Wondershare Technology Group Co.Ltd(300624)
Annual financial report for 2021
April 2022
financial reports
1、 Audit report
Unqualified opinion of audit opinion type standard
Signing date of audit report: April 22, 2022
Name of audit institution: Dahua Certified Public Accountants (special general partnership)
Audit report document No.: dhsz [2022] 007408
Name of certified public accountant Yang Qian, Tan Zhiqing
Body of audit report
1. Audit opinion
We have audited the financial statements of Wondershare Technology Group Co.Ltd(300624) (hereinafter referred to as ” Wondershare Technology Group Co.Ltd(300624) “), 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 provisions of the accounting standards for business enterprises in all material aspects, and fairly reflect the financial position of Wondershare Technology Group Co.Ltd(300624) 2021 as of December 31, 2021 and the operating results and cash flows of Wondershare Technology Group Co.Ltd(300624) 2021.
2. Basis for forming audit opinions
We conducted our audit in accordance with the auditing standards for Chinese certified public accountants. 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 Wondershare Technology Group Co.Ltd(300624) , 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.
3. Key audit matters
The key audit matters are the most important matters that we consider to audit the current financial statements according to our professional judgment. 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.
We confirm that the following matters are the key audit matters that need to be communicated in the audit report.
(1) Software revenue determination
1) Item description
The amount of software revenue in 2021 is 1026554900 yuan, and the proportion of software revenue in the current operating revenue is 99.75%. The company is mainly engaged in the R & D and sales of software products, mainly through online channels, and provides software and related value-added services to global users through self built e-commerce platforms. As the end customers of the company’s software products sold online are mainly overseas individual consumers, the number of sales orders in online transactions is large, the amount of single orders is small, and the number of end customers is relatively large, Whether the confirmation of the sales revenue of its software products is true, accurate and complete has a significant impact on the company’s operating results, so we regard the confirmation of the revenue of software products as a key audit matter. 2) Audit response
Our important audit procedures for the authenticity, accuracy and completeness of the recognition of sales revenue of software products include:
① Through consulting relevant documents, interviewing key personnel and performing walkthrough test, we understood the specific business process and internal control system, assessed the risk of sales and collection business process, and tested the effectiveness of internal control operation related to sales and collection business process, including registering an account on a third-party platform as a consumer to perform the purchase process, Check the consumer order information with the order information recorded in the CBS system, and calculate the timeliness and accuracy of the connection between the CBS system and the third-party platform;
② Interview with the management, analyze and evaluate the major risks related to revenue recognition and the time point of return transfer, and then evaluate whether the time point of sales revenue recognition of the company is appropriate;
③ We have independently tested the Wondershare Technology Group Co.Ltd(300624) information system, tested and evaluated it from the general level and application control level, and implemented the test procedures for the website visits, views, product downloads and other processes and modules involved in Wondershare Technology Group Co.Ltd(300624) business;
④ Understand the changes of the third-party platforms cooperated in 2021, obtain the cooperation agreement of the new platform and the change cooperation agreement of the original cooperation platform, and consult the main contract terms such as commission and sharing standard, handling fee collection standard, settlement method and settlement cycle;
⑤ Export the sales order details from the third-party platform, check the confirmed amount of the company’s book revenue with the detailed amount of the platform sales order, and check whether there are abnormal returns in the current period; Match the sales order details with the company’s CBS system details, and check whether there is a large number of repeated purchases in the same mailbox;
⑥ Obtain the bank flow of all bank accounts of the company, check the sales collection details listed in the bank flow with the sales payment details exported from the third-party platform, understand the reasons for the differences, and check whether the name of the bank flow collection unit is consistent with that of the cooperative third-party platform;
⑦ Confirm the product sales amount and the current payment collection amount in the reporting period to the third-party platform, and confirm whether the book revenue of the company and the recognized amount are true, accurate and complete; ⑧ Extract some software revenue recognition vouchers before and after the balance sheet date and conduct two-way verification. Trace the detailed records of income from several days before and after the balance sheet date to the sales order details of the third-party platform; Trace the sales order details of the third-party platform several days before and after the balance sheet date to the revenue details record to determine whether there is a cross period phenomenon in the sales;
Based on the audit work performed, we believe that the recognition of software revenue by the management is in line with the relevant accounting standards for business enterprises and the company’s accounting policies.
(2) Goodwill impairment
1) Item description
As of December 31, 2021, the book value of goodwill in Wondershare Technology Group Co.Ltd(300624) consolidated financial statements is 3164342 million yuan, the amount of provision for impairment of goodwill is 0 million yuan, and the book value of goodwill at the end of the period accounts for 20.54% of the total assets Wondershare Technology Group Co.Ltd(300624) ‘s goodwill is generated by the purchase of 51.00% equity of Shenzhen Yitu Software Co., Ltd. (hereinafter referred to as “Shenzhen Yitu”) in 2019 and 566647% equity of Beijing Modao Carving Technology Co., Ltd. (hereinafter referred to as “Beijing Modao”) in 2020, As well as the purchase of 72.44% equity of Hangzhou Gexiang Technology Co., Ltd. (hereinafter referred to as “Hangzhou Gexiang”) by paying cash in 2021, and the difference between the payment price at the time of M & A and the fair value of identifiable net assets of Shenzhen Yitu, Beijing Modao and Hangzhou Gexiang, the management conducted an impairment test on goodwill on December 31, 2021 and adjusted the book value of goodwill according to the results of impairment test.
The results of goodwill impairment test largely depend on the estimates made and assumptions adopted by the management, especially when predicting the future income and long-term income growth rate, gross profit margin, operating expenses, discount rate and other relevant indicators of relevant asset groups. There are fixed uncertainties in these estimates. Affected by the management’s judgment on the future market and the economic environment, the adoption of different estimates and assumptions will have a great impact on the recoverable value of the assessed goodwill. As the amount of goodwill is significant and the management needs to make significant judgments, we determine the impairment of goodwill as a key audit event.
2) Audit response
Our important audit procedures for goodwill impairment include:
① Evaluate the design and operation effectiveness of key internal controls related to the determination of the recoverable amount of goodwill by the management.
② Discuss with the company’s management the methods used in the goodwill impairment test, the assumptions of key evaluation, the selection of parameters, and the rationality of predicting future income and cash flow discount rate.
③ Discuss with the external evaluation organization hired by the company’s management the methods used in the goodwill impairment test, the assumptions of key evaluation, the selection of parameters, and the rationality of predicting future income and cash flow discount rate.
④ Evaluate the independence, objectivity, experience and qualification of the external evaluation organization hired by the company’s management.
⑤ Test whether the calculation of net present value of future cash flow is accurate.
⑥ Assess whether the management’s disclosure of goodwill and goodwill impairment in the financial statements is appropriate.
Based on the audit work performed, we believe that the management’s presentation and disclosure of goodwill impairment is appropriate.
4. Other information
Wondershare Technology Group Co.Ltd(300624) management is responsible for other information. Other information includes the information covered in the annual report of Wondershare Technology Group Co.Ltd(300624) 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
Wondershare Technology Group Co.Ltd(300624) 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 so that the financial statements are free from material misstatement due to fraud or error.
When preparing the financial statements, Wondershare Technology Group Co.Ltd(300624) the management is responsible for assessing Wondershare Technology Group Co.Ltd(300624) ‘s ability to continue as a going concern, disclosing matters related to going concern (if applicable), and applying the assumption of going concern, unless the management plans to liquidate Wondershare Technology Group Co.Ltd(300624) , terminate the operation or has no other realistic choice.
The management is responsible for supervising the financial reporting process of Wondershare Technology Group Co.Ltd(300624) .
6. Responsibilities of certified public accountants for the audit of financial statements
Our goal is to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement due to fraud or error, and issue an audit report containing audit opinions. Reasonable assurance is a high-level assurance, but it does not guarantee that the audit performed in accordance with the audit standards will always be found when a major misstatement exists. Misstatement may be caused by fraud or error. If it is reasonably expected that the misstatement alone or in summary may affect the economic decisions made by the users of the financial statements based on the financial statements, the misstatement is generally considered to be significant.
In the process of carrying out the audit work in accordance with the audit standards, we use professional judgment and maintain professional doubt. At the same time, we also carry out the following work:
1) Identify and assess the risks of material misstatement of financial statements due to fraud or error, design and implement audit procedures to deal with these risks, and obtain sufficient and appropriate audit evidence as the basis for issuing audit opinions. Since fraud may involve collusion, forgery, intentional omission, misrepresentation or override of internal control, the risk of failing to find major misstatement caused by fraud is higher than that caused by error.
2) Understand the internal control related to audit in order to design appropriate audit procedures, but the purpose is not to express an opinion on the effectiveness of internal control.
3) Evaluate the appropriateness of accounting policies selected by the management and the rationality of accounting estimates and related disclosures.
4) Draw conclusions on the appropriateness of management’s use of going concern assumptions. At the same time, according to the audit evidence obtained, draw a conclusion on whether there are major uncertainties in the matters or circumstances that may lead to major doubts about Wondershare Technology Group Co.Ltd(300624) going concern ability. If we conclude that there are significant uncertainties, the auditing standards require us to draw the attention of report users to the relevant disclosures in the financial statements in the audit report; If the disclosure is insufficient, we should express a non unqualified opinion. Our conclusions are based on the information available as of the date of the audit report. However, future events or circumstances may cause Wondershare Technology Group Co.Ltd(300624) unable to continue its business.
5) Evaluate the overall presentation, structure and content of the financial statements, and evaluate whether the financial statements fairly reflect relevant transactions and events.
6) Obtain sufficient and appropriate audit evidence on the financial information of entities or business activities in Wondershare Technology Group Co.Ltd(300624) to express an opinion on the financial statements. We are responsible for guiding, supervising and executing the group audit. We are fully responsible for the audit opinion.
7) We communicated with the management on the planned audit scope, schedule and major audit findings, including the internal control defects that we identified in the audit.
We also provide a statement to the management that we have complied with the professional ethics requirements related to independence, and communicate with the management all relationships and other matters that may reasonably be considered to affect our independence, as well as relevant preventive measures (if applicable).
From the matters communicated with the management, we determine which matters are the most important for the audit of the current financial statements, thus constituting key audit matters. We describe these matters in the audit report, unless laws and regulations prohibit the public disclosure of these matters, or in rare cases, if the negative consequences of communicating a matter in the audit report are reasonably expected to exceed the benefits in the public interest, we determine that we should not communicate the matter in the audit report. 2、 The unit of the statement in the notes to the financial statements is: yuan 1. Preparation unit of the consolidated balance sheet: Wondershare Technology Group Co.Ltd(300624)
December 31, 2021
Unit: Yuan
December 31, 2021 December 31, 2020
Current assets:
Monetary Fund
