Financial Reporting and Standards - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and the Companies Ordinance, with amounts rounded to the nearest thousand RMB[3]. - The company adopts the acquisition method for business combinations, measuring identifiable assets and liabilities at fair value on the acquisition date[7]. - Non-controlling interests are presented separately in the consolidated financial statements, reflecting their share of equity changes[10]. - Property, plant, and equipment are recorded at cost less accumulated depreciation and any impairment losses, with specific useful lives ranging from 2 to 16 years depending on the asset type[12][19][22]. - If the carrying amount of an asset exceeds its estimated recoverable amount, the asset is immediately reduced to its recoverable amount[24]. - The company recognizes gains or losses on the sale of property, plant, and equipment based on the difference between the net proceeds and the carrying amount at the time of sale[25]. - The financial statements include the performance of subsidiaries from the acquisition date or until the date of sale, as applicable[5]. - The company evaluates whether a group of assets and activities constitutes a business based on the presence of inputs and substantive processes[6]. - All non-controlling interests are measured at fair value unless otherwise specified by Hong Kong Financial Reporting Standards[7]. - The company assesses control over subsidiaries based on the ability to influence variable returns through power over the investee[11]. - The financial statements indicate that intangible assets are initially recognized at cost and subsequently measured at amortized cost[54]. - Development costs can be capitalized if certain criteria are met, including technical feasibility and intention to complete and sell the product[57]. - The company conducts impairment tests on intangible assets if there are indications of potential impairment[59]. - Financial instruments are classified based on the business model and cash flow characteristics, with specific measurement bases for debt instruments[62]. - The company recognizes research expenses as incurred, while development costs may be capitalized under certain conditions[56]. - Financial liabilities are measured at amortized cost using the effective interest method, with interest expenses recognized in profit or loss[103]. - The company has policies in place to ensure asset protection and compliance with relevant regulations and accounting standards[92]. - The company has established appropriate policies and controls to prevent the misuse or improper disposal of assets[92]. - The company confirmed that financial liabilities will be derecognized upon the fulfillment, cancellation, or expiration of related contracts[109]. - Inventory is initially recognized at cost and subsequently measured at the lower of cost or net realizable value, using the weighted average method for cost calculation[111]. - Revenue is recognized when control of goods or services is transferred to customers, typically at the point of delivery for LED chips and other semiconductor products[117]. Corporate Governance - The chairman and CEO Zhao Yiweng resigned as CEO on February 6, 2023, but remains as chairman of the board[30]. - The board of directors held one meeting with independent non-executive directors during the year[30]. - The audit committee held two meetings during the year to review and supervise the group's financial reporting procedures and internal controls[36]. - The remuneration committee convened three meetings to propose remuneration for directors and senior management[37]. - The nomination committee also held three meetings to review the board's composition and recommend candidates for re-election[38]. - As of December 31, 2022, the proportion of independent non-executive directors on the board was 40%[44]. - The board's female representation was 10% as of December 31, 2022, with plans to gradually increase this ratio[45]. - The company has adopted a board diversity policy to enhance diversity among board members[41]. - The company encourages continuous professional development for all directors to ensure they contribute effectively to the board[33]. - The board has established three committees: audit, remuneration, and nomination, to oversee specific areas of the company's affairs[35]. - The company has adopted a nomination policy for board member selection criteria and appointment procedures[51]. - The board consists of members with diverse professional experiences, including finance, business management, and research and development[50]. - The company has established guidelines for evaluating candidates based on their achievements and qualifications in the manufacturing industry[51]. - The board is responsible for assessing risks associated with achieving the company's strategic objectives and maintaining effective risk management and internal control systems[121]. - An independent consulting firm conducted an annual review of the company's risk management and internal control systems, finding no significant deficiencies[121]. - The board conducts annual assessments of the independence of non-executive directors to ensure they can provide independent opinions[87]. Risk Management and Compliance - The company has established a continuous process to identify, assess, and manage significant risks, with regular reporting to management[91]. - The company has not yet established an internal audit function but is reviewing the necessity of doing so annually[93]. - The company emphasizes the importance of ethical conduct and corporate governance in its operations and employee training[84]. - The company has adopted a whistleblowing policy to provide formal channels for employees and third parties to report concerns confidentially without fear of retaliation[88]. - The company has implemented an anti-corruption policy to maintain high standards of integrity and transparency in its operations[89]. - The group has a policy to assess credit risk based on various quantitative and qualitative data, including known credit assessments[68]. - The group recognizes that a financial asset is in default if certain conditions, such as overdue payments exceeding 90 days, are met[70]. - The group has established a provision matrix based on historical credit loss experience and adjusted for specific forward-looking factors[67]. - The group recognizes that significant increases in credit risk may lead to provisions based on lifetime expected credit losses if certain conditions are met[68]. Shareholder Communication and Dividends - At least 25% of the company's issued share capital is held by the public as of the report date[126]. - The company provides opportunities for shareholders to communicate with the board during the annual general meeting[127]. - The company has adopted a dividend policy to allow shareholders to share in profits while reserving earnings for future growth opportunities[135]. - The board will consider various factors before declaring dividends, including actual and expected financial performance, retained earnings, and capital expenditure needs[138]. - The company has established communication channels with shareholders, including annual general meetings, annual reports, and its website[134]. Environmental, Social, and Governance (ESG) Initiatives - The environmental, social, and governance (ESG) report covers the group's operations in China, focusing on semiconductor product design, development, and sales[168]. - The company has identified key environmental, social, and governance (ESG) issues through stakeholder engagement, focusing on areas such as health and safety, employee development, and corporate governance[174]. - The company aims to convert 10% of its office lighting to LED by 2023 to reduce electricity consumption, highlighting electricity as a key performance indicator for environmental performance[178]. - The company has achieved ISO 14001:2015 certification for its Zhuhai manufacturing facility, demonstrating its commitment to environmental management and pollution reduction[181]. - There were no significant non-compliance cases related to environmental laws and regulations in Hong Kong and China during the reporting period[182]. - The company has implemented strict controls on pollutant emissions and resource consumption, adhering to relevant environmental laws and regulations[181]. - The company engages with various stakeholders, including employees, investors, and regulatory bodies, to address their concerns and maintain open communication channels[175]. - The company focuses on sustainable supply chain management and product quality assurance as part of its social responsibility initiatives[177]. - The company emphasizes the importance of transparency and fairness in supplier selection processes[175]. - The company is committed to community investment and supporting local communities as part of its corporate social responsibility efforts[177]. - The company has identified significant environmental issues, including waste management and greenhouse gas emissions, as part of its ESG reporting[177]. - The company reported a total greenhouse gas emissions of 1,825 tons of CO2 equivalent in 2022, a decrease of 67% from 5,599 tons in 2021[187]. - Direct emissions (Scope 1) were reduced to 2 tons of CO2 equivalent, down 99% from 4,254 tons in 2021[187]. - Indirect emissions (Scope 2) increased by 36% to 1,823 tons of CO2 equivalent from 1,345 tons in 2021[187]. - The company aims to reduce benzene emissions by 5% by 2040, using 2020 as the baseline[184]. - The company generated 1.30 tons of hazardous organic solvent waste in 2022, a decrease of 19% from 1.60 tons in 2021[192]. - The total energy consumption in production activities was primarily electricity, with a focus on high-energy efficiency lighting installations[195]. - The company plans to explore alternative semiconductor manufacturing methods to achieve its environmental goals[188]. - The company has installed gas purification systems to control air pollutant emissions from production activities[184]. - The company has engaged independent laboratories for regular monitoring of air pollutant emissions to ensure compliance with regulatory limits[184]. - The company reported a 50% decrease in toluene and xylene emissions, from 0.2 kg in 2021 to 0.1 kg in 2022[184].
宏光半导体(06908) - 2022 - 年度财报