Wondershare Technology Group Co.Ltd(300624)
audit report
Dahuashen Zi [2022] No. 007408
Dahua Certified Public Accountants (special general partnership)
DaHuaCertifiedPublicAccountants（SpecialGeneralPartnership）
Beijing Institute of Certified Public Accountants
Business report unified coding reporting system
Unified code for business reporting: 110101482022169011360
Report name: Wondershare Technology Group Co.Ltd(300624) audit report
Report No.: dhsz [2022] 007408
Name of audited (inspected) unit: Wondershare Technology Group Co.Ltd(300624)
Name of accounting firm: Dahua Certified Public Accountants (special general partnership)
Business type: financial statement audit
Report opinion type: unqualified opinion
Report date: April 22, 2022
Filing date: April 14, 2022
Yang Qian (4301 Tecon Biology Co.Ltd(002100) 44),
Signed by:
Tan Zhiqing (110101480287)
(information can be queried by scanning QR code or logging into the official website of Beijing injection Association)
Note: this filing information only proves that the report has been filed with the Beijing Institute of certified public accountants, and does not mean that the Beijing Institute of Certified Public Accountants makes any form of guarantee for the content of the report in any sense.
Wondershare Technology Group Co.Ltd(300624)
Audit report and financial statements
(from January 1, 2021 to December 31, 2021)
Contents page I. audit report 1-7 II. Audited financial statements
Consolidated balance sheet 1-2 consolidated income statement 3 consolidated cash flow statement 4 consolidated statement of changes in shareholders’ equity 5-6 parent company balance sheet 7-8 parent company income statement 9 parent company cash flow Table 10 changes in shareholders’ equity of parent company 11-12 notes to financial statements 1-118
Dahua Certified Public Accountants (special general partnership) 12 / F, building 7, No. 16 courtyard, Middle West Fourth Ring Road, Haidian District, Beijing [100039] Tel: 86 (10) 58350011 Fax: 86 (10) 58350006 www.dahua-cpa com. Audit report
Dahuashen Zi [2022] No. 007408 Wondershare Technology Group Co.Ltd(300624) all shareholders:
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) the consolidated and parent company as of December 31, 2021 and the operating results and cash flow of the consolidated and parent company in 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. Recognition of software product revenue;
2. Impairment of goodwill.
（1） Revenue determination of software products
1. Event description
In 2021, the revenue of software products was 1026554900 yuan, and the revenue of software products accounted for 99.75% of the current operating revenue. The company is mainly engaged in the R & D and sales of software products, mainly through online channels, and provides software products 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 the revenue recognition vouchers of some software products 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 product 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. Event 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 The following 5.6 billion shares of Beijing Modao Technology Co., Ltd. (hereinafter referred to as “Shenzhen Modao”) were purchased through cash payment 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.
