丘鈦科技（集團）有限公司 Q Technology (Group) Company Limited (Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立的有限公司) Stock Code 股份代號：1478 Annual Report e O Contents 目錄 Contents Corporate Information 公司資料 2 Corporate Profile 公司介紹 5 Five-Year Financial Summary 五年財務概要 6 Chairman's Statement 主席報告 9 Management Discussion and Analysis 管理層討論與分析 24 Biographical Details of Directors and Senior Management 董事及高級管理層之履歷詳情 38 Directors' Report 董事會報告 46 Corporate Governance Report 企業管治報告 84 Environmental, Social ...

Business Focus and Strategy - Q Technology reported a significant focus on mid-to-high end camera and fingerprint recognition modules, targeting global branded smartphone and tablet PC manufacturers[6]. - The company aims to enhance its capabilities in optical designs, computational imaging, and system integration to become a leader in intelligent vision products[6]. - Q Technology is committed to building Industrial 4.0 mass production infrastructure, driving technological innovation, and vertically integrating core components to stand out in the market[6]. - The company is actively pursuing opportunities for market expansion and potential mergers and acquisitions to enhance its growth trajectory[6]. - The Group's strategic focus includes continuous improvement in product quality and technological advancements to meet market demands[6]. Product Offerings - Q Technology's product range includes ultra-thin camera modules with resolutions from 2 megapixels to 108 megapixels, as well as dual/multiple camera modules and under-glass fingerprint recognition modules[6]. - The Group has become one of the top three Chinese manufacturers of high-pixel single-camera modules with resolutions of 32 megapixels and above, achieving mass production of 64 megapixels and 108 megapixels products[15]. - The Group is focusing on the development of 3D ToF modules and new projects including long-wave iToF and dToF to meet the demands of virtual reality (VR), augmented reality (AR), and Internet of Things (IoT) applications[17]. - The Group successfully introduced a micro gimbal stabilizer that doubles the stabilizing angle of traditional optical image stabilizers (OIS) into mobile phones, enhancing video shooting stabilization and low-light photography capabilities[16]. Financial Performance - The Group's revenue reached approximately RMB 8,802,020,000, representing a growth of approximately 73.9% from approximately RMB 5,060,945,000 in the corresponding period[8]. - The sales volume of camera module products was approximately 180.21 million units, a slight decrease of approximately 1.3% from approximately 182.51 million units in the corresponding period[9]. - The average selling price of camera modules increased by approximately 99.6% from approximately RMB 21.5 to approximately RMB 42.8[8]. - The gross profit margin of the Group was approximately 8.3%, a steady increase of approximately 0.1 percentage point from approximately 8.2% in the corresponding period[12]. - The Group recorded a profit of approximately RMB 335,522,000 for the Period, representing a significant increase of approximately 85.5% compared to approximately RMB 180,833,000 in the Corresponding Period[51]. Research and Development - Q Technology's commitment to research and development is aimed at maintaining its competitive edge in the industry[6]. - The R&D team has completed pre-research on new technologies such as periscope five-fold optical zoom modules and ultra-macro imaging modules, preparing for mass production in the short term[15]. - Research and development expenses for the period were RMB 290,751, significantly higher than RMB 139,306 in the previous year, indicating a focus on innovation[156]. Market Trends and Outlook - The Group remains cautiously optimistic about the future development of camera modules and fingerprint recognition modules, anticipating steady market demand growth[26]. - The popularity of under-glass fingerprint recognition modules is increasing, expected to complement rather than replace face recognition systems[29]. - The company believes that the demand for intelligent mobile communication terminals will remain, despite potential delays in consumer purchasing behavior[24]. Operational Efficiency - The Group's production lines at the Kunshan production base have completed the automatic connection of production processes, optimizing production yield and first pass rate[18]. - The second phase of the Indian production base is progressing actively, aiming to provide high-end quality products and fast-responding quality services to overseas customers[18]. - The company is advancing its Industry 4.0 production system with significant upgrades in automation, achieving full automation in its production lines at the Kunshan facility[19]. Financial Management - The net cash inflow from operating activities decreased by approximately RMB 295,392,000 to approximately RMB 659,372,000 from approximately RMB 954,764,000 in the Corresponding Period[54]. - The net cash outflow used in investing activities amounted to approximately RMB 319,297,000, compared to approximately RMB 232,482,000 in the Corresponding Period, primarily due to expenses for plant expansion and purchasing equipment of approximately RMB 328,507,000[56]. - The gearing ratio as of 30 June 2020 was approximately 68.8%, a decrease of approximately 6.8 percentage points from approximately 75.6% as of 30 June 2019, but an increase of approximately 20.6 percentage points from approximately 48.2% as of 31 December 2019[58]. Share Options and Employee Engagement - A total of 71,682,000 share options were granted to staff under the Share Option Scheme, with none outstanding as of June 30, 2020[71]. - The Share Option Scheme is designed to recognize and reward contributions from eligible participants, motivating them to optimize performance for the benefit of the Group[80]. - The total number of options granted during the period was 483,600, with all options being exercised and none remaining outstanding[120]. Corporate Governance - The Company has established an Audit Committee comprising three independent non-executive Directors to review interim results and reports[144]. - The Company fully complied with the Corporate Governance Code during the reporting period[144]. - The independent auditor, KPMG, reviewed the interim financial report for the six months ended June 30, 2020[144].

Product Development and Technology - Q Technology reported a significant focus on mid-to-high end camera and fingerprint recognition modules, targeting global branded smartphone and tablet PC manufacturers[8]. - The company utilizes advanced technologies such as chip on board (COB), chip on flex (COF), molding on board (MOB), and molding on chip (MOC) in its manufacturing processes[9]. - Q Technology's product range includes camera modules from 2 megapixels to 48 megapixels, as well as dual/multiple camera modules and under-glass fingerprint recognition modules[9]. - Future strategies include a strong emphasis on research and development of new technologies and system integration[9]. - The Group is advancing R&D in camera modules focusing on new materials, processes, and products, including mass production of advanced technologies like Molding on Chips (MOC) and Molding on Board (MOB)[18]. - The Group has shipped bulk volumes of 48-megapixel camera modules and is actively developing 64-megapixel and 108-megapixel modules to meet consumer demand for high-definition imaging[18]. - The Group is also strengthening R&D of 3D camera modules, including time of flight (ToF) modules, to cater to industries such as IoT, VR, and AR[20]. - The Group continues to enhance the R&D of 3D camera modules, focusing on ToF 3D modules to meet the demand from IoT, VR, AR, MR, and smart manufacturing industries[22]. Market Performance and Sales - The sales volume of camera modules reached approximately 182.51 million units, representing an increase of approximately 77.5% compared to approximately 102.85 million units in the corresponding period[11]. - The sales volume of fingerprint recognition modules was approximately 37.75 million units, a decrease of approximately 16.6% compared to the corresponding period due to the abandonment of low gross profit margin projects[11]. - The Group's sales revenue reached approximately RMB 5,060,945,000, representing a substantial increase of approximately 57.8% compared to RMB 3,206,712,000 in the corresponding period[15]. - The sales volume of camera modules was approximately 182.51 million units, an increase of approximately 77.5% from approximately 102.85 million units in the corresponding period, with sales revenue of approximately RMB 3,917,299,000, up approximately 51.8% from RMB 2,580,461,000[15]. - The average selling price of camera modules decreased to approximately RMB 21.5, down approximately 14.5% from RMB 25.1 in the corresponding period[15]. - The sales volume of fingerprint recognition modules was approximately 37.75 million units, a decrease of approximately 16.6% from approximately 45.27 million units, but sales revenue increased by approximately 80.7% to RMB 1,121,750,000 from RMB 620,921,000[15]. Financial Performance - The Group recorded profit attributable to shareholders of approximately NT$321 million during the period, a significant improvement from a net loss of approximately NT$319 million in the corresponding period[13]. - The Group's gross profit margin improved to approximately 8.2%, an increase of approximately 7.0 percentage points from approximately 1.2% in the corresponding period[17]. - For the Period, the gross profit was approximately RMB415,205,000, representing an increase of approximately 963.1% compared to RMB39,056,000 in the Corresponding Period, with a gross profit margin of approximately 8.2%[31]. - The Group recorded a profit of approximately RMB180,833,000 for the Period, compared to a loss of approximately RMB51,288,000 for the Corresponding Period[46]. - The Group's revenue for the period was approximately RMB 5,060,945,000, representing an increase of approximately 57.8% compared to RMB 3,206,712,000 in the corresponding period[27]. Operational Efficiency and Capacity - The production capacity of camera modules increased from approximately 35 million units per month at the end of 2018 to approximately 42 million units per month at the end of the period[11]. - The Group's strategy of expanding the sales scale of camera modules and enhancing market position has been successfully realized[11]. - The automation upgrade significantly improved the Group's delivery capacity[11]. - The Group aims to achieve a shipment increase of not less than 50% year-on-year for camera modules in 2019, with at least 50% of those being 10 mega pixels and above[26]. - The production capacity of camera modules is planned to be expanded to not more than 50 million units per month by the end of 2019[26]. Challenges and Market Conditions - The smartphone industry is experiencing challenges, including an extended replacement cycle and uncertainties in 5G adoption, leading to significant pressure on smartphone sales growth[23]. - The camera module and fingerprint recognition module industries face both opportunities and challenges, with expected stable growth in demand and continuous improvement in product specifications[22]. - The macroeconomic environment poses risks, including fluctuations in the Renminbi against the US dollar, which could impact the Group's business model[23]. Corporate Governance and Compliance - The Company has fully complied with the Corporate Governance Code during the reporting period[151]. - The Audit Committee, comprising three independent non-executive Directors, reviewed the interim results and report for the six months ended 30 June 2019[152]. - The independent auditor, KPMG, reviewed the interim financial report in accordance with Hong Kong Standard on Review Engagements 2410[152]. - The Group is committed to enhancing Shareholders' value through good corporate governance practices[151]. Share Options and Employee Incentives - A total of 71,682,000 share options were granted to staff from 2016 to 2019 under the Share Option Scheme[65]. - The Share Option Scheme aims to motivate participants to optimize performance for the benefit of the Group[69]. - The total number of share options granted in 2019 was 11,454,000, representing approximately 1.0% of the total issued shares as of June 21, 2019, and as of August 12, 2019[108]. - The Group's employee policies emphasize fair working conditions, training, and competitive remuneration packages[62]. - The Group aims to attract and retain key employees through the Pre-IPO Share Option Scheme, which provides them with a personal stake in the company[114].

Financial Performance - The company's revenue for 2018 was RMB 8,135,161 thousand, an increase from RMB 7,938,958 thousand in 2017, representing a growth of approximately 2.5%[13] - Gross profit for 2018 was RMB 353,108 thousand, a significant decrease from RMB 882,733 thousand in 2017, indicating a decline of about 60%[13] - Profit for the year was RMB 14,399 thousand, down from RMB 436,277 thousand in 2017, reflecting a decrease of approximately 96.7%[13] - The gross profit margin for 2018 was 4.3%, down from 11.1% in 2017, indicating a significant decline in profitability[15] - The net profit margin for 2018 was 0.2%, a decrease from 5.5% in the previous year, reflecting challenges in maintaining profitability[15] - The EBITDA for 2018 was RMB 281,217 thousand, reflecting the company's operational performance before interest, tax, depreciation, and amortization[15] - The Group's sales revenue reached approximately RMB 8,135,161,000, representing an increase of approximately 2.5% compared to RMB 7,938,958,000 last year[25] - The cost of sales for the year was approximately RMB 7,782,053,000, an increase of approximately 10.3% compared to RMB 7,056,225,000 in 2017[54] - The total investment in raw materials increased by approximately 6.8% to approximately RMB 6,691,781,000 compared to 2017[54] - The Group's other revenue for the Year was approximately RMB 133,113,000, an increase of approximately 279.3% compared to RMB 35,099,000 in 2017[58] Market Position and Strategy - The company is focused on the mid-to-high end camera and fingerprint recognition module market for Chinese smartphone and tablet manufacturers[10] - The company has established a strong market position by producing ultra-thin camera modules with resolutions of 48 megapixels and above[10] - The Group's strategy of expanding sales scale was effectively realized, leading to rapid growth in product sales volume[21] - The Group's clear objectives for expanding sales scale were established early in 2018, driving the growth in product sales[21] - The Group expects camera module shipments in 2019 to increase by no less than 30% compared to the previous year, with at least 50% of these being 10 mega pixels and above[45] - Under-glass fingerprint recognition modules are projected to account for no less than 40% of the total fingerprint recognition module shipments in 2019[45] Research and Development - The Group focused on R&D for camera modules, achieving breakthroughs in miniaturization technology and mass production of new solutions[30] - The Group is accelerating the development of new generation 3D modules, including time of flight (ToF) modules, to meet IoT application demands[31] - The Group has successfully developed second-generation optical under-glass fingerprint recognition modules, securing major supplier qualifications for important models from various Chinese mobile phone brands[33] - The Group aims to enhance R&D in optical design, computing vision, and system integration to strengthen its core competitiveness and expand its market presence[44] - The company is committed to improving its technological advantages through the R&D of new materials, processes, and products, while optimizing its customer structure[37] Financial Position and Liabilities - Total assets increased to RMB 6,439,611 thousand in 2018 from RMB 6,100,250 thousand in 2017, representing a growth of 5.5%[15] - The company reported total liabilities of RMB 4,336,176 thousand in 2018, an increase from RMB 3,954,593 thousand in 2017, marking a rise of 9.7%[15] - The gearing ratio for 2018 was 56.0%, up from 50.2% in 2017, indicating a higher level of financial leverage[15] - As of December 31, 2018, the Group's bank borrowings amounted to approximately RMB 1,178,241,000, an increase of approximately 9.3% from RMB 1,078,119,000 as of December 31, 2017[73] - The net cash outflow from operating activities for the year was approximately RMB 172,505,000, compared to a net inflow of approximately RMB 2,221,513,000 in 2017, primarily due to an increase in trade and other receivables[77][80] Shareholder Information - The Board did not recommend the payment of any final dividend for the year ended December 31, 2018[100] - As of December 31, 2018, the aggregate amount of the Company's reserves available for distribution was approximately RMB1,020,682,000, an increase from approximately RMB986,162,000 in 2017[149] - He Ningning holds 752,191,000 shares, representing approximately 66.46% of the issued shares, as an interest of a controlled corporation[158] - Wang Jianqiang is a beneficial owner of 10,644,800 shares, accounting for 0.94% of the issued shares[158] - The Company had no other substantial shareholders with interests or short positions in shares or underlying shares as recorded in the register required under section 336 of the SFO[163] Management and Governance - The company has a strong board with members holding advanced degrees from prestigious universities, enhancing its governance and strategic oversight capabilities[114][116][118] - The management team has a diverse background in technology, finance, and investment, which supports the company's growth and innovation strategies[115][118] - The company is committed to maintaining high standards of corporate governance through its independent directors and various committees[114] - The management's expertise in technology and finance positions the company well for future market expansions and product innovations[115][118] Operational Efficiency - The production efficiency and first pass yield improved in the second half of the Year due to increased investment in automation[34] - The Group aims to continue investing in chip on board (COB) process automation, testing automation, and logistics automation to enhance production capabilities[34] - The company has a strong focus on developing new materials and technologies to stay competitive in the market[126] Economic Environment - The impact of international trade protectionism and US dollar interest rate hikes has created an uncertain economic outlook[20] - The International Monetary Fund (IMF) lowered the global economic growth forecast for 2019 to 3.5%, the lowest rate in three years, indicating a challenging macroeconomic environment for the intelligent mobile communication terminal industry[37] - China's GDP recorded a year-on-year increase of 6.6% in 2018, marking the lowest growth rate in the past 28 years[20] Employee Information - The Group's total employee remuneration for the year was approximately RMB 623,001,000, an increase from approximately RMB 463,868,000 in 2017[92][93] - The Group had a total of 2,874 employees as of December 31, 2018, an increase of 13.8% from 2,526 employees in 2017[94] Environmental and Compliance - The company has complied with environmental protection laws and implemented internal regulations for wastewater, waste gas, and greenhouse gas management[102] - The company successfully obtained a compliance certificate for work safety from the Administration of Work Safety and Environmental Protection of Kunshan Hi-tech Industrial Development Park[102] - The company continues to focus on improving fire safety management and emergency plans, conducting fire drills to enhance fire prevention capabilities[102]