Lingyi Itech (Guangdong) Company(002600)
From January 1, 2021
Financial statements for the year ended December 31, 2021
audit report
KPMG huazhenshen Zi No. 2203927 Lingyi Itech (Guangdong) Company(002600) all shareholders:
1、 Audit opinion
We have audited the financial statements of Lingyi Itech (Guangdong) Company(002600) (hereinafter referred to as " Lingyi Itech (Guangdong) Company(002600) "), including the consolidated and parent company's balance sheet as of December 31, 2021, the consolidated and parent company's income statement, consolidated and parent company's cash flow statement, consolidated and parent company's statement of changes in shareholders' equity and notes to relevant financial statements in 2021.
In our opinion, the attached financial statements are prepared in accordance with the accounting standards for business enterprises (hereinafter referred to as the "accounting standards for business enterprises") issued by the Ministry of finance of the people's Republic of China in all material aspects, and fairly reflect the consolidated and parent company's financial status as of December 31, 2021 and the consolidated and parent company's operating results and cash flow in 2021.
2、 Basis for forming audit opinions
We conducted our audit in accordance with the auditing standards for Chinese Certified Public Accountants (hereinafter referred to as the "auditing standards"). The "responsibilities of certified public accountants for the audit of financial statements" in the audit report further expounds our responsibilities under these standards. In accordance with the code of professional ethics for Chinese certified public accountants, we are independent of Lingyi Itech (Guangdong) Company(002600) , and have fulfilled other responsibilities in terms of professional ethics. We believe that the audit evidence we have obtained is sufficient and appropriate, which provides a basis for our audit opinion.
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Audit report (Continued)
KPMG hzsz No. 2203927 III. key audit matters
We believe that the audit matters are the most important ones for the current period. The response to these matters is based on the overall audit of the financial statements and the formation of audit opinions. We will not express separate opinions on these matters. For the impairment of goodwill, please refer to the accounting policies described in "III. important accounting policies and accounting estimates" 20 in the notes to the financial statements and "v. item notes to the consolidated financial statements" 17.
Key audit matters how to deal with them in the audit
As of December 31, 2021, the book value of Lingyi Itech (Guangdong) Company(002600) goodwill and the audit procedures related to the evaluation of the impairment of goodwill included a value of RMB 1.761 billion, mainly from the following procedures in previous years:
The acquired structure business and Salcomp PLC charger industry \uf0b7 understand and evaluate the key financial issues related to goodwill impairment test. Design and operation effectiveness of internal control of business report;
The management conducts impairment test on goodwill at the end of each year. The management \uf0b7 based on our understanding of Lingyi Itech (Guangdong) Company(002600) business, the evaluation management compares the book value of the asset group containing goodwill with the recognition of the asset group by the recoverable management and the allocation of goodwill to the corresponding amount to determine whether it is necessary to withdraw impairment. Whether the method of the asset group complies with the relevant accounting standards, and the recoverable amount is based on the fair value of the asset group minus the disposal provisions; The higher one between the net amount after expenses and the present value of its estimated future cash flow. This process involves significant management \uf0b7 based on our understanding of the industry in which Lingyi Itech (Guangdong) Company(002600) is located and the judgment of the management, especially the income growth rate, profit margin and empirical knowledge, we comprehensively consider the estimation of the historical discount rate of relevant asset groups. Evaluate the appropriateness of key assumptions such as income growth rate and profit margin used by the management in estimating the present value of the future cash flow of the asset group;
\uf0b7 use the work of the valuation experts of the exchange to evaluate the appropriateness of the method used by the management to estimate the present value of the estimated future cash flow of the asset group and the rationality of the discount rate used;
Audit report (Continued)
KPMG huazhenshen Zi No. 2203927 III. key audit matters (Continued) impairment of goodwill (Continued) please refer to the accounting policies described in "III. important accounting policies and accounting estimates" 20 in the notes to the financial statements and "v. notes to items in the consolidated financial statements" 17.
Key audit matters how to deal with them in the audit
As the goodwill impairment test of the management involves a relatively complex \uf0b7 sensitivity analysis of the key assumptions used to obtain the valuation technology of the estimated present value of future cash flow and determine the key assumptions used in the impairment test. The evaluation of key assumptions involves significant management judgments and estimates, which may be affected by the impact of changes in design on the impairment evaluation results and whether the management is biased, Therefore, we believe that there are signs of management bias in the impairment of goodwill;
Identified as key audit matters. \uf0b7 compare the revenue growth rate, profit margin and other key assumptions used by the management in the goodwill impairment test of the previous year with the actual operating results of relevant asset groups in the current year, and evaluate whether there are signs of management bias;
\uf0b7 check the accuracy of the management's calculation of the present value of the estimated future cash flow of the relevant asset group; and
\uf0b7 evaluate whether the disclosure of goodwill impairment in the financial statements complies with the provisions of the accounting standards for business enterprises.
Audit report (Continued)
KPMG hzsz No. 2203927 III. for inventory valuation of key audit matters (Continued), please refer to the accounting policies described in "III. important accounting policies and accounting estimates" 13 in the notes to the financial statements and "v. notes to items in the consolidated financial statements" 8.
Key audit matters how to deal with them in the audit
Lingyi Itech (Guangdong) Company(002600) the inventory mainly includes precision functional parts and structures. The audit procedures related to the evaluation of inventory valuation include the following electronic components and raw materials. December 2021 procedure:
On the 31st, the book value of inventories was RMB 5.032 billion. \uf0b7 understand and evaluate the internal control of key financial reports related to inventory management (including inventory falling price is subject to the balance sheet date, and inventory is withdrawn according to cost and variable net cash value), whichever is lower, and the design and operation effectiveness of inventory cost higher than net realizable value; Provision for inventory falling price shall be made for the difference. The net realizable value of inventories is determined by \uf0b7 evaluating whether the Lingyi Itech (Guangdong) Company(002600) inventory falling price provision policy subtracts the estimated selling price of inventories from the estimated to be incurred at the time of completion, which meets the requirements of the accounting standards for business enterprises, and based on the policy cost (if any), the estimated selling expenses and the relevant tax inspection fees for the calculation accuracy of Lingyi Itech (Guangdong) Company(002600) inventory falling price provision. Sex;
When determining the net realizable value, the management comprehensively considered the inventory \uf0b7 implemented the inventory supervision procedure for the inventory at the end of Lingyi Itech (Guangdong) Company(002600) year, sampled the sales price, inventory age, inventory status, post period sales samples, checked the inventory count quantity and observed the inventory status and sales status, and made judgments and estimates. To evaluate the quantity and status of Lingyi Itech (Guangdong) Company(002600) on the balance sheet date;
Audit report (Continued)
KPMG hzsz No. 2203927 III. key audit matters (Continued) inventory valuation (Continued) please refer to the accounting policies described in "III. important accounting policies and accounting estimates" 13 in the notes to the financial statements and "v. notes to items in the consolidated financial statements" 8.
Key audit matters how to deal with them in the audit
In the process of evaluating the net realizable value of inventory, it involves the management's judgment and estimation from the selection of items from the inventory age table to the inspection of large inventory warehousing, and may be affected by the inventory age information bias in the inventory age details in the management's single evaluation, so we identify the inventory pricing as the accuracy of key review information;
Count items. \uf0b7 on the basis of sampling, select the inventory items at the end of the year, compare the estimated selling price of the products with the actual selling price after the period, and compare the estimated selling expense rate with the actual selling expense rate of the current year, Check the rationality of relevant estimates in the calculation of net realizable value; and
\uf0b7 compare the estimation made by the management during the valuation test of inventory at the end of last year with the actual sales price of this year to evaluate whether there is any sign of management bias.
Audit report (Continued)
KPMG huazhenshen Zi No. 2203927 IV. other information
Lingyi Itech (Guangdong) Company(002600) management is responsible for other information. Other information includes the information covered in the annual report of Lingyi Itech (Guangdong) Company(002600) 2021, but does not include the financial statements and our audit report.
Our audit opinion on the financial statements does not cover other information, and we will not issue any form of assurance conclusion on other information.
In combination with our audit of the financial statements, our responsibility is to read other information and consider whether other information is materially inconsistent with the financial statements or the information we understand in the audit process, or there seems to be material misstatement.
Based on the work we have performed, if we determine that there is a material misstatement in other information, we should report that fact. In this regard, we have nothing to report.
5、 Responsibilities of management and governance for financial statements
The management is responsible for preparing the financial statements in accordance with the provisions of the accounting standards for business enterprises to achieve a fair reflection, and designing, implementing and maintaining necessary internal control to enable
