Electronics and Technology Co., Ltd.
An enterprise actually controlled by Mr. Liu Chengmin, the
Shenzhen Zhuiyuan Fortune Investment Partnership (Limited
former director of the Company and a joint investor of Beijing
Partnership)
Uphoton Technology Co., Ltd
GoerDyna Technology Co., Ltd. Enterprise controlled by an affiliated natural person
Jiang Long Affiliated natural person
Zhuoguang Xiangrong Technology (Tianjin) Partnership An entity controlled by affiliated natural persons as managing
(Limited Partnership) partners
5. Related party transactions
(1) Related transactions involving commodity purchase, and rendering and receipt of services
Statement of purchasing goods/accepting labor services
Unit: RMB
Approved trading Exceed the trading
Related parties Related transactions 2022 2021
limit limit or not
AKM Industrial Purchasing raw
203,633,398.93 300,000,000.00 No 108,622,154.32
Company Limited materials
Weifang Goer Farm Purchasing goods and
49,549,859.14 No 11,559,035.68
Co., Ltd. services
Weifang Point Hotel Purchasing goods and
16,117,887.30 No 14,774,953.49
Management Co., Ltd. services
Qingdao Virtual Reality Purchasing goods and
11,968,898.11 13,674,912.95
Institute Co., Ltd. services
Weifang Goer Property Purchasing goods and
8,688,125.52 No 6,399,062.47
Service Co., Ltd. services
Weifang Goer Manor
Purchasing goods 8,499,702.97 No 2,279,607.11
Trading Co., Ltd.
Weifang Goerdyna
Purchasing goods 7,057,138.25 No 12,059,629.96
Technology Co., Ltd.
Goertek Group Co., Purchasing goods and
7,040,506.52 No
Ltd. services
Qingdao Point Hotel Receiving labor
4,594,268.33 No 1,973,014.81
Management Co., Ltd. service
BUAA Goertek
Purchasing goods and
(Weifang) Intelligent 3,960,783.47 No 2,016,497.00
services
Robot Co., Ltd.
Shanghai Goertek Purchasing goods and
3,722,511.29 7,345,708.62
Robot Co., Ltd. services
Weifang Dotcom
Purchasing goods and
Catering Management 2,752,240.44 No 30,550,429.90
services
Co., Ltd.
208
Goertek Inc. Annual Report 2022
Weifang Goer Manor
food & Beverage Co., Purchasing goods 2,643,410.57 No 2,125,413.79
Ltd.
Beijing Bubble Lab Purchasing goods and
2,312,197.60 No 2,068,337.18
Co., Ltd. services
Weihai Goer Ecological
Purchasing goods 1,778,882.75 No 632,726.75
Agriculture Co., Ltd.
Beijing Xiaoniao
Tingting Technology Purchasing goods 1,768,403.43 9,895,201.01
Co., Ltd
Little Bird Co., Ltd Purchasing goods 1,023,036.15
Dotcom Investment Purchasing goods and
1,015,175.98 No 1,397,275.64
Co., Ltd. services
Weifang Daozao
Purchasing goods and
Catering Company Co., 303,917.60 No 485,022.00
services
Ltd.
Wemake (Weihai)
Purchasing goods and
Digital Creative 256,136.46 No 261,489.60
services
Technology Co., Ltd.
Wemake (Qingdao)
Purchasing goods and
Digital Creative 74,709.16 No
services
Technology Co., Ltd.
Receiving labor
Weifang Goer School 65,140.00 No
service
Wemake (Beijing)
Receiving labor
Digital Creative 61,072.39 No
service
Technology Co., Ltd.
Qingdao Dotcom
Catering Management Purchasing goods 21,818.80 No
Co., Ltd.
Weifang Gudian
Garden Floriculture Purchasing goods 17,463.00 No
Co., Ltd.
Purchasing goods and
Dynaudio Holding A/S 13,356.22 No 10,088,269.89
services
Weifang Goer Real Receiving labor
3,600.00 No
Estate Co., Ltd. service
Weifang ShiXiang Real Purchasing goods and
800.00
Estate Co., Ltd. services
Dynaudio (Shanghai)
Purchasing goods No 454,032.00
Co,.Ltd
Qingdao Pico
Purchasing goods 8,172,060.06
Technology Co., Ltd.
Weihai Point Hotel Receiving labor
14,876.00 No 38,750.94
Management Co., Ltd. service
Statement of sales of goods/rendering of services
Unit: RMB
Related parties Related transactions 2022 2021
Weifang Goerdyna Technology Sales of goods and services 29,201,690.39 18,684,849.56
209
Goertek Inc. Annual Report 2022
Co., Ltd.
Little Bird Co., Ltd Sales of goods 11,728,490.03
Beijing Xiaoniao Tingting
Sales of goods 8,203,382.90 43,567,472.65
Technology Co., Ltd
AKM Industrial Company
Sales of goods 7,937,930.55 1,134,756.63
Limited
Goertek Group Co., Ltd. Sales of goods and services 3,136,184.07 1,790,210.80
Qingdao Virtual Reality
Sales of goods and services 2,011,217.85 1,405,755.94
Institute Co., Ltd.
Shanghai Goertek Robot Co.,
Sales of goods and services 1,535,597.08 114,747.48
Ltd.
Weifang Goer Farm Co., Ltd. Sales of goods 1,121,814.20
Weifang Dotcom Catering
Sales of goods and services 719,821.85 1,477,900.21
Management Co., Ltd.
BUAA Goertek (Weifang)
Sales of goods 677,865.74 12,156.24
Intelligent Robot Co., Ltd.
GravityXR Electronics and
Sales of goods 578,775.60
Technology Co., Ltd.
Jiaxing Yuguang Opto-
Sales of goods 424,929.60
electronic Technology Co, Ltd.
Dynaudio (Shanghai) Co,.Ltd Sales of goods and services 132,629.36 7,809,105.05
Weifang Goer Manor Trading
Sales of goods 128,364.96 154,535.59
Co., Ltd.
Anqiu Wenge Vocational
Sales of goods 22,641.51
Training School Co., Ltd.
Dynaudio Holding A/S Sales of goods 22,683.88 835,047.55
Weifang Goertek Home
Decoration Engineering Co., Rendering of service 1,691,619.08
Ltd.
Wemake (Beijing) Digital
Rendering of service 42,000.00
Creative Technology Co., Ltd.
Qingdao Point Hotel
Rendering of service 238,490.57
Management Co., Ltd.
Qingdao Pico Technology Co.,
Sales of goods 164,082,292.53
Ltd.
Weifang Goer School Sales of goods 29,339.62
Weifang Point Hotel
Sales of goods 1,460.18
Management Co., Ltd.
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 its
subsidiaries, please see the Announcement of Goertek Inc. on Estimated Daily Related Transactions in 2022, issued through
information disclosure media on March 30, 2022.
(2) Related entrusted management/contracting and entrusted management/outsourcing
None
(3) Information of related lease
The Company acts as the lessor:
210
Goertek Inc. Annual Report 2022
Unit: RMB
Type of leased Lease income recognized Lease income recognized in
Name of lessee
assets in current period last period
Weifang Goerdyna Technology Co., Ltd. Building 5,489,586.84 2,407,111.58
Weifang Point Hotel Management Co., Ltd. Building 317,976.42 248,794.77
BUAA Goertek (Weifang) Intelligent Robot Co.,
Building 175,318.29 186,382.10
Ltd.
Weifang High-Tech Zone Yasong Linju
Building 152,190.47 43,885.72
Kindergarten
Anqiu Wenge Vocational Training School Co.,
Building 114,285.71
Ltd.
Dotcom Investment Co., Ltd. Building 39,633.03
Weifang Dotcom Catering Management Co., Ltd. Building 39,633.03
Wemake (Weihai) Digital Creative Technology
Building 28,899.08
Co., Ltd.
Goertek Group Co., Ltd. Building 12,735.85
Weifang Goer School Building 91,721.99
Weifang High-Tech Zone Goer Kindergarten Building 22,400.00
Weifang Hanzhi Enterprise Management Co.,
Building 39,633.03
Ltd.
Shandong Goer Education Group Co., Ltd. Building 7,840.44
The Company acts as the lessee:
Unit: RMB
Rental charges for
Variable lease payments
simplified treatment of Interest expenses
Type of not included in the Increased right-
short-term leases and low- Rent paid incurred on lease
Name of lessor leased measurement of lease of-use assets
value asset leases (if liabilities
assets liabilities (if applicable)
applicable)
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Goertek Group
Building 224,177.95 224,177.95 668,878.77 444,700.82 7,519.10 22,557.29 286,441.75
Co., Ltd.
Qingdao Virtual
Reality Institute Equipment 615,087.00 615,087.00 615,087.00
Co., Ltd.
Weifang Goer
Building 1,449,000.00 1,449,000.00 1,449,000.00
Farm Co., Ltd.
Weifang Hanhui
Enterprise
Building 20,078.80 20,078.80 20,078.80
Management Co.,
Ltd.
(4) Related guarantees
The Company acts as the guarantor
Unit: RMB
Whether the
Maturity date of
Guaranteed party Guarantee amount Starting date of guarantee guarantee has been
guarantee
performed fully
Goertek (HongKong)
174,115,000.00 August 20, 2021 August 20, 2022 Yes
Co.,Limited
Goertek (HongKong) 69,646,000.00 September 10, 2021 September 10, 2022 Yes
211
Goertek Inc. Annual Report 2022
Co.,Limited
Goertek (HongKong)
69,646,000.00 October 20, 2021 October 20, 2022 Yes
Co.,Limited
Goertek (HongKong)
793,790,285.00 January 16, 2020 January 16, 2023 Yes
Co.,Limited
Goertek (HongKong)
34,997,115.00 January 17, 2020 January 16, 2023 Yes
Co.,Limited
Goertek (HongKong)
494,486,600.00 February 24, 2020 January 16, 2023 Yes
Co.,Limited
Goertek (HongKong)
69,646,000.00 September 10, 2022 February 5, 2023 No
Co.,Limited
Goertek (HongKong)
69,646,000.00 October 20, 2022 February 5, 2023 No
Co.,Limited
Goertek (HongKong)
174,115,000.00 August 20, 2022 August 9, 2023 Yes
Co.,Limited
Goertek (HongKong)
205,455,700.00 May 17, 2022 April 26, 2023 No
Co.,Limited
Goertek (HongKong)
142,774,300.00 May 24, 2022 May 4, 2023 No
Co.,Limited
Goertek Technology Vina
23,000,000.00 June 6, 2021 June 5, 2022 Yes
Company Limited
Goertek Technology Vina
4,500,000.00 June 6, 2021 June 5, 2022 Yes
Company Limited
Goertek Technology Vina
496,413,129.00 July 30, 2021 July 29, 2022 Yes
Company Limited
Goertek Technology Vina
85,036,553.00 October 18, 2021 October 17, 2022 Yes
Company Limited
Goertek Technology Vina
55,000,000.00 August 1, 2021 July 30, 2022 Yes
Company Limited
Goertek Technology Vina
139,292,000.00 June 29, 2021 June 29, 2022 Yes
Company Limited
Goertek Technology Vina
11,732,000.00 June 22, 2022 June 21, 2023 No
Company Limited
Goertek Technology Vina
1,080,000.00 June 22, 2022 June 21, 2023 No
Company Limited
Weifang Goertek
5,000,000.00 March 27, 2021 March 26, 2022 Yes
Microelectronics Co., Ltd.
Weifang Goertek
3,000,000.00 May 12, 2022 May 11, 2023 No
Microelectronics Co., Ltd.
Rongcheng Goertek
3,000,000.00 May 12, 2022 May 11, 2023 No
Microelectronics Co., Ltd.
Goertek Microelectronics Inc. 20,893,800.00 November 19, 2021 November 18, 2022 Yes
Goertek Microelectronics Inc. 20,893,800.00 November 18, 2022 November 17, 2023 No
Goertek Intelligence
4,000,000.00 June 10, 2021 June 9, 2022 Yes
Technology Co., Ltd.
The Company acts as the guaranteed party
Unit: RMB
212
Goertek Inc. Annual Report 2022
Maturity date of Whether the guarantee has
Guarantor Guarantee amount Starting date of guarantee
guarantee been performed fully
Goertek Group Co., Ltd. 400,000,000.00 September 29, 2020 September 28, 2022 Yes
Goertek Group Co., Ltd. 200,000,000.00 April 1, 2021 March 31, 2022 Yes
Goertek Group Co., Ltd. 50,000,000.00 September 8, 2021 March 7, 2022 Yes
Goertek Group Co., Ltd. 10,920,000.00 September 28, 2021 January 25, 2022 Yes
Goertek Group Co., Ltd. 6,900,000.00 September 28, 2021 March 25, 2022 Yes
Goertek Group Co., Ltd. 9,980,000.00 September 28, 2021 February 25, 2022 Yes
Goertek Group Co., Ltd. 5,676,000.00 October 25, 2021 January 25, 2022 Yes
Goertek Group Co., Ltd. 300,000,000.00 October 29, 2021 October 28, 2022 Yes
Goertek Group Co., Ltd. 4,880,000.00 November 8, 2021 April 25, 2022 Yes
Goertek Group Co., Ltd. 4,550,000.00 November 8, 2021 February 25, 2022 Yes
Goertek Group Co., Ltd. 3,870,000.00 November 8, 2021 January 25, 2022 Yes
Goertek Group Co., Ltd. 50,000,000.00 November 18, 2021 May 17, 2022 Yes
Goertek Group Co., Ltd. 2,055,000.00 November 29, 2021 March 25, 2022 Yes
Goertek Group Co., Ltd. 1,560,000.00 November 29, 2021 April 25, 2022 Yes
Goertek Group Co., Ltd. 1,710,000.00 November 29, 2021 May 25, 2022 Yes
Goertek Group Co., Ltd. 4,770,000.00 November 29, 2021 May 25, 2022 Yes
Goertek Group Co., Ltd. 1,930,000.00 November 29, 2021 May 25, 2022 Yes
Goertek Group Co., Ltd. 10,249,000.00 November 29, 2021 May 25, 2022 Yes
Goertek Group Co., Ltd. 50,000,000.00 December 17, 2021 June 16, 2022 Yes
Goertek Group Co., Ltd. 4,800,000.00 January 11, 2022 June 27, 2022 Yes
Goertek Group Co., Ltd. 4,920,000.00 January 11, 2022 March 25, 2022 Yes
Goertek Group Co., Ltd. 2,000,000.00 January 11, 2022 March 25, 2022 Yes
Goertek Group Co., Ltd. 50,000,000.00 January 19, 2022 July 19, 2022 Yes
Goertek Group Co., Ltd. 200,000,000.00 March 29, 2022 March 29, 2027 No
Goertek Group Co., Ltd. 30,000,000.00 April 21, 2022 October 20, 2022 Yes
Goertek Group Co., Ltd. 40,000,000.00 May 18, 2022 November 18, 2022 Yes
Goertek Group Co., Ltd. 40,000,000.00 June 17, 2022 December 16, 2022 Yes
Goertek Group Co., Ltd. 200,000,000.00 June 24, 2022 March 29, 2027 No
Goertek Group Co., Ltd. 20,000,000.00 July 19, 2022 January 19, 2023 No
Goertek Group Co., Ltd. 30,000,000.00 July 26, 2022 September 25, 2022 Yes
Goertek Group Co., Ltd. 200,000,000.00 July 29, 2022 July 28, 2025 No
Goertek Group Co., Ltd. 500,000,000.00 September 19, 2022 September 19, 2025 No
Goertek Group Co., Ltd. 1,448,636.80 February 2, 2021 July 20, 2021 Yes
Goertek Group Co., Ltd. 15,000,000.00 March 23, 2022 May 31, 2023 Yes
Goertek Group Co., Ltd. 35,000,000.00 September 2, 2022 May 31, 2023 No
Goertek Group Co., Ltd. 9,000,000.00 March 23, 2022 May 31, 2023 No
Goertek Group Co., Ltd. 2,500,000.00 March 23, 2022 May 31, 2023 No
Goertek Group Co., Ltd. 146,256,600.00 April 11, 2022 July 31, 2023 Yes
Goertek Group Co., Ltd. 274,405,240.00 September 2, 2022 July 31, 2023 No
Goertek Group Co., Ltd. 130,000,000.00 September 2, 2022 May 31, 2023 No
Goertek Group Co., Ltd. 50,000,000.00 September 2, 2022 May 31, 2023 No
Goertek Group Co., Ltd. 26,000,000.00 September 2, 2022 May 31, 2023 No
Explanation of related guarantee
213
Goertek Inc. Annual Report 2022
The borrowings of USD 113,975,000.00, USD 5,025,000.00, and USD 71,000,000.00 by a subsidiary, Goertek (HongKong)
Co.,Limited, were repaid in January and March 2022.
The borrowing of USD 25,000,000.00 by Goertek (HongKong) Co.,Limited, was repaid on December 23, 2022.
(5) Funds borrowed from related parties
None
(6) Transfer of assets and debt restructuring of related parties
Unit: RMB
Related parties Related transactions 2022 2021
Purchasing fixed
Weifang Goer Real Estate Co., Ltd. 27,820,895.00
assets, etc.
Wemake (Weihai) Digital Creative Technology Purchasing fixed
9,513,110.31 56,603.77
Co., Ltd. assets, etc.
Purchasing fixed
Weifang Goer Farm Co., Ltd. 3,453,438.60
assets, etc.
Purchasing fixed
Qingdao Virtual Reality Institute Co., Ltd. 1,314,599.09 2,606,781.00
assets, etc.
Purchasing fixed
Goertek Group Co., Ltd. 1,175,396.00 6,700,007.82
assets, etc.
Purchasing fixed
Beijing Bubble Lab Co., Ltd. 592,444.40 1,845,155.05
assets, etc.
Purchasing fixed
Dynaudio (Shanghai) Co,.Ltd 492,566.37
assets, etc.
Purchasing fixed
Shanghai Goertek Robot Co., Ltd. 943,396.20
assets, etc.
Purchasing fixed
Weifang ShiXiang Real Estate Co., Ltd. 387,250.60
assets, etc.
Wemake (Beijing) Digital Creative Technology Purchasing fixed
2,237,536.87
Co., Ltd. assets, etc.
Weifang Goertek Home Decoration Purchasing fixed
6,171,794.28
Engineering Co., Ltd. assets, etc.
Wemake (Qingdao) Digital Creative Purchasing fixed
215,405.66
Technology Co., Ltd. assets, etc.
Disposal of fixed
Weifang Goerdyna Technology Co., Ltd. 6,676,812.63 9,295,634.00
assets
Disposal of fixed
Goertek Group Co., Ltd. 249,760.94
assets
Disposal of fixed
Qingdao Virtual Reality Institute Co., Ltd. 2,646.30 6,485,086.09
assets
Wemake (Weihai) Digital Creative Technology Disposal of fixed
478.33
Co., Ltd. assets
Disposal of fixed
Weifang Point Hotel Management Co., Ltd. 4,760.77
assets
214
Goertek Inc. Annual Report 2022
(7) Remuneration of key managers
Unit: RMB
Item 2022 2021
Remuneration of key managers 16,911,750.00 16,950,000.00
(8) Other related transactions
Unit: RMB
Amount in previous
Item Related transactions Amount of current period
period
Beijing Uphoton Technology Co., Ltd. Equity investment 200,000,000.00
GravityXR Electronics and Technology Co., Ltd. Equity investment 90,000,000.00
Goerdyna Technology Co., Ltd. Equity transfer 1,397,700.00
Capital increase to
Jiang Bin 64,290,000.00
subsidiaries
Capital increase to
Jiang Long 64,290,000.00
subsidiaries
Capital increase to
Goertek Group Co., Ltd. 64,000,000.00
subsidiaries
Zhuoguang Xiangrong Technology (Tianjin) Capital increase to
60,200,000.00
Partnership (Limited Partnership) subsidiaries
6. Receivables and payables of related parties
(1) Items with accounts receivable
Unit: RMB
Closing balance Opening balance
Name of
Related parties Bad-debt
project Book balance Book balance Bad-debt provision
provision
Accounts Weifang Goerdyna Technology Co.,
10,399,970.66 103,999.71 10,925,126.65 109,251.27
receivable Ltd.
Accounts
Little Bird Co., Ltd 2,181,873.05 21,818.73
receivable
Accounts
AKM Industrial Company Limited 466,054.46 4,660.54 516,600.00 5,166.00
receivable
Accounts
Shanghai Goertek Robot Co., Ltd. 186,792.73 1,867.93 78,523.44 785.23
receivable
Accounts
Goertek Group Co., Ltd. 104,206.00 1,042.06
receivable
Accounts Weifang Dotcom Catering
81,198.36 811.98
receivable Management Co., Ltd.
Accounts Jiaxing Yuguang Opto-electronic
30,460.37 304.60
receivable Technology Co, Ltd.
Accounts Weifang Goer Manor Trading Co.,
17,614.54 176.15
receivable Ltd.
Accounts Weifang High-Tech Zone Yasong
4,500.00 45.00
receivable Linju Kindergarten
215
Goertek Inc. Annual Report 2022
Accounts Beijing Xiaoniao Tingting
9,233,053.25 92,330.53
receivable Technology Co., Ltd
Accounts
Dynaudio (Shanghai) Co,.Ltd 189,133.13 1,891.33
receivable
Accounts Qingdao Point Hotel Management
252,800.00 2,528.00
receivable Co., Ltd.
(2) Items with accounts payable
Unit: RMB
Name of project Related parties Closing book balance Opening book balance
Accounts payable AKM Industrial Company Limited 48,787,168.95 39,135,420.36
Accounts payable Qingdao Virtual Reality Institute Co., Ltd. 6,797,327.04 4,925,805.03
Accounts payable Goertek Group Co., Ltd. 902,885.49
Accounts payable Weifang Goerdyna Technology Co., Ltd. 831,553.78 12,408,592.87
Accounts payable Weifang Goer Farm Co., Ltd. 640,072.69 1,747,498.74
Accounts payable Dynaudio (Shanghai) Co,.Ltd 556,600.00
Accounts payable Little Bird Co., Ltd 360,559.97
Accounts payable Weifang Point Hotel Management Co., Ltd. 331,842.00 98,568.00
Accounts payable Weifang Goer Manor Trading Co., Ltd. 264,603.04 212,941.81
Accounts payable Qingdao Point Hotel Management Co., Ltd. 258,802.92
Weifang Dotcom Catering Management Co.,
Accounts payable 237,005.09 260,375.00
Ltd.
Wemake (Qingdao) Digital Creative
Accounts payable 172,083.50 404,150.41
Technology Co., Ltd.
Accounts payable Beijing Bubble Lab Co., Ltd. 165,554.34 46,561.60
BUAA Goertek (Weifang) Intelligent Robot
Accounts payable 28,248.00
Co., Ltd.
Accounts payable Weihai Goer Ecological Agriculture Co., Ltd. 26,800.00 30,200.00
Weifang Goer Manor food & Beverage Co.,
Accounts payable 17,707.81 37,890.84
Ltd.
Accounts payable Weifang Gudian Garden Floriculture Co., Ltd. 7,296.00
Accounts payable Weifang Goer Property Service Co., Ltd. 1,542.00
Beijing Xiaoniao Tingting Technology Co.,
Accounts payable 2,757,461.08
Ltd
Wemake (Weihai) Digital Creative Technology
Accounts payable 10,293.85
Co., Ltd.
Accounts payable Dotcom Investment Co., Ltd. 42,478.00
Contract liabilities Little Bird Co., Ltd 33.57
Other payables Weifang Goer Property Service Co., Ltd. 23,623.90
Other payables Weifang Goer Real Estate Co., Ltd. 805.20
BUAA Goertek (Weifang) Intelligent Robot
Other payables 28,248.00
Co., Ltd.
7. Commitment of related parties
None
216
Goertek Inc. Annual Report 2022
8. Others
None
XIII. Share-based payment
1. Overview of share-based payment
Applicable Not applicable
Unit: RMB
Total amount of equity instruments granted by the Company in the current
205,604,318.00
period
Total amount of equity instruments exercised by the Company in the
27,828,274.00
current period
Total amount of equity instruments of the Company which are invalid in
6,454,710.00
the current period
The range of exercise price of stock options issued by the Company at the
See Explanation of Other Matters below
end of the period and their remaining period of contract
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 See Explanation of Other Matters below
contract
Other explanations:
(1) The Company's outstanding stock options at the end of the year
① 2022 Stock Option Incentive Plan
To fully mobilize the employees for enthusiasm and creativity, attract and retain outstanding management talents and business
backbones, and improve the cohesion of employees and competitiveness of the Company, the "2022 Stock Option Incentive Plan" for
the key management backbones and business backbones (excluding directors and senior management) of the Company and its wholly-
owned and controlled subsidiaries was considered and approved at the 31st meeting of the 5th Board of Directors held on July 8, 2022,
and the 1st extraordinary general meeting of shareholders in 2022 held on July 26, 2022.
The exercise price of the initial grant and reserved portion of the stock options in this incentive plan is RMB 34.24 per share, which is
valid for 48 months from the date of the stock option grant to the date when all stock options are exercised or canceled. The waiting
periods for the initial grant of stock options and the reserved grant of stock options under this incentive plan are 21 months and 12
months after the grant date, respectively. The exercise periods begin after the expiration of the waiting periods. In the exercise period,
the grantees will exercise the options in two phases according to the exercise ratio of 50%:50% at exercisable dates.
The fair value of stock options shall be calculated and determined based on the Black Scholes option pricing model, the value of each
stock option for each phase of the initial grant is RMB 2.81 per share and RMB 4.73 per share respectively.
Under the Accounting Standards for Business Enterprises, the Company recognizes share-based payments paid in exchange for
employee services at each balance sheet date during the waiting period based on the best estimate of the number of exercisable equity
instruments and the fair value of the equity instruments on the grant date. And the payments are amortized over a set service period.
The share-based payment amortization expense recognized in 2022 is RMB 28,460,219.04 (RMB 28,460,219.04 in total). The amount
included under capital surplus- other capital surplus is RMB 28,450,585.73, and the minority shareholders' equity is RMB 9,633.31.
② 2021 Stock Option Incentive Plan
To fully arouse the enthusiasm and creativity of employees, attract and retain management talents and people who make up the
backbone of each department, and improve employee cohesion and the Company's competitiveness, according to the resolution of the
19th meeting of the 5th Board of Directors held on April 16, 2021 and the 2020 Annual General Meeting of Shareholders held on May
7, 2021, the Company shall implement the "2021 Stock Option Incentive Plan" for the important personnel in management and various
departments (excluding directors and senior management) of the Company and its wholly-owned and holding subsidiaries.
The exercise price of the initial grant and reserved portion of the stock options in this incentive plan is RMB 29.13 per share, which is
valid for 48 months from the date of the stock option grant to the date when all stock options are exercised or canceled. The 12 months
from the day when the stock options are granted initially or when the reserved stock options are granted under the Incentive Plan shall
217
Goertek Inc. Annual Report 2022
be the waiting period, and the options may be exercised after the end of the waiting period. In the exercise period, the grantees will
exercise the options in two phases according to the exercise ratio of 50%:50% at exercisable dates.
The fair value of stock options shall be calculated and determined based on the Black Scholes option pricing model, the value of each
stock option for each phase of the initial grant is RMB 12.06 per share and RMB 14.50 per share respectively; and the value of each
stock option for each phase of the reserved grant is RMB 5.51 per share and RMB 7.14 per share respectively.
Under the Accounting Standards for Business Enterprises, the Company recognizes share-based payments paid in exchange for
employee services at each balance sheet date during the waiting period based on the best estimate of the number of exercisable equity
instruments and the fair value of the equity instruments on the grant date. And the payments are amortized over a set service period.
The share-based payment amortization expense recognized in 2022 is RMB 303,755,357.46 (RMB 565,880,477.99 in total). The
amount included under capital surplus- other capital surplus is RMB 302,029,060.59, and the minority shareholders' equity is RMB
1,726,296.87.
③ Goertek Microelectronics stock option incentive
According to the resolution of General Meeting dated September 29, 2020 and to the resolution of Board of Directors dated October
27, 2020, Goertek Microelectronics shall grant 17.335 million stock options to the directors, senior management and key backbones
(excluding supervisors and independent directors) of Goer Microelectronics and its holding subsidiaries to be exercised them in five
phases. The corresponding waiting periods are 18 months, 30 months, 42 months, 54 months and 66 months respectively from 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.
Under the Accounting Standards for Business Enterprises, Goertek Microelectronics recognizes share-based payments based on the
best estimate of the number of exercisable equity instruments and the fair value of the equity instruments on the grant date. And the
payments are amortized over a set service period. The share-based payment amortization expense recognized in 2022 is RMB
3,568,283.61 (RMB 34,292,282.09 in total). The amount included under capital surplus- other capital surplus is RMB 3,065,116.37,
and the minority interests is RMB 503,167.24.
(2) The Company's other outstanding equity instruments at the end of the year
① ''Homeland No. 4'' Employee Stock Ownership Plan
To fully arouse the enthusiasm and creativity of employees, attract and retain management talents and people who make up the
backbone of each department, and improve employee cohesion and the Company's competitiveness, according to the resolution of the
5th 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 independent
directors), supervisors and senior management as well as important personnel in management and various departments.
In order to ensure the efficiency of the incentives, the employee stock plan received the transfer of 49,270,100 shares in the Company’s
specific securities repurchase account 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 last underlying shares of the Company to the
name of this employee stock plan.
Under the Accounting Standards for Business Enterprises, the Company recognizes share-based payments paid in exchange for
employee services at each balance sheet date during the waiting period based on the best estimate of the number of exercisable equity
instruments and the fair value of the equity instruments on the grant date. And the payments are amortized over a set service period.
The share-based payment amortization expense recognized in 2022 is RMB 138,693,750.47 (RMB 1,015,624,005.31 in total). The
amount is included under capital surplus- other capital surplus.
② ''Homeland No. 5'' Employee Stock Ownership Plan
To fully arouse the enthusiasm and creativity of employees, attract and retain management talents and people who make up the
backbone of each department, and improve employee cohesion and the Company's competitiveness, according to the resolution of the
19th meeting of the 5th Board of Directors held on April 16, 2021 and the 2020 Annual General Meeting of Shareholders held on May
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 made important contributions
to the development of the Company.
218
Goertek Inc. Annual Report 2022
The “Homeland No.5” employee stock plan received the transfer of shares in the Company’s special securities account for re-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 24 months from the day of the transfer of the shares under the employee stock plan to this employee stock plan.
Under the Accounting Standards for Business Enterprises, the Company recognizes share-based payments paid in exchange for
employee services at each balance sheet date during the waiting period based on the best estimate of the number of exercisable equity
instruments and the fair value of the equity instruments on the grant date. And the payments are amortized over a set service period.
The share-based payment amortization expense recognized in 2022 is RMB 120,185,821.65 (RMB 231,219,021.65 in total). The
amount is included under capital surplus- other capital surplus.
③ ''Homeland No. 6'' Employee Stock Ownership Plan
To fully arouse the enthusiasm and creativity of employees, attract and retain management talents and people who make up the
backbone of each department, and improve employee cohesion and the Company's competitiveness, according to the resolution of the
2nd meeting of the 6th Board of Directors held on December 2, 2022 and the 3rd extraordinary general meeting of shareholders in
2022 held on 19 December 2022 to implement the ''Homeland No. 6'' 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 made
important contributions to the development of the Company.
The “Homeland No.6” employee stock plan received the transfer of shares in the Company’s special securities account for re-purchase
at RMB 7 per share. The shares under the employee stock plan will be released in four stages. The time of release is the end of 18
months, 30 months, 42 months, or 54 months from the day of the transfer of the shares under the employee stock plan to this employee
stock plan.
Under the Accounting Standards for Business Enterprises, the Company recognizes share-based payments paid in exchange for
employee services at each balance sheet date during the waiting period based on the best estimate of the number of exercisable equity
instruments and the fair value of the equity instruments on the grant date. And the payments are amortized over a set service period.
The share-based payment amortization expense recognized in 2022 is RMB 8,469,500.90 (RMB 8,469,500.90 in total). The amount is
included under capital surplus- other capital surplus.
④ Goertek Microelectronics equity incentive by way of capital increase
According to the resolution of the General Meeting of Shareholders on September 29, 2020 and the amended Articles of Association
of Goertek Microelectronics Co., Ltd., the natural-person shareholders Mr. Jiang Long and Mr. Song Qinglin subscribed for 21,500,000
shares of Goertek Microelectronics by way of capital increase. The capital increase price was RMB 2 per share, which was lower than
the fair value of Goertek Microelectronics shares, and the amount constituted a share-based payment.
Under the Accounting Standards for Business Enterprises, Goertek Microelectronics recognizes share-based payments based on the
best estimate of the number of exercisable equity instruments and the fair value of the equity instruments at the grant date. And the
payments are amortized over a set service period. The share-based payment amortization expense recognized in 2022 is RMB
49,923,000.00 (RMB 112,702,882.19 in total). The amount included under capital surplus- other capital surplus is RMB 42,883,307.85,
and the minority interests is RMB 7,039,692.15.
⑤ Goertek Optical equity incentive by way of capital increase
According to the resolution of the General Meeting of Shareholders on June 20, 2022 and the amended Articles of Association of
Goertek Optical Technology Co., Ltd., the natural-person shareholders Mr. Jiang Bin, Mr. Jiang Long, and Goertek Optical employee
shareholding platform subscribed for 257.16 million shares of Goertek Optical by way of capital increase. The capital increase price
was RMB 1.5 per share, which was lower than the fair value of Goertek Optical shares, and the amount constituted a share-based
payment.
Under the Accounting Standards for Business Enterprises, Goertek Optical recognizes share-based payments based on the best estimate
of the number of exercisable equity instruments and the fair value of the equity instruments at the grant date. And the payments are
amortized over a set service period. The share-based payment amortization expense recognized in 2022 is RMB 6,320,075.41 (RMB
6,320,075.41 in total). The amount included under capital surplus- other capital surplus is RMB 4,972,698.53, and the minority interests
is RMB 1,347,376.88.
2. Share-based payment settled with equity
Applicable Not applicable
219
Goertek Inc. Annual Report 2022
Unit: RMB
Determination method of the fair value of equity instruments at Black-Scholes model and fair value of equity instruments at the
the date of grant date of grant
The Company makes the determination according the equity
Basis for determining the quantity of equity instruments with
instruments corresponding to the current target employees and
vesting
the forecast of the Company's performance in the next year, etc.
Reason for significant difference in estimation in the current
None
period and estimation in the last period
Accumulative amount of equity-settled share-based payment
2,002,968,464.58
included in capital surplus
Total amount of share-based payment settled with equity in
659,376,008.54
current period
3. Cash-settled payment settled in cash
Applicable Not applicable
4. Modification and termination of share-based payment
On June 30, 2022, the Board of Directors of Goertek Microelectronics considered and approved the Proposal to adjust the "2020 Stock
Option Incentive Plan" and other proposals to adjust the relevant exercise dates. The grant date of the Stock Option Incentive Plan is
October 27, 2020. The granted stock options are to be exercised in five installments, and the corresponding waiting periods are 24
months, 36 months, 48 months, 60 months, and 72 months from the date of grant respectively.
Due to the substandard performance in 2022 and the failure to meet the exercise conditions for the second exercise period of the stock
option incentive plan, Goertek Microelectronics intends to cancel 2.668 million shares of stock options.
5. Others
None
XIV. Commitments and contingencies
1. Important commitments
Important commitments on the balance sheet date
None
2. Contingencies
(1) Important contingencies on the balance sheet date
① Contingent liability derived from pending litigations and arbitrations, and financial influence therefrom
None
② Contingent liabilities and financial impacts from debt guarantees for other organizations
As of the report date, except that the guarantees provided by the Company to its subsidiaries Goertek (HongKong) Co.,Limited, Goertek
Technology Vina Company Limited, Weifang Goertek Microelectronics Co., Ltd., Rongcheng Goertek Microelectronics Co., Ltd., and
Goertek Microelectronics Inc. are not fulfilled as specified in Note XII.5, there is no debt guarantees of the Company provided to other
entities.
③ Contingent liabilities related to investments in joint ventures or associates
None
④ Other contingent liabilities and financial impacts
None
220
Goertek Inc. Annual Report 2022
(2) The Company shall make a statement even if it does not have important contingencies to be disclosed
There are no important contingencies to be disclosed in the Company.
3. Others
None
XV. Matters after balance sheet date
1. Important non-adjustment matters
Unit: RMB
Impacted amount on
The reason why the impacted
Item Content financial conditions and
amount cannot be estimated
operating results
Goertek Microelectronics Inc., a
The progress of listing of a subsidiary of the Company, plans to
subsidiary, Goertek be listed on the ChiNext of Shenzhen
Not applicable
Microelectronics Inc. on SZSE Stock Exchange. At present, the
ChiNext review procedure for issuance and
listing is suspended.
2. Profit distribution
Unit: RMB
Profits or dividends to be distributed 340,516,294.90
Profits or dividend declared after
340,516,294.90
deliberation and approval
Based on the total share capital registered on the record date of equity distribution
minus the repurchased shares in the Company's specific securities repurchase account,
Profit distribution plan the Company will distribute cash dividend of RMB 1.00 (tax inclusive) for every 10
shares to all the shareholders, as well as 0 bonus shares (tax inclusive), and there is no
conversion of capital surplus into share capital.
3. Sales return
None
4. Explanation of other matters after the balance sheet date
On April 6, 2023, Mr. Jiang Long, Vice Chairman, Director, and President of the Company, resigned from the above position of the
Company for personal reasons. After his resignation, Mr. Jiang Long will serve as a senior advisor of the Company.
XVI. Other important matters
1. Correction of early accounting errors
None
2. Debt restructuring
None
221
Goertek Inc. Annual Report 2022
3. Asset replacement
None
4. Annuity plan
None
5. Discontinued operation
None
6. Division information
None
7. Other important transactions and matters that have an impact on investors' decisions
None
8. Others
Lease
(1) The Group as lessee
① For information on right-of-use assets and lease liabilities, please see Note VII. 16 and 34.
② Information on items recorded in current profit or loss and relevant asset costs
Unit: RMB
Items Amount of current period Amount in previous period
Short-term lease expense (simplified treatment applies) 70,892,405.81 56,008,840.98
Interest on lease liabilities included in finance expenses 17,092,607.19 13,692,320.31
Income derived from the sublease of the right-of-use assets 1,196,937.46 3,465,424.78
③ Cash outflows related to leases
Unit: RMB
Amount of current Amount in previous
Items Category of cash flows
period period
Cash for repayment of principal and interest of Cash outflows from
128,750,261.16 102,991,821.74
lease liabilities financing activities
Payment for short-term leases and leases for low- Cash outflows from
70,892,405.81 56,008,840.98
value assets (simplified treatment applies) operating activities
Total 199,642,666.97 159,000,662.72
(2) The Group as lessor
① Information on financing lease
None
② Information on operating lease
Unit: RMB
Items Reported items Amount of current period Amount in previous period
Lease income Other business income 148,658,794.96 53,039,818.78
222
Goertek Inc. Annual Report 2022
XVII. Notes to major items in the financial statements of the parent company
1. Accounts receivable
(1) Accounts receivable disclosed by classification
Unit: RMB
Closing balance Opening balance
Book balance Bad-debt provision Book balance Bad-debt provision
Category
Proportion of Book value Proportion of Book value
Amount Proportion Amount Amount Proportion Amount
accrual accrual
Including:
Accounts
receivable
with bad 8,897,702,147.22 100.00% 27,102,669.02 0.30% 8,870,599,478.20 8,040,359,505.41 100.00% 31,185,331.21 0.39% 8,009,174,174.20
debts reserves
by group
Including:
Group by
2,686,302,309.44 30.19% 27,102,669.02 1.01% 2,659,199,640.42 3,118,533,121.24 38.79% 31,185,331.21 1.00% 3,087,347,790.03
aging
Related party
6,211,399,837.78 69.81% 6,211,399,837.78 4,921,826,384.17 61.21% 4,921,826,384.17
group
Total 8,897,702,147.22 100.00% 27,102,669.02 0.30% 8,870,599,478.20 8,040,359,505.41 100.00% 31,185,331.21 0.39% 8,009,174,174.20
Bad debt reserve grouping: Group by aging
Unit: RMB
Closing balance
Name
Book balance Bad-debt provision Proportion of accrual
Within 1 year 2,685,475,944.16 26,854,759.44 1.00%
1 to 2 years 826,365.28 247,909.58 30.00%
2 to 3 years
Over 3 years
Total 2,686,302,309.44 27,102,669.02
223
Goertek Inc. Annual Report 2022
Bad debt reserve grouping: Related party group
Unit: RMB
Closing balance
Name
Book balance Bad-debt provision Proportion of accrual
Within 1 year 6,211,399,837.78
1 to 2 years
2 to 3 years
Over 3 years
Total 6,211,399,837.78
If the provision for bad debts on accounts receivable is based on the general model of expected credit losses, please disclose
information about the provision for bad debts by referring to the disclosure of other receivables:
Applicable Not applicable
Disclosed by age of accounts receivable
Unit: RMB
Aging Book balance
Within 1 year (including 1 year) 8,896,875,781.94
1 to 2 years 826,365.28
Total 8,897,702,147.22
(2) Accrual, recovery or return of bad debt reserve in current period
None
(3) Accounts receivable actually written off in current period
None
(4) Accounts receivable of the 5 highest closing balance by debtor
Unit: RMB
Closing balance of accounts Proportion of total closing Closing balance of bad debt
Company name
receivable balance of accounts receivable provision
Company 1 3,248,732,170.92 36.51%
Company 2 1,370,781,730.38 15.41%
Company 3 544,455,732.91 6.12% 5,444,557.33
Company 4 521,513,579.22 5.86%
Company 5 457,118,861.92 5.14%
Total 6,142,602,075.35 69.04%
(5) Amount of assets and liabilities formed by transferring accounts receivable and continuing to be
involved
None
(6) Accounts receivable derecognized due to transfer of financial assets
None
2. Other receivables
Unit: RMB
224
Goertek Inc. Annual Report 2022
Item Closing balance Opening balance
Other receivables 7,549,205,233.13 3,927,667,930.14
Total 7,549,205,233.13 3,927,667,930.14
(1) Interest receivable
None
(2) Dividends receivable
None
(3) Other receivables
1) Classification of other receivables by nature of payment
Unit: RMB
Nature of payment Closing book balance Opening book balance
Current account 7,513,774,764.36 3,774,035,738.53
Security deposit 5,919,227.94 40,178,537.85
Tax refund for export receivable 91,830,238.29
Withholding and remitting social
30,376,964.77 25,693,583.89
insurance and housing provident fund
Total 7,550,070,957.07 3,931,738,098.56
2) Provision for bad debts
Unit: RMB
First stage Second stage Third stage
Expected credit loss Expected credit loss for Expected credit loss for the
Bad-debt provision Total
over the next 12 the entire duration (credit entire duration (credit
months impairment not occurred) impairment has occurred)
Balance as of January 1, 2022: 4,070,168.42 4,070,168.42
Balance as of January 1, 2022
in the current period
Accrual in the current period -3,204,444.48 -3,204,444.48
Balance as of December 31,
865,723.94 865,723.94
2022:
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) 7,416,585,872.52
1 to 2 years 133,312,317.97
2 to 3 years 3,266.41
Over 3 years 169,500.17
3 to 4 years 69,500.17
4 to 5 years 0.00
Over 5 years 100,000.00
Total 7,550,070,957.07
225
Goertek Inc. Annual Report 2022
3) Accrual, recovery or return of bad debt reserve in current period
Provision for bad debts of the current period:
Unit: RMB
Changes in amount of the current period
Category Opening balance Withdrawal or Closing balance
Accrual Write-off Other
write-back
Group by aging 4,070,168.42 -3,204,444.48 865,723.94
Total 4,070,168.42 -3,204,444.48 865,723.94
4) Other receivables actually written off in the current period
None
5) Other receivables of the 5 highest closing balance by debtor
Unit: RMB
Ratio in the total
Closing balance of
Company name Nature of payment Closing balance Aging closing balance of
bad debt provision
other receivables
Company 1 Current account 2,236,100,000.00 Within 1 year 29.62%
Company 2 Current account 2,025,329,657.63 Within 1 year 26.83%
Company 3 Current account 1,223,530,287.69 Within 1 year 16.21%
Company 4 Current account 705,971,412.50 Within 1 year 9.35%
Company 5 Current account 664,922,879.36 Within 1 year 8.81%
Total 6,855,854,237.18 90.82%
6) Other receivables involving government subsidies
None
7) Other receivables derecognized due to transfer of financial assets
None
8) Amount of assets and liabilities formed by transferring other receivables and continuing to be involved
None
3. Long-term equity investments
Unit: RMB
Closing balance Opening balance
Item Depreciatio Depreciatio
Book balance Book value Book balance Book value
n reserves n reserves
Investment in
6,569,063,091.12 6,569,063,091.12 6,182,937,106.09 6,182,937,106.09
subsidiaries
Investment in
associated
192,305,163.87 192,305,163.87
businesses and
joint ventures
Total 6,761,368,254.99 6,761,368,254.99 6,182,937,106.09 6,182,937,106.09
226
Goertek Inc. Annual Report 2022
(1) Investment in subsidiaries
Unit: RMB
Increase or decrease in the current period
Closing
Provision
Opening balance Closing balance balance of
Invested entity Investment Investment for
(book value) Other (book value) impairment
addition reduction impairme
provision
nt reserve
Weifang
Goertek
1,461,802,456.32 26,502,266.94 1,488,304,723.26
Electronics Co.,
Ltd.
Weifang
Goertek
50,369,428.17 1,176,985.98 51,546,414.15
Trading Co.,
Ltd.
Yishui Goertek
Electronics Co., 30,000,000.00 30,000,000.00
Ltd.
Yili Precision
Manufacturing 331,899,916.31 6,645,851.82 338,545,768.13
Co., Ltd.
Goertek Optical
Technology 596,988,221.40 10,061,801.21 607,050,022.61
Co., Ltd
Goertek
Technology 958,337,466.08 31,376,217.82 989,713,683.90
Co., Ltd.
Beijing Goertek
Technology 30,160,833.60 26,656,809.23 56,817,642.83
Co., Ltd.
Qingdao
Goertek
Acoustics 61,876,266.54 27,071,578.01 88,947,844.55
Technology
Co., Ltd.
Shenzhen
Goertek
66,492,459.02 18,144,699.48 84,637,158.50
Technology
Co., Ltd.
Shanghai
Goertek
19,953,450.46 9,948,636.18 29,902,086.64
Technology
Co., Ltd.
Nanjing
Goertek
50,591,085.07 375,419.79 50,966,504.86
Technology
Co., Ltd.
Shenzhen
Mototek Smart 4,002,592.81 8,000,000.00 12,002,592.81
Technology
227
Goertek Inc. Annual Report 2022
Increase or decrease in the current period
Closing
Provision
Opening balance Closing balance balance of
Invested entity Investment Investment for
(book value) Other (book value) impairment
addition reduction impairme
provision
nt reserve
Co., Ltd.
Weifang
Lokomo
Precision 50,632,152.89 1,299,249.01 51,931,401.90
Industry Co.,
Ltd.
Goertek
Investment Co., 78,000,000.00 5,000,000.00 83,000,000.00
Ltd.
Beijing Goertek
Investment
2,744,323.56 1,591,323.18 4,335,646.74
Management
Co., Ltd.
Dongguan
JoyForce
Precision 30,633,305.44 737,675.11 31,370,980.55
Manufacturing
Co., Ltd.
Goertek Vina
247,634,379.61 247,634,379.61
Co., Ltd
Goertek
Technology 66,743,212.77 66,743,212.77
Korea Co., Ltd.
Goertek Electro
206,204,739.77 4,622,220.97 210,826,960.74
nics, Inc.
Goertek
Technology
129,078,085.50 20,877.78 129,098,963.28
Taiwan Co.,
Ltd.
Goertek
Technology 114,559,591.29 19,669,345.44 134,228,936.73
Japan Co., Ltd.
Goertek Seiki
Technology 1,024,111.56 1,024,111.56
Co., Ltd.
Goertek
Intelligence
352,561,720.50 2,993,460.18 355,555,180.68
Technology
Co., Ltd.
Goertek
Microelectronic 819,445,743.75 819,445,743.75
s Inc.
Beijing Goertek
Microelectronic 5,053,458.52 5,053,458.52
s Co., Ltd.
228
Goertek Inc. Annual Report 2022
Increase or decrease in the current period
Closing
Provision
Opening balance Closing balance balance of
Invested entity Investment Investment for
(book value) Other (book value) impairment
addition reduction impairme
provision
nt reserve
Qingdao
Goertek
Microelectronic
460,436.04 460,436.04
s Research
Institute Co.,
Ltd.
Qingdao
Goertek
Intelligent 842,096.78 842,096.78
Sensor Co.,
Ltd.
Rongcheng
Goertek
524,895.84 524,895.84
Microelectronic
s Co., Ltd.
Shanghai
Goertek
2,758,811.23 2,758,811.23
Microelectronic
s Co., Ltd.
Shenzhen
Goertek
1,206,995.30 1,206,995.30
Microelectronic
s Co., Ltd.
Weifang
Goertek
17,208,205.72 17,208,205.72
Microelectronic
s Co., Ltd.
Wuxi Goertek
Microelectronic 940,460.62 940,460.62
s Co., Ltd.
Qingdao
Goertek
Commercial 50,802,186.89 972,645.57 51,774,832.46
Factoring Co.,
Ltd.
Kunshan
Goertek
152,443,503.48 152,443,503.48
Electronics Co.,
Ltd
Rongcheng
Goertek
100,696,635.98 4,041,660.58 104,738,296.56
Technology
Co., Ltd.
Nanning
Goertek 80,000,000.00 233,954.95 80,233,954.95
Electronics Co.,
229
Goertek Inc. Annual Report 2022
Increase or decrease in the current period
Closing
Provision
Opening balance Closing balance balance of
Invested entity Investment Investment for
(book value) Other (book value) impairment
addition reduction impairme
provision
nt reserve
Ltd
Xi’an Goertek
Electronic
8,263,877.27 664,747.07 8,928,624.34
Technology
Co., Ltd.
Weifang High-
tech Zone
Goertek 300,000.00 300,000.00
Education
Center
Qingdao
Resonance
Venture Capital 2,295,000.00 2,295,000.00
Management
Co., Ltd.
Qingdao
Resonance
Phase I Venture
Capital Fund 160,000,000.00 160,000,000.00
Partnership
(Limited
Partnership)
Qingdao
Goertek
Horizons 30,021,151.54 30,021,151.54
Technology
Co., Ltd
Total 6,182,937,106.09 400,423,577.84 14,297,592.81 6,569,063,091.12
(2) Investment in associated businesses and joint ventures
Unit: RMB
Increase or decrease in the current period
Recognize
Opening d Closing Closing
Other Cash Provision
balance investment Other balance balance of
Investor Investment Investment comprehensi dividends for
(book gain and changes Other (book impairment
addition reduction ve income or profits impairment
value) loss under in equity value) provision
adjustments declared reserve
equity
method
I. Joint Venture
II. Affiliated enterprises
Beijing
-
Uphoton 200,000,00 192,305,16
7,694,836.
Technology 0.00 3.87
13
Co., Ltd.
200,000,00 - 192,305,16
Sub-total
0.00 7,694,836. 3.87
230
Goertek Inc. Annual Report 2022
13
-
200,000,00 192,305,16
Total 7,694,836.
0.00 3.87
13
(3) Explanation of other matters:
None
4. Operating revenue and operating cost
Unit: RMB
2022 2021
Item
Income Cost Income Cost
Main business 35,652,094,423.46 32,162,388,871.15 28,940,399,193.43 25,585,348,376.14
Other business 7,325,297,627.45 5,829,646,168.53 9,630,277,984.27 7,877,421,262.62
Total 42,977,392,050.91 37,992,035,039.68 38,570,677,177.70 33,462,769,638.76
Information about performance obligations:
None
5. Investment income
Unit: RMB
Item 2022 2021
Return on long-term equity investments
-7,694,836.13
measured by the equity method
investments income from disposal of long-
-10,604,892.81
term equity investments
Investment income from disposal of
9,695,767.32 197,230,152.13
financial assets held for trading
Dividend income from long-term equity
645,651,914.62
investments of subsidiaries
Investment income from products such as
20,466,167.48 2,488,497.76
certificates of deposit
Profits or losses arising from derecognised
-2,297,194.72
financial assets at amortised cost
Discount losses of financing receivables
-833,626.41
that meet the conditions for derecognition
Other 295,443.10
Total 656,680,494.07 197,716,898.27
6. Others
None
XVIII. Supplementary information
1. Statement of non-recurring profits and losses for the current period
Applicable Not applicable
231
Goertek Inc. Annual Report 2022
Unit: RMB
Item Amount Explanation
Mainly investment income from disposal of
Loss or gain from disposal of non-current assets 122,922,237.61
equity owned in other companies
Tax refunds, reductions, and exemptions approved ultra
vires or without official approval documents
Government subsidies included in the current profits and
losses (except those closely related to the Company's Mainly special funds for enterprise innovation
normal business, comply with national policies and 351,383,799.43 and development and other government
regulations, and continuously grant in accordance with a subsidies
certain standard quota or quantity)
Fund occupancy fees charged to non-financial
enterprises that are included in current profit and loss
Income generated from the fair value of the identifiable
net assets of an investee that is enjoyed by the Company
when the investment cost of acquiring a subsidiary, joint
venture, or joint venture is less than the cost of acquiring
the investment
Profits and losses from exchange of non-monetary assets
Profits and losses from entrusting others to invest or
manage assets
Provisions for impairment of various assets due to force
majeure, such as natural disasters
Profits and losses from debt restructuring
Enterprise reorganization expenses, such as expenses for
relocating employees, integration expenses, etc.
Profits and losses in excess of the fair value arising from
a transaction with an apparently unfair price
Current net profits and losses of a subsidiary from the
beginning of the current period until the combination
date resulting from a business combination under
common control
Profits and losses arising from contingencies unrelated to
the normal operation of the Company
In addition to the effective hedging business related to
normal business of the Company, the profits and losses
from the changes in fair value arising from holding
Mainly the gains from the fair value changes
financial assets held for trading and financial liabilities
-367,080,970.87 and transaction of the Company's foreign
held for trading, as well as the investment income
exchange derivatives
obtained from the disposal of financial assets held for
trading, financial liabilities held for trading and
available-for-sale financial assets
Reversal of provision for impairment of receivables
individually tested for impairment
Profits and losses on external entrusted loans
Profits and losses arising from changes in the fair value
of investment properties subsequently measured using a
fair value model
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Goertek Inc. Annual Report 2022
The impact of one-time adjustment on the current profits
and losses according to the requirements of tax,
accounting, and other laws and regulations
Custody fee income from entrusted operations
Other non-operating income and expenditures other than
15,710,102.76
those mentioned above
Mainly tax benefits and investment income
Other profit and loss items that meet the definition of
42,288,231.23 from large-denomination deposits and other
non-recurring profit and loss
products
Less: Impact of income tax 26,114,589.64
Impact of minority interests 17,306,309.42
Total 121,802,501.10 --
Details of other profit and loss items that meet the definition of non-recurring profit and loss：
Applicable Not applicable
Mainly tax benefits and investment income from large-denomination deposits and other products
Description of defining the non-recurring profit and loss items, which are listed in Explanatory Announcement No. 1 on Information
Disclosure for Companies with Public Offerings of Securities - Non-recurring Profit and Loss, as recurring profit and loss
Applicable Not applicable
2. Net assets income rate and earnings per share
Earnings per share
Weighted average
Profit during the reporting period Basic earnings per share (RMB Diluted earnings per share
return on net assets
/ share) (RMB / share)
Net profit attributable to ordinary
6.17% 0.52 0.52
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company after 5.74% 0.49 0.49
deducting non-recurring profits and losses
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 international
accounting 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 accounting
standards and Chinese accounting standards at the same time
Applicable Not applicable
(3) Explanation of reasons for differences in accounting data under domestic and foreign accounting
standards; if the data audited by an overseas audit firm is adjusted for differences, the name of the overseas
firm shall be indicated.
None
233
Goertek Inc. Annual Report 2022
4. Others
None
Goertek Inc.
Chairman: Jiang Bin
April 17, 2023
234
