2023 Annual Report
Stock Code: 601231 Abbreviated Name: USI
Convertible Bond Code:113045 Abbreviated Name: USI Convertible Bond
Universal Scientific Industrial (Shanghai) Co., Ltd.
2023 Annual Report
Note: This Report has been prepared in both Chinese and English. Should there be any discrepancies or
misunderstandings between the two versions, the Chinese version shall prevail.
1 / 285
2023 Annual Report
Important Notice
I. The Board of Directors, the Board of Supervisors, directors, supervisors and senior
management of the Company hereby assure that the content set out in the annual report is
truthful, accurate and complete, and contains no misrepresentations, misleading statements or
material omissions, and are individually and collectively responsible for the content set out
therein.
II. All directors attended the Board of Directors meeting.
III. Deloitte Touche Tohmatsu Certified Public Accountants LLP has issued a standard unqualified
audit report for the Company.
IV. Jeffrey Chen, person in charge of the Company, Tan-Yang Liu, person in charge of accounting,
and Yuh-Huah Chern, person in charge of the accounting firm (accountant in charge) declare
that the financial report in the annual report is truthful, accurate and complete.
V. The proposal of profit distribution for the reporting period deliberated and approved by the
Board of Directors
Regarding its profit distribution plan for 2023, USI is going to distribute a cash dividend of RMB 2.70
(tax included) for every 10 shares on the basis of the total share capital on the record date for implementing
the plan after deducting the number of shares in its special buy-back securities account, without bonus
share or transfer of capital reserve into share capital, and all the remaining undistributed profits were
carried forward for distribution in the following years. In case of any change in the total share capital of
the Company and the number of shares in its buy-back securities account prior to the record date for
implementing the plan, the cash dividend per share shall remain unchanged, and the total amount of cash
dividend shall be adjusted accordingly.
The Company's Profit Distribution Plan for the 2023 was deliberated and approved at the Tenth Meeting
of the Sixth Session of the Board of Directors of the Company, and it still needs to be deliberated at the
Company's 2023 Annual General Meeting of Shareholders.
VI. Risk disclosure for forward-looking statements
√Applicable □ Not Applicable
This report involves forward-looking statements such as future plans, and does not constitute a material
commitment of the Company to investors. Investors are requested to pay attention to investment risks.
VII.Are there any funds occupied by controlling shareholder or other related parties for non-
operational purposes?
No
2 / 285
2023 Annual Report
VIII. Is there any external guarantee in violation of the prescribed decision-making process?
No
IX. Are more than half of the directors unable to guarantee the truthfulness, accuracy and
completeness of the annual report disclosed by the Company?
No
X. Major risk disclosure
The major risks facing the Company are described in “Possible Risks” of “Discussion and Analysis of
Corporate Development in the Future” in this report.
XI. Others
√Applicable □ Not Applicable
3 / 285
2023 Annual Report
Contents
Section I Definitions .................................................................................................................................. 5
Section II Company Profile and Key Financial Indicators ................................................................... 7
Section III Management Discussion and Analysis ............................................................................... 12
Section IV Corporate Governance ........................................................................................................ 50
Section V Environmental and Social Responsibility ............................................................................ 83
Section VI Major Events ........................................................................................................................ 93
Section VII Changes in Shares and Information of Shareholders.................................................... 120
Section VIII Information on Preferred Shares .................................................................................. 130
Section IX Information on Bonds ........................................................................................................ 131
Section X Financial Statements ........................................................................................................... 135
Accounting statements signed and sealed by the person in charge
of the Company, the person in charge of accounting and the person
in charge of the accounting firm
Catalog of files for Original audit report sealed by the accounting firm and signed and
reference sealed by certified public accountants
Original copies of all documents and announcements of the
Company publicly disclosed in newspapers designated by CSRC
during the reporting period
4 / 285
2023 Annual Report
Section I Definitions
I. Definitions
In this report, the following terms shall have the following meanings unless the context otherwise
requires:
The Company, the Group,
Universal Scientific Industrial (Shanghai) Co., Ltd.
USI, or the listed company
SSE Shanghai Stock Exchange
USI Enterprise Limited, the controlling shareholder of the
USIE
Company, registered in Hong Kong
Universal Scientific Industrial Co., Ltd., a company listed on
Universal Scientific
the Taiwan Stock Exchange with the stock code 2350, which
Industrial Co., Ltd.
terminated its listing on June 17, 2010
ASE Technology Holding Co., Ltd., a company listed on the
ASE Technology Holding
Taiwan Stock Exchange with the stock code 3711
Advanced Semiconductor Engineering, Inc., formerly listed on
ASE Inc. the Taiwan Stock Exchange with the stock code 2311 and
delisted in 2018.
ASE (Shanghai) Inc., a subsidiary of ASE Inc. in which it
ASE Shanghai
holds 100% shares
Universal Global Technology Co., Limited, a subsidiary of the
UGT Company in which the Company holds 100% shares, registered
in Hong Kong
Universal Global Technology (Shanghai) Co., Ltd., a
UGT Shanghai, Jinqiao
subsidiary of the Company in which the Company holds 100%
Subsidiary, Jinqiao Factory
shares
USI Shenzhen, Shenzhen
USI Electronics (Shenzhen) Co., Ltd., a subsidiary of the
Subsidiary, Shenzhen
Company in which the Company holds 100% shares
Factory
UGT Kunshan, Kunshan Universal Global Technology (Kunshan) Co., Ltd., a wholly-
Subsidiary, Kunshan Factory owned subsidiary of the Company
Universal Global Electronics Co., Ltd., a subsidiary of the
UGE
Company in which the Company holds 100% shares
UGT Huizhou, Huizhou Universal Global Technology (Huizhou) Co., Ltd., a subsidiary
Subsidiary, Huizhou Factory of the Company in which the Company holds 100% shares
Universal Global Scientific Industrial Co., Ltd., registered in
UGSI Taiwan, a subsidiary of the Company in which the Company
holds 100% shares
Universal Scientific Industrial Vietnam Company Limited, a
USI Vietnam, Vietnam
subsidiary of the Company in which the Company holds 100%
Subsidiary, Vietnam Factory
shares
Financière AFG, a simplified joint stock company established
FAFG and validly existing under the laws of France and a subsidiary
of the Company in which the Company holds 100% shares
ASDI Assistance Direction, a simplified joint stock company
ASDI
established and validly existing under the laws of France
Asteelflash Group, a simplified joint stock company
established and validly existing under the Laws of France. It is
AFG a subsidiary of FAFG in which FAFG holds 100% shares.
Since January 1, 2022, it has been merged into its parent
company FAFG.
FAFG Suzhou, Suzhou Asteelflash (Suzhou) Co., Ltd., a subsidiary of FAFG in which
Factory FAFG holds 100% shares
Formerly known as Chung Hong Electronics Poland SP.Z.
USI Poland, Poland Factory
O.O; the Company completed the acquisition of 100% of its
5 / 285
2023 Annual Report
equity on June 22, 2020, and it was renamed Universal
Scientific Industrial Poland Sp.z o.o.
Memtech International Ltd., which was listed on the Singapore
Memtech Stock Exchange in 2004, and was delisted on August 22, 2019.
The Company indirectly holds 42.23% of its equity.
Hirschmann Car Communication Holding S.a.r.l., a limited
liability company established in Luxembourg, is headquartered
Hirschmann in Germany and has production sites in Germany, Hungary and
China. USI and Ample Trading completed the acquisition of
100% of its shares in October 2023.
EMEA Abbreviation for Europe, the Middle East, and Africa
APAC Abbreviation for the Asia-Pacific region
Americas North and South America
Electronic Manufacturing Services, the services provided by
EMS manufacturers for electronic brand owners, such as
manufacturing, procurement, partial design and logistics
ODM Original Design and Manufacturer
DMS Design and Manufacturing Services
An acronym for DMS combined with Miniaturization and
D(MS)2
Solution
Surface Mount Technology, a new generation of electronic
assembly technology, which compresses traditional electronic
components into components that mare tens of times smaller
than their original volume and realizes high-density, highly
SMT reliable, miniaturized and low-cost assembly of electronic
products, as well as automated production. The process for
assembling components onto printed (or other) substrates is
called SMT process, and the associated assembly equipment is
called SMT equipment.
Printed Circuit Board, known as the “cornerstone” of electronic
products. A large number of electronic parts used in electronic
PCB products are embedded on PCBs of different sizes. In addition
to fixing parts, the main function of PCBs is to provide circuit
connections between various parts.
System in Package; multiple functional wafers, including
processors and memory wafers, are integrated into a package
SiP according to the application scenarios, the number of package
substrate layers and other factors, so as to achieve a basic
package scheme with complete functions
CAGR Compound Annual Growth Rate
YoY Year Over Year
The reporting period or
January 1, 2023 to December 31, 2023
current period
6 / 285
2023 Annual Report
Section II Company Profile and Key Financial Indicators
I. Company profile
Name in Chinese Universal Scientific Industrial (Shanghai) Co., Ltd.
Abbreviation in Chinese USI
Name in English Universal Scientific Industrial (Shanghai) Co., Ltd.
Abbreviation in English USISH
Legal representative Jeffrey Chen
II. Contact
Secretary of the Board of Directors Securities affairs representative
Name Jinpeng Shi Lily Liu
F/5, Building B, 169 Shengxia Road, F/5, Building B, 169 Shengxia Road,
Address
Pudong New Area, Shanghai Pudong New Area, Shanghai
Tel. 021-58968418 021-58968418
Fax 021-58968415 021-58968415
Email Public@usiglobal.com Public@usiglobal.com
III. Basic information
1558 Zhangdong Road, Integrated Circuit Industrial
Registered address
Zone, Zhangjiang Hi-tech Park, Shanghai
Change record of registered address None
F/5, Building B, 169 Shengxia Road, Pudong New Area,
Office address
Shanghai
Zip code of office address 201203
Website www.usiglobal.com
Email Public@usiglobal.com
IV. Information disclosure and place at which the report is available
Names and websites of press media on which Shanghai Securities News, China Securities Journal,
the Company discloses its annual report and Securities Times
Website of the stock exchange on which the
www.sse.com.cn
Company discloses its annual report
Annual report available at Securities Department of the Company
V. The Company's stocks
The Company's Stocks
Abbreviated Former
Stock class Listed on Stock Code
Name Abbreviated Name
Shanghai Stock
A-share USI 601231 None
Exchange
USI
Corporate bonds convertible into Shanghai Stock
Convertible 113045 None
the Company’s A shares Exchange
Bond
VI. Other related information
Domestic Deloitte Touche Tohmatsu Certified Public
Name
accounting firm Accountants LLP
hired by the Office address F/30, 222 East Yan’an Road, Shanghai
Company Names of accountants who Yuan Shouqing, and Hu Ke
7 / 285
2023 Annual Report
give their signatures
Name Haitong Securities Co., Ltd.
Sponsor
Office address 888 South Zhongshan Road, Shanghai
organization that
Names of sponsor
performs the duty of
representatives who give Zhang Zihui, and Chen Hengrui
continuous
their signatures
supervision during
Period of continuous
the reporting period April 2, 2021 to December 31, 2022
supervision
Note: As the Company has not used up the raised funds or completed the conversion of the convertible
bonds, the sponsor will continue to perform its responsibility of continuous supervision over the use of
the raised funds.
VII. Key accounting data and financial indicators in the past three years
(I) Key accounting data
Unit: yuan Currency: RMB
Key accounting data 2023 2022 YoY (%) 2021
Revenue 60,791,909,537.87 68,516,075,963.26 -11.27 55,299,654,770.21
Net profits
attributable to
1,947,846,866.12 3,059,967,081.20 -36.34 1,857,968,074.82
shareholders of the
listed company
Net profit
attributable to
shareholders of the
listed company after 1,779,078,630.35 3,010,200,488.88 -40.90 1,695,083,855.46
deducting non-
recurring gains and
losses
Net cash flows from
6,823,435,492.62 3,435,196,255.50 98.63 -1,102,446,978.90
operating activities
End of 2023 End of 2022 YoY (%) End of 2021
Net assets
attributable to
16,990,407,623.67 15,749,394,179.86 7.88 13,081,960,207.42
shareholders of the
listed company
Total assets 39,306,382,898.66 38,574,464,731.16 1.90 35,856,733,503.81
(II) Key financial indicators
Key financial indicators 2023 2022 YoY (%) 2021
Basic EPS (yuan/share) 0.89 1.40 -36.43 0.85
Diluted EPS (yuan/share) 0.87 1.35 -35.56 0.83
Basic EPS net of non-recurring
0.81 1.38 -41.30 0.77
gains/losses (yuan/share)
Weighted average ROE (%) 12.02 21.43 Down 9.41 pct. 14.83
Weighted average ROE net of non-
10.98 21.08 Down 10.10 pct. 13.53
recurring gains/losses (%)
Explanation of the Company’s key accounting data and financial indicators in the past three years at the
end of the reporting period
√Applicable □ Not Applicable
Revenue during the reporting period decreased by 11.27% YoY, mainly because (1) following changes in
the global economy and end market demand, communications products and consumer electronics products
8 / 285
2023 Annual Report
experienced a YoY decrease in revenue due to sluggish demand; (2) cloud and Storage products
experienced a significant YoY decline due to structural adjustments in product demand; (3) automotive
electronics products and medical electronics products continued to grow YoY, mainly due to the
Company's expansion of new customers and increased customer demand.
Net profit attributable to shareholders of the listed company decreased by 36.34% YoY during the
reporting period, which was mainly due to the decrease in the Company's revenue in 2023, as well as the
impact of the increase in the material cost rate and the decrease in exchange-related gains, and therefore
the decrease in operating profit and net profit exceeded the decrease in revenue.
Net profits attributable to shareholders of the listed company net of non-recurring gains/losses for the
reporting period decreased by 40.90% YoY, and the main reason is that due to the decrease in the net
profit of the Company in 2023, as well as the increase in the realized gains from financial assets and
government grants received, the amount of non-recurring gains and losses for the period increased by
239.12% YoY.
VIII. Accounting data differences under domestic and overseas accounting standards
(I) Differences in net profits and net assets attributable to shareholders of the listed company in the
financial report disclosed under international accounting standards and Chinese accounting
standards
□Applicable √Not Applicable
(II) Differences in net profits and net assets attributable to shareholders of the listed company in the
financial report disclosed under overseas accounting standards and Chinese accounting
standards
□Applicable √Not Applicable
(III) Explanation of differences between Chinese accounting standards and overseas accounting
standards
□Applicable √Not Applicable
IX. Key financial data by quarter for 2023
Unit: yuan Currency: RMB
Q1 Q2 Q3 Q4
(Jan.-Mar.) (Apr – Jun) (Jul – Sep) (Oct – Dec)
Revenue 12,998,168,439.83 13,867,465,732.95 16,191,371,617.51 17,734,903,747.58
Net profits
attributable to
277,457,152.84 489,810,672.49 625,253,216.58 555,325,824.21
shareholders of the
listed company
Net profits
attributable to
shareholders of the
219,683,026.20 474,173,065.63 580,788,156.35 504,434,382.17
listed company net of
non-recurring
gains/losses
Net cash flows from
2,545,922,484.41 1,234,632,685.56 359,750,163.45 2,683,130,159.20
operating activities
Explanation for differences between the quarterly data and formerly disclosed data in periodic reports
□Applicable √Not Applicable
X. Non-recurring profit or loss
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
Items of non-recurring 2023 Notes (if 2022 2021
9 / 285
2023 Annual Report
gains/losses applicable)
Gains and losses on disposal
See Note
of non-current assets,
5,463,221.02 (VII) 68, 73, 2,724,930.03 -9,115,989.64
including the write-off of asset
75
impairment provisions
Government grants recognized
in profit or loss (other than
grants which are closely
related to the Company's
business, have a lasting impact
See Note
on the Company's profits and 71,813,784.39 56,144,655.78 50,678,106.85
(XI) 3
losses and are either in fixed
amounts or determined under
quantitative methods in
accordance with the national
standard)
Profit or loss on changes in the
fair value of financial assets
and financial liabilities and
investment income on disposal
of financial assets and See Note
106,839,747.09 96,937,973.50 134,150,704.71
financial liabilities held by (VII) 68, 70
non-financial companies, other
than those used in the effective
hedging activities relating to
normal operating business
Write-back of provisions for
receivables impairment subject 0.00 0.00 2,836,069.00
to separate impairment tests
One-time costs incurred by
enterprises due to the fact that
the relevant business activities
-3,701,028.03 -65,435,485.39 0.00
are no longer sustainable, such
as expenses for relocating
employees
The impact of one-time
adjustment of current profit
and loss in accordance with 0.00 -49,852,343.57 0.00
tax, accounting and other laws
and regulations
Other non-operating income or See Note
12,916,711.91 22,281,394.77 18,576,128.64
expenses other than the above (VII) 74, 75
Less: tax effects 24,950,729.58 13,033,613.18 34,238,090.20
Effects attributable to
-386,528.97 919.62 2,710.00
minority interests (After tax)
Total 168,768,235.77 49,766,592.32 162,884,219.36
Explanations for significant amount of extraordinary gain or loss items identified by the Company but not
listed in the “Explanatory Announcement No.1 for Public Company Information Disclosures –
Extraordinary Gains or Losses”, and recurring gain or loss items identified by the Company which are
listed as extraordinary gain or loss items in the “Explanatory Announcement No.1 for Public Company
Information Disclosures – Extraordinary Gains or Losses”.
□Applicable √Not Applicable
XI. Items measured at fair value
√Applicable □ Not Applicable
10 / 285
2023 Annual Report
Unit: yuan Currency: RMB
Impact on profit
Change in the
Name of project Opening amount Closing balance of the current
current period
period
Financial assets held for
271,243,519.53 245,558,007.22 -25,685,512.31 78,795,857.46
trading
Other equity
38,420,782.40 38,935,237.58 514,455.18 0.00
instruments
Other non-current
170,126,278.86 193,994,862.05 23,868,583.19 25,098,870.95
financial assets
Derivative financial
-3,118,891.32 -173,872.64 2,945,018.68 2,945,018.68
liabilities
Total 476,671,689.47 478,314,234.21 1,642,544.74 106,839,747.09
XII. Others
□Applicable √Not Applicable
11 / 285
2023 Annual Report
Section III Management Discussion and Analysis
I. Discussion and analysis of corporate operations
USI is a global leader in electronic design and manufacturing as well as a leader in the field of SiP (System-
in-Package) technology. The Company has 30 production and service locations across four continents of
Asia, Europe, Americas, and Africa, and offers customer diversified electronic products with D(MS)2
product services: Design, Manufacturing, Miniaturization, Industrial software and hardware Solutions,
and material procurement, logistics and maintenance Services.
(I) An overview the Company's performance in 2023
In 2023, the global demand for electronic products went down, the supply chain was in the de-stocking
stage, the external operating environment deteriorated compared to 2022, and the Company's revenue in
2023 decreased by 11.27% YoY. In response to the trend of global supply chain restructuring and
economic and trade regionalization, the Company continued to invest in overseas production capacity and
operating costs increased, in addition, factors such as supply chain cost-cutting pressure and changes in
the exchange rate of RMB to USD also contributed to the YoY decline in the Company's gross profit
margin and operating profit margin in 2023. The Company realized operating profit of RMB 2.18 billion
in 2023, a decrease of 37.08% YoY, resulting in a corresponding decrease in total profit and net profit
attributable to shareholders of the listed company.
(II) Changes in revenue
The Company realized total revenue of RMB 60.79 billion in 2023, down 11.27% from the previous year.
Specifically, the revenue of medical electronics increased by 85.98% YoY; the revenue of automotive
electronics increased by 10.18% YoY; the revenue of communication electronics decreased by 14.93%
YoY; the revenue of consumer electronics decreased by 11.39% YoY; the revenue of industrial electronics
decreased by 5.68% YoY; the revenue of cloud and storage decreased by 23.07% YoY.
Changes in revenue by product category reflect changes in the global economy and end-market demand.
Communications products and consumer electronics products experienced a YoY decrease in revenue due
to sluggish demand; cloud and storage products experienced a significant YoY decline due to structural
adjustments in product demand; automotive electronics products and medical electronics products
continued to grow YoY, mainly due to the Company's expansion of new customers and increased customer
demand.
(III) Changes in expenses and profits
Affected by the increase in material cost rate and the decrease in exchange-related gains, the Company's
gross profit margin in 2023 was 9.63%, a decrease of 0.86 percentage points YoY, and the operating profit
margin was 3.58%, a decrease of 1.47 percentage points YoY, and the Company achieved an operating
profit of RMB 2.18 billion in 2023, a decrease of 37.08% YoY.
The Company strengthened cost control in 2023 and its total sales expenses, administrative expenses,
R&D expenses and financial expenses in 2023 added up to RMB 3.60 billion, down RMB 196 million or
5.17% YoY. Among them, administrative expenses decreased by RMB 206 million, or 14.52% YoY;
R&D expenses decreased by RMB 227 million, or 11.17% YoY; selling expenses increased by RMB 44
million, or 13.6% YoY, mainly due to the increase in the global sales layout after the epidemic; and
financial expenses increased by RMB 193 million, a large YoY increase, mainly due to the YoY decrease
in net foreign currency exchange gains and the increase in foreign currency borrowing costs in 2023.
Affected by the YoY decline in operating profit, the Company realized total profit of RMB2.19 billion in
2023, a YoY decrease of 37.03%, and net profit attributable to shareholders of the listed company of
RMB1.95 billion, a YoY decrease of 36.34%.
(IV) Key results of work in 2023
1. Continuous investment in overseas production capacity
The Company's global manufacturing footprint continued to expand in 2023 with a new plant in Poland
and a second plant in Mexico, which is expected to be put into operation in mid-2024. In October 2023,
12 / 285
2023 Annual Report
the Company successfully completed a transaction to acquire the automotive wireless business of TE
Connectivity, a significant milestone in the Company's growth strategy.
In 2023, the Company established a "Digital Transformation Center" to promote the optimization of global
operation management processes, in order to integrate global operation capabilities, match the Company's
globalization process, and enhance the efficiency and competitive advantage of "global platform, localized
service".
2. Prudent inventory control and sound operation
In 2023, the electronics industry chain is still in a downward economic cycle. Affected by the slowdown
in demand growth in the post-epidemic era, the destocking of the supply chain is slower than expected.
The Company actively controls inventory, which was reduced from RMB 10.9 billion at the end of 2022
to 8.3 billion yuan at the end of 2023, and the amount of working capital occupied has been significantly
reduced.
3. Accelerated promotion of intelligent manufacturing
The Company's core business is to provide high-efficiency, high-quality electronic manufacturing services.
The Company has deployed smart lights-out factories and is committed to developing a more
comprehensive "Industry 4.0" smart manufacturing blueprint, covering product design, production and
manufacturing, supply chain management and other aspects. In 2023, the lights-out factory of Shanghai
Zhangjiang Factory will be upgraded to a new scale, with the number of robot arms expanded by 2.5 times,
integrating Industry 4.0, artificial intelligence, war room, automatic guided vehicle (AGV), automated
material handling system (AMHS), intelligent warehousing, automatic scheduling, remote control and
data collection, provide customers with the most advanced intelligent manufacturing solutions.
4. ESG performance hits another milestone
The Company adheres to the sustainable development strategy of "low-carbon, circular, inclusive, and
collaborative" and is committed to practicing social responsibilities and pursuing sustainable development
in which the environment, society and governance coexist and prosper. With a total score of 90 in the 2023
S&P Global Corporate Sustainability Assessment (CSA), the Company achieved the highest CSA score
out of 451 companies assessed in the Electronic Equipment, Instruments & Components Industry and was
recognized in the S&P Global Sustainability Yearbook for the third consecutive year.
II. Industry of the Company during the reporting period
(I) Basic situation of the industry
The EMS industry mainly provides integrated solutions such as design, engineering development, raw
material procurement, manufacturing, testing, logistics, and after-sales service for various electronic
products and equipment.
Main product areas involved in EMS mainly include 3C (i.e. Computer, Communication, Consumer
Electronics), cloud, artificial intelligence, automobile, industrial, medical, transportation, energy,
aerospace and other fields, among which consumer electronics occupies the most important share. The
growing demand for smart phones, smart wearable devices, XR (Virtual Reality, Augmented Reality and
Mixed Reality) devices, computers, computing power and cloud, smart home, smart cabin and other
products has driven the rapid development and continuous upgrading of chips, storage, electronic
components, modules and smart manufacturing.
China has the largest market share and the most competitive supply chain in the global EMS industry. The
demand for nearshoring and friend-shoring outsourcing in the global supply chain is increasing rapidly,
promoting the industry to invest in expanding production capacity in Mexico, Southeast Asia, India,
Eastern Europe and other regions, and also driving the transfer of production capacity in the upstream
supply chain. In the future, the industry will also continue to improve in such aspects as production
capacity scale and industrial chain clustering.
(II) Industry characteristics and development trends
1. The industry has a large overall scale, with high industry concentration and fierce competition
13 / 285
2023 Annual Report
According to industry statistics, the global EMS industry had a market size of approximately USD 724
billion and high industry concentration in 2023, with top ten global manufacturers accounting for more
than 70% of the total revenue. The industry-leading enterprises have accumulated rich customer resources
and industry experience, developed strong supply chain management capabilities and bargaining power,
have a large scale of assets and revenues, and thus maintain a stable leading position. In general, electronic
products were still in the destocking stage of the supply chain in 2023, and inflation in major economies
and US dollar interest rate hikes had a negative impact on industry demand. Meanwhile, in the context of
global supply chain restructuring and economic and trade regionalization, Chinese mainland's EMS
industry and upstream supply chain were facing more challenges.
In addition, technological progress continues to promote the upgrading and iteration of electronic products
and equipment. Enterprises in the industry have been under great operating pressure for a long time, such
as product innovation, quality improvement, cost reduction and efficiency improvement, and continuous
investment. Enterprises need to work hard to develop new products and incremental customer demand,
enhance design and development capabilities, refine processes, improve intelligent manufacturing and
research and development (R&D) capabilities, increase customer stickiness, and offer more added value
of products.
2. Technological innovation empowers consumer electronics to upgrade
(1) “AI +” products
Currently, AI has become the focus of the industry and is widely considered to be another foundational
technological milestone for mankind after steam engines, internal combustion engines, electricity,
semiconductors and information technology. It has become a consensus that AI empowers all walks of
life. Through AI empowerment or "AI+", consumer electronics products are expected to achieve new
breakthroughs in terms of optimizing interaction methods, improving usage efficiency, and enhancing
original functions. In addition, driven by the need for data security and cost reduction, the deployment of
AI models has begun to move from the cloud to mobile terminals and edge terminals.
Well-known consumer electronics brands and some new brands have launched "AI+" consumer
electronics products, such as the Galaxy AI Phone released by Samsung, which uses locally running
generative artificial intelligence models to provide features including Live Translate, Note Assist and
Photo Assist, so that users can complete tasks through simple interaction with the phone, which previously
required complex tools and operations. Products such as AI PC, AI Pin, and Rabbit R1 launched on the
market have also attracted widespread attention from consumers.
In the future, using AI-enabled core terminal devices such as mobile phones and computers in daily life
scenarios such as home, work, and travel, people can seamlessly connect and interact in real time with
smart wearable devices (such as Smart Watch, TWS, XR, etc.) and smart IoT devices in home and office
scenarios (such as home appliances, furniture, office equipment, etc.) with the help of new-generation
communication technologies featuring high bandwidth, low latency, and easy access, such as WiFi 7,
UWB, and mmWave. Based on Artificial Intelligence of Things (AIoT), AI can actively perceive and
analyze consumer needs in real time, and collaborate with electronic devices to provide more convenient
and efficient services.
(2) XR devices
In recent years, the concept of metaverse has attracted much attention. Following this trend, many
companies in gaming, technology, and Internet industries have entered the VR industry, and AR and MR
head-mounted display devices have been innovating and rolling out new products. In 2023, Apple released
the smart head-mounted display device Vision Pro, and launched a new Vision OS ecosystem with "Spatial
Computing" as the core, which allows users to interact with the device using "eye movement" plus "hand
gesture" control methods, and brings a refreshing audio-visual experience through 4K Micro OLED
screens and spatial audio. Vision Pro leads the innovative iteration of XR devices, and draws the market
attention to the release of new products in the form of AR Glasses.
3. Demand for AI computing power and data exchange surges
ChatGPT has set off an AI craze. Since 2023, accelerated iterations of large generative AI models,
increasingly higher demand for large AI model training and inferencing, and oversubscription of GPU
chips and AI servers have all driven the growing demand for edge servers. Edge servers can process and
14 / 285
2023 Annual Report
analyze data in real time on AI-based terminals, reducing data transmission delays and costs, improving
response speed, and reducing risks during data transmission.
In addition to computing power, AI large models require more efficient and lower-latency data
transmission and exchange, thus promoting the upgrade of network infrastructure and driving the growth
of demand for hardware products such as high-speed optical fiber networks, high-speed optical modules,
HBM, high-speed network cards and switches, heat dissipation and server cooling systems.
4. Automotive electronics maintains growth potential
In the future, cars will become a "mobile smart space" for people to travel while meeting the needs of
leisure, working, audio and video entertainment, etc. Smart cabins and autonomous driving will continue
to be upgraded and iterated. Meanwhile, the penetration rate of automobile electrification will continue to
increase. In consideration of production costs, car running costs and market demands, users can choose
battery electric vehicles (BEV), hybrid electric vehicles (HEV), plug-in hybrid electric vehicles (PHEV),
hydrogen fuel cell vehicle (FCV) and other differentiated solutions. According to market forecast data,
the sales volumes of global new energy vehicles (xEV) grew by 37% year-on year in 2023, in which the
growth rate of HEV and PHEV sales volume reached 50%, higher than that of BEV. It is expected that
from 2023 to 2026, the sales volume of new energy vehicles will grow at a CAGR of 25%, in which the
sales volumes of HEV will have a CAGR of 33%.
(III) Periodic, regional and seasonal characteristics of the industry
1. Periodicity of industry development
The development of the EMS industry is directly affected by the cyclical demand of downstream industries.
The demand for electronic products is affected by factors such as the macroeconomic environment,
economic cycle, consumer preferences, and technological innovation. When the economy is booming, the
market demand for electronic products grows, thus driving the production and sales of the EMS industry
to increase; during economic downturn, the purchasing power of consumers and companies decreases,
product demand decreases, and the industrial production and sales decrease.
2. Regional characteristics of industry
The global EMS industry emerged in Europe and the United States, and then gradually moved to Southeast
Asia, Taiwan, and Chinese mainland. Currently, China, Southeast Asia, India, Mexico, Eastern Europe
and other places are regional centers for low-cost manufacturing. The current trend of "economic and trade
regionalization" is conducive to the development of regional low-cost manufacturing centers, but the Asia-
Pacific supply chain with Chinese mainland as the core still has the advantages of "industrial clustering"
and "low cost".
3. Seasonal characteristics of industry operation
Affected by traditional consumption patterns, orders from consumer electronics brand customers tend to
concentrate in the second half of the year, resulting in certain degree of seasonality in the shipment and
revenue of the EMS industry. The first and second quarters of each year are the traditional off-season, and
during the second half of the year, shipments climb to the peak month by month before a normal pullback.
(IV) Competitive position of the Company in the industry
The Company is a world-renowned manufacturer in the EMS industry. According to the latest ranking of
global EMS providers (2022), USI ranked 12th with top-ranking annual revenue growth rate and net
operating margin in the industry. The Company is an industry leader in SiP miniaturization technology,
leading the industry in many business segments.
III. Core business during the reporting period
(I) Key Products and Solutions
As a world-leading EMS provider, by providing brand customers with more value-added design,
manufacturing and related services, USI participates in developing product application solutions, and
enhances the manufacturing value added of products and overall services. In the future, USI will attach
more importance to developing its ability of providing solutions, design and services, so as to create core
15 / 285
2023 Annual Report
value for customers, establish long-term and stable cooperative relations with high-quality customers in
various industries, and gradually develop from manufacturing service providers to system solution
providers and comprehensive service providers.
1. Wireless communication products
In the field of wireless communication, the Company, with a strong design and manufacturing team,
provides customers with design, verification, manufacturing and testing services for industry-leading
wireless communication modules and enterprise-class wireless interconnection products by collaborating
with the world's leading wireless communication IC companies. From product concept, prototype design,
testing and verification to mass production, USI, with its R&D team and management system, offers
customers with a suitable R&D schedule and reliable quality assurance to meet customer needs, achieve
rapid product launches, and enhance customers' competitive advantages.
Wireless communication products mainly include wireless communication system-level packaging (SiP)
module, system-level Internet of Things (IoT) module, wireless router, and etc.
16 / 285
2023 Annual Report
2. Consumer electronics
The Company is the industry's leading manufacturer of smart wearable SiP modules. As more and more
feature-rich smart wearables tend to be “light, thin, short and small”, the system in package (SiP)
technology has become the key to providing highly integrated and miniaturized designs. Since 2013, the
Company has been committed to the miniaturization and development of highly integrated manufacturing
process of SiP modules related to wearables, including new advanced packaging technologies such as
local partition shielding, selective molding, thin-film molding technology, selective sputtering, and
profiled cutting technology, dry ice cleaning technology, and 3D metal stencil printing. At present, the
Company’s smart wearable SiP module products include smart watch SiP module, True Wireless Stereo
earbuds (TWS) module, and optical heart rate module. As for XR(VR/AR/MR) smart head-mounted
display devices, the Company's products include Wi-Fi modules, and SiP modules integrating multiple
functions or with specific functions.
In addition to smart wearable SiP modules, consumer electronics products also include SiPlet modules,
video devices, connection devices, mainly X-Y bar control board, mini LED display control, timing
control board, smart stylus, smart tablet, electromagnetic sensing board, etc.
3. Industrial products
With sophisticated professionals in product R&D, design, project management, manufacturing and
logistics support, USI is committed to the industrial product market, such as point-of-sale (POS), smart
handheld device (SHD), smart fleet recorder and industrial control panel, to provide customers with the
most cost-effective, optimized design and a full package of solutions with a strict quality control process,
and meet their needs from mass production in the form of low-mix high-volume to customized production
of high-mix low-volume manufacturing, to production. With the development needs of global carbon
neutrality, the Company has added the green energy products for energy storage and photovoltaics.
17 / 285
2023 Annual Report
4. Cloud and storage products
USI’s motherboard products mainly include motherboards for servers and workstations, AI Cards, and
CPU modules for laptops, etc. USI’s computer peripheral products are mainly devices that connect laptops
to peripherals, such as docking station and dongle. The server related products manufactured by the
Company are widely used in cloud computing, data centers, edge computing and other fields. In terms of
standard rack servers and edge servers, the Company provides JDM (Join Design Manufacture) service
mode, and has adopted new generation technologies such as DDR5 and PCI-G5.
Storage and interconnection products include solid-state drives (SSDs) and high-speed switches and
network adapters. USI has industry-leading R&D capabilities for new technologies, such as Fiber Optic
Channel, SAS, SATA, 10 Gigabit Ethernet, dual port I/O and wireless broadband, etc. The Company is a
leading SSD design and manufacturing partner, providing customers with manufacturing services ranging
from hardware design to product verification and custom-developed production and test platforms. The
Company also provides customers with motherboard and complete machine manufacturing services for
high-speed switches.
5. Automotive electronic products
The Company, boasting more than four decades of experience in the automotive industry, is a leading
manufacturing service provider of automotive electronics.
18 / 285
2023 Annual Report
Automotive electronic products mainly include power modules, traction inverters, Battery Management
System (BMS), On-Board Charger (OBC), electronic pumps, intelligent cabin products, ADAS related
controllers, domain controllers, vehicle NAD modules, vehicle antennas, LED lights, other body controller
products, etc.
Following the development trend of "electrification, intelligence, and connectivity" in automotive
electronics, the Company focuses on investing in "electrification" related power modules and traction
inverters, BMS, OBC and other products to serve power chip manufacturers and Tier 1 and automobile
manufacturers. Meanwhile, taking into account "intelligence" and "connectivity", the Company expands
new products and businesses in the fields of intelligent cabins, ADAS, and vehicle telematics. In October
2023, the Company completed the acquisition of Hirschmann Car Communication Holding S.a.r.l. to
strengthen the Company's R&D and design capabilities in the fields of automotive antennas and
automotive communications.
6. Medical electronics
Medical electronic products are mainly home care and hospital analytical equipment, including vitamin K
antagonist therapy equipment, medical wireless blood glucose meter, sleep ventilator, blood analysis
machine, and glucose metering device.
(II) Miniaturization design and products
19 / 285
2023 Annual Report
The Company is a leader in SiP miniaturization technology. SiP module is a heterogeneous integrated
electronic system that integrates chips and passive devices into one module to achieve the effects of
reducing functional module area, improving circuit system efficiency, and shielding electromagnetic
interference. Through miniaturization technology, the size and space occupied by most electronic systems
can be reduced, which is especially suitable for mobile communication equipment, Artificial Intelligence
of Things (AIoT) and wearable electronic products. With the development of AI, metaverse and spatial
computing, the categories of wearable devices will be more abundant, including watches, bands, TWS,
XR devices, smart rings, etc., and the integrated functions will also be more powerful, covering health,
sports, spatial computing, AI, etc., the need to be "light, thin, short, and small" will also become more
intense, and miniaturized module technology will have more application scenarios.
The Company insists on deepening the R&D of SiP modules, and stays ahead in the industry. At the end
of 2020, the Company established Miniaturization Capability Competence (MCC) center which focuses
on the application and promotion of miniaturization technology and SiP modules, serve the needs of
domestic and foreign customers for miniaturization and modular products, and provide "one-stop services"
from design to manufacturing.
The Company continues to break through technical challenges in all aspects of the SiP process to meet
product requirements of high stability and high integration:
(1) In the horizontal aspect, the minimum device is 0.25 mm * 0.125 mm, the design value of the
minimum part spacing is 30 microns, and the design value of the distance from the board edge is
65 microns, which require higher-level parts, production equipment and process control.
(2) In the vertical aspect, the design value of the molding top clearance is 50 microns and the molding
bottom clearance is 50 microns, which require well selected molding materials, process
parameters and process control.
(3) Technologies such as selective molding, plug-in interconnection, and thin-film molding to
directly leak solder balls provide diversified support for SiP interconnection and subsequent
processes.
20 / 285
2023 Annual Report
The design and manufacturing capabilities of "miniaturized" products are the Company's competitive
advantage. The Company will keep improving in SiP module design and process technology. In terms of
single-sided molding, the Company achieves comprehensive or selective molding, and develops processes
such as chip embedding and gold wire/wafer bonding packaging according to customer needs. In terms of
double-sided molding, the Company has introduced plug-in interconnection, and will later develop 3D
structures and combine soft and hard boards to further reduce product size. The Company will introduce
front-end wafer manufacturing processes, including wafer thinning and dicing, combined with the current
SiP process to achieve Wafer-In-Module-Out.
IV. Analysis of core competitiveness during the reporting period
√Applicable □ Not Applicable
As a large design and manufacturing service provider in the field of electronic products, the Company has
the following core competitive advantages:
(I) Prominent position in the industry and standardized corporate governance
The Company is a world-renowned manufacturer in the EMS industry. In the latest global ranking of EMS
providers (2022), the Company ranked 12th in revenue scale with its annual revenue growth rate and net
operating margin of main business ranking top in the industry. The Company is a leading manufacturer in
many business segments and an industry leader in SiP miniaturization technology, with a prominent
position in the industry.
The Company attaches great importance to internal control and corporate governance, strictly abides by
the requirements of laws and regulations, and follows the relevant regulatory requirements of the Shanghai
Stock Exchange as well as the Taiwan Stock Exchange and the New York Stock Exchange where its parent
company ASE Technology Holding Co., Ltd is listed. Since July 2013, the Company has been
21 / 285
2023 Annual Report
continuously included in the constituent stocks of the Shanghai Corporate Governance Index, awarded A-
level ratings on information disclosure by the Shanghai Stock Exchange for the last six consecutive years,
and won a series of honors in the field of business operation and corporate governance.
(II) Global layout and localized services
Due to the global supply chain restructuring following the trend of global economic and trade
regionalization, customers have shifted some offshore outsourcing to nearshore or friend-shore
outsourcing for risk management needs of supply chain diversification. Facing the adjustment of the
supply chain, the Company launched a glocalization strategy in 2018: In 2018, the Company acquired the
Poland factory; in 2020, the Company acquired the Financière AFG, the second largest EMS company in
Europe, and continued to strengthen integration; in 2021, the Company's Vietnam factory was put into
operation; in 2022, the Company's Nankang second factory was put into operation; in 2023, the Company
built a second factory building in Poland factory and established the Guadalajara factory, the second
factory in Mexico. In recent years, the Company's revenue generated by overseas factories in proportion
to its total revenue has continued to increase, and the new operating model of "global platform, localized
service" has promoted the company's sustainable and healthy growth.
The Company's global layout focuses not only on the globalization of business cooperation and production
bases, but also on the global market, integrating global resources and becoming a more internationally
operating company. Currently, the Company has 30 manufacturing sites in 12 countries or regions
including China (mainland and Taiwan), Vietnam, the United States, Mexico, France, Germany, the
United Kingdom, the Czech Republic, Hungary, Poland, and Tunisia, and provides global customers with
varied and differentiated manufacturing service solutions based on the localized operation systems in
North America, Europe, Asia Pacific and North Africa.
22 / 285
2023 Annual Report
(III) Diversified business areas and rich product portfolio
The Company not only has the comprehensive strength of professional design and manufacturing of
electronic products (covering electronic components, spare parts and complete machines) and system
assembly, but also the advantages of selected subdivisions and integrated products. The Company's
product portfolio is rich and balanced, covering five major fields: communications, consumer electronics,
cloud and storage, industrial electronics and medical, and automotive electronics. The Company attaches
great importance to the study and judgment of industry trends, and can respond quickly to changes in the
market demand. The Company can adjust its product portfolio flexibly according to changes in customer
demand.
(IV) Focus on automation and intelligent manufacturing
As a global leader in electronic design and manufacturing, "intelligent manufacturing" has always been
an important business strategy of the Company. The Company has formulated the "Five-Star Factory
Standard" with reference to the industry practice, that is, machines are 100% automated, more than 80%
of the production lines can be operated with the lights out, and the direct manpower is less than 30%, etc.
The Company also uses Industry 4.0 automation technology to achieve a smart manufacturing roadmap,
and has currently introduced technologies including internal factory equipment communication networks
that support 4G and 5G, Automated Material Handling Systems (AMHS), fully automated robot testing
unmanned workshops, and real-time production equipment status monitoring platforms with remote
access dashboards; the Company also applies AI technology to the management of key production
equipment, production systems and product testing systems. The Company will continue to
comprehensively improve the intelligent manufacturing capabilities and automation levels of its regional
production bases in Asia, Europe and North America. The Company plans to upgrade all factories that
have introduced Industry 4.0 by an average of 0.58 star in 2024, and have five lights-out factories that
achieve fully automated production in 2028.
(V) Product innovation driven by R&D
The Company always attaches great importance to technology R&D, and continues to increase investment
in R&D. From 2021 to 2023, the Company's R&D investment was RMB 1.641 billion, 2.034 billion and
1.807 billion respectively. As of the end of 2023, the Company had an R&D team of 2,809 employees,
and obtained 801 patents and 264 potential patents under application.
The Company is a global leader in SiP technology. In 2023, it integrated a number of advanced
technologies with the miniaturized and multifunctional SiP modules, such as high-density SMT part
design (40um pitch), 150um pitch WLCSP molding and filling technology, double layer stacking
technology of passive components, more complex double-sided molding technology with more connectors,
double-sided special-shaped selective electromagnetic shielding, etc. In addition, to meet the needs of
high-performance computing, the Company cooperates deeply with ASUS to develop the first CPU SiP
module among industry peers, which reduces the high-speed signal line between the processor and
LPDDR5X memory, and increases the performance by 25%, while reducing the core area of the
motherboard by 38%. It can improve the overall heat dissipation efficiency of the system and achieve the
high performance required by high performance laptops.
23 / 285
2023 Annual Report
(VI) Long-term adherence to sustainable management
In face of a complex and ever-changing business environment, corporate resilience has increasingly
become a part of the core competitiveness for company to achieve sustainable operations. Highly resilient
companies can cope with a variety of unpredictable dynamic changes, recover quickly from crises, and
survive and thrive in adversity. USI not only focuses on risk control and crisis management, but also pays
attention to forging resilience in corporate strategy, organizational system, operating system, cultural
development, and technological innovation.
The Company always takes “be a most reliable provider for electronic design and manufacturing service”
as its vision, and according to the United Nations Sustainable Development Goals (SDGs), it focuses on
the four dimensions of its Sustainability Strategy, i.e. Low Carbon, Circular, Collaborative and Inclusive,
strengthens employees' consciousness of sustainable development, and cooperates with partners and
communities to promote economic growth and enhance productivity through sustainable development.
The Company has been constantly improving employees’ career planning, performance appraisal and
incentive mechanism, providing a platform for the development of talents and a channel for more
outstanding talents to join, and a powerful talent foundation for the Company to achieve its development
goals. The Company has established a long-term and effective employee incentive mechanism. Since 2019,
the Company has launched employee stock ownership plans and stock option incentive plans according
to operational needs. As of the end of 2023, the Company has launched three stock option incentive plans,
granting a total of 59,452,500 stock options with 17,418,440 shares exercised by employees, and rolled
out six employee stock ownership plans, purchasing or transferring a total of 11,576,197 shares.
While operating steadily, the Company takes the mission of “creating value for shareholders and sharing
growth with shareholders”. In order to fully protect the interests of shareholders and enhance investor
confidence, the Company has continuously launched share repurchase plans, repurchasing 13,037,477,
16,042,278, and 9,356,317 shares in 2019, 2021, and 2022 respectively. At the beginning of 2024, the
Company launched a new share repurchase program, with a total repurchase amount of no less than RMB
100 million. As of the end of 2023, the Company has achieved cumulative net profits of RMB 15.84 billion,
and cumulative cash dividend (including the 2023 profit distribution plan) of RMB 5.38 billion since its
listing, with an average cash payout ratio of 34.0%.
24 / 285
2023 Annual Report
V. Main business operations during the reporting period
The Company realized total revenue of RMB 60.79 billion in 2023, down 11.27% from RMB 68.52 billion
in 2022. Specifically, the revenue of medical electronics increased by 85.98% YoY; the revenue of
automotive electronics increased by 10.18% YoY; the revenue of communication electronics decreased
by 14.93% YoY; the revenue of consumer electronics decreased by 11.39% YoY; the revenue of industrial
electronics decreased by 5.68% YoY; the revenue of cloud and storage decreased by 23.07% YoY.
Changes in revenue was mainly caused by: (1) following changes in the global economy and end market
demand, communications products and consumer electronics products experienced a YoY decrease in
revenue due to sluggish demand; (2) cloud and Storage products experienced a significant YoY decline
due to structural adjustments in product demand; (3) automotive electronics products and medical
electronics products continued to grow YoY, mainly due to the Company's expansion of new customers
and increased customer demand.
The total sales, administrative, R&D and financial expenses of the Company in 2023 were RMB 3.60
billion, an decrease of RMB 196 million or 5.17% over RMB 3.80 billion in 2022.
The Company achieved operating profit of RMB 2.18 billion in 2023, a decrease of 37.08% over RMB
3.46 billion in 2022; the total profit was RMB 2.19 billion, a decrease of 37.03% over RMB 3.48 billion
in 2022; the net profit attributable to shareholders of the listed company was RMB 1.95 billion, a decrease
of 36.34% over RMB 3.06 billion in 2022.
(I) Main business analysis
1. Analysis of changes in related items in income statement and cash flow statement
Unit: yuan Currency: RMB
Item 2023 2022 Change (%)
Revenue 60,791,909,537.87 68,516,075,963.26 -11.27
Operating costs 54,939,136,481.69 61,327,074,531.73 -10.42
Sales expenses 367,994,662.03 323,833,862.87 13.64
Administrative expenses 1,215,427,939.02 1,421,848,997.88 -14.52
Financial expenses 212,029,208.10 18,865,406.63 1,023.90
R&D expenses 1,807,204,128.27 2,034,461,775.71 -11.17
Net cash flows from operating
6,823,435,492.62 3,435,196,255.50 98.63
activities
Net cash flow from investment
-1,428,897,187.20 -1,524,248,331.61 N/A
activities
Net cash flow from financing
-1,836,253,228.36 -502,415,196.59 N/A
activities
Reasons for changes in financial expenses: Mainly due to the decrease in net foreign currency exchange
gains in the current period.
Reasons for changes in net cash flows from operating activities: Mainly due to an increase in collections
of receivables, as well as a decrease in funds tied up in inventories as a result of strengthened
procurement and inventory control in the current period.
Reasons for changes in net cash flow from investing activities: Mainly due to prudent investments in
fixed assets.
Reasons for changes in net cash flow from financing activities: Mainly due to higher cash dividend
payments and less borrowings during the period.
Detailed explanation of the major changes in the business type, profit composition or profit source of the
Company in the current period
□Applicable √Not Applicable
2. Revenue and cost analysis
√Applicable □ Not Applicable
25 / 285
2023 Annual Report
In the current period, the Company's revenue from its main businesses decreased by 11.30% over the same
period last year, and costs incurred by its main business decreased by 10.42% over the same period last
year. The specific analysis is as follows:
(1). Main business by sector, product, region and by sales mode
Unit: yuan Currency: RMB
Main business by product
Gross
Operating
profit Revenue Gross profit
Product Revenue Operating costs cost YoY
margin YoY (%) margin YoY (%)
(%)
(%)
Communication
21,799,269,805.02 20,103,196,795.12 7.78 -14.93 -13.39 Down 1.64 pct.
electronics
Consumer electronics 19,254,189,286.98 17,728,131,621.69 7.93 -11.39 -10.92 Down 0.48 pct.
Industrial products 8,164,460,442.66 6,982,306,047.58 14.48 -5.68 -3.89 Down 1.59 pct.
Cloud and storage
5,378,779,152.02 4,518,126,147.87 16.00 -23.07 -23.69 Up 0.69 pct.
products
Automotive
5,137,439,831.33 4,721,705,037.54 8.09 10.18 11.04 Down 0.71 pct.
electronics
Medical electronics 376,027,790.19 350,579,209.65 6.77 85.98 92.73 Down 3.27 pct.
Others 619,672,267.13 531,715,141.89 14.19 2.73 -9.96 Up 12.08 pct.
Total 60,729,838,575.32 54,935,760,001.34 9.54 -11.30 -10.42 Down 0.90 pct.
Main business by region
Gross
Operating
profit Revenue Gross profit
Region Revenue Operating costs cost YoY
margin YoY (%) margin YoY (%)
(%)
(%)
Chinese Mainland 37,464,004,420.29 33,929,932,007.50 9.43 -17.22 -16.48 Down 0.81 pct.
Other regions in
19,467,015,768.29 17,831,065,044.79 8.40 -15.03 -14.04 Down 1.06 pct.
APAC
Europe 4,987,338,693.76 4,372,898,325.09 12.32 35.31 31.83 Up 2.31 pct.
Others 4,477,998,105.83 4,196,123,100.50 6.29 6.55 6.31 Up 0.21 pct.
Inter-segment
-5,666,518,412.85 -5,394,258,476.55 4.80 -25.32 -26.2 Up 1.12 pct.
offsetting
Total 60,729,838,575.32 54,935,760,001.34 9.54 -11.30 -10.42 Down 0.90 pct.
Explanation of the main business by sector, product, region and sales mode
None
(2). Analysis of production and sales volume
√Applicable □ Not Applicable
Sales
Production Production Inventory
Main products Sales volume Inventory volume
volume YoY(%) YoY (%)
YoY (%)
Communication
514,334,984.00 519,357,458.00 25,252,650.00 -23.62 -22.75 -16.59
electronics
Consumer
299,765,804.00 301,103,860.00 6,885,828.00 2.98 2.13 -16.27
electronics
Industrial products 24,663,386.00 24,920,041.00 605,830.00 -42.60 -41.67 -29.76
Cloud and storage
15,604,509.00 15,613,142.00 907,720.00 -24.12 -23.51 -0.94
products
Automotive
96,636,017.00 92,230,359.00 7,604,264.00 69.66 61.18 137.74
electronics
Medical electronics 912,081.00 911,130.00 26,280.00 -2.50 -4.60 3.75
Others 6,508,517.00 6,469,059.00 94,922.00 13.08 12.46 71.14
Total 958,425,298.00 960,605,049.00 41,377,494.00 -12.21 -12.21 -5.00
Explanation of production and sales volume
The revenue from automotive electronic products increased by 10.18% YoY in 2023, and the number of
low unit price products sold increased significantly YoY.
26 / 285
2023 Annual Report
(3). Performance of major procurement contracts and major sales contracts
□Applicable √Not Applicable
(4). Cost analysis
Unit: yuan Currency: RMB
Cost analysis by product
Percentage Amount in the Percentage
Product Cost item 2023 in total cost same period last in total YoY (%)
Note
(%) year cost (%)
Raw
18,574,689,443.39 92.40 21,165,596,271.64 91.19 -12.24
Communication materials
electronics Labor and
1,528,507,351.73 7.60 2,046,015,573.99 8.81 -25.29
others
Raw
16,449,923,460.54 92.79 18,471,392,052.71 92.81 -10.94
Consumer materials
electronics Labor and
1,278,208,161.15 7.21 1,429,989,271.88 7.19 -10.61
others
Raw
Cloud and 3,892,924,586.58 86.16 5,031,592,645.30 84.98 -22.63
materials
storage
Labor and
products 625,201,561.29 13.84 889,134,827.71 15.02 -29.68
others
Raw
5,754,547,710.27 82.42 6,232,147,734.00 85.78 -7.66
Industrial materials
products Labor and
1,227,758,337.31 17.58 1,033,116,630.72 14.22 18.84
others
Raw
3,730,517,985.44 79.01 3,437,066,835.09 80.83 8.54
Automotive materials
electronics Labor and
991,187,052.10 20.99 815,313,255.03 19.17 21.57
others
Raw
248,859,541.67 70.99 93,155,828.61 51.21 167.14
Medical materials
electronics Labor and
101,719,667.98 29.01 88,744,533.95 48.79 14.62
others
Raw
340,650,856.57 64.07 338,727,970.60 57.36 0.57
materials
Others
Labor and
191,064,285.32 35.93 251,773,362.75 42.64 -24.11
others
Raw
48,992,113,584.46 89.18 54,769,679,337.96 89.31 -10.55
materials
Total
Labor and
5,943,646,416.88 10.82 6,554,087,456.03 10.69 -9.31
others
Explanation of other aspects of cost analysis
None
(5). Changes in the consolidation scope due to equity changes of major subsidiaries during the
reporting period
√Applicable □ Not Applicable
At the Twenty-first Meeting of the Fifth Session of the Board of Directors of the Company held on March
17, 2023, the Board of Directors considered and approved the Proposal on the Establishing a Joint Venture
Company for the Purchase of the Automotive Wireless Business of TE Connectivity, allowing UGT, a
wholly-owned subsidiary of the Company to set up a joint venture company with AmpleTrading, Co.,
Ltd.(hereinafter referred to as the "subject business") for the acquisition. In April 2023, a joint venture
company, Universal Ample Technology Co., Limited (hereinafter referred to as the "UAT"), was
established with a capital contribution of 75.1% from UGT and 24.9% from AmpleTrading, Co., Ltd. In
October 2023, UAT has indirectly owned 100% of the shareholding company related to the subject
business, and the transaction has been completed and settled. The subject business holding company has
been included in the Company's consolidated financial statements for fiscal year 2023.
27 / 285
2023 Annual Report
(6). Major changes or adjustments in the business, products or services of the Company during
the reporting period
□Applicable √Not Applicable
(7). Major customers and major suppliers
A. Main customers of the Company
√Applicable □ Not Applicable
The sales to the top five customers amounted to RMB 30.76 billion, accounting for 50.59% of the total
annual sales; among the top five customers, the sales to related parties amounted to 0 RMB, accounting
for 0% of the total annual sales.
During the reporting period, the proportion of sales to a single customer exceeded 50% of the total, and
there were new customers among the top 5 customers or heavy dependence on a few customers.
□Applicable √Not Applicable
B. Main suppliers of the Company
√Applicable □ Not Applicable
The purchase amount from the top five suppliers was RMB 25.11 billion, accounting for 59.01% of the
total purchase amount; among the top five suppliers, the purchase amount from related parties was 0
yuan, accounting for 0% of the total purchase amount.
During the reporting period, the proportion of purchases from a single supplier exceeded 50% of the
total, and there were new suppliers among the top 5 suppliers or heavy dependence on a few suppliers.
□Applicable √Not Applicable
Other explanations
The sales to the Company's top five customers are as follows:
Unit: 10,000 yuan Currency: RMB
No. Customer name 2023 Proportion (%)
1 Customer A 1,713,114.36 28.18
2 Customer B 758,247.47 12.47
3 Customer C 204,926.01 3.37
4 Customer D 199,836.75 3.29
5 Customer E 199,464.78 3.28
Total 3,075,589.36 50.59
The purchase amount of the Company's top five suppliers is as follows:
Unit: 10,000 yuan Currency: RMB
No. Supplier name 2023 Proportion (%)
1 Supplier A 1,186,995.59 27.90
2 Supplier B 1,060,497.89 24.93
3 Supplier C 117,595.22 2.76
4 Supplier D 73,802.51 1.73
5 Supplier E 71,991.99 1.69
Total 2,510,883.21 59.01
3. Expenses
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
Name of
2023 2022 Change YoY Remark
project
Sales expenses 367,994,662.03 323,833,862.87 44,160,799.16 13.64
Administrative 1,215,427,939.02 1,421,848,997.88 -206,421,058.86 -14.52
28 / 285
2023 Annual Report
expenses
R&D expenses 1,807,204,128.27 2,034,461,775.71 -227,257,647.44 -11.17
Mainly due to the
decrease in net
Financial
212,029,208.10 18,865,406.63 193,163,801.47 1,023.90 foreign currency
expenses
exchange gains in
the current period.
Total 3,602,655,937.42 3,799,010,043.09 -196,354,105.67 -5.17
4. R&D investment
(1). Particulars of R&D investment
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
Expensed R&D investment in the current
1,807,204,128.27
period
Capitalized R&D investment in the
0
current period
Total R&D investment 1,807,204,128.27
Proportion of total R&D investment to
2.97
revenue (%)
Proportion of capitalized R&D
0
investment (%)
(2). Table of R&D personnel
√Applicable □ Not Applicable
Number of R&D personnel in the Company 2,809
Proportion of R&D personnel in the total number of employees of the
12.21
Company (%)
Breakdown by educational background
Educational background Number of personnel
Doctor’s degree 12
Master’s degree 994
Bachelor’s degree 1,498
Junior college 292
Senior high school and below 13
Breakdown by age
Age Number of personnel
Under 30 years old (excluding 30 years old) 370
30-40 years old (including 30 years old and excluding 40 years old) 1,187
40-50 years old (including 40 years old and excluding 50 years old) 911
50-60 years old (including 50 years old and excluding 60 years old) 332
60 years old and above 9
(3).Remark
□Applicable √Not Applicable
(4).Reasons for major changes in the composition of R&D personnel and its impact on the future
development of the Company
□Applicable √Not Applicable
29 / 285
2023 Annual Report
5. Cash flow
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
Items 2023 2022 Reasons for changes
Mainly due to an increase in
collections of receivables, as well as a
decrease in funds tied up in
Net cash flows from operating activities 6,823,435,492.62 3,435,196,255.50
inventories as a result of strengthened
procurement and inventory control in
the current period.
Mainly due to prudent investments
Net cash flow from investment activities -1,428,897,187.20 -1,524,248,331.61
in fixed assets.
Mainly due to the payment of
higher cash dividends and
Net cash flow from financing activities -1,836,253,228.36 -502,415,196.59
repayment of borrowings during the
period.
(II) Explanation of significant changes in profit caused by non-essential business
□Applicable √Not Applicable
(III) Analysis of assets and liabilities
√Applicable □ Not Applicable
1. Assets and Liabilities
Unit: yuan Currency: RMB
Proportion Proportion
Items December 31, 2023 to total December 31, 2022 to total YoY Remark
assets (%) assets (%)
Mainly due to higher
Cash and bank net cash inflow from
11,218,698,389.32 28.54 7,695,016,173.40 19.95 45.79
balances operating activities
during the period.
Mainly due to
receivables upon
expiry of contingent
consideration for
Other
208,748,837.09 0.53 137,008,284.72 0.36 52.36 equity acquisition
receivables
projects and increase
of advanced tooling
costs for clients
during the period.
Mainly due to the
increase in
subsidiaries' value-
Other current added tax to be
838,262,285.94 2.13 599,581,332.72 1.55 39.81
assets deducted and the
increase in prepaid
income tax in the
current period.
Mainly due to the
Non-current decrease in the
assets due 123,989.32 0.00 322,815.55 0.00 -61.59 closing balance of
within one year lease receivables in
the current period.
Mainly due to the
increase in investment
Construction in
641,030,985.98 1.63 303,432,536.69 0.79 111.26 in the expansion of
progress
overseas subsidiaries
in the current period.
Mainly due to the
Other non- subsidiary's advance
68,274,790.92 0.17 124,611,895.32 0.32 -45.21
current assets payment for
equipment and
30 / 285
2023 Annual Report
completion of
equipment
acceptance.
Mainly due to the
sublease of the entire
Investment
4,324,045.51 0.01 0.00 0.00 100.00 self-owned property
properties
by the subsidiary in
the current period.
Mainly due to
Derivative changes in fair value
financial 173,872.64 0.00 3,118,891.32 0.01 -94.43 caused by derivative
liabilities financial products in
the current period.
Mainly due to the
accrual of the transfer
consideration required
for the business
Other payables 1,044,770,045.86 2.66 716,932,703.77 1.86 45.73
combination and the
receipt of customer
deposits in the current
period.
Mainly due to the
Non-current transfer of convertible
liabilities due 3,564,025,750.56 9.07 506,820,025.23 1.31 603.21 corporate bonds from
within one year non-current to current
liabilities.
Mainly due to the
transfer of convertible
Bond payable 0.00 0.00 3,243,085,241.27 8.41 -100.00 corporate bonds from
non-current to current
liabilities.
Mainly due to the
Long-term increase in the
employee 273,605,892.45 0.70 199,342,510.02 0.52 37.25 amount of the pension
benefits payable account in the current
period.
Mainly due to
subsidiaries' accrual
Provisions 48,279,064.03 0.12 7,350,296.14 0.02 556.83
of product warranty
expenses.
Mainly due to
Other non-
subsidiaries' return of
current 1,046,909.26 0.00 3,692,335.61 0.01 -71.65
supplier deposits in
liabilities
the current period.
Mainly due to the
gains on foreign
Other currency statement
comprehensive 261,726,655.45 0.67 111,850,168.58 0.29 134.00 translation caused by
income changes in foreign
exchange rate in the
current period.
Mainly due to
Minority 22,243.6 business combination
99,421,563.54 0.25 444,965.69 0.00
interests 5 not under common
control in this period.
Other explanations
None
2. Overseas assets
√Applicable □ Not Applicable
(1) Asset size
Including: overseas assets 20,450,785,716.71 (unit: yuan; currency: RMB), accounting for 52.03% of the
total assets.
31 / 285
2023 Annual Report
(2) Relevant explanations on the relatively high proportion of overseas assets
√Applicable □ Not Applicable
Unit: RMB 10,000 yuan
Operating 2023 2023
Overseas assets Causes
model Revenue Net profit
Universal Global Scientific Independent
Establishment 1,290,108 19,650
Industrial Co., Ltd. operation
Universal Global Technology Independent
Establishment 2,171 -11,550
Co., Limited operation
Universal Global Industrial Independent
Establishment 546 1,016
Co., Limited operation
UNIVERSAL SCIENTIFIC
INDUSTRIAL Independent
Establishment 353,132 11,748
VIETNAM COMPANY operation
LIMITED
Universal Scientific Industrial Independent
Establishment 0 -633
(France) operation
Business
Universal Scientific Industrial Independent
combination under 386,214 -1,555
De México S.A. De C.V. operation
common control
Business
Universal Scientific Industrial Independent
combination under 301,144 5,772
Co., Ltd. operation
common control
Business
Universal Scientific Industrial Independent
combination under 31,295 5,478
Poland Sp. zo.o. operation
common control
Note: the above are overseas subsidiaries within the scope of the consolidated statements that meet the
conditions that one of the indicators of total assets, operating income, and net profit accounts for more
than 5% of the corresponding amount in the consolidated statements. The financials are from standalone
financial statements, not including subsidiaries.
3. Restrictions on major assets as at the end of the reporting period
□Applicable √Not Applicable
4. Other explanations
□Applicable √Not Applicable
(IV) Analysis of industry business information
√Applicable □ Not Applicable
1. In terms of communication products, Apple smart phones accounted for 20% of the global smart
phone market in 2023, with sales reaching 235 million units, an increase of 4% over that of 2022.
WW Smart Phone Estimated Market Share
2022 2023 22'23
Shipments Market Shipments Market YoY
(M units) Share% (M units) Share% Growth%
Worldwide Total 1,206 1,167 -3.2%
Apple 226 19% 235 20% 4%
Samsung 262 22% 227 19% -14%
Xiaomi 153 13% 146 13% -5%
OPPO 114 9% 103 9% -10%
Transsion 73 6% 95 8% 31%
Others 377 31% 362 31% -4%
32 / 285
2023 Annual Report
Source: USI, Feb. 2024
2. In terms of consumer electronics products, in 2023 the wearable product shipments grew by 6.6%
overall, 5.9% for earphones, 11% for watches, and augmented reality/virtual reality (AR/VR)
represented by Glasses, AR HMD, VR HMD is expected to have a high CAGR in the future.
WW Wearable Market Forecast
22’23 22-27
2022 2023 2024 2025 2026 2027
Growth CAGR
Total
Shipment (M 517 552 582 611 638 664 6.6% 4.7%
Units)
Earwear 323 342 358 372 385 396 5.9% 3.7%
Smartwatch 149 165 178 190 199 206 11% 5.7%
Wrist Band 35 34 31 30 29 29 -2.9% -3.9%
Glasses 0.4 1.1 1.8 1.8 2.0 2.1 175.0% 18%
AR HMD 0.3 0.5 0.8 1.6 3.7 6.8 66.7% 92%
VR HMD 8.5 7.6 11.0 13.9 17.2 21.9 -10.6% 30%
Others 1.2 1.3 1.6 1.7 1.8 2.0 8.3% 11%
Source: USI, Feb. 2024
3. In terms of cloud and storage products, the market demand for server mainboards and switches has
maintained stable growth, in which AI server is expected to realize a significantly higher CAGR than
than the server industry average as the global demand for computing power continues to explode. By
strengthening cooperation with major customers, the Company is striving for more market shares and
orders.
3.1 WW Server Shipment Forecast
Sever 2022 2023 2024 2025 2026 2027 2028 23-28 CAGR
Shipments
18,122 14,802 15,532 16,588 17,301 18,651 19,751 5.9%
(K Units)
YoY% 6.5% -18.3% 4.9% 6.8% 16.9% 20.1% 19.1%
Source: USI, Feb. 2024
3.2 AI Server Shipment Forecast
AI Sever 2022 2023 2024 2025 2026 23-26 CAGR
Shipments
1,300 1,440 1,596 1,768 1,959 10.8%
(K Units)
Source: USI, Feb. 2024
3.3 The scale of global switch market continued to grow, among which the demand for high-speed
switches was stronger. The Company currently provides complete switch manufacturing services to core
customers.
Switch 2022 2023 2024 2025 2026 2027 2028 23-28 CAGR
Revenue
30.7 33.0 35.2 37.5 40.0 42.6 45.5 6.6%
($ Billion)
YoY% 6.5% 7.5% 6.6% 6.6% 6.6% 6.6% 6.8%
Source: USI, Feb. 2024
3.4 In terms of storage products, SSD is the important product of the Company. The growth of SSD
applications in laptops and data centers maintained, and the market grew by 10.93% in 2023. The CAGR
of the SSD market from 2023 to 2026 is expected to be around 12.73%.
22’23 23-26
2022 2023 2024 2025 2026
YoY CAGR
Total SSD Revenue
42.1 46.7 51.2 57.3 66.9 10.93% 12.73%
($ Billion)
Source: USI, Feb. 2024
33 / 285
2023 Annual Report
4. In terms of industrial products, the market of smart handheld devices and POS grew by 11% in 2023
due to the growth of logistics and warehousing demand and the recovery of retail industry.
22'23 22-26
2022 2023 2024 2025 2026
YoY CAGR
Total POS Revenue
85 94 103 112 123 11% 10%
($ Billion)
Source: USI, Feb. 2024
5. In terms of the automotive products, 2023 automotive electronics market grew by 8.3%, and the CAGR
from 2022 to 2026 is expected to be 7.4%. Meanwhile, the electric vehicle market showed high growth in
2022 with sales growth of 53%.
5.1 Global Automotive Electronics Market Forecast
22'23 23-26
2022 2023 2024 2025 2026
YoY CAGR
Total AE Revenue
295 316 337 364 389 7.1% 7.2%
($ Billion)
Source: USI, Feb. 2024
5.2 The global sales of new energy vehicles have been growing at a fast pace, and the trend of
electrification contributes to a continuous increase in their penetration rate in the automobile market.
However, with the expected retreat of global governments' subsidy policies in the pure electric vehicle
sector, as well as the weak improvement of pure electric vehicle profit margins, the pure electric
transformation of major traditional vehicle manufacturers in the world is slowing down, and the market
for hybrid electric vehicles (HEVs) is expected to grow at a higher CAGR than that of pure electric
vehicles by 2026.
22'23 23-26
2022 2023 2024 2025 2026
YoY CAGR
Total
15,407 21,080 28,877 34,453 41,638 37% 25%
(K units)
HEV 4,667 7,000 10,110 13,333 16,472 50% 33%
BEV 8,000 10,000 13,667 14,667 18,444 25% 23%
PHEV 2,667 4,000 5,000 6,333 6,528 50% 18%
FCV 73 80 100 120 194 10% 34%
Source: USI, Feb. 2024
5.3 Total Auto Power Module
22'23 23-26
2022 2023 2024 2025 2026
YoY CAGR
Total Auto Power
2,474 3,070 3,679 4,316 4,798 24% 18%
Module ($ Million)
IGBT Power Module 2,027 2,471 2,920 3,353 3,673 22% 14%
MOSFET Power Module 370 481 568 634 678 30% 12%
Wide Bandgap Power
77 118 191 329 447 53% 56%
Module
Source: USI, Feb. 2024
5.4 Automotive Advanced Driver Assistance Systems (ADAS) Market Forecast
22'23 23-26
2022 2023 2024 2025 2026
YoY CAGR
Total ADAS Revenue
31 37 44 53 62 18.0% 19.0%
($ Billion)
Source: USI, Feb. 2024
34 / 285
2023 Annual Report
5.5 Automotive Communication Products Market Forecast
22'23 23-26
2022 2023 2024 2025 2026
YoY CAGR
Total Automotive
Communication Revenue 5.7 6.3 7.0 7.7 8.6 10.5% 10.8%
($ Billion)
Source: USI, Feb. 2024
6. In terms of medical electronic products, the market demand for outsourced electronic manufacturing
services has been growing steadily.
Medical Product 22'23 22-26
Assembly Value 2022 2023 2024 2025 2026
($ Million) YoY CAGR
Total 53,068 55,988 59,069 62,322 65,756 5.5% 5.5%
Medical Diagnostics 20,950 22,144 23,406 24,740 26,151 5.7% 5.7%
Therapeutic 12,125 12,670 13,240 13,836 14,459 4.5% 4.5%
Monitoring & Surgical 19,994 21,173 22,423 23,746 25,147 5.9% 5.9%
Source: USI, Feb. 2024
35 / 285
2023 Annual Report
(V) Analysis of investment
Overall analysis of foreign equity investment
√Applicable □ Not Applicable
As of the end of this reporting period, the Company's long-term equity investment was RMB 498 million, a decrease of RMB 113 million or 18.45% from the beginning
of the year. The main reason is the disposal of joint ventures and associates in current period. For details, refer to Note VII 17 Long-term Equity Investment.
1. Significant equity investment
□Applicable √Not Applicable
2. Significant non-equity investment
□Applicable √Not Applicable
3. Financial assets measured at fair value
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
Gain or loss from Cumulative Impairment
Purchase amount Sales/redemption
change in fair changes in fair provision in
Category of assets Opening balance in the current amount in the current Other changes Ending balance
value in the value included in the current
period period
current period equity period
Stocks 96,195,976.11 61,663.54 27,162,804.05 - - -77,284,965.48 16,283,539.89 62,419,018.11
Private equity funds 112,351,085.15 2,865,221.57 - - 54,130,858.29 -8,455,456.44 9,619,372.95 170,511,081.52
Derivatives 32,939,594.28 -12,381,158.46 - - - -31,866,142.64 33,290,271.18 21,982,564.36
Others: Wealth
- - - - - -60,903,020.88 60,903,020.88 -
management products
Others: Accounts
135,812,841.71 - - - 1,309,113,715.53 -1,230,949,631.30 9,424,644.28 223,401,570.22
receivable factoring
Others: Contingent
99,372,192.22 -17,653,478.47 - - - -104,865,130.40 23,146,416.65 -
consideration
Total 476,671,689.47 -27,107,751.82 27,162,804.05 - 1,363,244,573.82 -1,514,324,347.14 152,667,265.83 478,314,234.21
Note:
1. Stocks: equity investment in TriKnight Capital Corporation, GaN System Inc, Senscomm Semiconductor Co., Ltd.
2. Private-equity fund: PHI FUND, L.P. and Suzhou Glory Ventures Equity Investment Partnership
36 / 285
2023 Annual Report
3. Derivatives: foreign exchange forward contract
4. Other changes include realized income and foreign currency translation in the current period
Investment in securities
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
Purchase
Gain or loss from Cumulative Gains and losses
amount in Sales amount
Type of Stock Initial cost of Source Beginning book change in fair changes in fair on investments Ending book Accounting
Stock abbreviation the in the current
security code investment of fund value value in the value included in in the current value items
current period
current period equity period
period
Self- Investments in
TriKnight Capital
Stocks 66,414,298.60 owned 38,420,782.40 - 27,162,804.05 - -27,680,312.65 1,031,963.78 38,935,237.58 other equity
Corporation
funds instruments
Self- Other non-
Stocks GaN System Inc. 34,822,962.11 owned 33,022,365.35 1,330,711.37 - - -49,604,652.83 15,251,576.11 - current
funds financial assets
Senscomm Self- Other non-
Stocks Semiconductor Co., 20,000,000.00 owned 24,752,828.36 -1,269,047.83 - - - - 23,483,780.53 current
Ltd. funds financial assets
Total / / 121,237,260.71 / 96,195,976.11 61,663.54 27,162,804.05 - -77,284,965.48 16,283,539.89 62,419,018.11 /
Investment in securities
√Applicable □ Not Applicable
During the reporting period, the Company sold its entire equity in GaN System Inc. and realized an investment gain of RMB15,251,576.11.
Investment in private equity funds
√Applicable □ Not Applicable
1. Glory Ventures
The Company signed the Suzhou Glory Ventures Equity Investment Partnership (Limited Partnership) Agreement with Shanghai Glory Ventures Investment
Management Co.,LTD and 21 other limited partners (LP). USI invested in Suzhou Glory Ventures Equity Investment Partnership (Limited Partnership) as an LP. The
total target subscribed capital contribution of the partnership shall not exceed RMB 1.5 billion, and can be raised through multiple deliveries. The total subscribed
capital contribution after the first and the second closing were RMB 793 million and RMB 1.128 billion respectively, of which the Company subscribed RMB 30
million. As of December 31, 2023, the Company had contributed RMB 21 million, including RMB 9 million paid during the current period, and RMB 9 million
remained unfunded.
37 / 285
2023 Annual Report
2. PHI FUND
According to the partnership agreement signed by UGE and the investee PHI FUND, L.P., UGE shall pay a total of USD 25,000,000.00 for subscriped capital
contribution, and USD 6,245,794 was paid in the current period, equivalent to RMB 45,130,858.29. UGE's obligation of capital contribution has been fully fulfilled.
Investment in derivatives
√Applicable □ Not Applicable
(1). Derivative investments for hedging purposes during the reporting period
□Applicable √Not Applicable
(2). Derivative investments for speculative purposes during the reporting period
□Applicable √Not Applicable
Other explanations
The Nineteenth Meeting of the Fifth Session of the Board of Directors of the Company considered and approved the Proposal on the Estimated Amount of Financial
Derivatives Transactions in Q1 2023, agreeing that the Company shall carry out financial derivatives transactions business, and that it is expected that the total amount
of foreign exchange hedging transactions in Q1 2023 will be limited to USD 500 million (or the equivalent of other currencies, and the same transaction rolled over
will not be repeatedly calculated); the Twenty-second Meeting of the Fifth Session of the Board of Directors and the 2022 Annual General Meeting of the Company
considered and approved the Proposal on the Amount of Financial Derivatives Transactions, agreeing that the Company shall carry out financial derivatives
transactions business, and it is expected that the total amont of foreign exchange hedging transactions from the Q2 2023 to Q1 2024 will be subject to a limit of USD
1 billion (or the equivalent of other currencies), and that such amount can be utilized on a recurring basis within the quota. The total transaction amount for 2023 was
USD 2,432 million, of which USD 2,143 million was settled and USD 289 million was not settled yet as of December 31, 2023, with a realized gain of RMB
33,290,271.18 and an unrealized loss of RMB 12,381,158.46.
38 / 285
2023 Annual Report
4. Specific progress of material asset restructuring and integration during the reporting period
□Applicable √Not Applicable
(VI) Sale of material assets and equity
√Applicable □ Not Applicable
On January 19, 2023, the Company's Kunshan subsidiary signed the Agreement on the Equity Transfer of
SUMA-USI Electronics Co., Ltd (SUMA-USI) with SUMA to transfer 49% equity of SUMA-USI to
SUMA at a transfer price of RMB 110.88 million. As of February, 2023, as SUMA-USI completed the
change of business license, the equity transfer was completed, and Kunshan Factory no longer holds equity
in SUMA-USI. This equity transfer is the transfer of the listed company's minority stake in a joint stock
company, an adjustment made by the listed company based on its business strategy. It is conducive to the
Company's business development and optimization of its business structure, and will not have a significant
impact on the Company's financial status and operating results.
(VII) Analysis of major holding and joint stock companies
√Applicable □ Not Applicable
1. Holding subsidiaries
Unit: RMB 10,000 yuan
Currency
of Registered Total Net Net
Company Name Main business
registered capital (RMB) assets assets profit
capital
Production and
Universal Global Scientific
sales, product NTD 1,980,000,000 650,525 248,905 19,650
Industrial Co., Ltd.
design and R&D
UNIVERSAL GLOBAL
Production and
TECHNOLOGY(KUNSHAN) RMB 550,000,000 375,294 215,936 31,447
sales
CO., LTD.
Universal Global Technology Trade and
USD 480,803,000 913,057 463,365 -11,550
Co., Limited Investment
Production and
Universal Global Technology
sales, product RMB 1,330,000,000 315,615 226,799 22,591
(Shanghai) Co., Ltd.
design and R&D
Universal Global Technology Production and
RMB 800,000,000 225,660 102,655 23,508
(Huizhou) Co., Ltd sales
USI Electronics (Shenzhen) Production and
USD 75,000,000 105,012 98,971 1,252
Co., Ltd. sales
Universal Global Industrial Co., Trade and
USD 31,000,000 209,871 26,189 1,016
Limited Investment
Contract
Universal Scientific Industrial manufacturing, Mexico
2,293,299,926 354,604 70,671 -1,555
De México S.A. De C.V. product repair and MXN
related services
UNIVERSAL SCIENTIFIC IN Production and
DUSTRIAL VIETNAM sales, product USD 105,000,000 152,494 85,611 11,748
COMPANY LIMITED design and R&D
Universal Scientific Industrial
Investment EUR 321,374,822 281,203 256,297 -633
(France)
Production and
Universal Scientific Industrial
sales, product NTD 1,399,727,400 137,596 84,725 5,772
Co., Ltd.
maintenance
Universal Scientific Industrial Production and
PLN 80,852,300 44,445 37,600 5,478
Poland Sp. z o.o. sales
Production and
Asteelflash(Suzhou)Co.,Ltd. USD 18,000,000 115,303 69,887 7,614
sales
Note 1: the registered capital includes the amount of re-investment to other subsidiaries, and the amount
of total assets, net assets and net profit is from standalone financial statements, not including subsidiaries.
Note 2: the above are subsidiaries within the scope of the consolidated statements that meet the conditions
that one of the indicators of total assets, operating income, and net profit accounts for more than 5% of the
corresponding amount in the consolidated statements.
39 / 285
2023 Annual Report
2. Affiliates
Unit: RMB 10,000 yuan
Currency of Registered
Total Net Net
Company Name % registered capital
assets assets profit
capital (RMB)
M-Universe Investments
42.23 USD 138,969,126 162,073 113,318 3,446
PTE.LTD.
Note: the above are affiliates that meet the conditions that one of their indicators of net assets and net
profit accounts for more than 1% of the corresponding amount in the consolidated statement.
3. Subsidiaries or affiliates that contributed over 10% to the net profit of the Company
Unit: RMB 10,000 yuan
Contribution to
Operating
Company Name Revenue Net profit consolidated
profit
net profit
UNIVERSAL GLOBAL
TECHNOLOGY(KUNSHAN)CO., 544,834 36,199 31,447 16.13%
LTD.
Universal Global Technology
682,842 24,029 22,591 11.59%
(Shanghai) Co., Ltd.
Universal Global Scientific
1,290,108 18,817 19,650 10.08%
Industrial Co., Ltd.
(VIII) Structured entities controlled by the Company
□Applicable √Not Applicable
VI. Discussion and analysis of corporate development in the future
(I) Industry landscape and trends
√Applicable □ Not Applicable
1. Global market capacity of the industry
According to industry statistics, the revenue of global EMSs was approximately USD 724 billion in 2023,
and the revenue of global EMSs is expected to exceed USD 900 billion in 2027, with an average CAGR
of approximately 5.5% from 2022 to 2027. The overall market shows a stable growth trend, and the Asia-
Pacific region will continue to maintain its leading growth rate.
Data source: Summarized by USI, February 2024
Global CM, EMS and ODM market capacity (2022-2027) (unit: USD 100 million)
40 / 285
2023 Annual Report
The Worldwide CM, EMS and ODM Market by Region, 2022-2027
2022 2023 2024 2025 2026 2027 CAGR
CM Revenue
Americas 1,199 1,248 1,301 1,359 1,420 1,484 4.3 %
EMEA 927 966 1,005 1,045 1,086 1,127 4.0 %
APAC 4,818 5,025 5,311 5,655 6,041 6,456 6.0 %
Total 6,944 7,239 7,617 8,060 8,547 9,067 5.5 %
EMS Revenue
Americas 1,157 1,204 1,255 1,311 1,370 1,432 4.4 %
EMEA 881 918 955 994 1,032 1,072 4.0 %
APAC 3,573 3,722 3,939 4,203 4,497 4,818 6.2 %
Total 5,611 5,844 6,149 6,508 6,899 7,321 5.5 %
ODM Revenue
Americas 43 44 46 47 49 51 3.9 %
EMEA 46 48 50 52 54 56 3.9 %
APAC 1,244 1,303 1,372 1,452 1,544 1,638 5.7 %
Total 1,333 1,395 1,468 1,551 1,647 1,746 5.5 %
Data source: Summarized by USI, February 2024
2. Global competition landscape and industry rankings
According to the latest ranking of global EMS providers (2022), the Company's operating revenue ranks
twelfth.
Operating Operating
Net
Manufacturer revenue revenue Annual
operating
Ranking name (USD 100 (USD 100 growth rate
margin
million) million)
Year 2021 2022 21'22 2022
1 Foxconn 2,144 2,228 3.9 % 2.3 %
2 BYD 335 623 85.8 % 4.1 %
3 Pegatron 453 444 -2.0 % 1.6 %
4 Quanta 404 432 6.9 % 2.3 %
5 Compal 443 363 -18.0 % 0.8 %
6 Jabil 300 345 15.1 % 2.8 %
7 Wistron 309 329 6.4 % 1.9 %
8 Luxshare 240 316 32.0 % 4.9 %
9 Flextronics 255 297 16.8 % 2.8 %
10 Inventec 186 181 -2.8 % 1.1 %
11 Delta Electric 113 129 15.0 % 9.6 %
12 USI 86 101 18.2 % 4.4 %
41 / 285
2023 Annual Report
Whole
6,827 6,944 1.7 % 2.6 %
industry
Data source: Summarized by USI, February 2024
2. Change trends in industry profit levels and analysis of net profit margins
The Company's net profit margin in 2022 was approximately 4.5%, which is better than the average level
of the world's top ten EMS providers. The Company's net profit margin in 2023 was 3.2%, a decrease of
1.3 percentage points compared with 2022, mainly due to an 11.3% drop in revenue, a 0.9 percentage
point drop in gross profit margin and a significant decrease in exchange-related revenue.
Electronic products were still in the destocking stage of the supply chain in 2023. Combined with the
impact of the economic cycle on the demand for consumer electronics, the restructuring of the global
electronics supply chain, and the exchange rate of RMB against the USD, domestic companies in the same
industry generally experienced declines in revenue and profit margin in 2023. By contrast, companies in
the same industry in North America benefited from an increase in product mix and regional orders,
resulting in increased revenue and improved profit margins.
3. Industry development pattern
(1) Industry demand pattern
The current destocking of the global supply chain is coming to an end, and demand for electronic products
has begun to recover. However, the global economy is still facing more uncertainties, and consumers are
less willing to purchase optional consumer products. "AI+" consumer electronics products such as AI
Phones and AI PCs have attracted consumer attention. Generative artificial intelligence and large models
have driven significant growth in demand for GPUs, AI servers, optical communications and related
industries. The penetration rate of vehicle electrification will continue to increase, but the growth rate will
slow down significantly.
(2) Capacity supply pattern
With the increase of trade protectionism and geopolitical factors, European and American companies are
paying more attention to strengthening the supply chain within the region in order to reduce the uncertainty
and risk of the supply chain, causing the EMS industry to shift to Southeast Asia, India, Mexico, and
Eastern Europe. In order to improve production efficiency and quality, the EMS industry will increase
investment in automation and intelligent manufacturing, reduce the use of direct labor, and improve the
flexibility and response speed of production capacity.
(3) Supply chain development trends
Under the pressure of customers to reduce costs, EMS companies are accelerating the optimization of
supply chains, improving the local supply chain of production bases, and giving priority to alternative
suppliers. Customers are also paying more attention to the flexibility of the supply chain and tend to
cooperate with supply chain partners or increase outsourcing of some production processes to achieve
resource sharing and risk sharing.
(4) Technological development
In order to better meet the diverse needs of the market, the EMS industry will pay more attention to the
development of flexible manufacturing technology and realize small batch and multi-variety production
models in the future. Technologies such as artificial intelligence, big data and the Internet
of Things will be more widely used in the production process to achieve intelligent production scheduling,
quality control and equipment maintenance.
In addition, the EMS industry will also strengthen the digital management of the supply chain, improve
the transparency and efficiency of the supply chain through technologies such as blockchain and cloud
computing, and realize the visualization and collaborative management of the supply chain. With the
improvement of environmental protection and carbon reduction, electronic manufacturing
42 / 285
2023 Annual Report
companies will pay more attention to the R&D and application of green manufacturing technology to
reduce energy consumption and environmental pollution.
(5) Changes in customer service needs
In order to reduce supply chain risks, well-known brand manufacturers tend to cooperate with EMS
companies with global layout, requiring manufacturing service companies to have rapid response
capabilities to cope with changes in market demand. In order to maintain cost competitiveness, customers
expect manufacturing service companies to provide more technologically innovative solutions, including
hardware design and software design, and to establish closer R&D partnerships with customers. In addition,
as consumers pay more attention to environmental protection and sustainable development, manufacturing
service companies are increasingly paying attention to energy conservation and carbon reduction issues
and sustainable development.
4. Industry entry barriers
(1) Barriers to R&D and manufacturing capabilities
The technological innovation of electronic products is changing with each passing day, and the product
upgrade cycle is shortening, requiring manufacturing service providers to continuously improve their
product design and process R&D capabilities. The EMS industry is transforming and upgrading towards
intelligent manufacturing, using automated production and Industry 4.0 technology to improve product
quality, process stability and delivery on time. The threshold for manufacturing service providers to have
high-level product development and intelligent manufacturing capabilities, economic scale of production
capacity, and quality control systems is very high.
(2) Barriers to qualification of entering the supply chain of large brands
Since the EMS industry is highly competitive, establishing cooperative relationships with large-scale
brand customers and entering their global supply chain systems require strict quality management system
and product performance certification. Therefore, strict supplier qualification builds a barrier to entry for
new entrants. In addition, the solid relationships established by manufacturing service providers through
long-term cooperation with customers and their supply chain vendors are also barriers faced by new
entrants.
(3) Barriers to capital investment
Large electronic product brands require that the manufacturing service providers they cooperate with must
have manufacturing capabilities that match their business scale, which requires high investment in fixed
assets such as equipment, factories, supporting facilities, a large scale of initial investment, and additional
equipment investment in the future based on new orders or product upgrade requirements. In addition,
large quantities of materials need to be purchased for large-scale production and manufacturing, and a
large amount of working capital is required to establish and improve the material procurement system and
maintain its efficient operation.
(4) Barriers to global business layout
Large brand manufacturers hope that EMS providers with long-term cooperation can provide turnkey
solutions covering R&D, design, manufacturing and after-sales, have intelligent manufacturing and global
manufacturing service capabilities, and can provide customers with glocalized manufacturing services and
delivery solutions, so as to meet customers’ needs for supply chain diversification and risk management.
Therefore, global presence is crucial to serving top-level customers in the industry.
(II) Company development strategy
√Applicable □ Not Applicable
1. Difficulties faced by the Company
(1) Industry competitors are striving for market share with more active competition methods, and
competition pressure is increasing.
43 / 285
2023 Annual Report
(2) In the face of cost reduction and R&D requirements from customers, the Company needs to speed up
the optimization of the supply chain and increase investment to improve R&D capabilities, which is urgent
in time.
(3) The supply chain of the electronics industry is shifting to Southeast Asia, Mexico, Eastern Europe and
other regions. The comprehensive cost of new investment in production capacity is relatively high and the
profit margin is low. It is necessary to optimize costs and improve quality and efficiency in operations.
(4) The Company accelerates its global layout and vertical integration through mergers and acquisitions
and strategic investments, and there are management and operational difficulties in post-investment
integration and coordination.
(5) The Company has become a globally operating enterprise. Facing an operating environment with
multi-cultural backgrounds, multi-languages, multi-ethnicities, and multi-time zones, it needs to establish
better institutional system in terms of strategy execution, operational management, internal collaboration,
team building, and incentive mechanisms, etc.
2. The Company’s coping strategy
(1) Relying on the Company's technological advantages, capital advantages, and resource integration
advantages, the Company deeply cultivates existing customers in the field of modular products and strives
for more potential customers to expand its business territory.
(2) Following the development trend of "global demand, local services", the Company rationally deploys
global production capacity, uses advanced processes, flexible production capacity and local services to
introduce new technologies, develop new products, shorten the time from design concept to mass
production, and provide more added value for customers.
(3) The Company increases R&D investment in key technologies and application areas, strengthens the
ability to design and provide JDM/ODM services for customers, strengthens vertical integration and
industrial cooperation in the upstream and downstream of the industry chain through the integration of
group resources, technology sharing, and independent innovation, and actively deploys new products and
new customers in the fields of industrial and automotive electronics.
(4) The Company deepens business collaboration with Financière AFG and Hirschmann to jointly expand
business growth.
(5) To serve the development strategy, the Company establishes a more competitive salary and incentive
system, strengthens employee work skills training, improves the internal talent cultivation mechanism,
and cultivates and recruits global talents.
(6) The Company adheres to a sound financial structure to meet the funding needs for global operations
and M&A investments.
(III) Business plan
√Applicable □ Not Applicable
1. Growth plan
The Company will adhere to the development strategy of "modularization, diversification, and
globalization", enhance vertical integration and intelligent manufacturing capabilities, and improve the
global production and operation system to promote endogenous growth. Meanwhile, it will continue to
invest in M&A activities and actively seek external growth opportunities.
Faced with the challenge of slowing macroeconomic growth, the Company will make more prudent
arrangements for human resources and capital expenditures, strike a balance between annual financial
goals and long-term growth plans, expand the application scope of digital management systems based on
the needs of business development and global operations, and continuously improve the level of intelligent
and automated production in factories.
The Company's growth plan mainly includes:
44 / 285
2023 Annual Report
(1) Striving to maintain the market share in the core customer SiP module business, strengthen the
application and promotion of miniaturization technology and SiP modules, new product R&D and new
customer development, and continuing to expand the revenue scale of the module business;
(2) Continuing to invest in production capacity in North America, Eastern Europe, and Asia-Pacific,
establish regional EMS business departments to directly serve local customers, and leverage local
manufacturing services and differentiated competitive advantages to expand automotive electronics and
industrial businesses;
(3) Improving the cost competitiveness of automotive power modules and powertrain products;
(4) Improving software design and solution capabilities to serve customer needs;
(5) Continuing to strengthen digital transformation, promote the process of intelligent manufacturing in
each factory area, and use IT technology platforms to upgrade to create future-oriented industrial
competitiveness.
2. Supply chain plan
Against the backdrop of global supply chain restructuring as well as economic and trade regionalization,
large enterprises are increasingly paying attention to supply chain diversification and risk management,
hoping to improve supply chain risk management capabilities and enhance supply chain flexibility and
resilience. In line with the needs of its global operations, the Company's supply chain department actively
builds a more resilient supply chain to provide flexible, stable, and efficient services to meet customer
needs. The main strategies are as follows:
(1) Strategically cooperating with large-scale international manufacturing factories or agents, integrating
the needs of the entire company, and striving for better support policies from suppliers to satisfy the needs
of each factory locally in the Company's production area;
(2) Developing local suppliers in each region to reduce transportation time and costs, and increasing
supply flexibility and response speed, including exploring suppliers for large-volume materials (such as
mechanical components, packaging materials, wires, etc.), and processing materials, chemicals and
consumables with shelf life or requiring special delivery at major production bases; developing printed
circuit board manufacturers outside Greater China, and focusing on suppliers from Southeast Asia;
developing production equipment, automation equipment or other non-raw material suppliers that can be
localized in various regions;
(3) Working with existing partners to set up factories near the new base and provide services nearby;
(4) Continuing to develop local suppliers in China, and leveraging the advantages of scale and efficiency
to serve customers with requirements in scale;
(5) Actively assessing risks, pre-arranging supply bases and formulating supply chain emergency plans to
fully prevent and disperse risks.
3. Global production base plan
As of the end of 2023, the Company has 30 production bases in 12 countries (or regions) around the world,
and the overseas factory revenue accounts for approximately 41% of total revenue.
In mid-2024, the Company's new factory in Poland and the second factory in Mexico will be completed
and put into production. The newly added production capacity will be used to serve customers in the
automotive electronics and industrial fields. The Company's newly built Tanzi factory in Taiwan and the
second phase of the Vietnam factory are expected to be completed and put into production in early 2025.
The Tanzi factory in Taiwan will be used to produce automotive power modules, and the second phase of
the Vietnam factory will be used to serve customers in the consumer electronics and industrial fields.
4. Human resources plan
According to the global localization development strategy, the Company will formulate global human
resources planning, predict and plan the Company's future manpower needs, talent introduction and
employee training to cope with the complex challenges of multi-cultural backgrounds, multi-languages,
multi-ethnicities and multi-time zones faced in the integration of global operations. The Company will
continue to improve the people-oriented corporate culture, provide space for the development of talents,
45 / 285
2023 Annual Report
plan employee career development and performance appraisal, and continue to optimize the long-term
incentive mechanism with equity incentives as the core to attract and retain outstanding talents, and
provide strong talent guarantee for the Company to achieve its development goals.
5. R&D plan
At present, the Company's products have developed towards being thin, light, short, low power consuming,
interconnected, and AI intelligent. In 2024, the Company will continue to study the functional integration
of SiP system modules and communication antennas, and expand more application functions of SiP
modules by introducing more process technologies into SiP module design; develop new post-laser cutting
water washing technology to overcome the damage to sensitive components in current dry ice cleaning.
In addition, the importance of environmental protection and sustainability issues has increased year by
year. Plastic casings of electronic products have begun to use recycled plastics (PCR, Post-Consumer
Plastics) in large quantities, and carbon footprint inventory has been taken into consideration when
selecting materials. The Company plans to take the following R&D directions as its main focus in the
future:
(1) Developing wireless communication module products, and establishing 5G new wireless radio
frequency design capabilities; continuing to focus on development based on Qualcomm’s latest 5G IoT
platform, and upgrading product specifications in line with the mainstream market trends; the Company
is expected to invest in B5G (Beyond 5 Generation) technology development, while taking into account
the product lifecycle;
(2) Automotive electronics power modules, powertrains, automotive communication solutions and
intelligent cabin products;
(3) Continuing to expand the application fields of miniaturized products, even covering the application of
IoT products in addition to existing products, and continuing to improve the manufacturing process;
(4) Cooperating with industry-leading technology companies to produce module products with higher
integration and more functions, and establishing a presence in the Internet of Things and other fields;
(5) Developing technologies related to network storage for cloud computing, cooperating with major chip
companies to launch high-performance solid-state drives, and developing miniaturized solid-state drives;
(6) Miniaturization and automation, and developing design automation tools;
(7) Continuously developing green design products to reduce material and energy consumption.
6. Sustainable business plan
The Company integrates the core corporate values of "Realizing IDEAS together" into the its business
strategy and operation management, constantly pursues sustainable development, and actively promotes
the improvement of environment (E), society (S) and governance (G): in terms of environment (E), it
reduces environmental impact, promotes resource recycling development, and actively seeks climate
governance solutions to address climate change; in terms of society (S), it continues to care for employees
and promote social participation activities to increase corporate influence and achieve global partnerships;
in terms of governance (G), it upholds the corporate governance structure of safeguarding the rights and
interests of investors, strengthening operational risk management, and implementing information security
control.
The Company established the Group Sustainability Committee in 2020 to jointly promote and achieve the
specific implementation of various sustainable development goals and actions. The committee's mission
has been divided into five taskforces, Corporate Governance, Green Product & Innovation, Value Chain
Management, Employee & Society Well-being Engagement, and Environmental Protection &
Occupational Safety. In March 2022, the Company's board of directors reviewed and approved the ESG
Code of Practice, which clearly specifies relevant requirements such as implementing corporate
governance, developing a sustainable environment, safeguarding social welfare, and strengthening
information disclosure on corporate sustainable development.
USI continues to strengthen its resilience in dealing with climate change, and carries out Task Force on
Climate-related Financial Disclosures (TCFD) with the “low-carbon mission” as its focus. The Company
constructs climate change management based on four core elements of TCFD: “governance, strategy, risk
46 / 285
2023 Annual Report
management, metrics and targets.”, assesses the risks and opportunities brought by climate change,
discloses the Company's strategies and measures to face the risks and opportunities brought by climate
change, and allocates capital more rationally and effectively in order to achieve the low-carbon economic
transformation and the net-zero carbon emission target by 2040.
(IV) Possible risks
√Applicable □ Not Applicable
1. Risk of weak macroeconomic recovery and insufficient demand
The EMS industry chain has shifted from being supply chain-driven to demand-driven, which has a strong
correlation with the macroeconomic environment. Many unfavorable factors such as the Russia-Ukraine
war, geopolitics, inflation, and USD interest rate hikes have affected global economic growth and terminal
demand. The supply chain destocking is now nearing an end, and the demand is expected to recover
significantly in the second half of this year. The Company will continue to pay attention to the trend of
the industrial chain pattern, maintain close interaction with customers to grasp customer needs, and
strengthen the collection and analysis of market information to reduce the impact of changes in product
demand on the Company.
2. Risk of industry competition
The EMS industry with many global manufacturers is a fully competitive industry, and the overall
concentration within the industry is on the rise. Under the trend of restructuring of the international market
supply chain and economic and trade regionalization, Chinese mainland's EMS industry and upstream
supply chain will face even severe competition. Through the new operating model of “global platform,
localized service”, the Company combines its own advantages to compete with its peers in a differentiated
manner. However, if the Company cannot maintain cost competitiveness and product technology
advantages, its market share and profit margins will be at risk of being squeezed.
3. Risk of high customer concentration
During the reporting period, the sales revenue from the Company's top five direct customers accounted
for 50.59% of the Company's total revenue, indicating a high degree of customer concentration. Although
these customers are all well-known international electronics brands and have established long-term and
stable cooperative relationships with the Company and served as a sufficient source of business orders, if
customer demand declines, or the Company fails to meet customer requirements in terms of product R&D,
design, product quality control, qualified supplier certification, delivery period and other aspects in a
timely manner, it may cause certain fluctuations in customer orders, which will adversely affect the
Company's business scale and operating performance. Therefore, the Company is exposed to the risk of
high customer concentration to a certain extent.
4. Risk of insufficient R&D and innovation
Technological progress continues to drive the upgrading and iteration of electronic products and
equipment. Enterprises in the EMS industry have been under great operating pressure for a long time, such
as product innovation, quality improvement, cost reduction, continuous investment, etc., and only by
sticking to R&D investment and technological innovation can enterprises cope with rapid changes in the
market and competitive pressure. Under the restructuring of the supply chain, customers have also put
forward higher demands and service standards for the Company's hardware R&D, software R&D,
intelligent manufacturing, low-carbon environmental protection, etc. The Company must accelerate the
improvement of its R&D strength, and make up for weaknesses to explore new business opportunities.
The Company is at risk of insufficient R&D and innovation.
5. Risk of transnational business
In order to better serve its major customers, the Company has a global layout of production, sales and
logistics to quickly respond to the product delivery needs of major customers. The Company has 30
manufacturing bases in 12 countries and regions. Overseas companies conducting business and
establishing branches overseas need to comply with the laws and regulations of the country and region
where the overseas business is located. In case of any material changes in the laws, regulations, industrial
47 / 285
2023 Annual Report
policies or political and economic environment of the country and region where the overseas business is
located, or due to international tensions, wars, trade sanctions and other unpredictable factors or other
force majeure events, it may have potential adverse effects on the normal development and sustainable
development of overseas businesses of overseas companies. Moreover, in consideration of differences
between operating bases in various countries or regions and listed companies in terms of accounting and
taxation systems, business practices, company management systems, corporate culture, etc., the Company
needs to integrate financial management, customer management, resource management, business
development, corporate culture, and etc. If relevant integration plans are not effectively implemented, the
Company may face risks such as the effect of the merger or new enterprise is not up to expectations, the
loss of core personnel, and the decline in performance.
6. Risk of exchange rate fluctuations
As a global EMS provider, most of its production bases are overseas, main customers and suppliers are
overseas enterprises, and its purchases and sales are mainly settled in foreign currencies. The Company
usually uses foreign exchange hedging operations to deal with the risk of exchange rate fluctuations.
However, the significant fluctuation of the exchange rate, if any, will still incur a large amount of exchange
gains and losses. The Company will pay close attention to changes in the international foreign exchange
market, conduct reasonable foreign exchange hedging operations, and actively hedge major exchange rate
risks when necessary to minimize exchange losses.
7. Emerging risks
The Company has set up a Risk Management Committee to identify internal and external risk factors that
may affect the Company's sustainable business goals, evaluate the level of each risk and the effectiveness
of related control activities, and implement appropriate measures and responses based on the risk
assessment results to ensure that risks can be effectively monitored.
(1) Risk of cyber attack
Cyberattack risks refer to various potential threats from the Internet, which may lead to adverse
consequences such as system intrusion, data theft, or business interruption. By taking advantage of
vulnerabilities, malware, social engineering and other means, attackers may have a serious impact on
individuals, businesses and critical infrastructure, paralyze corporate networks and affect production and
operations. In order to deal with the risk of ransomware and network attacks, the Company's information
security department actively tracks the latest information security technology and virus protection methods,
deploys and upgrades the security level of the front-end system in advance, to reduce the risk of hacker
penetration and intrusion, regularly conducts system vulnerability scans, repairs system vulnerabilities in
a timely manner, and continues to strengthen information security education for employees to improve
awareness of prevention of emerging cyber attacks. In addition, through the Information Security
Committee, the Company has made a thorough information security plan to protect the Company's
intellectual property and business secrets.
(2) Risk of economic conditions and industry trends
The current global economic situation and trade pattern are faced with many uncertain factors, such as
geopolitics, inflation, interest rates, exchange rates, financial investment, policies of major countries, etc.
In the post-epidemic era, companies need to face the challenge of restructuring the global supply chain,
adjust business strategies and industrial layout under the trend of regional economic and trade development,
and respond to business risks under industry trends. However, due to many uncertain factors, the business
decision-making risks faced by companies have increased significantly. The Company will strengthen
industry analysis and cooperate with professional research institutions to gain insight into global economic
changes and industry trends, objectively judge their impact on the company's operations, formulate
response strategies and take timely action plans, and strive to achieve the Company's business goals.
(IX) Others
□Applicable √Not Applicable
48 / 285
2023 Annual Report
VII. The circumstances and reasons for the Company’s failure to disclose according to the standards
due to special reasons such as non-applicability of the standards or state secrets and trade
secrets
□Applicable √Not Applicable
49 / 285
2023 Annual Report
Section IV Corporate Governance
I. Particulars on corporate governance
√Applicable □ Not Applicable
During the reporting period, the Company, in strict accordance with the relevant requirements of the
Company Law the Securities Law and the Code of Corporate Governance for Listed Companies, China
Securities Regulatory Commission, and Shanghai Stock Exchange, strengthened information disclosure
efforts, continuously optimized the corporate legal person governance structure, established the sound
internal control system, and standardized the business operation, to effectively guarantee the interests of
the Company and its all shareholders. The Company's general meeting of shareholders, Board of Directors,
Board of Supervisors, and all operation levels had clear responsibilities. All directors, supervisors and
members of the senior management were diligent and responsible. Directors and supervisors actively
participated in the Company's general meetings of shareholders, meetings of the Board of Directors, and
meetings of the Board of Supervisors, and earnestly performed their responsibilities. Related directors
voluntarily abstained from voting on relevant related transactions to ensure the safe, stable, healthy and
sustainable development of the Company.
(I) Shareholders and general meetings of shareholders: The Company convened and held general meetings
of shareholders in accordance with the requirements of the Company Law, the Articles of Association,
and the Rules of Procedure for the General Meeting of Shareholders. The general meetings of shareholders
complied with the relevant provisions in aspects of preparations, proposals, procedures, voting and
resolutions, resolution execution and information disclosure, and ensured that all shareholders, especially
minority shareholders, fully exercised their voting rights and maintained equal status. and ensured that all
shareholders, especially minority shareholders, fully exercised their voting rights and maintained equal
status. The Company also invited lawyers to attend the general meetings of shareholders to confirm and
witness the convening procedures, deliberation matters, and identities of attendees, and issue legal
opinions to ensure the legality and validity of the general meeting of shareholders.
(II) Relationship between the controlling shareholder and the listed company: The Company and its
controlling shareholder were independent of each other. The Company's board of directors, board of
supervisors and internal institutions could operate independently. The Company established a long-term
mechanism to prevent the controlling shareholder and its affiliated companies from occupying the listed
company's funds and infringing on the listed company's interests, and no major shareholders occupied the
listed company's funds and assets.
(III) Directors and the Board of Directors: The Company elected directors in strict accordance with the
selection and appointment procedures stipulated in the Company Law and the Articles of Association. The
Company's Board of Directors met the requirements of laws and rules in terms of number and composition
of members. The Company's directors could seriously attend the meetings of the Board of Directors in
accordance with the Procedure Rules of the Board of Directors and other regulations. The Board of
Directors set up four special committees, namely the Audit Committee, the Strategic Committee, the
Nomination Committee, and the Remuneration Committee, of which the membership is reasonable. Since
their establishment, the special committees have been operating in strict accordance with the
corresponding work regulations, and fully playing its professional role in the Company's operation and
management. The independent directors of the Company, in strict compliance with the Guidelines on the
Performance of Duties by Independent Directors, performed their responsibilities in a conscientious and
responsible, diligent and honest manner, and put forward valuable opinions and suggestions in the process
of reviewing related transactions and internal control norms.
(IV) Supervisors and the Board of Supervisors: The Company's Board of Supervisors strictly complied
with the relevant provisions of the Company Law and the Articles of Association, met the requirements
of laws and rules in terms of number and composition of members, and could, according to the Rules of
Procedure of the Board of Supervisors and other regulations, seriously performed their responsibilities,
and supervised the compliance with laws and regulations of the Company's finance personnel, directors
and members of the senior management in performing their responsibilities and expressed relevant
opinions.
(V) Performance evaluation and incentive and restraint mechanisms: The Company established fair and
transparent performance evaluation standards and incentive and restraint mechanism for members of the
50 / 285
2023 Annual Report
senior management; the members of the senior management of the Company were appointed in an open
and transparent manner and in compliance with the provisions of relevant laws and regulations.
(VI) Information disclosure and transparency: The Company truthfully, accurately, completely and timely
disclosed relevant information through Shanghai Securities News, China Securities Journal, Securities
Times, and the website of Shanghai Stock Exchange, in strict accordance with relevant laws and
regulations and the requirements of the Information Disclosure Management Regulations formulated by
the Company, and did a good job in confidentiality before information disclosure, and earnestly fulfilled
the obligation of information disclosure as a listed company, to ensure the openness, fairness and
impartiality of information disclosure by the Company and actively safeguard the legitimate rights and
interests of the Company and its investors, especially minority shareholders. During the reporting period,
the Company was not criticized, condemned or punished by regulatory agencies for information disclosure
violations.
(VII) Investor relations and related stakeholders: The Company, in accordance with the relevant
requirements of the Self-disciplinary Rules Listed Companies No. 3 - Cash Dividends of Listed
Companies by China Securities Regulatory Commission and the Guidelines for the Self-supervision of
Listed Companies No. 1 - Standardized Operation of Shanghai Stock Exchange, firmly established the
awareness of rewarding shareholders, improved the cash dividend regulations, maintained the consistency,
rationality and stability of the cash dividend policy, and ensured the authenticity of cash dividend
information disclosure. The Company actively received all kinds of investors, and set up an investor
relations section on the Company's website, which further strengthened investors' understanding and
recognition of the Company, promoted the benign interaction between the Company and investors, and
was conducive to effectively protecting the interests of investors. The Company could fully respect and
safeguard the legitimate rights and interests of its employees, suppliers, customers, banks and other
stakeholders, and achieved mutual benefits in economic exchanges to promote the sustainable and healthy
development of the Company.
(VIII) Establishment and improvement of the internal control system: The Company continuously
improved the internal control system and strengthened the execution and implementation of internal
control norms in strict accordance with the regulatory requirements, and performed the self-inspection and
self-evaluation over the effectiveness of internal control of the Company's key business processes and key
control links on the basis of strengthening daily supervision and special inspections.
(IX) Registration and management of insiders: The Company strictly implemented the Administrative
Regulations for Registration of Information Insiders in accordance with the requirements of regulatory
agencies.
Whether there are significant differences between the Company’s corporate governance and laws,
administrative regulations and the requirements of China Securities Regulatory Commission on corporate
governance of listed companies; if there are significant differences, the reasons shall be explained
□Applicable √Not Applicable
II. Specific measures taken by the Company's controlling shareholder and actual controller to
ensure the independence of the Company's assets, personnel, finance, organization, and business,
and solutions, work progress and subsequent work plans adopted by them to affect the
Company's independence
√Applicable □ Not Applicable
For details, see the "Commitment to Guarantee the Independence of the Listed Company" in "Section VI
Major Events".
Situation that the Company's controlling shareholder, actual controller, and other units under their
control are engaged in the same or similar business as or with the Company, impact of horizontal
competition or major changes in horizontal competition on the Company, settlement measures taken,
settlement progress and subsequent settlement plans
□Applicable √Not Applicable
51 / 285
2023 Annual Report
III. Brief Introduction to general meetings of shareholders
Query index of Disclosure
the designated date when
Meeting website on the
Date Resolution
Session which the resolution
resolution is is
published published
2022 Annual April 24, www.sse.com.cn April 25, 1. Proposal on 2022 Work Report of the
General 2023 (Announcement 2023 Board of Directors
Meeting of No.: 2023-048) 2. Proposal on 2022 Work Report of the
Shareholders Board of Supervisors
3. Proposal on 2022 Financial Final
Report
4. Proposal on the 2022 Annual Report
and its Summary
5. Proposal on Profit Distribution Plan for
2022
6. Proposal on Actual Regular Related
Party Transactions in 2022 and Predicted
Regular Related Party Transactions in
2023
7. Proposal on the Amount of Wealth
Management Products Using Self-owned
Idle Funds Allowed for 2023
8. Proposal on Bank Credit Lines in 2023
9. Proposal on the Amount of Financial
Derivative Transactions
10. Proposal on Guarantee Between
Holding Subsidiaries
11. Proposal on Renewing the Contract
with the Financial Audit Institution
12. Proposal on Renewing the Contract
with the Internal Control Audit Institution
13. Proposal on Purchasing Liability
Insurance for Directors, Supervisors and
Senior Executives
14. Proposal on Procedures for the
Acquisition or Disposal of Assets
15. Proposal on the Remuneration of
Directors of the Sixth Session of the
Board of Directors
16. Proposal on the Remuneration of
Supervisors of the Sixth Session of the
Board of Supervisors
17. Proposal on Election of Non-
independent Directors
18. Proposal on Election of Independent
Directors
19. Proposal on Election of Non-
Employee Supervisors
The First September www.sse.com.cn September 1. Proposal on 2023 Incentive Stock
Extraordinary 15, 2023 (Announcement 16, 2023 Option Plan and its summary
General No.: 2023-084) 2. Proposal on Assessment and
Meeting of Management Measures for the
Shareholders Implementation of 2023 Incentive Stock
in 2023 Option Plan
3. Proposal on Requesting the
52 / 285
2023 Annual Report
Shareholders' Meeting to Authorize the
Board of Directors to Handle Formalities
Related to 2023 Incentive Stock Option
Plan
4. Proposal on 2023 Employee Stock
Ownership Plan and its summary
5. Proposal on Administrative Rules for
2023 Employee Stock Ownership Plan
6. Proposal on Requesting Shareholders'
Meeting to Authorize the Board of
Directors to Handle Formalities Related to
2023 Employee Stock Ownership Plan
7. Proposal on Adjustment, Extension of
Some Raised Fund Projects, and Closure
and Change of Some Raised Fund Projects
Convening of an extraordinary general meeting of shareholder requested by the preferred shareholders
whose voting rights have been restored
□Applicable √Not Applicable
Particulars on general meetings of shareholders
□Applicable √Not Applicable
53 / 285
2023 Annual Report
IV. Directors, supervisors and members of the senior management
(I) Changes in shareholding and remuneration of current directors, supervisors, and senior management and those who left the position during the reporting
period
√Applicable □ Not Applicable
Unit: Share
Whether
Number Total pre-tax
Number received
of shares remuneration
of shares Change in remunera
held at from the
Gen Start of End of held at shareholdi Reasons tion from
Name Position Age the Company during
der tenure tenure the end ng during for change related
beginnin the reporting
of the the year parties of
g of the period (RMB
year the
year 10,000)
Company
Chairman of
Excercise
the Board of 2018-06-28 2026-04-23 189
Jeffrey Chen Male 60 93,200 163,100 69,900 of stock Yes
Directors
options
Director 2016-04-19 2026-04-23 30
Excercise
Director and
Chen-Yen Wei Male 70 2008-06-20 2026-04-23 80,000 140,000 60,000 of stock 653 No
President
options
Dtuang Wang Director Male 65 2018-07-16 2026-04-23 0 0 0 N/A 30 Yes
Rutherford
Director Male 45 2010-03-10 2026-04-23 0 0 0 N/A 30 Yes
Chang
Neng Chao
Director Male 46 2017-04-17 2026-04-23 0 0 0 N/A 30 Yes
Chang
(Gilles Baruk (Former)
Male 70 2021-04-23 2023-04-23 0 0 0 N/A 58 Yes
Benhamou) Director
(Former)
Yiyun Chu Independent Male 60 2017-04-17 2023-04-23 0 0 0 N/A 12 No
director
(Former)
Yunwei Tang Independent Male 80 2017-04-17 2023-04-23 0 0 0 N/A 12 No
director
Michael Chung (Former) Male 62 2020-04-28 2023-04-23 0 0 0 N/A 12 No
54 / 285
2023 Annual Report
Independent
director
Yifan Li Director Male 57 2023-04-24 2026-04-23 0 0 0 N/A 20 No
Independent
Yongtao Cang Male 47 2023-04-24 2026-04-23 0 0 0 N/A 24 No
director
Jiangdong Independent
Male 45 2023-04-24 2026-04-23 0 0 0 N/A 24 No
Huang director
Independent
Wei Guo Male 42 2023-04-24 2026-04-23 0 0 0 N/A 24 No
director
Chairman of
Meng-Kuo
the Board of Male 61 2008-06-19 2026-04-23 0 0 0 N/A 30 Yes
Shih
Supervisors
Andrew Robert (Former)
Male 49 2016-04-19 2023-04-23 0 0 0 N/A 10 Yes
Tang Supervisor
Jye-Shing Lin Supervisor Male 50 2023-04-24 2026-04-23 0 0 0 N/A 20 Yes
Employee
David Huang Male 52 2020-04-28 2026-04-23 0 0 0 N/A 88 No
supervisor
Excercise
Ta-I Lin Vice President Male 61 2011-02-09 2026-04-23 89,900 141,800 51,900 of stock 205 No
options
Excercise
Feng-Ta Chen Vice President Male 62 2008-06-20 2026-04-23 69,200 121,100 51,900 of stock 201 No
options
Yuan-Hsin (Former) Vice
Male 66 2009-12-09 2023-04-23 0 0 0 N/A 26 No
Sheng President
Jing Cao Vice President Male 65 2017-04-27 2026-04-23 0 0 0 N/A 557 No
Chen-Lung
Vice President Male 61 2017-04-27 2026-04-23 0 0 0 N/A 184 No
Wei
(Former) Vice
Jeh-Chang Lee Male 61 2020-04-28 2023-04-23 0 0 0 N/A 28 No
President
Yung-Che (Former) Vice
Male 59 2020-04-28 2023-04-23 0 0 0 N/A 30 No
Fang President
Increase in
Chia-Hsiung (Former) Vice
Male 65 2020-04-28 2023-04-23 40,000 100,000 60,000 holdings 27 No
Yu President
on the
55 / 285
2023 Annual Report
secondary
market
(Former) Vice
Yueh-Ming Lin Male 58 2020-04-28 2023-04-23 47,000 47,000 0 N/A 26 No
President
Vice President
Excercise
and Chief
Tan-Yang Liu Male 59 2008-06-20 2026-04-23 40,000 70,000 30,000 of stock 160 No
Financial
options
Officer
Vice President
Excercise
and Secretary
Jinpeng Shi Male 48 2018-06-28 2026-04-23 52,000 91,000 39,000 of stock 384 No
to the Board
options
of Directors
Total / / / / / 511,300 874,000 362,700 / 3,122 /
Note: The fixed allowances received by the directors (including independent directors) of the Sixth Session of the Board of Directors and the supervisors of the Sixth
Session of the Board of Supervisors of the Company have been considered and approved at the 2022 Annual General Meeting of the Company. Based on the data of
professional surveys on the remuneration of senior executives of companies in the same industry in Chinese mainland, Taiwan and the United States, the remuneration
level of the Company's senior executives is at the 50th to 75th percentile of the remuneration of senior executives of companies in the same industry. In 2023, the
remuneration of Jing Cao, Vice President of the Company, was higher than that of other executives of the same rank, mainly due to the fact that the revenue generated
by the business unit under his leadership accounted for more than 50% of the Company's consolidated revenue for the current year, and the level of profit was in line
with expectation; the remuneration of Chen-Yen Wei, President of the Company, was higher than that of the remuneration level for the rank of Vice President, which
was in compliance with the Company's employee performance evaluation and management system; and Jeffrey Chen, Chairman of the Board of Directors, in addition
to receiving remuneration from the Company, also served as director of ASE Technology Holding and its affiliates and received the remuneration for the directorship,
and his remuneration arrangement was in compliance with the relevant rules of ASE Technology Holding.
Name Work Experience
Mr. Jeffrey Chen, from Taiwan, China, graduated from the University of British Columbia with a master’s degree in business administration. Mr.
Chen previously worked for Citibank Taiwan as the general manager assistant and Bankers Trust Taipei Branch as the deputy general manager.
He joined the predecessor of ASE Technology Holding Co., Ltd. in 1994, serving successively as the assistant to the central staff office, special
Jeffrey Chen assistant to the chairman and chief of staff of the Group, as well as CFO and director of ASE Test Limited, a subsidiary of the Group and a listed
company on NASDAQ. In addition to serving as Chairman of the Board of the Company, he serves as director of ASE Technology Holding Co.,
Ltd., director (representative) and general manager of Shanghai headquarters of Advanced Semiconductor Engineering, Inc. Currently he also
takes a position as an independent director of Mercuries & Associates Holding, LTD.
Chen-Yen Mr. Chen-Yen Wei, from Taiwan, China, holds a bachelor’s degree from National Chiao Tung University. Mr. Wei joined Universal Scientific
Wei Industrial Co., Ltd in 1979, where he served successively as engineering manager, vice president of finished product business group, senior vice
56 / 285
2023 Annual Report
president of communication product business group, senior vice president of corporate service unit, and president of the company. Currently he
serves as director and president of the Company.
Mr. Dtuang Wang, from Taiwan, China, holds a bachelor’s degree in laws from National Taiwan University, a master’s degree in laws from
National Chung Hsing University, and a doctorate in law from National Chengchi University. He was the CEO of ASE Cultural and Education
Foundation, a director of Dinggu Holdings Co., Ltd., a director of Hongjing Construction Co., Ltd., an independent executive director of First
Dtuang Wang
Commercial Bank Co., Ltd., professor and dean of School of Law, Ming Chuan University. Currently he serves as Group Chief Executive and
Corporate Governance Director of ASE Technology Holding Co., Ltd. and a member of the company’s Risk Management Committee, a director
of ASE Semiconductor Manufacturing Co., Ltd., and the honorary professor of Ming Chuan University Law School.
Mr. Rutherford Chang, American, holds a bachelor’s degree in Psychology from Wesleyan University. Mr. Chang served as the special assistant
Rutherford
to the chairman of J&R Holding and the special assistant to the chairman of Advanced Semiconductor Engineering, Inc. In addition to serving as
Chang
director of USI, he also serves as director of Advanced Semiconductor Engineering, Inc.
Mr. Neng Chao Chang, British, with a bachelor’s degree in economics from Williams University, is a former analyst at Morgan Stanley. He
Neng Chao
currently serves as general manager of ASE Global Sales, director of ASE Test Inc., director of USI Inc., and director of Advanced
Chang
Semiconductor Engineering, Inc.
Gilles Baruk
Mr. Gilles Baruk Benhamou, French, born in June, 1953, graduated from cole Polytechnique in Paris with a master’s degree in science. Mr.
Benhamou
Gilles Benhamou has more than three decades’ experience in the electronic components & assembly industry. Currently he serves as the CEO of
(former
Financière AFG S.A.S., the CEO of ASDI Assistance Direction, the CEO of Saphir, a director of Decelect, and the CEO of Retail Evolution.
director)
Mr. Yunwei Tang, Chinese, with a doctorate in accounting from SUFE, is the founder of the Chinese Accounting Professors Association. Mr.
Tang worked for SUFE where he held the following positions including a lecturer, associate professor, assistant to the president, professor, vice
president and president. He previously served as a member of the China Accounting Standards Committee, a member of Chinese Auditing
Yunwei Tang
Standards Board, president of Shanghai Accounting Association, and a member of the Listing Committee for Shanghai Stock Exchange. Mr. Tang
(former
served as a senior researcher of the International Accounting Standards Board from March 1999 to January 2000. He was awarded honorary
independent
membership to the Association of Chartered Certified Accountants, an honorary fellowship of Lingnan University in Hong Kong, and the title of
director)
an outstanding international visiting professor of the American Accounting Association. During the reporting period, in addition to serving as the
independent director of the Company, he also served as an independent director of Ping An Healthcare and Technology Company Limited, China
Jushi Co., Ltd., and Maitrox Enterprise Services Inc. (not listed).
Mr. Yiyun Chu, Chinese, with a doctorate in accounting from Shanghai University of Finance and Economics (SUFE), is a professor and doctoral
advisor of the School of Accounting, SUFE, a researcher at Key Research Institute of Accounting and Finance, SUFE, and member of the First
Yiyun Chu
and Second Session of the Senior Accounting Qualification Review Committee of the National Government Offices Administration, who
(former
concurrently takes the position of a member of the Committee for Accounting Standards for Business Enterprises appointed by the Ministry of
independent
Finance, the director of Accounting Society of China, and executive secretary of Accounting Education Branch, Accounting Society of China
director)
(resigned in December 2023). He also serves as an independent director of Ping An Insurance (Group) Company Of China, Ltd., Bank Of Hebei
Co.,Ltd. (not listed), and an external supervisor of Bank Of China Limited.
Michael Mr. Michael Chung, from Taiwan, China, has a bachelor’s degree in Electrical Engineering from National Tsing Hua University, Taiwan. Mr.
57 / 285
2023 Annual Report
Chung Chung served as the general manager of the business group of Hon Hai Precision Industry Co., Ltd. and the CEO of TPK Holding Co., Ltd. He
(former joined AcSiP in June 2019 as the Chairman of the Board since. He also serves as an independent director of LuxNet Corp., and CEO of Feng Tay
independent Enterprises Co., Ltd.
director)
Mr. Yifan Li, American, holds a bachelor’s degree in World Economy from Fudan University, an MBA degree from the University of Chicago,
master’s degree in Accounting from the University of Texas. Mr. Li is qualified as the United States Certified Public Accountant, Chartered
Global Management Accountant, and member of the American Institute of Certified Public Accountants and the Texas Society of CPAs. He
Yifan Li worked as Executive Vice President and CFO of Zhengxing Wheel Group Co.,Ltd., Vice President and CFO of Sanpower Group Co.,Ltd.,
director, Vice President and CFO of Zhejiang Geely Holding Group Co.,Ltd., founding partner and CFO of Human Horizons. In addition to
serving as a director of USI, he also servces as an independent director of Shanghai Jinqiao Export Processing Zone Development Co., Ltd. Mr.
Li was appointed as a director of the Company in April 2023.
Mr. Yongtao Cang, Chinese, holds a doctorate degree in accounting from Shanghai University of Finance and Economics. Mr. Cang is a non-
practicing member of the Chinese Institute of CPA, and a member of CPA Australia. He worked as lecturer, assistant dean and associate professor
Yongtao of accounting successively at the School of Economics and Finance, Shanghai International Studies University (SISU). Currently he serves as
Cang professor of accounting and deputy dean at the School of Economics and Finance, SISU. Additionally, he served as an independent director of
Zhejiang Founder Motor Co., Ltd (resigned in April 2023) and Zhejiang Qinglian Food Co.,Ltd. Mr. Cang was appointed as an independent
director of the Company in April 2023.
Mr. Jiangdong Huang, Chinese, has a doctorate degree in law from East China University of Political Science and Law and qualifications to
practice law in China. Mr. Huang worked as deputy director, director and deputy researcher of the Second Division of the China Securities
Regulatory Commission (CSRC) Shanghai Office, deputy researcher of the CSRC Legal Affairs Department, deputy researcher of the Review
Jiangdong
Division of the CSRC Shanghai Commissioner Office, director of the Third Division of Investigation of the CSRC Shanghai Commissioner
Huang
Office. He currently serves as partner of Grandall Law Firm, and independent director of Changjiang Pension Insurance Co.,Ltd., Sinopec
Shanghai Petrochemical Company Limited and Fuanda Fund Management Co.,Ltd., and outside director of China Shipping Environment
Technology (Shanghai) Co.,Ltd. Mr. Huang was appointed as an independent director of the Company in April 2023.
Ms.Wei Guo, from Hong Kong, China, holds a doctorate degree in strategic management from the University of Maryland, an MBA degree from
Marshall University, and a bachelor's degree in business from Auckland University of Technology. Ms. Guo used to work as assistant professor of
Wei Guo
strategy at Hong Kong Polytechnic University, and currently serves as associate professor of strategy and entrepreneurship at China Europe
International Business School. Ms. Guo was appointed as an independent director of the Company in April 2023.
Mr. Meng-Kuo Shih, from Taiwan, China, has a master’s degree in management science from Taiwan Jiaotong University. Mr. Shih used to serve
Meng-Kuo as deputy director of finance of TECO Electric & Machinery Co., Ltd., director of finance of TECO OPTRONICS CORPORATION, chief
Shih financial officer and spokesperson of InterServ International Inc., and chief financial officer of Advanced Semiconductor Engineering, Inc. In
addition to the supervisor of USI, he holds the position of director of USI Inc.
Mr. Jye-Shing Lin, from Taiwan, China, holds a master’s degree in engineering from Massachusetts Institute of Technology (MIT) and National
Jye-Shing
Taiwan University. Mr. Lin used to work for Accenture as an consultant and joined Advanced Semiconductor Engineering, Inc. in 2006. He
Lin
currently serves as vice president of Advanced Semiconductor Engineering, Inc. Shanghai headquarters, and supervisor of USI Inc.
58 / 285
2023 Annual Report
Andrew
Mr. Andrew Robert Tang, American, graduated from Yale University. Mr. Tang previously worked for Morgan Stanley, and joined Advanced
Robert Tang
Semiconductor Engineering, Inc. in 2014 where he currently assumes director (representative), Vice Chairman, and deputy CEO, and he also
(former
serves as the chief procurement officer of ASE Technology Holding Co., Ltd.
supervisor)
Mr. David Huang, from Taiwan, China, holds an EMBA degree from Shanghai Jiaotong University. Mr. Huang previously worked for Universal
David Huang
Scientific Industrial Co., Ltd. Currently he serves as the director of USI's Manufacturing Service Division 1.
Mr. Chen-Lung Wei, from Taiwan, China, holds an MBA's degree from Tunghai University. In July 1987, Mr. Wei joined in Universal Scientific
Chen-Lung Industrial Co., Ltd. where he served as the manager of the engineering department, the director of the development unit, the vice president of the
Wei business unit, the senior vice general manager of the business group, and the general manager of the Company. Currently, he serves as the vice
president of the Company.
Mr. Ta-I Lin, from Taiwan, China, has a bachelor's degree in Electrical Engineering from National Cheng Kung University and a master's degree
of EMBA from Peking University. After graduation, Mr. Lin joined in Universal Scientific Industrial Co., Ltd. where he served successively as
Ta-I Lin head of engineering, production, and business divisions, the general manager of information products business group, president of USI
Electronics (Shenzhen) Co., Ltd., and manager of Universal Scientific Industrial Co., Ltd. Taiwan Factory. Currently, he serves as the Vice
President of the Company.
Mr. Feng-Ta Chen, from Taiwan, China, once served as deputy manager of SAMPO CORP., manager of wireless network card operation
management of Universal Scientific Industrial Co., Ltd., associate manager of ERP project management, associate manager of global human
Feng-Ta
resources administration, and general manager of Shanghai Zhangjiang Factory, Jinqiao Factory, and Shengxia Factory of USI. Currently, he
Chen
serves as head of global business and after-sales service, global operations development, North American operations, special application products
and green energy products business group, and vice president of the Company.
Mr. Jing Cao, American, holds a double master's degree in engineering from Arizona State University. Once served as the senior Vice President
Jing Cao of Mindspeed, the vice president of , and the senior Vice President of UTAC Semiconductor Co., Ltd. Currently, serves as vice president of the
Company.
Allen Sheng
(former Mr. Yuan-Hsin Sheng, from Taiwan, China, once served as the general manager of Eagle Test Systems Taiwan, the vice president of ASE Inc.,
senior and the vice president of Universal Scientific Industrial Co., Ltd.
executive)
Mr. Tan-Yang Liu, from Taiwan, China, holds a master's degree from the University of Southampton, UK. Once worked as director of Audit
Department of KPMG, deputy manager of Underwriting Department of Taiwan International Securities Investment Consulting Corp., the deputy
Tan-Yang Liu manager of International Department of UOB Securities Pte Ltd, the deputy manager of International Department of Mega Capital (Asia)
Company Limited, and the vice president of Capital Market Department of Polaris Securities Co., Ltd. Currently, he serves as the vice president
and chief financial officer of the Company.
Mr. Jinpeng Shi, Chinese, holds a bachelor's degree from the School of Economics and Management of Tongji University, and an EMBA degree
Jinpeng Shi from China Europe International Business School. Mr. Shi worked as the project manager of International Business Department of Guotai Junan
Securities, the director of the Shanghai Investment Banking Department of Southwest Securities, and the vice president of Investment Banking
59 / 285
2023 Annual Report
Department, the president of No.3 Business Department and the managing director of China Great Wall Securities. Currently, he serves as vice
president and the secretary to the Board of Directors of the Company.
Yung-Che
Mr. Yung-Che Fang, from Taiwan, China, holds a doctor's degree in Mechanical and Aeronautical Engineering from Case Western Reserve
Fang (former
University. Mr. Fang worked as the executive vice president at SOCLE Technology Corporation, and the vice president at GIGABYTE
senior
Technology Co., Ltd. and First International Computer, Inc.
executive)
Jeh-Chang
Lee (former Mr. Jeh-Chang Lee from Taiwan, China, holds a MBA's degree from University of Maryland. Mr. Lee once worked as the deputy director of
senior Taiwan Semiconductor Manufacturing Co., Ltd.
executive)
Chia-Hsiung
Yu (former
Mr. Chia-Hsiung Yu, from Taiwan, China, holds a MBA's degree from National Chiao Tung University.
senior
executive)
Yueh-Ming
Lin (former Mr. Yueh-Ming Lin, from Taiwan, China, holds a bachelor's degree of Electrical Engineering from Feng Chia University. Mr. Lin Joined in
senior Universal Scientific Industrial Co.，Ltd. In 1995.
executive)
Particulars on other information
□Applicable √Not Applicable
60 / 285
2023 Annual Report
(II) Employment of current directors, supervisors and senior management and those who left the
position during the reporting period
1. Employment in shareholders’ companies
√Applicable □ Not Applicable
Name of Position held in
Start of
person Name of shareholder’s company shareholder’s End of tenure
tenure
employed company
ASE Technology Holding Co., Director
2018-04-30
Ltd. (representative)
Advanced Semiconductor Director
2003-06-19
Engineering, Inc. (representative)
Director
ASE Test Inc. 1998-06-30
(representative)
ASE (Shanghai) Inc. Supervisor 2018-06-19
ASE (Korea) Inc. Supervisor 2021-03-30
Wuxi Tongzhi Microelectronics
Director 2022-05-27
Co.,Ltd.
ASE Test Limited (Singapore) Director 1998-03-31
ASE Test Holdings Ltd. Director 1999-04-12
Omniquest Industrial Ltd. Director 2001-06-01
ASE Assembly & Test
Supervisor 2023-06-05
(Shanghai) Limited
Shanghai Ding Hui Real Estate
Director 2005-04-18
Development Co., Ltd.
Director
ASE Electronics Inc. 2006-03-14
(representative)
Advanced Semiconductor
Director 2008-05-05
Engineering (HK) Limited
Shanghai Ding Wei Real Estate
Director 2010-06-01
Development Co., Ltd.
Shanghai Ding Yu Real Estate
Jeffrey Chen Director 2010-05-12
Development Co., Ltd.
KunShan Ding Hong Real Estate
Director 2012-02-01
Development Co., Ltd.
Shanghai Ding Qi Property
Director 2005-05-11
Management Co., Ltd.
Shanghai Dingfan Business
Director 2016-03-18
Management Co., Ltd
Shanghai DingXu Property
Director 2017-06-19
Management Co., Ltd.
Real Tech Holdings Limited Director 2008-12-04
Chairman of the
Board of
USI Inc. Directors and 2018-06-26
director
(representative)
Huntington Holdings
Director 2012-06-30
International Co., Ltd.
Shanghai Dingxu Property
Director 2016-03-31
Management Co., Ltd. –
Real Tech Holdings Limited Director 2012-06-30
ASE Environmental Protection
Director 2020-09-14
and Sustainability Foundation
ASE Cultural and Educational
Director 2020-06-10
Foundation
61 / 285
2023 Annual Report
ASE Enterprise Service
Supervisor 2023-11-01
(Shanghai) Co., Ltd
Director
USI Inc. 2015-04-01 2025-06-23
(representative)
HUNTINGTON HOLDINGS
Director 2012-06-30
Chen-Yen INTERNATIONAL CO. LTD.
Wei UNITECH HOLDINGS
Director 2012-06-30
INTERNATIONAL CO. LTD.
Real Tech Holdings Limited Director 2012-06-30
USI Enterprise Limited Director 2012-12-28
Chief executive
and corporate
governance
director, member
ASE Technology Holding Co., of the Risk
2018-04-30
Ltd. Management
Committee and
chief risk officer,
chief information
security officer
Director
Advanced Semiconductor (representative)
2018-04-30
Engineering, Inc. and chief
executive
Dtuang Chairman of the
Wang Advanced Semiconductor Board of
2018-07-05
Engineering (China) Ltd. Directors and
General Manager
ASE Assembly & Test Director and
2021-07-29
(Shanghai) Limited President
Sino Horizon Holdings Limited Director 2014-06-18
Hung Ching Development &
Director 2011-07-13
Construction Co., Ltd.
Director and
Hung Chin Hsin Co., Ltd. 2011-08-08
President
Director and
ASE Social Enterprise Co., Ltd. 2022-04-21
President
ASE Environmental Protection Director and
2020-09-14
and Sustainability Foundation CEO
Goodcare Holdings Inc. Director 2023-03-14
ASE Technology Holding Co.,
Director 2018-04-30
Ltd.
Advanced Semiconductor Director
2009-06-26
Engineering, Inc. (representative)
Rutherford Director
ASE Test Inc. 2011-07-27
Chang (representative)
ASE Investment (Kunshan) Director and
2012-05-24
Limited General Manager
Director
USI Inc. 2015-04-01
(representative)
Advanced Semiconductor Director
2018-04-30
Engineering, Inc. (representative)
Neng Chao Director
ASE Test Inc. 2015-08-06
Chang (representative)
Director
USI Inc. 2015-04-01
(representative)
62 / 285
2023 Annual Report
USI Inc. Director 2015-04-01 2025-06-23
HUNTINGTON HOLDINGS
Director 2012-06-30
INTERNATIONAL CO. LTD.
Meng-Kuo UNITECH HOLDINGS
Director 2012-06-30
Shih INTERNATIONAL CO. LTD.
Real Tech Holdings Limited Director 2012-06-30
Universal ABIT Holding Co.,Ltd. Director 2008-12-31
USI Enterprise Limited Director 2012-12-28 2024-06-22
Deputy chairman
of the Board of 2018-04-30
Advanced Semiconductor Directors
Engineering, Inc. Director
2022-12-15
(representative)
Deputy CEO 2023-01-01
Supervisor
ASE Test Inc. 2018-05-30
(representative)
Shanghai Ding Hui Real Estate
Director 2018-08-29
Development Co., Ltd.
Andrew
Shanghai Ding Wei Real Estate
Robert Tang Director 2018-10-31
Development Co., Ltd.
(former
Shanghai Ding Yu Real Estate
supervisor) Director 2018-10-17
Development Co., Ltd.
Supervisor
USI Inc. 2018-06-26
(representative)
ASE Cultural and Educational
Director 2020-06-10
Foundation
ASE Environmental Protection
Director 2020-09-14
and Sustainability Foundation
Chief
ASE Technology Holding Co.,
procurement 2023-09-01
Ltd.
officer
USI Inc. Director 2015-04-01 2025-06-23
Chen-Lung HUNTINGTON HOLDINGS
Director 2012-06-30
Wei INTERNATIONAL CO. LTD.
Universal ABIT Holding Co.,Ltd. Director 2008-12-31
Tan-Yang
USI Enterprise Limited Director 2020-12-30
Liu
Deputy general
Advanced Semiconductor manager of
2016-09-22
Engineering, Inc. Shanghai
Jye-Shing headquarters
Lin Shanghai Ding Wei Real Estate
Vice President 2015-02-01
Development Co., Ltd.
Supervisor
USI Inc. 2018-06-26 2025-06-23
(representative)
Particulars
on
employment
None
in
shareholders’
companies
2. Employment in other companies
√Applicable □ Not Applicable
Name of person Position held in Start of
Name of other companies End of tenure
employed other companies tenure
63 / 285
2023 Annual Report
Mercuries & Associates Independent
Jeffrey Chen 2015-06-24
Holding, LTD director
MUtek Electronics
Director 2022-05-12 2025-05-11
Co.,Ltd., etc
Chen-Yen Wei
Independent
Lelon Electronics Corp. 2022-06-29 2025-06-28
director
Chang Yao Hong-Ying
Social Welfare & Charity Director and CEO 2020-07-25
Foundation
Dtuang Wang Bank of Kaohsiung Co., Independent
2023-05-25
Ltd. director
School of Law of Ming Honorary
2020-08-06
Chuan University, etc. Professor
Saphir, etc. CEO 1995-09
Gilles Baruk Decelect Director 1987-07
Benhamou Retail Evolution CEO 2020-07
(former director) ASDI Assistance
CEO 1994-12
Direction
MUtek Electronics
Supervisor 2022-05-12 2025-05-11
Co.,Ltd., etc
Meng-Kuo Shih
Global Venture Capital
Director 2023-06-12 2026-06-11
Co., Ltd.
Ping An Healthcare and
Independent
Technology Company 2018-05-03
Yunwei Tang director
Limited, etc.
(former
Independent
independent China Jushi Co., Ltd. 2019-05-10 2025-09-07
director
director)
Maitrox Enterprise Independent
2022-06-09
Services Inc. (not listed) director
School of Accounting, Professor 2003-07-03
Shanghai University of
PhD advisor 2003-12-31
Finance and Economics
Yiyun Chu Ping An Insurance
Independent
(former (Group) Company Of 2019-07-17
director
independent China, Ltd.
director) Independent
Bank Of Hebei Co.,Ltd. 2021-08-05
director
External
Bank Of China Limited 2022-06-30
supervisor
Chairman of the
AcSiP 2019-06
Board of Directors
LuxNet Corp. Director 2021-07
Savitech Corp. Director 2019-06 2023-07
Michael Chung
Dasheng Venture Capital
(former Director 2021-08 2023-02
Co., Ltd.
independent
director) FENG TAY
ENTERPRISES CO., Director 2021-07
LTD.
LOROM INDUSTRIAL
CEO 2020-06-01 2023-03-31
CO., LTD
Chief Financial
Human Horizons and Investment 2022-03-17 2023-12-31
Advisor
Yifan Li
Shanghai Jinqiao Export
Independent
Processing Zone 2019-06-25
director
Development Co., Ltd.
64 / 285
2023 Annual Report
School of Economics and Professor of
2021-12-31
Finance, Shanghai accounting
International Studies
Deputy dean 2023-11-19
University
Yongtao Cang
Zhejiang Founder Motor Independent
2019-09-23 2023-04-07
Co., Ltd. director
Zhejiang Qinglian Food Independent
2018-07-19
Co.,Ltd. director
Grandall Law Firm Partner 2019-05-10
, Sinopec Shanghai
Petrochemical Company
Limited and Fuanda Fund
Management Co.,Ltd., Independent
2023-06-28
and outside director of director
China Shipping
Jiangdong Environment Technology
Huang (Shanghai) Co.,Ltd.
Changjiang Pension Independent
2021-09-16
Insurance Co.,Ltd. director
Fuanda Fund Independent
2023-07-25
Management Co.,Ltd. director
China Shipping
Environment Technology Outside director 2023-05-30
(Shanghai) Co.,Ltd.
Associate
China Europe
professor of
Wei Guo International Business 2020-06-01
strategy and
School
entrepreneurship
GJS Capital Co., Ltd. Director 2023-05-28 2026-05-27
Jinpeng Shi Questyle Audio
Director 2022-11-29 2025-11-28
Technology Co.,Ltd
Particulars on
employment in None
other companies
(III) Remuneration of directors, supervisors and members of the senior management
√Applicable □ Not Applicable
The Proposal on the Remuneration of Directors of the Sixth Session
of the Board of Directors was considered and approved at the
Twenty-second Meeting of the Fifth Session of the Board of
Directors and the 2022 Annual General Meeting of Shareholders;
Decision-making procedures the Proposal on the Remuneration of Supervisors of the Sixth
for the remuneration of Session of the Board of Supervisors was considered and approved at
directors, supervisors and the Twentieth Meeting of the Fifth Session of the Board of
members of the senior Supervisors and the 2022 Annual General Meeting of Shareholders;
management the Proposal on the Remuneration of the Senior Management for
2023 was considered and approved at the Fifth Meeting of the
Remuneration Committee of the Sixth Session of the Board of
Directors, and the Tenth Meeting of the Sixth Session of the Board
of Directors.
Whether a director abstained
from voting in discussion of
Yes
his or her own remuneration
issues
Opinion of the Remuneration The Company held the Twenty-second Meeting of the Fifth Session
Committee or the Special of the Board of Directors on March 31, 2023, at which the
65 / 285
2023 Annual Report
Meeting of Independent Independent Directors verified the remuneration of the directors of
Directors on matters relating the Sixth Session of the Board of Directors of the Company, and
to the remuneration of commented that: the remuneration of the directors drawn up by the
directors, supervisors and Board of Directors of the Company was determined after taking into
senior Management account the characteristics of the industry in which the Company is
operating, the scale of operation of the Company, the level of
corporate governance, the backgrounds and professional qualities of
the directors, and in the light of the actual circumstances of the
Company, which is conducive to the enhancement of scientific
decision-making by the Board of Directors of the Company, and
ensures the realization of the Company's development strategy
objectives, and is in line with the interests of investors. We approve
the Proposal on the Remuneration of Directors of the Sixth Session
of the Board of Directors, and agree to submit the proposal to
shareholders' meeting for deliberation.
The Company held the Fifth Meeting of the Remuneration
Committee of the Sixth Session of the Board of Directors on March
29, 2024, and the Remuneration Committee deliberated and
approved the Proposal on the Chairman's Actual Remuneration for
2023 and the Remuneration Plan for 2024 with a view that the
Chairman of the Board of Directors of the Company, Mr. Jeffrey
Chen, in addition to holding the position of director in ASE
Technology Holding and its affiliated companies, works exclusively
for the Company, and the assessment and issuance of his
remuneration for 2023 and his remuneration plan for 2024 are in
compliance with the Company's operation and management and
remuneration assessment systems and would not jeopardize the
interests of the Company and its shareholders.
The Company adopted fixed remuneration for directors and
supervisors taking into account the characteristics of the industry in
which the Company operates, the scale of business operations, the
Determination basis for the level of corporate governance, the backgrounds and professional
remuneration of directors, qualities of the directors and supervisors, as well as the actual
supervisors and members of situation of the Company.
the senior management Remuneration of senior management shall be determined according
to their performance appraisal, combined with the Company's
financial status, profitability and progress of annual business
objectives.
Actual payment of the For details, see Section IV-I (I) Changes in shareholding and
remuneration of directors, remuneration of current directors, supervisors, and senior
supervisors and members of management and those who left the position during the reporting
the senior management period.
Total remuneration actually
received by all directors,
supervisors and members of RMB 31.22 million
the senior management at the
end of the reporting period
(IV) Changes in directors, supervisors and members of the senior management of the Company
√Applicable □ Not Applicable
Name Position Change Reason for change
Gilles Baruk
Director Termination Expiry of tenure
Benhamou
Yunwei Tang Independent director Termination Expiry of tenure
Yiyun Chu Independent director Termination Expiry of tenure
Michael Chung Independent director Termination Expiry of tenure
66 / 285
2023 Annual Report
Approintment by
Yifan Li Director Approintment
shareholders' meeting
Approintment by
Yongtao Cang Independent director Approintment
shareholders' meeting
Approintment by
Jiangdong Huang Independent director Approintment
shareholders' meeting
Approintment by
Wei Guo Independent director Approintment
shareholders' meeting
Andrew Robert Tang Supervisor Termination Expiry of tenure
Approintment by
Jye-Shing Lin Supervisor Approintment
shareholders' meeting
Yuan-Hsin Sheng Vice President Termination Expiry of tenure
Yung-Che Fang Senior Vice President Termination Expiry of tenure
Jeh-Chang Lee Senior Vice President Termination Expiry of tenure
Chia-Hsiung Yu Vice President Termination Expiry of tenure
Yueh-Ming Lin Vice President Termination Expiry of tenure
(V) Particulars on punishments by securities regulatory authorities in the past three years
□Applicable √Not Applicable
(VI) Others
□Applicable √Not Applicable
V. Meetings of the Board of Shareholders held during the reporting period
Meeting Session Date Proposals and Resolutions
The Twenty-first March 17, 1. Proposal on Using Idle Raised Funds of Convertible Bonds for
Meeting of the 2023 Cash Management
Fifth Session of 2. Proposal on the Establishment of a Joint Venture to Purchase
the Board of the Automotive Wireless Business of TE Connectivity
Directors
The Twenty- March 31, 1. Proposal on 2022 Work Report of the Board of Directors
second Meeting of 2023 2. Proposal on 2022 Work Report of the General Manager
the Fifth Session 3. Proposal on 2022 Financial Final Report
of the Board of 4. Proposal on the 2022 Annual Report and its Summary
Directors 5. Proposal on 2022 Annual Internal Control Self-Assessment
Report
6. Proposal on 2022 ESG Report
7. Proposal on the Special Report on the Deposit and Actual
Usage of the Raised Funds in 2022
8. Proposal on Profit Distribution Plan for 2022
9. Proposal on Recognition of Loss of Assets Deductible Against
Taxable Income in 2022
10. Proposal on Actual Regular Related Party Transactions in
2022 and Predicted Regular Related Party Transactions in 2023
11. Proposal on the Amount of Wealth Management Products
Using Self-owned Idle Funds Allowed for 2023
12. Proposal on Bank Credit Lines in 2023
13. Proposal on the Amount of Financial Derivative Transactions
14. Proposal on the Company's Provision of Financial Assistance
to Subsidiaries
15. Proposal on Guarantee Between Holding Subsidiaries
16. Proposal on 2023 Internal Audit Plan
17. Proposal on Renewing the Contract with the Financial Audit
Institution
67 / 285
2023 Annual Report
18. Proposal on Renewing the Contract with the Internal Control
Audit Institution
19. Proposal on the Remuneration of the Company's Senior
Management in 2022
20. Proposal on Purchasing Liability Insurance for Directors,
Supervisors and Senior Executives
21. Proposal on Election of the Sixth Session of the Board of
Directors
22. Proposal on the Remuneration of Directors of the Sixth
Session of the Board of Directors
23. Proposal on Formulating the Rules of the Group Sustainability
Committee
24. Proposal on Procedures for the Acquisition or Disposal of
Assets
25. Proposal on Amending the Rules of Information Disclosure
Management
26. Proposal on Amending the Rules for Shareholding by
Directors, Supervisors and Senior Executives and Related
Changes
27. Proposal on Amending the Control Measures for Financial
Derivatives Trading
28. Proposal on Holding 2022 Annual General Meeting of
Shareholders
The First Meeting April 25, 1. Proposal on Quarterly Report for Q1 2023
of the Sixth 2023 2. Proposal on the Election of the Chairman of the Sixth Board of
Session of the Directors of the Company
Board of Directors 3. Proposal on the Election of Special Committees of the Sixth
Session of the Board of Directors of the Company
4. Proposal on the Appointment of General Manager of the
Company
5. Proposal on the Appointment of the Company's Senior
Management
6. Proposal on Election of the Secretary to the Board of Directors
7. Proposal on Appointing Securities Affairs Representative
8. Proposal on Completion and Termination of 2021 Employee
Stock Ownership Plan
9. Proposal on Adjusting the Exercise Price of 2019 Incentive
Stock Option Plan After Profit Distribution
10. Proposal on Capital Increase to the Company's Wholly-owned
Subsidiary Universal Scientific Industrial De México S.A.De
C.V.
The Second May 19, Proposal on Not Making Downward Adjustment to the
Meeting of the 2023 Conversion Price of USI Convertible Bonds
Sixth Session of
the Board of
Directors
The Third Meeting 31 July 2023 1. Proposal on Environment, Health, Safety (EHS) & Energy
of the Sixth Policy and Biodiversity and No Deforestation Commitment
Session of the 2. Proposal on Amending Rules of Procedure for the
Board of Directors Remuneration Committee of the Board of Directors
The Fourth August 25, 1. Proposal on 2023 Semi-Annual Report and its Summary
Meeting of the 2023 2. Proposal on 2023 Incentive Stock Option Plan and its summary
Sixth Session of 3. Proposal on Assessment and Management Measures for the
the Board of Implementation of 2023 Incentive Stock Option Plan
Directors 4. Proposal on Requesting the General Meeting of Shareholders
to Authorize the Board of Directors to Handle Formalities Related
to 2021 Employee Stock Ownership Plan
68 / 285
2023 Annual Report
5. Proposal on 2023 Employee Stock Ownership Plan and its
summary
6. Proposal on Administrative Rules for 2023 Employee Stock
Ownership Plan
7. Proposal on Requesting Shareholders' Meeting to Authorize the
Board of Directors to Handle Formalities Related to 2023
Employee Stock Ownership Plan
8. Proposal on Providing Financial Assistance to Subsidiaries
9. The Proposal on the Special Report on the Deposit and Actual
Usage of the Raised Funds in the First Half of 2023
10. Proposal on Closure, Adjustment, Extension of Some Raised
Fund Projects, and Change of Usage of Some Raised Fund
Projects
11. Proposal on Holding the First Bondholders' Meeting in 2023
12. Proposal on Holding the First Extraordinary General Meeting
of Shareholders in 2023
The Fifth Meeting September Proposal on Revising 2023 Employee Stock Ownership Plan and
of the Sixth 7, 2023 its summary
Session of the
Board of Directors
The Sixth Meeting October 13, 1. Proposal on Adjustment of Participants and Number of Granted
of the Sixth 2023 Options in the 2023 Incentive Stock Option Plan
Session of the 2. Proposal on Granting Stock Options to Participants of 2023
Board of Directors Incentive Stock Option Plan
3. Proposal on the Third Exercise Period of 2019 Incentive Stock
Option Plan Part II and the Method of Independent Exercise
The Seventh October 24, 1. Proposal on Quarterly Report for Q3 2023
Meeting of the 2023 2. Proposal on the Adjustment of Participants and Cancellation of
Sixth Session of Part of the Options in the 2015 Incentive Stock Option Plan
the Board of 3. Proposal on the Adjustment of Participants and Cancellation of
Directors Part of the Stock Options in the Incentive Stock Option Plan 2019
Part I
4. Proposal on the Second Exercise Period of 2019 Incentive
Stock Option Plan Part I and the Method of Independent Exercise
5. Proposal on Using Idle Raised Funds of Convertible Bonds for
Cash Management
6. Proposal on Amending the Rules for Independent Directors
7. Proposal on Amending the Rules of Procedure for the Audit
Committee of the Board of Directors
8. Proposal on Amending the Rules of Procedure for the Strategy
Committee of the Board of Directors
9. Proposal on Amending Rules of Procedure of Remuneration
Committee of the Board of Directors
10. Proposal on Amending the Rules of Procedure for the
Nomination Committee of the Board of Directors
11. Proposal on Amending Procedures for Loaning of Funds
VI. Performance of functions and duties by directors
(I) Attendance of directors at meetings of the Board of Directors and general meetings of
shareholders
Attendan
Independ
ce at the
Director ent
Attendance at the Board of Directors meetings sharehold
Name director
ers'
or not
meetings
69 / 285
2023 Annual Report
Numb
Absence
er of Numbe Numbe Numb
Number of for two Number
meetin r of r of er of
attendance by consecut of
gs attenda attenda absen
telecommunic ive attendanc
held nce in nce by ce
ation meeting e
this person proxy
s
year
Jeffrey
No 9 9 4 0 0 No 2
Chen
Chen-
No 9 9 4 0 0 No 0
Yen Wei
Rutherfo
No 9 9 4 0 0 No 1
rd Chang
Neng
Chao No 9 9 4 0 0 No 1
Chang
Dtuang
No 9 9 4 0 0 No 1
Wang
Gilles
Baruk
Benham
No 2 2 0 0 0 No 0
ou
(former
director)
Yiyun
Chu
(former
Yes 2 2 0 0 0 No 1
independ
ent
director)
Yunwei
Tang
(former
Yes 2 0 0 2 0 No 0
independ
ent
director)
Michael
Chung
(former
Yes 2 2 0 0 0 No 0
independ
ent
director)
Yifan Li No 7 7 4 0 0 No 1
Yongtao
Yes 7 7 4 0 0 No 1
Cang
Jiangdon
Yes 7 7 4 0 0 No 1
g Huang
Wei Guo Yes 7 6 4 1 0 No 1
Particulars on absence of two consecutive meetings of the Board of Directors
□Applicable √Not Applicable
Number of meetings of the Board of Directors
9
held in 2023
Including: on site meetings 5
Meetings held by telecommunication 4
70 / 285
2023 Annual Report
Number of meetings held both on site and by
0
telecommunication
(II) Objection raised by directors to relevant issues of the Company
□Applicable √Not Applicable
(III) Others
□Applicable √Not Applicable
VII. Special committees under the Board of Directors
√Applicable □ Not Applicable
(I) Members of special committees under the Board of Directors
Type of special committees Name of members of special committees
Audit Committee Yongtao Cang, Jiangdong Huang, Wei Guo, Jeffrey Chen, Yifan Li
Nomination Committee Wei Guo, Jiangdong Huang, Yongtao Cang, Jeffrey Chen, Chen-Yen Wei
Remuneration Committee Jiangdong Huang, Yongtao Cang, Wei Guo, Jeffrey Chen, Chen-Yen Wei
Strategy Committee Jeffrey Chen. Chen-Yen Wei, Neng Chao Chang, Wei Guo
(II) 5 meetings held by the Audit Committee during the reporting period
Other
Important comments and information on
Date Contents
suggestions performance
of duties
March The following proposals were Under the premise of ensuring
17, 2023 deliberated and adopted: that the implementation of the
Proposal on Using Idle Raised Funds raised fund investment
of Convertible Bonds for Cash projects and the safety of the
Management raised funds are not affected,
the Company will use part of
the idle raised funds for cash
management, which can
improve the efficiency of the
None
use of the raised funds, obtain
investment income, improve
the overall performance of the
Company, and seek more
investment returns for the
shareholders of the Company,
which is in line with the
interests of the Company and
all shareholders.
March The following proposals were The Company's financial
31, 2023 deliberated and adopted: report was true, complete and
1. Proposal on Financial Statements accurate, with no related
Communicated
and Audit Report for 2022 cheating, fraud and material
with the
2. Proposal on 2022 Financial Final misstatement, and the
management
Report Company had no significant
on the
3. Proposal on 2022 Annual Internal accounting error adjustments,
Company's
Control Self-Assessment Report no changes in significant
operations and
4. Proposal on the Special Report on accounting policies and
development.
the Deposit and Actual Usage of the estimates, no matters
Raised Funds in 2022 involving important
accounting judgments, and no
71 / 285
2023 Annual Report
5. Proposal on Actual Regular matters resulting other type of
Related Party Transactions in 2022 audit report than standard
and Predicted Regular Related Party unqualified audit report. After
Transactions in 2023 the internal audit work report
6. Proposal on the Amount of Wealth was reviewed, no major
Management Products Using Self- problems were found in the
owned Idle Funds Allowed for 2023 internal audit work.
7. Proposal on Renewing the Contract The Company used the raised
with the Financial Audit Institution funds in accordance with the
8. Proposal on Renewing the Contract provisions and requirements
with the Internal Control Audit of relevant laws, regulations,
Institution and regulatory documents, and
9. Proposal on Internal Audit Work disclosed the relevant
Report for 2022 information of the raised funds
10. Proposal on 2023 Internal Audit in a timely, true, accurate and
Plan complete manner, with no
11. Proposal on 2022 Performance violation of the use and
Report of the Audit Committee management of the raised
funds.
April 25, The following proposals were The Company operates strictly
2023 deliberated and adopted: in accordance with the Communicated
1. Proposal on Quarterly Report for standard financial rules for the with the
Q1 2023 listed companies, and the management
2. Proposal on Work Report on Company's Quarterly Report on the
Internal Control for Q1 2023 for Q1 2023 fully and fairly Company's
reflected the financial operations and
condition and operating results development.
for the reporting period.
August The following proposals were
25, 2023 deliberated and adopted:
1. Proposal on the 2023 Semi-Annual
Report and its Summary
Communicated
2. Proposal on Internal Audit Work
with the
Report for the First Half of 2023
management
3. Proposal on the Special Report on
on the
the Deposit and Actual Usage of the
Company's
Raised Funds in the First Half of
operations and
2023
development.
4. Proposal on Closure, Adjustment,
Extension of Some Raised Fund
Projects, and Change of Usage of
Some Raised Fund Projects
October The following proposals were The Company operates strictly
24, 2023 deliberated and adopted: in accordance with the Communicated
1. Proposal on Quarterly Report for standard financial rules for the with the
Q3 2023 listed companies, and the management
2. Proposal on Internal Audit Work Company's Quarterly Report on the
Report for Q3 2023 for Q3 2023 fully and fairly Company's
reflected the financial operations and
condition and operating results development.
for the reporting period.
(III) 2 meetings held by the Nomination Committee during the reporting period
Other
Important comments and
Date Contents information
suggestions
on
72 / 285
2023 Annual Report
performance
of duties
March The following proposals were The nominated non- None
31, 2023 deliberated and adopted: independent director
Proposal on Nominating Candidates candidates have the
for the Sixth Session of the Board of qualifications and ability to
Directors serve as directors of the
Company, and have not been
found to have any
circumstances prohibiting
them from serving as directors
of the Company as stipulated
by laws and regulations; the
independent director
candidates have the
qualifications and experience
to perform the duties of an
independent director, and have
the independence required for
serving as an independent
director, and have not been
determined by the China
Securities Regulatory
Commission (CSRC) to be
currently market banned. All
the members agreed on the
proposal.
April 25, The following proposals were The senior management None
2023 deliberated and adopted: personnel nominated herein
1. Proposal on the Nomination of the are not in a situation where
General Manager of the Company they are not allowed to be
2. Proposal on the Nomination of nominated as senior
Senior Management of the Company management; they have not
3. Proposal on Nomination of the been punished by the CSRC
Secretary to the Board of Directors and other relevant authorities
or disciplined by the stock
exchange; they have not been
investigated by the judicial
authorities for suspected
crimes or suspected of
violating laws and regulations
or subject to criminal
investigation by the CSRC;
they do not have any
affiliation with the
shareholders who hold more
than 5% of the Company's
shares, actual controllers, and
the Company's other directors,
supervisors and senior
management; they are not the
persons responsible for breach
of trust or the targets of
punishment for breach of trust,
and they are not the persons
subject to execution for breach
of trust; and they do not have
73 / 285
2023 Annual Report
any other material matters
requiring disclosure.
(IV) 5 meetings held by the Remuneration Committee during the reporting period
Other
information
Important comments and
Date Contents on
suggestions
performance
of duties
February The following proposals were Based on the data provided by None
6, 2023 deliberated and adopted: the human resources
Proposal on Confirming the department, a comprehensive
Eligibility of Participants of 2021 assessment was conducted on
Employee Stock Ownership Plan the performance of
participants of the 2021
Employee Stock Ownership
Plan in 2022.
August The following proposals were The 2023 Incentive Stock None
25, 2023 deliberated and adopted: Option Plan is conducive to
1. Proposal on 2023 Incentive Stock attracting and retaining
Option Plan and its summary outstanding talents, fully
2. Proposal on Assessment and mobilizing the enthusiasm of
Management Measures for the the Company's middle
Implementation of 2023 Incentive managers and core technical
Stock Option Plan and business personnel, and
3. Proposal on 2023 Employee Stock effectively combining the
Ownership Plan and its summary interests of shareholders, the
4. Proposal on Administrative Rules Company interests and the
for 2023 Employee Stock Ownership employees of the core team, so
Plan that all parties will pay
attention to the Company's
long-term development.
The 2023 Employee Stock
Ownership Plan can bind the
interests of the operating team
with the Company through
equity incentives, inspire team
morale, enhance growth
momentum, actively promote
the realization of the
Company's operating goals,
and lay a solid foundation for
the Company's sustainable and
healthy development.
September The following proposals were In accordance with laws, None
7, 2023 deliberated and adopted: regulations and relevant rules
Proposal on Revising 2023 Employee and regulations, the
Stock Ownership Plan and its Remuneration Committee
summary fully communicated and
discussed the submitted
proposal and unanimously
agreed.
October The following proposals were The adjustment and granting None
13, 2023 deliberated and adopted: of options are in line with the
1. Proposal on Adjustment of relevant provisions of the
Participants and Number of Granted
74 / 285
2023 Annual Report
Options in the 2023 Incentive Stock Company's 2023 Stock Option
Option Plan Incentive Plan.
2. Proposal on Granting Stock The requirements for the
Options to Participants of 2023 exercise of the third exercise
Incentive Stock Option Plan period of the 2019 Incentive
3. Proposal on the Third Exercise Stock Option Plan Part II have
Period of 2019 Incentive Stock been fulfilled, and the
Option Plan Part II and the Method of implementation of this
Independent Exercise exercise by the Company is in
compliance with the 2019
Stock Option Incentive Plan
and relevant regulations.
October The following proposals were The adjustment and None
24, 2023 deliberated and adopted: cancellation are in line with
1. Proposal on Adjustment of the relevant provisions of the
Participants and Cancellation of Part Company's Incentive Stock
of the Options in the 2015Incentive Option Plan and Appraisal
Stock Option Plan Administrative Measures for
2. Proposal on the adjustment of Implementation of the
participants and cancellation of part Incentive Stock Option Plan.
of the stock options in the 2019 The adjustment and
Incentive Stock Option Plan Part I cancellation are in line with
3. Proposal on the Third Exercise the relevant provisions of the
Period of Incentive Stock Option Plan Company's 2019 Incentive
2019 Part I and the Method of Stock Option Plan and
Independent Exercise Assessment and Management
Measures for the
Implementation of 2019
Incentive Stock Option Plan.
The requirements for the
exercise of the third exercise
period of the 2019 Incentive
Stock Option Plan Part I have
been fulfilled, and the
implementation of this
exercise by the Company is in
compliance with the 2019
Incentive Stock Option Plan
and relevant regulations.
(V) 2 meetings held by the Strategy Committee during the reporting period
Other
information
Important comments and
Date Contents on
suggestions
performance
of duties
March Proposal on the Establishment of a This acquisition will help the None
17, 2023 Joint Venture to Purchase the company deepen the layout of
Automotive Wireless Business of TE Internet of Vehicles products,
Connectivity optimize the customer
structure and increase the
number of customers, and
realize the business layout
extending from modules to
system solutions.
75 / 285
2023 Annual Report
April 25, Proposal on Capital Increase to the The Company's capital None
2023 Company's Wholly-owned Subsidiary increase in the Mexican
Universal Scientific Industrial De factory will be used for the
México S.A.De C.V. construction of the new
factory, which will make
better use of Mexican factory's
geographical advantages and
increase production capacity to
meet the needs of North
American customers, improve
its operational scale and
production efficiency, enhance
its profitability and market
competitiveness, and
consolidate and enhance the
Company's position in the
industry.
(VI) Specific particulars on matters of objection
□Applicable √Not Applicable
VIII. Particulars on risks in the Company identified by the Board of Supervisors
□Applicable √Not Applicable
The Board of Supervisors had no objection to the supervision during the reporting period.
IX. Employees of the parent company and major subsidiaries at the end of the period
(I) Employees
Number of on-the-job employees of the parent
2,011
company
Number of on-the-job employees of the main
20,998
subsidiaries
Total number of on-the-job employees 23,009
Number of retirees of whom the parent company
and major subsidiaries are responsible for the 35
expenses
Breakdown by function
Function Number
Production 14,562
Sales 712
Technical 4,387
Financial 209
Administrative 3,139
Total 23,009
Breakdown by education background
Education background Number
Doctor’s degree 16
Master’s degree 1,646
Bachelor’s degree 6,325
Junior college 2,576
Senior high school and below 12,446
Total 23,009
(II) Remuneration policy
√Applicable □ Not Applicable
76 / 285
2023 Annual Report
According to the needs of the Company's development strategy, combined with industrial characteristics,
talent market supply and demand, employment areas and other factors, the Company applied a market-
following strategy for the remuneration of ordinary position personnel, while gave key position personnel
and outstanding talents competitive remuneration and provided them with equity incentives such as stock
options or employee stock ownership plan.
(III) Training program
√Applicable □ Not Applicable
In order to enhance the effectiveness of organizational learning and create a learning corporate culture,
the Company has set up the "USI University" (USIU), which continuously improves and develops the
professional knowledge, skills and abilities of employees through the USIU online and offline courses, so
as to achieve the strategic goals of the Company. USIU offers internal training courses in different
categories designed systematically and arranged by five colleges, so that employees can take required
courses, join training sessions held by internal lecturers as well as workshops organized by external
professional lecturers. The Company also promotes the Individual Development Program, so as to ensure
the depth and breadth of employees' career development and contribute to the Company's sustainable
development.
(IV) Labor outsourcing
√Applicable □ Not Applicable
Total working hours of labor outsourcing 4,227,429
Total remuneration paid for labor outsourcing 129,807,115
X. Plan for profit distribution or conversion of capital reserve into share capital
(I) Formulation, implementation or adjustment of the cash dividend policy
√Applicable □ Not Applicable
1.Formulation of the cash dividend policy
In order to improve and perfect the Company's scientific, sustainable, stable and active dividend
distribution and monitoring mechanism, and to actively reward investors, the Company has formulated a
clear cash dividend policy and its decision-making and adjustment mechanism in the Articles of
Association in accordance with the Listed Companies Regulatory Guidance No. 3 – Cash Dividends
Distribution of Listed Companies and other relevant policies.
2. Implementation of the cash dividend policy
During the reporting period, the Company formulated the profit distribution plan for 2022 in accordance
with the relevant regulations, the cash expenditure needs of the Company and the relevant provisions of
the Articles of Association andtaking into account the actual operation of the Company as the following:
Regarding its profit distribution plan for 2022, USI is going to distribute a cash dividend of RMB 4.30
(tax included) for every 10 shares on the basis of the total share capital on the record date for implementing
the plan after deducting the number of shares in its special buy-back securities account, without bonus
share or transfer of capital reserve into share capital, and all the remaining undistributed profits shall be
carried forward for distribution in the following years. The total share capital of the Company on the
record date for implementing the plan for 2022 was 2,207,290,610 shares. USI paid out the cash dividends
on the basis of 2,183,573,065 shares, excluding 23,717,545 shares in its special buy-back securities
account. 2022 profit distribution was completed on May 30, 2023.
3. Adjustment of cash dividend policy
During the reporting period, the Company did not adjust its cash dividend policy.
(II) Special description of the cash dividend policy
√Applicable □ Not Applicable
Whether in compliance with provisions of the Articles of Association or
√Yes □ No
requirements of the resolution of the general meeting of shareholders
77 / 285
2023 Annual Report
Whether the dividend standard and ratio are definite and clear √Yes □ No
Whether the related procedures and mechanisms for decision-making are
√Yes □ No
complete
Whether independent directors performed their duties responsibly and played
√Yes □ No
their due roles
Whether minority shareholders were given the opportunity to fully express
their opinions and demands, and whether their legitimate rights and interests √Yes □ No
were fully protected
(III) If the profits of the Company and the parent company's profits distributable to shareholders
are positive during the reporting period, but there is no profit distribution plan, the Company
shall disclose the reasons, the usage and the utilization plan of the undistributed profits in detail
□Applicable √Not Applicable
(IV) Plan of profit distribution and conversion of capital reserve into share capital in the reporting
period
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
Number of bonus shares distributed for every 10
0
shares held
Dividend for every 10 shares held (RMB yuan)
2.70
(tax included)
Number of shares transferred from capital
0
reserve for every 10 shares held
Amount of cash dividend (tax included) 590,481,938.88
Net profits attributable to common shareholders
1,947,846,866.12
of the listed company in 2023
Proportion of cash dividend to net profits
attributable to common shareholders of the listed 30.31
company (%)
Amount of share repurchase included in the cash
0
dividend distribution
Total amount of dividend (tax included) 590,481,938.88
Proportion of total dividend distributed to net
profits attributable to common shareholders of 30.31
the listed company (%)
XI. Equity incentive plan, employee stock ownership plan or other employee incentive measures of
the Company and their impacts
(I) Incentive matters disclosed in temporary announcements and without further progress or
change in subsequent implementation
√Applicable □ Not Applicable
Overview Index
The non-trade transfer of shares for Core Employee Stock Ownership For details, see the
Plan Phase III: announcement (No.: 2023-
1,715,250 shares held in the Company's special buy-back securities 019) disclosed by the
account (B882423910) were transferred to the Company's Core Company on the website of
Employee Stock Ownership Plan Phase III securities account in the Shanghai Stock Exchange
form of non-trading transfer, at a price of RMB 12.405 per share (the (www.sse.com.cn) on March
total transaction consideration was RMB 21,277,676.25) 7, 2023
Option exercise in Q1 2023: For details, see the
The 2015 Incentive Stock Option Plan: In Q1 2023, a total of 47,767 announcement (No.: 2023-
shares were exercised and registered for transfer; by the end of Q1 041) disclosed by the
2023, a total of 8,602,087 shares were exercised and registered, Company on the website of
78 / 285
2023 Annual Report
accounting for 41.89% of the total number of exercisable stock Shanghai Stock Exchange
options. (www.sse.com.cn) on April
The 2019 Incentive Stock Option Plan Part I: In Q1 2023, a total of 4, 2023
233,250 shares were exercised and registered for transfer; by the end
of Q1 2023, a total of 5,972,805 shares were exercised and registered
for transfer, accounting for 44.45% of the total number of exercisable
stock options.
The 2019 Incentive Stock Option Plan Part II: By the end of Q1
2023, no option was exercised yet.
For details, see the
announcement (No.: 2023-
Termination of the 2021 Employee Stock Ownership Plan:
051) disclosed by the
The First Meeting of the Sixth Session of the Board of Directors held
Company on the website of
on April 25, 2023 approved the Proposal on Completion and
Shanghai Stock Exchange
Termination of the 2021 Employee Stock.
(www.sse.com.cn) on April
26, 2023.
Proposal on the Adjustment of the Excercise Price of 2019 Incentive
For details, see the
Stock Option Plan Part I and Part II：
announcement (No.: 2023-
Due to the implementation of the annual dividend distribution, the 052) disclosed by the
exercise price of the 2019 Incentive Stock Option Plan Part I was Company on the website of
adjusted from RMB 12.41 yuan per share to RMB 11.98 yuan per
Shanghai Stock Exchange
share and the exercise price of 2019 Incentive Stock Option Plan Part
(www.sse.com.cn) on April
II was adjusted from RMB 20.89 yuan per share to RMB 20.46 yuan
26, 2023
per share.
Option exercise in Q2 2023:
The 2015 Incentive Stock Option Plan: In Q2 2023, a total of 0
shares were exercised and registered for transfer; by the end of Q2 For details, see the
2023, a total of 8,602,087 shares were exercised accounting for announcement (No.: 2023-
41.89% of the total number of exercisable stock options. 063) disclosed by the
The 2019 Incentive Stock Option Plan Part I: In Q2 2023, a total of Company on the website of
230,800 shares were exercised and registered for transfer; by the end Shanghai Stock Exchange
of Q2 2023, a total of 6,203,605 shares were exercised, accounting (www.sse.com.cn) on July
for 46.16% of the total number of exercisable stock options. 4, 2023
The 2019 Incentive Stock Option Plan Part II: By the end of Q2
2023, no option was exercised yet.
Option exercise in Q3 2023:
The 2015 Incentive Stock Option Plan: In Q3 2023, a total of 16,700
shares were exercised and registered for transfer; by the end of Q3
For details, see the
2023, a total of 8,618,787 shares were exercised, accounting for
announcement (No.: 2023-
41.97% of the total number of exercisable stock options.
091) disclosed by the
The 2019 Incentive Stock Option Plan Part I: In Q3 2023, a total of
Company on the website of
311,030 shares were exercised and registered for transfer; by the end
Shanghai Stock Exchange
of Q3 2023, a total of 6,514,635 shares were exercised and registered
(www.sse.com.cn) on
for transfer, accounting for 48.48% of the total number of exercisable
October 10, 2023
stock options.
The 2019 Incentive Stock Option Plan Part II: By the end of Q3
2023, no option was exercised yet.
For details, see the
announcement (No.: 2023-
The First Extraordinary General Meeting of Shareholders in 2023 084) disclosed by the
considered and approved the 2023 Stock Option Incentive Plan, the Company on the website of
2023 Employee Stock Ownership Plan and related proposals. Shanghai Stock Exchange
(www.sse.com.cn) on
September 16, 2023
Adjustment of Participants and Number of Granted Options in the For details, see the
2023Incentive Stock Option Plan: announcement (No.: 2023-
79 / 285
2023 Annual Report
Among the 421 participants, 23 were no longer eligible due to giving 098) disclosed by the
up (including failure to open securities accounts in a timely manner), Company on the website of
resignation and other reasons. After the adjustment, the number of Shanghai Stock Exchange
participants was adjusted from 421 to 398 and the number of stock (www.sse.com.cn) on
options to be granted was adjusted from 15,232,200 to 14,560,000. October 14, 2023
For details, see the
Granting stock options to participants of the 2023 Incentive Stock announcement (No.: 2023-
Option Plan: 099) disclosed by the
The Company granted 14,560,000 stock options to 398 eligible Company on the website of
participants with October 13, 2023 as the granting date, and Shanghai Stock Exchange
RMB14.54 per share as the exercise price of the stock options. (www.sse.com.cn) on
October 14, 2023.
For details, see the
announcement (No.: 2023-
100) disclosed by the
The third exercise period of the 2019 Incentive Stock Option
Company on the website of
PlanPart II met the requirements for Exercise.
Shanghai Stock Exchange
(www.sse.com.cn) on
October 14, 2023.
For details, see the
announcement (No.: 2023-
101) disclosed by the
The granted options of the 2023 Incentive Stock Option Plan were
Company on the website of
registered.
Shanghai Stock Exchange
(www.sse.com.cn) on
October 14, 2023
Adjustment of participants and cancellation of part of the options in
the 2015 Incentive Stock Option Plan:
As from October 26, 2022 to October 24, 2023, 37 participants
For details, see the
resigned and 13 participants retired, the Company agreed to cancel
announcement (No.: 2023-
219,083,000 stock options granted but not yet exercised by the above
104) disclosed by the
mentioned participants; and the aforementioned 13 retired
Company on the website of
participants whose stock options granted but not yet exercised were
Shanghai Stock Exchange
approved to excercise the options prior to their retirement, therefore
(www.sse.com.cn) on
continue to retain the right to exercise without the need for
October 26, 2023
cancellation. After this adjustment, the number of participants was
adjusted to 917 and the number of stock options granted was adjusted
to 20,317,367,000.
The third exercise period of the 2019 Incentive Stock Option Plan
Part I meeting the requirements for excercise and cancellation of part
of the options 2019 Incentive Stock Option Plan Part I:
As from October 26, 2022 to October 24, 2023, 15 participants
For details, see the
resigned and 10 participants retired, and the number of participants of
announcement (No.: 2023-
the 2019 Incentive Stock Option Plan Part I was adjusted from 448 to
105) disclosed by the
423; 9 incentive recipients failed the performance appraisal in 2022
Company on the website of
and were required to cancel 50% or 100% of the number of stock
Shanghai Stock Exchange
options granted in the third exercise period (50% for 7 participants
(www.sse.com.cn) on
and 100% for 2 participants), therefore, it is proposed to cancel
October 26, 2023
299,550,000 stock options granted but not yet exercised by the
above-mentioned participants, and the number of stock options in
Part I was adjusted from 13,438,255,000 to 13,138,705,000 after this
adjustment.
For details, see the
announcement (No.: 2023-
The trust deed for 2023 Employee Stock Ownership Plan was signed. 108) disclosed by the
Company on the website of
Shanghai Stock Exchange
80 / 285
2023 Annual Report
(www.sse.com.cn) on
October 27, 2023
For details, see the
announcement (No.: 2023-
116) disclosed by the
The non-trade transfer of shares for 2023 Employee Stock Ownership
Company on the website of
Plan was completed.
Shanghai Stock Exchange
(www.sse.com.cn) on
November 25, 2023
(II) Incentive matters not disclosed in temporary announcements or with further progress
Equity incentive
□Applicable √Not Applicable
Other explanations
□Applicable √Not Applicable
Employee stock ownership plan
√Applicable □ Not Applicable
The Core Employee Stock Ownership Plan Phase I held a total of 102,600 shares on December 31, 2023,
the same number as on December 31, 2022; Core Employee Stock Ownership Plan Phase II held a total
of 1,271,500 shares on December 31, 2022, and 590,150 shares on December 31, 2023 with 680,900
shares sold during the year 2023.
Other incentive measures
□Applicable √Not Applicable
(III) Equity incentives granted to directors and members of the senior management during the
reporting period
□Applicable √Not Applicable
(IV) Establishment and implementation of appraisal mechanism and the incentive mechanism for
senior management during the reporting period
√Applicable □ Not Applicable
The Company had an appraisal and incentive mechanism. The Remuneration Committee evaluated
directors, supervisors and members of the senior management and formulated an annual remuneration
plan based on the profit completion and the Company's operational indicators of the year. The plan
comprehensively considered the average annual salary level of related industries and the current situation
of the Company, and linked the annual salary of the Company's operators with the Company's financial
position, profitability and completion of annual business goals, to fully mobilize the enthusiasm of
operators, further improve the work performance appraisal and the survival of the fittest mechanism for
the Company's members of the senior management, and strengthen the restraint of responsibility
objectives.
XII. Construction and implementation of internal control system during the reporting period
√Applicable □ Not Applicable
In accordance with legal and regulatory requirements such as the Company Law, Basic Standards for
Enterprise Internal Control and its supporting guidelines, the Company has established internal control
rules for various businesses and strictly implemented the rules. Besides, the company continues to develop
and improve internal control. In accordance with the newly issued Opinions of the General Office of the
State Council and the Measures for the Administration of Independent Directors of Listed Companies, the
Company has sorted out the conditions of independent directors of the Company and confirmed that the
three independent directors of the Company are in compliance with the requirements of the laws and
81 / 285
2023 Annual Report
regulations. During the reporting period, the Company revised a total of 10 rules, including the Rules for
Independent Directors, the rules for various special committees and the Rules of Information Disclosure,
and instructed its subsidiaries to implement the internal control system, improve the relevant business
processes, and ensure the effectiveness of the internal control.
The Company maintained effective internal control over all material aspects of financial and non-financial
reporting during the reporting period, as detailed in the 2023 Internal Control Evaluation Report disclosed
on the website of the Shanghai Stock Exchange (www.sse.com.cn) at the same time as this report.
Particulars on major defects in the internal control during the reporting period
□Applicable √Not Applicable
XIII. Management and control on subsidiaries during the reporting period
√Applicable □ Not Applicable
During the reporting period, subject to the requirements of the Company's internal control system, the
Company carried out effective management in terms of operation, organization structure, human resources,
finance, capital, guarantee and information disclosure of its subsidiaries in accordance with the
Administration Regulations for Subsidiaries. In order to strengthen the compliance management of
subsidiaries and enhance management efficiency and convenience, in 2023, the Company developed and
put on line a software platform of corporate governance system, which integrates a series of functions
such as entity management, meeting management, and reporting of major issues, which enhances the
digitalization of the compliance management of subsidiaries. Subsidiaries operated in accordance with the
administration regulations formulated by the Company, and established corresponding decision-making,
execution, monitoring and feedback systems. Their organizational structures were with clear division of
labor and sound and clear functions.
XIV. Particulars on the internal control audit report
√Applicable □ Not Applicable
The internal control audit report is available on the website of the Shanghai Stock Exchange at
www.sse.com.cn.
Whether disclosed the internal control audit report: Yes
Type of internal control audit report opinion: standard unqualified opinion
XV. Rectification of problems identified in self-examination of governance special actions by the
listed company
N/A
XVI. Others
□Applicable √Not Applicable
82 / 285
2023 Annual Report
Section V Environmental and Social Responsibility
I. Environmental information
Whether relevant mechanisms for environmental
Yes
protection are established
Investment in environmental protection during the
4,749.6
reporting period (unit: RMB 10,000 yuan)
(I) Environmental protection information of companies belonging to key pollutant-
discharge units and their main subsidiaries announced by the environmental
protection department
√Applicable □ Not Applicable
The companies included in the key pollutant discharge units during the reporting period are USI (not
including subsidiaries) and wholly-owned subsidiary Asteelflash Suzhou.
1. Pollutant Discharge Information
√Applicable □ Not Applicable
(1) The information of wastewater detection and waste treatment in USI (not including subsidiaries) in
2023 is as follows:
Information on Wastewater Discharge in 2023
Monitoring Entrust Shanghai
Number & position of
DW001 units and Huihuan Environmental
wastewater discharge port
methods Testing Co., Ltd. to test
GB 39731-2020
Electronic Industry
Water Pollutant
It is discharged from
Discharge Standard, Discharge
the pipe and enters the
Discharge standard DB31/199-2018 mode and
urban sewage treatment
“Integrated destination
plant
Wastewater
Discharge
Standard”
Test date
Testing items Standard value
2023/9/27
pH 6-9 6.9
Chemical Oxygen Demand
500 48
(COD) (mg/L)
Anionic Surfactant (mg/L) 20 0.28
Biochemical Oxygen
300 21.7
Demand (BOD5) (mg/L)
Ammonia Nitrogen (NH3-N)
45 9.84
(mg/L)
Total Phosphorus (mg/L) 8 0.82
Total Nitrogen (mg/L) 70 10.85
Suspended Solids (SS)
400 55
(mg/L)
Petroleum (mg/L) 15 0.065
83 / 285
2023 Annual Report
Animal and Vegetable Oils
100 0.38
(mg/L)
Dissolved Solids (mg/L) 2000 326.8
Note / Qualified
Information on Solid (Hazardous) Waste Discharge in 2023
Name Category Code Output Transfer Storage Disposal or
(tons) amount capacity recovery
(tons) (tons)
Handed over to a
PCB dust, board edge, Hazardous
900-045-49 50.939 50.939 0 qualified unit for
PCB with parts waste
processing
Empty barrels, rags,
Handed over to a
filter elements and Hazardous
900-041-49 41.511 41.511 0 qualified unit for
sludge contaminated waste
processing
with chemicals
Handed over to a
Hazardous
Organic resin 900-014-13 38.89 38.89 0 qualified unit for
waste
processing
Handed over to a
Hazardous
Bromopropane 900-404-06 134.138 134.138 0 qualified unit for
waste
processing
Handed over to a
Waste isopropanol Hazardous
900-402-06 22.858 22.858 0 qualified unit for
and other solvents waste
processing
Handed over to a
Hazardous
Waste oil 900-249-08 0.545 0.545 0 qualified unit for
waste
processing
Handed over to a
Hazardous
Waste cutting fluid 900-006-09 0.291 0.291 0 qualified unit for
waste
processing
Handed over to a
Waste activated Hazardous
900-039-49 12.064 12.064 0 qualified unit for
carbon waste
processing
Handed over to a
Hazardous
200L iron drum 900-041-49 0 0 0 qualified unit for
waste
processing
Handed over to a
Waste fluorescent Hazardous
900-023-29 0.044 0.044 0 qualified unit for
tubes waste
processing
Handed over to a
Hazardous
Lead accumulator 900-052-31 1 1 0 qualified unit for
waste
processing
Handed over to a
Lead–tin paste and tin Hazardous
900-025-31 1.964 1.964 0 qualified unit for
slag waste
processing
Handed over to a
Hazardous
Laboratory waste 900-047-49 0.187 0.187 0 qualified unit for
waste
processing
Handed over to a
Hazardous
Potassium dichromate 900-999-49 0.00049 0.00049 0 qualified unit for
waste
processing
Information on Industrial Exhaust Emission in 2023
84 / 285
2023 Annual Report
Test result Remarks:
Standard
Sampling Particulate matter Voc
dry flue
point Emission Emission Emission Emission Reporting
gas flow
position concentration rate concentration rate Kg/h date: April 23,
rate
Mg/m3 Kg/h Mg/m3 2023
DA001 62800 ND ND 1.68 0.106
DA002 15700 ND ND 1.87 0.0294 Entrusted third
DA003 20900 ND ND 1.56 0.0326 party:
Integrated Emission Shanghai
Standard of Air Huihuan
Pollutants (DB 30 1.5 70 3.0 Environmental
31/933-2015) Testing Co.,
Ltd. to test
(2) Information on wastewater detection and waste treatment of Asteelflash Suzhou in 2023 is as
follows:
Information on Wastewater Discharge in 2023
Suzhou Youlian
Coordinates: Monitoring Checking &
Number & position of wastewater
X=53452.745 units and Measuring
discharge port
Y=31496.402 methods Technology
Service Co., Ltd.
It is discharged
Wastewater quality standards Discharge from the pipe and
Discharge standard for discharge to municipal mode and enters the urban
sewers GB/T31962-2015 destination sewage treatment
plant
Test date
Testing items Standard value
2023/09/07 2023/12/7
PH 6.5-9.5 7.3 8.6
Suspended Solids (SS) (mg/L) ≤400 23 56
Chemical Oxygen Demand (COD)
≤500 128 316
(mg/L)
Biochemical Oxygen Demand
≤350 67.7 142
(BOD5) (mg/L)
Ammonia Nitrogen (NH3-N) (mg/L) ≤45 23.4 36.9
Total Nitrogen (mg/L) ≤70 29.0 39.0
Total Phosphorus (mg/L) ≤8 2.93 4.98
Animal and Vegetable Oils (mg/L) ≤100 0.06L 0.66
Note / Qualified Qualified
Information on Solid (Hazardous) Waste Discharge in 2023
Transfer Storage
Output
Name Category Code amount capacity Disposal or recovery
(tons)
(tons) (tons)
Empty barrels for Hazardous Handed over to a qualified
900-041-49 34.6725 34.6725 0
chemicals waste unit for processing
Wipes containing Hazardous Handed over to a qualified
900-041-49 14.603 14.603 0
chemicals waste unit for processing
Waste soldering Hazardous Handed over to a qualified
900-402-06 4.095 4.095 0
flux waste unit for processing
85 / 285
2023 Annual Report
Waste activated Hazardous Handed over to a qualified
900-039-49 0.131 0.131 0
carbon waste unit for processing
Waste cleaning Hazardous Handed over to a qualified
900-402-06 3.962 3.962 0
agent waste unit for processing
Waste circuit Hazardous Handed over to a qualified
900-045-49 49.3105 49.3105 0
board scraps waste unit for processing
Hazardous Handed over to a qualified
Scruff with lead 900-000-31 4.776 4.776 0
waste unit for processing
Hazardous Handed over to a qualified
Dust 900-451-13 0.6985 0.6985 0
waste unit for processing
2. Construction and operation of pollution prevention and treatment facilities
√Applicable □ Not Applicable
(1) USI (not including subsidiaries)
Construction status: In 2023, the waste gas treatment facilities and wastewater treatment facilities are in
good operation, and consumables such as activated carbon and filter cotton are replaced regularly. The
outsourced monitoring results show that the wastewater and waste gas emissions meet the standards.
1 discharge port in Building A: Water spray + defogger +activated carbon adsorption + dry dust removal
2 discharge ports in Building B: Activated carbon adsorption + dry dust removal, water spray + defogger
+ activated carbon adsorption + dry dust removal (The two ports have been merged into one in October
2023, and the port started discharges after tests shows that it has reached the standard)
Total emissions: hazardous waste 304.431 tons / VOCs 1.399 tons
Excessive emissions: N/A
Approved total discharge: wastewater CODcr: 11.1341ton/year; ammonia nitrogen: 0.5592ton/year;
exhaust gas particulate matter: 1.795 ton/year ; SO2: 0.013 ton/year; NOx: 1.1098 ton/year; VOCs:
12.1229 ton/year
(2) Asteelflash Suzhou
Construction status: There is no change in pollution source treatment facilities in 2023 compared with that
in 2022.
12 discharge ports in Building 1: Activated carbon adsorption
Operation status: In 2023, the waste gas treatment facilities are in good operation, with regular operation
and maintenance. The outsourced monitoring results of each waste gas outlet show that the waste gas
reaches the standard.
Total emissions: Tin and its compounds 0.007 tons, non-methane total hydrocarbon 0.317 tons, particulate
matter 0.036 tons
Excessive emissions: N/A
Approved total emissions: currently no relevant requirements by Suzhou government
3. Environmental impact assessment (EIA) of construction projects and other environmental protection
administrative licenses
√Applicable □ Not Applicable
(1) USI (not including subsidiaries)
86 / 285
2023 Annual Report
Name of
Production or
administrative Project file name License No. Description
approval unit
license
Pudong New Area
Pollutant Pollutant
Ecological 91310000745611834X001U None
discharge permit discharge permit
Environment Bureau
Display & touch
chip module
Pudong New Area
Environmental technology R&D
Ecological H.P.H.B.X.P.[2022] No. 145 None
Impact Report and
Environment Bureau
industrialization
project
(2) Asteelflash Suzhou
Name of
EIA/Administrative Licensing Authority Licensing Date License File No.
License
Production technical
transformation project
Suzhou Wujiang
with an annual output of
Ecological Environment July 8, 2019 W.H.J [2019] No.180
150 million automatic
Bureau
canned cigarette oil
boxes
Suzhou Wujiang
Pollutant discharge Permit No.:
Ecological Environment July 7, 2022
permit 91320509734422894M001Y
Bureau
Annual output of 7.7
million pieces of Suzhou Ecological
May 6, 2023 S.H.J.N.[2023] 09 No. 0049
automotive electronic Environment Bureau
circuit boards
4. Emergency plan for environmental emergencies
√Applicable □ Not Applicable
Project file name Filing Date Filing Department Record No.
Environmental Emergency Plan of Pudong New Area
Universal Scientific Industrial 2022.11.30 Ecological Environment 02-310115-2022-532-L
(Shanghai) Co., Ltd. Bureau
Environmental Emergency Plan of Wujiang Environment
2016-05-20 SST-WI-FA-009
Asteelflash Suzhou Bureau
5. Environmental self-monitoring scheme
√Applicable □ Not Applicable
The Company entrusts a third-party environmental testing agency to conduct environmental monitoring
work for the Company in strict accordance with the relevant requirements of the Technical Guide for Self-
Monitoring of Pollutant Discharge Units. At the same time, the Company has also formulated a detailed
daily monitoring plan to monitor emission sources of various pollutants regularly and routinely. After
being tested by a third-party environmental testing agency, pollutants in all processes of the Company
meet the discharge standards.
6. The situation of administrative punishment due to environmental problems during the reporting period
□ Applicable √Not Applicable
7. Other environmental information that should be disclosed
√Applicable □ Not Applicable
87 / 285
2023 Annual Report
Participation in environmental
None
pollution liability insurance
Payment of environmental tax Pay environmental tax on time every quarter
Complying with laws and regulations, responding to environmental
Environmental policy and protection, hazard prevention, communication training, pollution
annual environmental prevention, continuous improvement, energy saving and waste
objectives and results reduction, effective utilization, setting goals and sustainable
operation.
Every year, special funds are invested in environmental protection
projects to ensure that environmental protection funds are earmarked.
Environmental protection
The funds are used for annual environmental testing, pollution
investment and environmental
prevention and control, waste reduction and recycling to ensure that
technology development
all environmental emissions meet the requirements of environmental
protection laws and regulations.
A waste management plan has been formulated, in which hazardous
Recycling of waste products wastes are handed over to qualified units for treatment and non-
hazardous wastes are recycled by licensed recycling units.
USI (not including subsidiaries): 204,032 tons of water, 68,034,750
KWH of electricity
Resource consumption in 2023
Asteelflash Suzhou: 122,140 tons of water, 11,748,822 KWH of
electricity
Environmental violations of
None
law in 2023
On March 28, 2023, the Office of Shanghai Pudong New Area Work
Safety Commission organized the creation and evaluation of safety
culture demonstration enterprises in the district, and a total of 23
enterprises in Pudong New Area were included in safety culture
Environmental awards in 2023 demonstration enterprises, including Zhangjiang Factory and Jinqiao
Factory. On June 28, 2023, USI ranked in the Top 1% for its S&P
Global ESG score and the Best Improvement Enterprise in the
industry. On November 1, 2023, USI won the 2023 Advanced
Collective of Fire Safety in Pudong New Area.
(II) Description of environmental protection of companies other than key pollutant-discharging
units
□ Applicable √Not Applicable
(III) Relevant information conducive to protecting ecology, preventing and controlling pollution and
fulfilling environmental responsibilities
√Applicable □ Not Applicable
1. Recycling of electronic waste
USI adheres to the principles of “pollution prevention and continuous improvement” and “energy saving,
waste reduction and effective use” and lists waste reduction and reuse as the Company’s policies which
are implemented by all factories and listed as annual performance indicators. It strengthens the effective
control of wastes through regular data recording, tracking and monitoring of use and output. Among them,
hazardous wastes are handed over to licensed qualified processors for treatment and non-hazardous wastes
are recycled by licensed recyclers or cleared and transported to licensed incineration plants for treatment.
In 2023, the recovery rate of waste reached 95%. USI will continue to implement the waste reduction
policy, reduce the waste from the source, and strive to achieve the goal of sustainable resources.
2. Cleaning technology
USI follows the strategy of green management and ecological design of products, quickly responds to the
latest international environmental protection laws and regulations and environmental protection
88 / 285
2023 Annual Report
instructions of sales areas, and formulates “Specifications of Green Products” to control the hazardous
substances contained in electronic components and products. In product design, USI considers the
potential environmental impact of products according to specifications of green products and Design for
Environment (DfE) operation procedures, and adopts the latest international energy consumption laws and
regulations (Energy Star and ErP) and various environmental indicators (such as utilization of materials,
energy saving and carbon reduction, recyclability,, etc.) to reduce the negative impact of product life cycle
on the environment.
The design and R&D personnel of USI have the ability of designing ecological products, and continuously
introduce the concepts of green products and clean technologies to ensure that the clean technology
products manufactured and sold will meet the requirements of environmental protection laws and
regulations of various countries and meet customer needs, development trends of environmental protection
and internal control standards of the Company.
3. Renewable energy
In order to reduce the energy consumption of buildings and mitigate the impact of climate change, the
Company's Nantou Nankang No. 1 Factory successfully obtained the first EEWH green building
certification in 2020. In addition, the Nantou factory has cooperated with a photovoltaic panel construction
manufacturer to build a photovoltaic power generation system, which has produced a total of 2,753.2
megawatt hours of renewable energy by 2023 since it is officially put into power production since October
2019. In 2023, the Huizhou factory set up a photovoltaic power generation system on the roof of the
factory, with an annual power generation of 551.9 megawatt hours, and the Company’s cumulative total
photovoltaic power generation was 3,305 megawatt hours. In the future, the Company will continue to
strive to promote cleaner production and green buildings, and establish green factories for USI.
(IV) Measures taken to reduce their carbon emissions during the reporting period and their effects
Whether carbon reduction measures
Yes
were taken
Reduction of carbon dioxide equivalent
54,073
emissions (unit: tons)
Types of carbon reduction measures
1. In 2023, USI (not including subsidiaries) used 100%
(such as using clean energy to generate
renewable energy certificates to offset greenhouse gas
electricity, using carbon reduction
emissions from electricity consumption;
technologies in the production process,
2. In 2023, USI (not including subsidiaries) completed
developing and producing new products
various energy-saving schemes.
that help reduce carbon emissions, etc.)
Detailed introductions
√Applicable □ Not Applicable
1. In 2023, USI (not including subsidiaries) used 100% renewable energy certificates to offset greenhouse
gas emissions generated by electricity use, totaling approximately 52,911 tons of CO2;
2. In April 2023, USI (not including subsidiaries) completed the energy-saving project of changing the
drying method of roof exhaust fans, and actual operation verified that it reduced carbon emissions by 142
tons of CO2;
In September 2023, USI (not including subsidiaries) completed the energy-saving project of air
compressor heat recovery for production line cleaning water heating, and actual operation verified that it
reduced carbon emissions by 157 tons of CO2;
In May 2023, USI (not including subsidiaries) completed the energy-saving project of water washing
machine drainage heat recovery, and actual operation verified that it reduced carbon emissions by 552
tons of CO2;
89 / 285
2023 Annual Report
In March 2023, USI (not including subsidiaries) completed the energy-saving project of installing
frequency converters on cooling pumps, and actual operation verified that it reduced carbon emissions by
311 tons of CO2.
II. Work on corporate social responsibility
(I) Whether social responsibility report, sustainability report or ESG report is disclosed separately
√Applicable □ Not Applicable
Since 2013, the Company has issued sustainable development reports annually on the Sustainability
section of USI's website (https://www.usiglobal.com/csr).
(II) Specific situation of corporate social responsibility
√Applicable □ Not Applicable
Donations, public welfare projects Quantity/Content Remark
Total investment (Unit: RMB 10,000 yuan) 800.8
Including funds (Unit: RMB 10,000 yuan) 711.2
Materials (Unit: RMB 10,000 yuan) 89.6
Number of beneficiaries 8,977
Detailed introductions
√Applicable □ Not Applicable
USI has been adhering to the concept of “Realizing IDEAS together”, actively fulfilling corporate social
responsibilities by participating in social welfare, and practicing its commitment of “actively investing in
public welfare activities that promote social well-being, and encouraging employees to participate in social
welfare activities” in its “Sustainability Policy”, hoping to become an excellent example of corporate
citizenship. The Company gathered internal resources and manpower, and invested RMB 8,008,387 yuan
in support of social welfare projects in 2023, and promoted social engagement in the four aspects of
“Education, Contributing to Society, Promoting Arts & Culture, and External Participation” to make a
positive impact on surrounding communities.
In addition to expanding education for poverty alleviation and actively carrying out public welfare actions
such as rural education and rural revitalization, in the fields of education, society, environment and
literature and art, factories of the Company sponsored such projects as "Performances of Same Root and
Same Origin - Cross-Strait Cooperation to Tell the Story of Chinese Peking Opera", “the 4th Cross-Strait
Student Baseball League”, "China Go League", "Book Library of Love", "Million Tree Planting Plan",
"Stream Cleaning Activities", "Campus LED Project" and other artistic performances.
III. Efforts in consolidating the achievements in poverty alleviation and rural revitalization
√Applicable □ Not Applicable
Poverty Alleviation and Rural Revitalization Projects Quantity/Content Remark
Total investment (Unit: RMB 10,000 yuan) 53.1
Including funds (Unit: RMB 10,000 yuan) 40.5
Materials (Unit: RMB 10,000 yuan) 12.6
Number of beneficiaries 2,732
Forms of assistance (such as poverty alleviation by industrial Poverty alleviation
development, poverty alleviation by job creation, poverty by educational
alleviation by educational support, etc.) support
Detailed introductions
√Applicable □ Not Applicable
90 / 285
2023 Annual Report
In order to help eliminate poverty and provide quality education, USI focuses on expanding the
achievements of poverty alleviation through education, actively carries out public welfare actions such as
rural education and rural revitalization to subsidize children in remote areas to obtain better educational
resources, and fully consolidates the achievements of poverty alleviation, to help more students realize
their dreams and achieve harmonious social development. In 2023, USI promoted revitalization activities
such as “Rural Science and Technology Education Program”, “Hope for Pearl”, “Love Library”, “Western
Student Assistance Plan”, “Loving and Grateful Mother's Home of Shanghai Soong Ching Ling
Foundation”, “Rural Revitalization ‘Embracing Autistic Children’ of Kunshan Charity Federation”,
“Lucheng Love Charity” and “Heartfelt Wishes” with a total investment of RMB 531,000 to help 2,732
poor students.
1. Rural Science and Technology Education Program
USI adheres to the concept of science and technology for good, and attaches great importance to education
in poverty-stricken areas. By donating computers and building computer classrooms, USI helped children
in remote areas to obtain better educational resources. The program aimed to narrow the gap between
urban and rural education development by giving educational support to rural students. On the basis of the
previous plan, USI not only upgraded and optimized the educational equipment and infrastructure, but
also focused on cultivating rural teachers and talents with scientific and technological knowledge. The
Company’s efforts extended to two schools in Yunan Province in 2023, and provided a total of 8 schools
with customized and step-by-step technological support for their teachers, by developing video teaching
contents and materials on technology applications and conducting interesting quizzes and computer typing
competitions to reinforce students' learning outcome, and helped teachers to achieve the purpose of
developing students' scientific and technological knowledge, benefiting 2,235 students.
2. Hope for Pearl
The Company's Shenzhen factory and Kunshan factory have actively participated in the "Hope for Pearl"
program, and supported outstanding students from poor families to complete their studies for eight
consecutive years. In 2023, "Charity Sale and Auction" activity was held within the Company to allow
employees to directly support Pearl students, and the employees used their creativity and enthusiasm to
promote a wide range of charity products. In addition to donating RMB 100,000 yuan to Anhui Province
Qianshan Yezhai Middle School , to help 50 impoverished students in the “2021 USI Shuijing Pearl Class”
complete their studies, the funds raised were used to customize school supplies for students to encourage
them to study. Under the escort of love every year, all students of the "2020 USI Shuijing Pearl Class"
were successfully admitted to their favorite undergraduate schools.
3. Love Library
Reading is the basis for accumulating innovative R&D capabilities. In order to implement the concept of
“promoting education”, the Company built a Love Library in Malibao Primary School, Donggan Town,
Malipo County, Yunnan Province, which is a targeted county of rural revitalization in China. During the
construction of the library, the Company invited employees to participate in the activity of “Donating
Books for Children”, bringing better educational resources to 345 children in remote areas. When the
library was completed, USI sent 1,237 books and 20 speakers loaded with 200 audiobooks donated by 42
colleagues and the company to the reading room to enrich the teaching resources of the primary school.
By providing practical assistance, USI intended to narrow the gap between urban and rural education
development, and promote the balanced development of education in the country. The library was built so
that students can gain knowledge and positive energy from books, keep up with the pace of technological
development, and develop in an all-round way like children in cities.
4. Western Student Assistance Plan
As the saying goes, “it takes ten years nurture a tree, but a hundred years to train a man”, investment in
the education brings pains for the moment, gains for the millennia. USI carried out the Western Student
Assistance Plan through China Charity Federation in western rural areas such as Yunnan and Sichuan
Province, invested RMB 48,000 yuan to support 12 college students, guaranteed students' educational
opportunities in the form of subsidies, helped outstanding students in remote villages to further their
education, and escorted their growth to successfully complete their education, so that they can help more
people with the knowledge they learned.
91 / 285
2023 Annual Report
5. Loving and Grateful Mother's Home of Shanghai Soong Ching Ling Foundation
In order to pay more attention to education in rural areas, especially in Sichuan Province and Tibet, the
Company donated RMB 20,000 yuan to the student aid program to provide children with necessary daily
necessities and school supplies to promote the healthy development of school children.
6. “Rural Revitalization ‘Embracing Autistic Children’ of Kunshan Charity Federation, “Lucheng
Love Charity” and “Heartfelt Wishes”
In an unstable environment, vulnerable groups are often the first to be affected. Adhering to the heart of
great love, the Company participated in the "Embracing Autistic Children" and "Lucheng Great Love
Charity" program and donated materials worth a total of RMB 29,000 yuan to care for 60 seriously ill
patients, disabled people, children in need, and groups in special positions and in need, to provide them
with warmth and care. Besides, the Company once again fulfilled the Children's Day "Heartfelt Wishes"
of 30 children in need from remote rural areas.
92 / 285
2023 Annual Report
Section VI Major Events
I. Performance of commitments
(I) Commitments by the Company's actual controllers, shareholders, affiliates, acquirers, the Company and other relevant commitment parties during or
subsisted during the reporting period
√Applicable □ Not Applicable
If not If not
Whether performed performed
Whether there
Party making strictly in a timely in a timely
Commitment Commitment Commitment Commitment is a deadline Commitment
the performed manner, manner,
background Type content time for duration
commitment in a timely describe describe
performance
manner the specific the next
reasons step
USI
Enterprise
Limited and December 12,
Others Note 1 No Long term Yes
actual 2019
controllers of
USI
USI
Enterprise
Settlement of
Commitments Limited and December 12,
horizontal Note 2 No Long term Yes
related to major actual 2019
competition
asset controllers of
restructuring USI
USI
Enterprise
Settlement of
Limited and December 12,
related Note 3 No Long term Yes
actual 2019
transactions
controllers of
USI
Restriction on February 12, December 8,
ASDI Note 4 Yes Yes
sale of shares 2020 2020 to
93 / 285
2023 Annual Report
December 7,
2023
USI
Settlement of
Enterprise
horizontal Note 5 May 3, 2010 No Long term Yes
Limited and
competition
ASE Inc.
Settlement of Actual
horizontal controller of Note 6 May 3, 2010 No Long term Yes
Commitments
competition USI
related to IPO
Others USIE Note 7 June 17, 2010 No Long term Yes
ASE
Others Note 8 June 25, 2010 No Long term Yes
Shanghai
Actual
Others controller of Note 9 June 17, 2010 No Long term Yes
USI
Note 1: Commitment to Guarantee the Independence of the Listed Company:
(1) Guarantee that the listed company's personnel are independent
1) Guarantee that the general manager, vice president and other members of the senior management of the listed company hold full-time positions in the listed company
and receive remuneration from the listed company, and no other administrative positions other than directors and supervisors in the party making the commitment and
its related parties; and that the personnel of the listed company continue maintaining independent;
2) Guarantee that the listed company has an independent and complete labor, personnel and remuneration management system, and that such system is completely
independent of the party making the commitment and its related parties;
3) Guarantee that the directors, supervisors and members of the senior managers of the listed company are elected and perform the corresponding procedures in strict
accordance with the relevant provisions of the Company Law and the articles of association of the listed company, and no directors, supervisors and members of the
senior managers exceed the power or authority of the Board of Directors or the general meeting of the listed company to make personnel appointment and removal
decisions or interfere with personnel appointment and removal decisions.
(2) Guarantee that the listed company's assets are independent
1) Guarantee that the listed company has independent and complete assets, and all of its assets are under the control of the listed company, and are independently
owned and operated by the listed company;
2) Guarantee that the party making the commitment and its related parties did not and will not illegally occupy the funds and assets of the listed company in any way
before and after the completion of this transaction.
94 / 285
2023 Annual Report
(3) Guarantee that the listed company's finance is independent
1) Guarantee that the listed company has an independent financial department and an independent financial accounting system, is equipped with specialized financial
personnel, and establishes an independent and complete financial accounting system. Guarantee that the listed company has a standardized and independent financial
accounting system and a financial management system for branches and subsidiaries;
2) Guarantee that the listed company opens a bank account independently, and does not share a bank account with the party making the commitment and its related
parties;
3) Guarantee that the listed company can make financial decisions independently and there is no interference in the use of funds of the listed company;
4) Guarantee that the financial personnel of the listed company are independent and do not take part-time jobs at or receive remuneration from the party making the
commitment and its related parties;
5) Guarantee that the listed company pays taxes independently in accordance with the law.
(4) Guarantee that the listed company's organization is independent
1) Guarantee that the listed company has a sound corporate governance structure as a joint-stock company and has an independent and complete organizational
structure;
2) Guarantee that the general meeting of shareholders, the Board of Directors, independent directors, the Board of Supervisors, and the general manager of the listed
company exercise their functions and powers independently in accordance with laws, regulations and the articles of association of the listed company.
(5) Guarantee that the listed company's business is independent
1) Guarantee that the listed company has the assets, personnel, qualifications and capabilities to carry out business activities independently, and has the ability to
operate independently and continuously in the market;
2) Guarantee not to interfere in the business activities of the listed company except through the exercise of shareholder rights;
3) Guarantee that the party making the commitment and its related parties do not engage in the same or similar business as or with that of the listed company, and take
effective measures to avoid horizontal competition.
(6) This letter of commitment shall have legal effect upon signature by the party making the commitment. The party making the commitment shall strictly fulfill all
the commitments in this letter of commitment, and if its violation of any of such commitments causes any losses to the listed company, the party making the
commitment shall bear the corresponding legal liabilities.
Note 2: Commitment to avoid horizontal competition
(1) The party making the commitment guarantees that after the completion of this transaction, it shall not directly or indirectly engage in the same or similar business
or projects as or with that in the business scope of the Company, so as to avoid direct or indirect competition with the Company's production and operation.
95 / 285
2023 Annual Report
(2) The controlling shareholder of the Company guarantees that it shall not use its share-controlling relationship with the Company to conduct business activities that
damage or may damage the interests of the Company and its other shareholders; and that it shall not use the information it understands or knows about the Company
to assist third parties to engage in, participate in or invest in a business or project that competes with the Company.
(3) The actual controller guarantees that it shall make efforts to cause the family members in close relation with it not to directly or indirectly engage in, participate in
or invest in any business activities that compete with the production and operation of the Company. The actual controller guarantees that it shall not use its relationship
with the Company to conduct business activities that damage or may damage the interests of the Company and its other shareholders; and that it shall not use the
information it understands or knows about the Company to assist third parties to engage in, participate in or invest in a business or project that competes with the
Company.
(4) In case of any losses caused to the Company due to the violation of the above commitments by the party making the commitment, the party making the commitment
shall be liable for compensation and bear corresponding legal liabilities. The above commitments shall take effect from the date of this letter of commitment, and shall
continue to be effective throughout the period in which the party making the commitment is the controlling shareholder and the actual controller of the Company, and
cannot be changed or revoked.
Note 3: Commitment to reduce and regulate related transactions:
(1) The party making the commitment and the enterprises controlled or influenced by the party making the commitment shall try their best to avoid and reduce related
transactions with the listed company and its subsidiaries.
As far as the commitment of the listed company to reduce and regulate related transactions, the transactions between the listed company and its subsidiaries and
independent third parties through the market shall be conducted by the listed company and its subsidiaries and independent third parties. Other companies controlled
or influenced by the committing party will strictly refrain from lending to the listed company and its subsidiaries, occupying the funds of the listed company and its
subsidiaries, or encroaching on the listed company and its subsidiaries by making advances and repaying debts. Listed company funds;
(2) All transactions required between the party making the commitment and the enterprises controlled or influenced by the party making the commitment and the
listed company and its subsidiaries shall be conducted in strict with the market principal and in a fair and reasonable manner based on the general principles of equality,
mutual benefit and valuable consideration. If there is a government price for the transaction, the government price shall prevail; if not, the market fair price shall
prevail; if there is neither a government price nor a market reference price, the cost price shall be determined according to the cost plus a comparable and reasonable
profit level;
(3) Related transactions between the party making the commitment and the listed company and its subsidiaries shall be subject to necessary legal procedures and
information disclosure obligations in strict accordance with the listed company's articles of association and related transaction management system. The party making
the commitment shall take the initiative to perform the obligation of avoidance according to the law when the listed company's authority deliberates related transactions;
related transactions subject to deliberation by the authority can only be executed after the deliberation and approval by the authority;
(4) The party making the commitment guarantees that it shall not obtain any illegitimate benefits through related transactions or make the listed company and its
subsidiaries undertake any undue obligations. If the listed company or its subsidiaries or other shareholders suffer losses due to the violation of the above commitments
96 / 285
2023 Annual Report
by the party making the commitment, or the listed company or its subsidiaries or other shareholders' interests are misappropriated due to the use of related relationship
by the party making the commitment, the party making the commitment shall be liable for compensation to the losses caused therefrom of the listed company, its
subsidiaries and other shareholders;
(5) The above commitments shall continue to be valid during the period when the party making the commitment and the enterprises controlled or influenced by the
party making the commitment constitute the related parties of the listed company, and cannot be changed or revoked.
Note 4:
The lock-up period for the shares of the Company acquired by ASDI in the share exchange transaction is thirty-six months from the delivery of the new shares.
Note 5:
(1) The commitment person (including other enterprises controlled by the party making the commitment, the same below) currently does not engage in the same or
similar business as or to that of Universal Scientific Industrial (Shanghai) Co., Ltd. ("USI"), which constitute horizontal competition with USI, or other business that
may adversely affect USI. (2) The person making the commitment shall not directly or indirectly engage in or participate in any business or activity that competes
with USI in any way (including but not limited to independent operation, joint venture operation, or owning equity and other interests in another company or enterprise)
inside or outside China, or engage in any business activities that are the same as, similar to or may replace USI's business in any way. (3) If the business opportunity
obtained by the person making the commitment from any third party does or may constitute competition with the business operated by USI, the person making the
commitment shall notify USI immediately and cause the business opportunity to be transferred to USI. (4) Where USI further expands its business scope on the basis
of its existing business, if the Company has already carried out production and operation of suchexpanded business, the person making the commitment agrees that
USI has theright of first refusal to purchase the relevant business under the same commercial conditions; If the Company has not yet produced or operated such
expanded business, it shall not engage in new business that competes with USI. (5) The person making the commitment shall, in future business operations, avoid
operating business that constitutes horizontal competition with USI. If the new business that the person making the commitment intends to carry out may constitute
horizontal competition with USI, the person making the commitment shall obliged to notify USI of the new business. If USI objects to this, the person making the
commitment shall unconditionally give up the development of the new business. If USI believes that the new business is beneficial to its development, the person
making the commitment shall not only unconditionally give up the development of the new business, butalso promote the new business to be carried out by USI. If
USI determines that a certain business the person making the commitment has already conducted is in competition with USI, the person making the commitment shall
transfer the business to a third party or terminate the business on its own in a timely manner after USI raises an objection. If USI makes a transfer request, the person
making the commitment shall unconditionally transfer the above-mentioned business and assets to USI in priority at a fair price assessed by an intermediary with
qualifications for securities business.
Note 6:
97 / 285
2023 Annual Report
(1) Other enterprises excluding USI (including enterprises controlled by USI, the same below) controlled by the person making the commitment currently do not
engage in the same or similar business as or to that of Universal Scientific Industrial (Shanghai) Co., Ltd.("USI"), which constitute horizontal competition with USI,
or other business that may adversely affect USI. 2) The person making the commitment shall not, during the period of being confirmed as the actual controller of USI
according to Chinese laws and regulations, directly or indirectly engage in or participate in any business or activity that competes with USI in any way (including but
not limited to independent operation, joint venture operation, or owning equity and other interests in anothercompany or enterprise) inside or outside China, or engage
in any business activities that are the same as, similar to or may replace USI's business in any way. (3) If the business opportunity obtained by the person making the
commitment from any third party does or may constitute competition with the business operated by USI, the person making the commitment shall notify USI
immediately and cause the business opportunity to be transferred to USI. (4) Where USI further expands its business scope on the basis of its existing business, if
other enterprises controlled by the person making the commitment have already carried out production and operation of such expanded business, the person making
the commitment agrees that USI has the right of first refusal to purchase the relevant business under the same commercial conditions; If other enterprises controlled
by the person making the commitment have not yet produced or operated such expanded business, the person making the commitment shall ensure that the enterprise
under their control does not engage in new business that competes with USI. (5) Other enterprises controlled by the person making the commitment shall, in future
business operations, avoid operating business that constitutes horizontal competition with USI. If the new business that other enterprises controlled by the person
making the commitment intend to carry out may constitute horizontal competition with USI, such other enterprises shall be obliged to notify USI of the new business.
If USI objects to this, such other enterprises shall unconditionally give up the development of the new business. If USI believes that the new business is beneficial to
its development, such other enterprises shall not only unconditionally give up the development of the new business, but also promote the new business to be carried
out by USI. If USI determines that a certain business such other enterprises has already conducted is in competition with USI, such other enterprises controlled by the
person making the commitment shall transfer the business to a third party or terminate the business on its own in a timely manner after USI raises an objection. If USI
makes a transfer request, such other enterprises shall unconditionally transfer the above-mentioned business and assets to USI in priority at a fair price assessed by an
intermediary with qualifications for securities business. (5) Other enterprises controlled by the person making the commitment shall not engage in business or activities
that do or may adversely affect the operation and development of USI in any way. Such way includes but is not limited to: utilizing the social resources and customer
resources of the person making the commitment to hinder or limit the independent development of USI; spreading news or information that is unfavorable to USI in
the society and among customers; using the control position of the person making the commitment to exert influence, resulting in abnormal changes or fluctuations of
USI's management personnel and R&D technicians, which are not conducive to the development of USI.
Note 7:
(1) For the situation that USI currently has or is about to have some patent rights and patent application rights in common with Universal Scientific Industrial Co.,
Ltd., in order to protect the interests of USI and its minority shareholders, the person making the commitment hereby commits that: if Universal Scientific Industrial
Co., Ltd. (including other enterprises controlled by Universal Scientific Industrial Co., Ltd. except USI and enterprises controlled by USI) causes any right infringement
and economic losses to USI and enterprises controlled by USI when exercising its patent application co-ownership and patent co-ownership, the person making the
commitment shall be legally liable for the losses suffered by USI and enterprises controlled by USI and shall also pay full compensation. (2) Before the IPO of USI,
if USI must be jointly and severally liable for damages to the dispatched personnel due to the fact that the labor dispatch unit is in arrears with the dispatched
personnel’s wages, the person making the commitment agrees to compensate USI for the entire economic loss. (3) If USI and its subsidiaries need to pay social
insurance premiums or housing provident fund for employees as required or decided by the competent department, or USI and its subsidiaries are fined or suffer losses
98 / 285
2023 Annual Report
for failure to pay social insurance premiums or housing provident funds for employees in accordance with the law, the person making the commitment shall be willing
to assume such liability without the consideration of USI and its subsidiaries.
Note 8
USI is currently leasing part of the property of ASE (Shanghai) Inc. (hereinafter referred to as the "person making the commitment") for staff dormitory purposes. The
person making the commitment hereby makes the following commitments: If USI cannot continue using the leased property or suffers a claim from a third party due
to the defect of the property right of the person making the commitment to the leased property, the person making the commitment shall bear the corresponding legal
liabilities, and shall also fully compensate USI for any losses, fines and relocation expenses incurred thereby.
Note 9:
The person making the commitment and enterprises controlled by the person making the commitment (except ASE Technology Holding Co., Ltd. and enterprises
controlled by ASE Technology Holding Co., Ltd.) do not own any patents, patent application rights or non-profit patented technology. (2) For the situation that USI
currently has or is about to have some patent rights and patent application rights in common with Universal Scientific Industrial Co., Ltd., in order to protect the
interests of USI and its minority shareholders, the person making the commitment hereby commits that: if Universal Scientific Industrial Co., Ltd. (including other
enterprises controlled by Universal Scientific Industrial Co., Ltd. except USI and enterprises controlled by USI) causes any right infringement and economic losses to
USI and enterprises controlled by USI when exercising its patent application co-ownership and patent co-ownership, the person making the commitment shall be
legally liable for the losses suffered by USI and enterprises controlled by USI and shall also pay full compensation. (3) Before the IPO of USI, if USI must be jointly
and severally liable for damages to the dispatched personnel due to the fact that the labor dispatch unit is in arrears with the dispatched personnel’s wages, the person
making the commitment agrees to compensate USI for the entire economic loss. (4) If USI and its subsidiaries need to pay social insurance premiums or housing
provident fund for employees as required or decided by the competent department, or USI and its subsidiaries are fined or suffer losses for failure to pay social
insurance premiums or housing provident funds for employees in accordance with the law, the person making the commitment shall be willing to assume such liability
without the consideration of USI and its subsidiaries.
99 / 285
2023 Annual Report
(II) Where the Company has profit forecasts on assets or projects, and the reporting period was
within the term of profit forecasts, the Company has to state whether such profit forecasts on
assets or projects are fulfilled and the reasons therefor
□Fulfilled □Unfulfilled √Not Applicable
(III) Execution of the performance commitments and its impact on the goodwill impairment testing
□Applicable √Not Applicable
II. Non-operating misappropriation of funds by controlling shareholders and other related parties
during the reporting period
□Applicable √Not Applicable
III. Illegal guarantees
□Applicable √Not Applicable
IV. Explanation by the Board of Directors of the Company on other type of audit report than
standard unqualified audit report issued by the accounting firm
□Applicable √Not Applicable
V. Analysis by the Company on reasons for and impacts of changes in accounting policies and
accounting estimates or corrections of significant accounting errors
(I) Analysis by the Company on reasons for and impacts of changes in accounting policies and
accounting estimates
□Applicable √Not Applicable
(II) Analysis by the Company on reasons and impacts of the correction of significant accounting
errors
□Applicable √Not Applicable
(III) Communication with the previous accounting firm
□Applicable √Not Applicable
(IV) Approval process and other explanations
√Applicable □ Not Applicable
During the reporting period, the Company made corresponding changes in accounting policies in
accordance with the Notice on Issuance of Interpretation of Enterprise Accounting Standards No. 16 issued
by the Ministry of Finance of the People's Republic of China, which did not require the approval by the
Board of Directors or the General Meeting of Shareholders of the Company. For details, see the
announcement (No.: 2023-107) disclosed by the Company on the website of Shanghai Stock Exchange
(www.sse.com.cn) .
VI. Appointment and dismissal of the accounting firm
Unit: 10,000 Currency: RMB
Current accounting firm
Deloitte Touche Tohmatsu Certified Public
Name of domestic accounting firm
Accountants LLP
Remuneration of domestic accounting firm 440
Number of years of audit services by the
13
domestic accounting firm
Name of CPAs from domestic accounting Yuan Shouqing, and Hu Ke
100 / 285
2023 Annual Report
Number of consecutive years of audit services
13
of CPAs in domestic accounting firms
Name Remuneration
Deloitte Touche Tohmatsu Certified
Internal control audit accounting firm 73.6
Public Accountants LLP
Sponsor Haitong Securities Co., Ltd. 0
Particulars on appointment and dismissal of the accounting firm
√Applicable □ Not Applicable
The Company's 2022annual general meeting of shareholders was held on April 24, 2023, and this
meeting deliberated and approved the appointment of Deloitte Touche Tohmatsu Certified Public
Accountants LLP as the Company's 2023 financial audit agency and internal control audit agency.
Particulars on the change of accounting firm during the auditing period
□Applicable √Not Applicable
Explanation of the decrease of 20% or more (including 20%) in audit fees compared to the previous year
□Applicable √Not Applicable
VII. Risk of suspension of listing
(I) Reasons for the suspension of listing risk warning
□Applicable √Not Applicable
(II) Measures to be taken by the Company
□Applicable √Not Applicable
(III) Circumstances and reasons for termination of listing
□Applicable √Not Applicable
VIII. Matters related to bankruptcy and reorganisation
□Applicable √Not Applicable
IX. Material litigation and arbitration
□Applicable √Not Applicable
X. The listed company, directors, supervisors, senior management, controlling shareholders and
actual controllers suspected of violating laws and regulations, penalized and relevant
rectifications
□Applicable √Not Applicable
XI. Particulars on credibility status of the Company, its controlling shareholders and actual
controllers during the reporting period
√Applicable □ Not Applicable
During the reporting period, the Company's controlling shareholders and actual controllers did not fail to
perform the obligations determined by the effective legal documents of the court, and had no bad faith
situation such as a large amount of debts due and unpaid.
101 / 285
2023 Annual Report
XII. Major related transactions
(I) Related transactions in relation to daily operation
1. Events disclosed in temporary announcements and without further progress or change in
subsequent implementation
√Applicable □ Not Applicable
Overview Index
Announcement on Actual Regular Related Party For details, see the announcement (No.: 2023-
Transactions in 2022 and Predicted Regular 034) on the website of the Shanghai Stock
Related Party Transactions in 2023 Exchange (www.sse.com.cn).
1. Events disclosed in temporary announcements and with further progress or change in subsequent
implementation
□Applicable √Not Applicable
2. Events not disclosed in temporary announcements
□Applicable √Not Applicable
(II) Related transactions as a result of acquisition and disposal of assets or equity
2. Events disclosed in temporary announcements and without further progress or change in
subsequent implementation
□Applicable √Not Applicable
3. Events disclosed in temporary announcements and with further progress or change in subsequent
implementation
□Applicable √Not Applicable
4. Events not disclosed in temporary announcements
□Applicable √Not Applicable
5. Disclosable performance achievements during the reporting period when involved with agreed-
upon performance
□Applicable √Not Applicable
(III) Major related transactions in joint external investment
1. Events disclosed in temporary announcements and without further progress or change in
subsequent implementation
□Applicable √Not Applicable
2. Events disclosed in temporary announcements and with further progress or change in subsequent
implementation
□Applicable √Not Applicable
3. Events not disclosed in temporary announcements
□Applicable √Not Applicable
(IV) Creditor's rights and debts with affiliates
1. Events disclosed in temporary announcements and without further progress or change in
subsequent implementation
□Applicable √Not Applicable
102 / 285
2023 Annual Report
2. Events disclosed in temporary announcements and with further progress or change in subsequent
implementation
3. Events not disclosed in temporary announcements
□Applicable √Not Applicable
(V) Financial business between the Company and the financial company with a related relationship
with the Company, the Company's holding financial company, and the related party
□Applicable √Not Applicable
(VI) Others
□Applicable √Not Applicable
XIII. Material contracts and their performance
(I) Trusteeship, contracting and leasing matters
1. Trusteeship
□Applicable √Not Applicable
2. Contracting
□Applicable √Not Applicable
3. Leasing
□Applicable √Not Applicable
103 / 285
2023 Annual Report
(II) Guarantees
√Applicable □ Not Applicable
Unit: 10,000 Currency: EUR
The Company's external guarantees (excluding guarantees to subsidiaries)
Relationship Guarantee
between the date (date Guarantee Guarantee Counter- Whether
Guaranteed Guarantee Guarantee Guarantee Collateral Whether Whether Related
Guarantor guarantor and of signing expiry overdue guarantee for related
party amount start date type (if any) fulfilled overdue relationship
the listed the date amount situation parties
company agreement)
/ / / / / / / /
Total amount of guarantees during the reporting period (excluding
0
guarantees to subsidiaries)
Total balance of guarantees at the end of the reporting period (A)
0
(excluding guarantees to subsidiaries)
Guarantee of the Company and its subsidiaries to subsidiaries
Total amount of guarantees to subsidiaries during the reporting period 2,100
Total balance of guarantees to subsidiaries at the end of the reporting
2,100
period (B)
Total amount of the Company's guarantees (including guarantees to subsidiaries)
Total amount of guarantees (A+B) 2,100
Proportion of the total amount of guarantees in the Company's net
1.01
assets (%)
Including:
Amount of guarantee provided to shareholders, actual controllers and
0
related parties (C)
Amount of debt guarantee provided directly or indirectly for the
2,100
guaranteed party whose asset-liability ratio exceeds 70% (D)
Amount of the total guarantee exceeding 50% of the net assets (E) 0
Total amount of the above three guarantees (C+D+E) 2,100
Particulars on the situation that unexpired guarantees may bear joint
None
liability for repayment
104 / 285
2023 Annual Report
The above are all guarantees between controlled subsidiaries for the purpose of
satisfying the daily operation needs of the subsidiaries. The objects of the guarantee are
the wholly-ownedx subsidiaries within the scope of its consolidated statement. The
Particulars on guarantees
Company have decision-making power on their operation and have access to their latest
financial and credit status information, therefore can effectively control and prevent
risks.
(III) Entrusting others to manage cash assets
1. Entrusted wealth management
(1) Overall condition of entrusted wealth management
√Applicable □ Not Applicable
Unit: 10,000 Currency: RMB
Type Source of fund Amount incurred Undue balance Overdue uncollected amount
Bank wealth management products Self-owned funds 925,800.00 0 0
Bank wealth management products Raised funds 106,700.00 0 0
Others
□Applicable √Not Applicable
(2) Individual entrusted wealth management
√Applicable □ Not Applicable
Unit: 10,000 Currency: RMB
Overd Future
Restri Legal Impai
Und ue entrust
Type of cted Expecte Actual proced rment
Sourc Type of Annual ue uncoll ed
Trustee Entrusted Amount Start Date End date Direction circu d return gain or ures provis
e Returns Return bala ected invest
Investment mstan (If any) loss condu ion (if
nce amoun ment
ces cted any)
t plan
Xiamen Money Principal
Bank wealth Self-
International market: protected,
managemen 20,000 2023/1/4 2023/3/30 owned No 3.1400% 148.28 148.28 0 0 Yes No
Bank Shanghai cash&dep floating
t products funds
Branch osit rate
China Money Principal
Bank wealth
Construction Raised market: protected,
managemen 10,000 2023/1/6 2023/2/28 No 3.1000% 45.01 45.01 0 0 Yes No
Bank Shanghai funds cash&dep floating
t products
Branch osit rate
105 / 285
2023 Annual Report
China Money Principal
Bank wealth
Construction Raised market: protected,
managemen 24,000 2023/1/6 2023/3/30 No 3.1000% 169.18 169.18 0 0 Yes No
Bank Shanghai funds cash&dep floating
t products
Branch osit rate
Money Principal
Fubon Bank Bank wealth
Raised market: protected,
Shanghai Xuhui managemen 8,800 2023/1/4 2023/3/29 No 3.1500% 63.79 63.79 0 0 Yes No
funds cash&dep floating
Branch t products
osit rate
Xiamen Money Principal
Bank wealth Self-
International market: protected,
managemen 20,000 2023/4/4 2023/5/16 owned No 3.2000% 74.67 74.67 0 0 Yes No
Bank Shanghai cash&dep floating
t products funds
Branch osit rate
Xiamen Money Principal
Bank wealth Self-
International market: protected,
managemen 20,000 2023/4/4 2023/6/29 owned No 3.2000% 152.89 152.89 0 0 Yes No
Bank Shanghai cash&dep floating
t products funds
Branch osit rate
China Money Principal
Bank wealth
Construction Raised market: protected,
managemen 29,000 2023/4/4 2023/6/29 No 3.1000% 211.82 211.82 0 0 Yes No
Bank Shanghai funds cash&dep floating
t products
Branch osit rate
China Money Principal
Bank wealth Self-
Construction market: protected,
managemen 20,000 2023/4/4 2023/6/29 owned No 3.1000% 146.08 146.08 0 0 Yes No
Bank Shanghai cash&dep floating
t products funds
Branch osit rate
Money Principal
Fubon Bank Bank wealth
Raised market: protected,
Shanghai Xuhui managemen 5,400 2023/4/4 2023/6/29 No 3.2000% 40.71 40.71 0 0 Yes No
funds cash&dep floating
Branch t products
osit rate
Money Principal
Fubon Bank Bank wealth Self-
market: protected,
Shanghai Xuhui managemen 30,000 2023/4/4 2023/6/29 owned No 3.2000% 226.19 226.19 0 0 Yes No
cash&dep floating
Branch t products funds
osit rate
Xiamen Money Principal
Bank wealth Self-
International 2023/5/1 market: protected,
managemen 20,000 2023/5/31 owned No 3.3500% 25.28 26.06 0 0 Yes No
Bank Shanghai 7 cash&dep floating
t products funds
Branch osit rate
Xiamen Money Principal
Bank wealth Self-
International market: protected,
managemen 20,000 2023/6/1 2023/6/27 owned No 3.2500% 46.94 46.94 0 0 Yes No
Bank Shanghai cash&dep floating
t products funds
Branch osit rate
106 / 285
2023 Annual Report
China Money Principal
Bank wealth
Construction Raised market: protected,
managemen 29,500 2023/7/3 2023/9/27 No 2.9741% 208.52 206.72 0 0 Yes No
Bank Shanghai funds cash&dep floating
t products
Branch osit rate
China Money Principal
Bank wealth Self-
Construction market: protected,
managemen 40,000 2023/7/3 2023/9/27 owned No 2.9741% 282.74 280.30 0 0 Yes No
Bank Shanghai cash&dep floating
t products funds
Branch osit rate
Xiamen Money Principal
Bank wealth Self-
International market: protected,
managemen 20,000 2023/7/4 2023/9/28 owned No 3.2000% 152.89 152.89 0 0 Yes No
Bank Shanghai cash&dep floating
t products funds
Branch osit rate
China Money Principal
Bank wealth Self-
Construction 2023/10/ market: protected,
managemen 80,000 2023/12/28 owned No 2.5000% 526.03 438.36 0 0 Yes No
Bank Shanghai 9 cash&dep floating
t products funds
Branch osit rate
Xiamen Money Principal
Bank wealth Self-
International market: protected,
managemen 4,600 2023/1/4 2023/3/30 owned No 3.1400% 34.10 34.10 0 0 Yes No
Bank Shanghai cash&dep floating
t products funds
Branch osit rate
Xiamen Money Principal
Bank wealth Self-
International market: protected,
managemen 4,600 2023/4/4 2023/6/29 owned No 3.2000% 35.16 35.16 0 0 Yes No
Bank Shanghai cash&dep floating
t products funds
Branch osit rate
Xiamen Money Principal
Bank wealth Self-
International market: protected,
managemen 4,600 2023/7/4 2023/9/28 owned No 3.2000% 35.16 35.16 0 0 Yes No
Bank Shanghai cash&dep floating
t products funds
Branch osit rate
Xiamen Money Principal
Bank wealth Self-
International 2023/10/ market: protected,
managemen 4,600 2023/10/31 owned No 3.0200% 8.10 8.10 0 0 Yes No
Bank Shanghai 10 cash&dep floating
t products funds
Branch osit rate
Xiamen Money Principal
Bank wealth Self-
International 2023/11/ market: protected,
managemen 4,700 2023/11/30 owned No 3.0200% 10.65 10.65 0 0 Yes No
Bank Shanghai 3 cash&dep floating
t products funds
Branch osit rate
Xiamen Money Principal
Bank wealth Self-
International 2023/12/ market: protected,
managemen 4,700 2023/12/28 owned No 3.0200% 10.65 10.65 0 0 Yes No
Bank Shanghai 1 cash&dep floating
t products funds
Branch osit rate
107 / 285
2023 Annual Report
Money Principal
Fubon Bank Bank wealth Self-
market: protected,
Shanghai Xuhui managemen 20,000 2023/1/4 2023/3/29 owned No 3.1500% 144.99 144.99 0 0 Yes No
cash&dep floating
Branch t products funds
osit rate
Money Principal
Fubon Bank Bank wealth Self-
market: protected,
Shanghai Xuhui managemen 30,000 2023/4/4 2023/6/29 owned No 3.2000% 226.19 226.19 0 0 Yes No
cash&dep floating
Branch t products funds
osit rate
Xiamen Money Principal
Bank wealth Self-
International market: protected,
managemen 30,000 2023/7/4 2023/9/28 owned No 3.2000% 232.92 232.92 0 0 Yes No
Bank Shanghai cash&dep floating
t products funds
Branch osit rate
Xiamen Money Principal
Bank wealth Self-
International 2023/10/ market: protected,
managemen 55,000 2023/12/28 owned No 3.0200% 364.50 364.50 0 0 Yes No
Bank Shanghai 10 cash&dep floating
t products funds
Branch osit rate
Kunshan Rural
Money Principal
Commercial Bank wealth Self-
market: protected,
Bank managemen 5,000 2023/1/4 2023/2/1 owned No 3.2000% 12.27 12.27 0 0 Yes No
cash&dep floating
Development t products funds
osit rate
Zone Branch
Kunshan Rural
Money Principal
Commercial Bank wealth Self-
market: protected,
Bank managemen 5,000 2023/1/4 2023/3/1 owned No 3.3000% 25.32 25.32 0 0 Yes No
cash&dep floating
Development t products funds
osit rate
Zone Branch
Bank of Suzhou Money Principal
Bank wealth Self-
Kunshan market: protected,
managemen 5,000 2023/1/5 2023/3/30 owned No 3.3100% 39.08 39.08 0 0 Yes No
Qiandeng cash&dep floating
t products funds
Branch osit rate
Kunshan Rural
Money Principal
Commercial Bank wealth Self-
2023/1/1 market: protected,
Bank managemen 20,000 2023/3/28 owned No 3.4000% 143.45 143.45 0 0 Yes No
0 cash&dep floating
Development t products funds
osit rate
Zone Branch
Bank of Suzhou Money Principal
Bank wealth Self-
Kunshan 2023/1/1 market: protected,
managemen 5,000 2023/3/30 owned No 3.2500% 32.05 32.05 0 0 Yes No
Qiandeng 9 cash&dep floating
t products funds
Branch osit rate
108 / 285
2023 Annual Report
Bank of Suzhou Money Principal
Bank wealth Self-
Kunshan market: protected,
managemen 5,000 2023/2/6 2023/3/30 owned No 3.1500% 23.63 23.63 0 0 Yes No
Qiandeng cash&dep floating
t products funds
Branch osit rate
Bank of Suzhou Money Principal
Bank wealth Self-
Kunshan market: protected,
managemen 5,000 2023/4/4 2023/6/29 owned No 3.1000% 36.60 36.60 0 0 Yes No
Qiandeng cash&dep floating
t products funds
Branch osit rate
Bank of Suzhou Money Principal
Bank wealth Self-
Kunshan market: protected,
managemen 5,000 2023/4/4 2023/6/29 owned No 3.1000% 36.60 36.60 0 0 Yes No
Qiandeng cash&dep floating
t products funds
Branch osit rate
Bank of Suzhou Money Principal
Bank wealth Self-
Kunshan market: protected,
managemen 5,000 2023/4/4 2023/6/29 owned No 3.1000% 36.60 36.60 0 0 Yes No
Qiandeng cash&dep floating
t products funds
Branch osit rate
Bank of Suzhou Money Principal
Bank wealth Self-
Kunshan market: protected,
managemen 5,000 2023/4/4 2023/6/29 owned No 3.1400% 37.07 37.07 0 0 Yes No
Qiandeng cash&dep floating
t products funds
Branch osit rate
Bank of Suzhou Money Principal
Bank wealth Self-
Kunshan market: protected,
managemen 5,000 2023/4/4 2023/6/29 owned No 3.1400% 37.07 37.07 0 0 Yes No
Qiandeng cash&dep floating
t products funds
Branch osit rate
Kunshan Rural
Money Principal
Commercial Bank wealth Self-
2023/4/2 market: protected,
Bank managemen 10,000 2023/6/29 owned No 3.1000% 52.66 52.66 0 0 Yes No
8 cash&dep floating
Development t products funds
osit rate
Zone Branch
Kunshan Rural
Money Principal
Commercial Bank wealth Self-
market: protected,
Bank managemen 5,000 2023/5/8 2023/6/27 owned No 3.1000% 21.23 21.23 0 0 Yes No
cash&dep floating
Development t products funds
osit rate
Zone Branch
Kunshan Rural
Money Principal
Commercial Bank wealth Self-
market: protected,
Bank managemen 5,000 2023/6/2 2023/6/29 owned No 3.2500% 12.02 12.02 0 0 Yes No
cash&dep floating
Development t products funds
osit rate
Zone Branch
109 / 285
2023 Annual Report
Kunshan Rural
Money Principal
Commercial Bank wealth Self-
market: protected,
Bank managemen 5,000 2023/6/2 2023/6/29 owned No 3.2500% 12.02 12.02 0 0 Yes No
cash&dep floating
Development t products funds
osit rate
Zone Branch
Kunshan Rural
Money Principal
Commercial Bank wealth Self-
market: protected,
Bank managemen 10,000 2023/7/5 2023/9/27 owned No 3.2000% 73.64 73.64 0 0 Yes No
cash&dep floating
Development t products funds
osit rate
Zone Branch
Kunshan Rural
Money Principal
Commercial Bank wealth Self-
market: protected,
Bank managemen 10,000 2023/7/5 2023/9/27 owned No 3.2000% 73.64 73.64 0 0 Yes No
cash&dep floating
Development t products funds
osit rate
Zone Branch
Kunshan Rural
Money Principal
Commercial Bank wealth Self-
market: protected,
Bank managemen 10,000 2023/7/5 2023/9/27 owned No 3.2000% 73.64 73.64 0 0 Yes No
cash&dep floating
Development t products funds
osit rate
Zone Branch
Kunshan Rural
Money Principal
Commercial Bank wealth Self-
market: protected,
Bank managemen 10,000 2023/7/5 2023/9/27 owned No 3.2000% 73.64 73.64 0 0 Yes No
cash&dep floating
Development t products funds
osit rate
Zone Branch
Bank of Suzhou Money Principal
Bank wealth Self-
Kunshan market: protected,
managemen 10,000 2023/7/7 2023/9/26 owned No 3.0600% 68.85 67.15 0 0 Yes No
Qiandeng cash&dep floating
t products funds
Branch osit rate
Bank of Suzhou Money Principal
Bank wealth Self-
Kunshan market: protected,
managemen 10,000 2023/7/7 2023/9/26 owned No 3.0600% 68.85 67.15 0 0 Yes No
Qiandeng cash&dep floating
t products funds
Branch osit rate
Kunshan Rural
Money Principal
Commercial Bank wealth Self-
2023/10/ market: protected,
Bank managemen 10,000 2023/12/26 owned No 3.0000% 63.29 63.29 0 0 Yes No
10 cash&dep floating
Development t products funds
osit rate
Zone Branch
Kunshan Rural Bank wealth Self-
2023/10/ Money Principal
Commercial managemen 10,000 2023/12/26 owned No 3.0000% 63.29 63.29 0 0 Yes No
10 market: protected,
Bank t products funds
110 / 285
2023 Annual Report
Development cash&dep floating
Zone Branch osit rate
Bank of Suzhou Money Principal
Bank wealth Self-
Kunshan 2023/10/ market: protected,
managemen 10,000 2023/12/26 owned No 2.9500% 110.63 61.46 0 0 Yes No
Qiandeng 11 cash&dep floating
t products funds
Branch osit rate
Money Principal
Bank of Ningbo Bank wealth Self-
2023/10/ market: protected,
Kunshan managemen 20,000 2023/12/26 owned No 3.1000% 125.70 125.70 0 0 Yes No
13 cash&dep floating
Branch t products funds
osit rate
Money Principal
Bank of Ningbo Bank wealth Self-
2023/10/ market: protected,
Kunshan managemen 5,000 2023/12/26 owned No 2.8500% 28.89 28.89 0 0 Yes No
13 cash&dep floating
Branch t products funds
osit rate
Money Principal
Bank of Ningbo Bank wealth Self-
2023/10/ market: protected,
Kunshan managemen 5,000 2023/12/26 owned No 2.8500% 24.99 24.99 0 0 Yes No
23 cash&dep floating
Branch t products funds
osit rate
Bank of Money Principal
Bank wealth Self-
Shanghai market: protected,
managemen 10,000 2023/1/5 2023/2/8 owned No 2.8000% 26.08 26.08 0 0 Yes No
Shenzhen cash&dep floating
t products funds
Branch osit rate
Money Principal
Bank wealth Self-
Industrial Bank market: protected,
managemen 10,000 2023/1/4 2023/3/31 owned No 3.2200% 70.21 75.87 0 0 Yes No
Shenzhen Bank cash&dep floating
t products funds
osit rate
Money Principal
Bank wealth Self-
E.SUN Bank market: protected,
managemen 10,000 2023/1/5 2023/3/31 owned No 3.3000% 76.85 76.85 0 0 Yes No
Shenzhen Bank cash&dep floating
t products funds
osit rate
Money Principal
Bank wealth Self-
Industrial Bank market: protected,
managemen 10,000 2023/1/5 2023/3/31 owned No 2.9200% 62.41 68.00 0 0 Yes No
Shenzhen Bank cash&dep floating
t products funds
osit rate
Bank of Money Principal
Bank wealth Self-
Shanghai 2023/1/1 market: protected,
managemen 8,000 2023/2/22 owned No 2.7000% 20.12 20.12 0 0 Yes No
Shenzhen 9 cash&dep floating
t products funds
Branch osit rate
Bank wealth Self-
China Money Principal
managemen 10,000 2023/3/3 2023/3/31 owned No 3.0100% 23.78 23.10 0 0 Yes No
Construction market: protected,
t products funds
111 / 285
2023 Annual Report
Bank South cash&dep floating
Keyuan Branch osit rate
China Money Principal
Bank wealth Self-
Merchants Bank market: protected,
managemen 5,000 2023/3/3 2023/3/30 owned No 2.2500% 10.17 8.32 0 0 Yes No
Daya Bay cash&dep floating
t products funds
Branch osit rate
Bank of Money Principal
Bank wealth Self-
Communication market: protected,
managemen 10,000 2023/3/6 2023/3/30 owned No 2.9500% 19.40 19.40 0 0 Yes No
s Shanghai cash&dep floating
t products funds
Branch osit rate
Money Principal
Bank wealth Self-
E.SUN Bank market: protected,
managemen 10,000 2023/4/4 2023/6/29 owned No 3.3000% 77.75 77.75 0 0 Yes No
Shenzhen Bank cash&dep floating
t products funds
osit rate
Money Principal
Bank wealth Self-
E.SUN Bank market: protected,
managemen 10,000 2023/4/4 2023/6/30 owned No 3.3000% 78.66 78.66 0 0 Yes No
Shenzhen Bank cash&dep floating
t products funds
osit rate
Money Principal
Bank wealth Self-
E.SUN Bank market: protected,
managemen 10,000 2023/4/4 2023/6/30 owned No 3.3000% 78.66 78.66 0 0 Yes No
Shenzhen Bank cash&dep floating
t products funds
osit rate
Money Principal
Bank wealth Self-
Industrial Bank market: protected,
managemen 10,000 2023/4/4 2023/6/29 owned No 2.9600% 64.79 69.74 0 0 Yes No
Shenzhen Bank cash&dep floating
t products funds
osit rate
Bank of
Money Principal
Communication Bank wealth Self-
market: protected,
s Shenzhen managemen 10,000 2023/4/6 2023/6/29 owned No 2.9500% 67.89 67.89 0 0 Yes No
cash&dep floating
Huaqiang t products funds
osit rate
Branch
China
Money Principal
Construction Bank wealth Self-
market: protected,
Bank Shenzhen managemen 10,000 2023/4/7 2023/6/29 owned No 3.1000% 20.38 70.49 0 0 Yes No
cash&dep floating
South Keyuan t products funds
osit rate
Branch
Bank of
Money Principal
Communication Bank wealth Self-
market: protected,
s Shenzhen managemen 10,000 2023/7/5 2023/9/27 owned No 2.9000% 66.74 66.74 0 0 Yes No
cash&dep floating
Huaqiang t products funds
osit rate
Branch
112 / 285
2023 Annual Report
Money Principal
Bank SinoPac Bank wealth Self-
market: protected,
Guangzhou managemen 10,000 2023/7/5 2023/9/27 owned No 3.0500% 70.19 70.19 0 0 Yes No
cash&dep floating
Branch t products funds
osit rate
Money Principal
Bank wealth Self-
E.SUN Bank market: protected,
managemen 10,000 2023/7/4 2023/9/28 owned No 3.3000% 77.75 77.75 0 0 Yes No
Shenzhen Bank cash&dep floating
t products funds
osit rate
Money Principal
Bank wealth Self-
E.SUN Bank market: protected,
managemen 20,000 2023/7/4 2023/9/28 owned No 3.3000% 155.51 155.51 0 0 Yes No
Shenzhen Bank cash&dep floating
t products funds
osit rate
China
Money Principal
Construction Bank wealth Self-
market: protected,
Bank Shenzhen managemen 10,000 2023/7/6 2023/9/27 owned No 2.8909% 68.22 65.74 0 0 Yes No
cash&dep floating
South Keyuan t products funds
osit rate
Branch
Money Principal
Bank SinoPac Bank wealth Self-
2023/10/ market: protected,
Guangzhou managemen 10,000 2023/12/11 owned No 2.6278% 50.92 45.36 0 0 Yes No
9 cash&dep floating
Branch t products funds
osit rate
Money Principal
Bank SinoPac Bank wealth Self-
2023/10/ market: protected,
Guangzhou managemen 15,000 2023/12/29 owned No 3.0500% 101.53 101.53 0 0 Yes No
9 cash&dep floating
Branch t products funds
osit rate
Money Principal
Bank wealth Self-
E.SUN Bank 2023/10/ market: protected,
managemen 20,000 2023/12/29 owned No 3.0000% 131.51 131.51 0 0 Yes No
Shenzhen Bank 10 cash&dep floating
t products funds
osit rate
China
Money Principal
Construction Bank wealth Self-
market: protected,
Bank Shenzhen managemen 20,000 23/10/12 2023/12/12 owned No 2.8125% 100.27 94.01 0 0 Yes No
cash&dep floating
South Keyuan t products funds
osit rate
Branch
Others
□Applicable √Not Applicable
(3) Provision for the impairment of entrusted wealth management
□Applicable √Not Applicable
113 / 285
2023 Annual Report
2. Entrusted loans
(1) Overall condition of entrusted loans
□Applicable √Not Applicable
Others
□Applicable √Not Applicable
(2) Individual entrusted loans
□Applicable √Not Applicable
Others
□Applicable √Not Applicable
(3) Provision for the impairment of entrusted loans
□Applicable √Not Applicable
3. Others
□Applicable √Not Applicable
(IV) Other material contracts
□Applicable √Not Applicable
XIV. Progress of the use of raised funds
√Applicable □ Not Applicable
(I) An overview of the use of raised funds
√Applicable □ Not Applicable
Unit: RMB 10,000 yuan
114 / 285
2023 Annual Report
Total
Net investment Proportion
Total Adjusted
amount of amount of Amount
Time of Total Including amount of amount of Investment
Source of raised from raised investment of raised
receiving amount of over- committed committed progress Investments
raised funds after funds by amount in funds for
funds raised raised investment investment (3)＝ in 2023
funds deducting the end of 2023 (%) changed
raised funds funds from raised from raised (2)/(1)
flotation the (5)＝ purpose
funds funds (1)
costs reporting (4)/(1)
period (2)
Issuance
of March
345,000.00 0 342,957.00 342,957.00 349,719.79 319,210.12 91.28 35,212.00 10.07 36,716.99
convertible 10, 2021
bonds
(II) Details of investment projects with raised funds
√Applicable □ Not Applicable
Unit: RMB 10,000 yuan
Whe
Whet ther
Wh Reaso Inco
her Total the
ethe Total Adjusted Date ns me Expla
invol investme inve
r amount amount when Whe why gener natio
ving Time nt amount Invest stme
use of of the ther invest ated n for
any Sourc of from ment nt Income Surpl
Name Nature d committe committe Investme project the ment or chang
chan e of receiv raised progres prog generated us
of of ove d d nts in reaches proje progr R&D es in
ge in raised ing funds by s (%) ress during Balan
project project r- investme investme 2023 intende ct is ess result proje
inves funds funds the end of (3)＝ was the year ce
rais nt from nt from d close fell s of ct
tmen raised the (2)/(1) in
ed raised raised usable d short the feasib
t reporting line
fun funds funds status of the proje ility
purp period (2) with
ds plan ct
ose the
plan
Issuan
Chip Product
ce of March
module ion and July
Yes conver 10, No 86,000.00 79,283.01 1,544.39 79,283.01 100.00 Yes Yes N/A No 0
project constru 2023
tible 2021
in ction
bonds
115 / 285
2023 Annual Report
Shengx
ia site
Wearab
le Issuan
Product
device ce of March Decemb
ion and
project Yes conver 10, No 56,000.00 56,000.00 5,540.26 50,649.55 90.45 er 8, No Yes N/A 11,748.00 No N/A
constru
in tible 2021 2022
ction
Vietna bonds
m site
Electro
nic Issuan
Product
product ce of March Septemb
ion and 73.52
project Yes conver 10, No 100,000.00 70,000.00 9,733.26 69,926.48 99.89 er 2023 Yes Yes N/A 23,507.79 No
constru Note 6
in tible 2021 (Note 2)
ction
Huizho bonds
u site
Supple
mentar
Supple
y
mentar Issuan
workin
y ce of March
g
Workin No conver 10, No 100,957.00 100,957.00 80.47 101,037.47 100.08 N/A Yes Yes N/A N/A No 0
capital
g tible 2021
and
Capital bonds
loan
Project
repaym
ent
Constru
ction
and
Issuan
loan Product
ce of March
repaym ion and Decemb
Yes conver 10, No N/A 43,479.78 18,313.61 18,313.61 42.12 No Yes N/A N/A No N/A
ent of constru er 2024
tible 2021
Mexico ction
bonds
Second
Factory
Project
Note 1: Due to the epidemic, the investment progress of the chip module project in Shengxia Factory lagged behind, and the market demand and customer order
situation also changed. The total amount of fund raised and invested in the project by July 31, 2023 was RMB 792,830,100, and the production capacity formed by
the invested funds could already meet the customer demand. In view of the above, the Company held the Fourth Meeting of the Sixth Session of the Board of Directors
and the Second Meeting of the Sixth Session of the Board of Supervisors on August 25, 2023 to close the chip module project in Shengxia Factory, as detailed in the
116 / 285
2023 Annual Report
announcement of the Company dated August 29, 2023 (Announcement No.: 2023-076). In addition, given that the project is a technological upgrade project of the
Shengxia factory, the income realized cannot be singled out and calculated separately.
Due to the epidemic, the market demand and customer order situation have changed. In this case, the Company held the Fourth Meeting of the Sixth Session of the
Board of Directors and the Second Meeting of the Sixth Session of the Board of Supervisors on August 25, 2023 and approved the adjustment and extension of some
projects, and change of investment purpose of some projects, as detailed in the announcement of the Company dated August 29, 2023 (Announcement No.: 2023-
076).
Note 3: The investment in the wearable device production project of the Vietnam factory has not yet been completed. The project achieved a net profit equivalent to
RMB 117.48 million in 2023 and a net profit equivalent to RMB 44.33 million in 2022.
Note 4: In FY2023, the electronic product production project of the Huizhou Plant realized a net profit of RMB23,507,900; in FY2022, the electronic product
production project of the Huizhou Plant realized a net profit of RMB4,724,500.
Note 5: The total amount of investment by raised funds for the Mexico factory project includes the interest generated from the raised funds for the chip module project
in Shengxia factory and the electronic product production project in Huizhou factory, and therefore the adjusted total committed investment is larger than the original
total committed investment.
Note 6: By the end of Q3 2023, the electronic product production project of Huizhou factory has been closed and had a surplus of RMB 735,207.45 yuan. As the
amount is less than RMB 1 million and is less than 5% of the committed investment amount of the project from raisd funds, the Company has transferred the surplus
amount to the special account for Mexico factory construction project, which is in compliance with the Guidelines No. 1 of the Shanghai Stock Exchange for the Self-
regulation of Listed Companies - Standard Operation.
Note 7: When the supplementary working capital project was closed, the surplus raised funds (including interest) were transferred to the Company's own working
capital account.
(III) Industry of the Company during the reporting period
√Applicable □ Not Applicable
Unit: 10,000 Currency: RMB
Total Total
invested amount of
Total
raised raised
investment
funds funds used
from raised
Project before for
funds before Description of decision-
name change of supplemen
change of Item Reasons for changes of investment purpose making process and
before investmen tary
investment information disclosure
change t purpose working
purpose or
or capital
termination of
terminatio after
project
n of change of
project investmen
117 / 285
2023 Annual Report
t purpose
or
terminatio
n of
project
As of July 31, 2023, a total of RMB 792.83 million raised The Company considered
funds has been invested in the project, and the remaining RMB and approved the Proposal
67.17 million have not yet been invested. Due to the epidemic, on Closure, Adjustment,
Chip the project investment progress was affected, and the market Extension of Some Raised
module demand for the products produced by the project has also Fund Projects, and Change
project in 86,000.00 79,283.01 changed. The production capacity formed by the invested 0 of Usage of Some Raised
Shengxia funds could meet the needs of customer orders. Therefore, the Fund Projects at the Fourth
site Company decided to close the chip module project in Meeting of the Sixth
Construc Shengxia Factory and change the purpose of the unused funds Session of the Board of
tion and RMB 67.17 million as well as the interest accrued from the Directors and the Second
loan funds so as to effectively use the funds. Meeting of the Sixth
repayme Session of the Board of
nt of Supervisors held on
Due to the adjustment of the investment arrangement of the
Mexico August 25, 2023, the First
project caused by the epidemic and the change of the market
Second Extraordinary
environment during the construction of the project, the
Factory Shareholders' Meeting of
Electronic Company intended to adjust investment in the project
Project 2023 and the Bondholders'
product according to the change of the market demand and customers'
Meeting held on
project in 100,000.00 69,926.48 orders by postponing the investment progress without 0
September 15, 2023 and
Huizhou adjusting the total investment amount of the project. In order
disclosed the relevant
site to improve the efficiency of the use of proceeds, the Company
announcement
decided to reduce the amount of raised funds used in the
(Announcement No. 2023-
project and change the purpose of surplus raised fund for
076) on the website of
another project.
Shanghai Stock Exchange
( www.sse.com.cn).
(IV) Other information on the usage of raised funds during the reporting Period
1. Replacement of pre-issuance investment with raised funds
□Applicable √Not Applicable
118 / 285
2023 Annual Report
2. Use idle raised funds as working capital
□Applicable √Not Applicable
3. Cash management of idle raised funds
√Applicable □ Not Applicable
Unit: 100 million Currency: RMB
Cash
Whether the maximum
Amount of raised funds management
Date of approval by the balance during the
approved for cash Start date End date balance at the
Board of Directors period exceeds the
management end of the
authorized amount
reporting period
March 17, 2023 5 March 17, 2023 March 16, 2024 0 No
October 24, 2023 4 October 24, 2023 October 23, 2024 0 No
Other explanations
None
4. Use excessive raised funds for working capital or bank loan repayment permanently
□Applicable √Not Applicable
5. Others
□Applicable √Not Applicable
XV. Particulars on other major events that have great influence on investors' value judgments and investment decisions
□Applicable √Not Applicable
119 / 285
2023 Annual Report
Section VII Changes in Shares and Information of Shareholders
I. Changes in share capital
(I) Table of changes in shares
1. Table of changes in shares
Unit: Share
Before the change Change After the change
Shares
conve
Bon
rted
us
Number % New Issue from Others Subtotal Number %
Issu
capital
e
reserv
e
I. Shares
subject to
25,939,972 1.18 0 0 0 -25,939,972 -25,939,972 0 0
selling
restrictions
1. Shares held
by the foreign 25,939,972 1.18 0 0 0 -25,939,972 -25,939,972 0 0
capital
Including:
Shares held by
25,939,972 1.18 0 0 0 -25,939,972 -25,939,972 0 0
the foreign
legal person
II. Tradable
shares held not
subject to 2,180,924,267 98.82 3,127,341 0 0 25,939,972 29,067,313 2,209,991,580 100
selling
restrictions
1. RMB
ordinary 2,180,924,267 98.82 3,127,341 0 0 25,939,972 29,067,313 2,209,991,580 100
shares
III. Total
number of 2,206,864,239 100 3,127,341 0 0 0 3,127,341 2,209,991,580 100
shares
2. Particulars on changes in ordinary shares
√Applicable □ Not Applicable
During the reporting period, the Company's total share capital increased from 2,206,864,239 to
2,209,991,580 shares, an increase of 3,127,341 shares due to option excercise and conversion of
convertible bonds.
3. Impact of changes in shares on the earnings per share, net asset value per share and other
financial indicators in the last year and period (if any)
√Applicable □ Not Applicable
During the reporting period, the Company's total shares increased by 3,127,341 shares due to exercise of
stock options and conversion of convertible bonds, accounting for 0.14% of its total share capital after
120 / 285
2023 Annual Report
these changes, with little impact on financial indicators such as earnings per share and net asset per
share.
4. Other contents that must be disclosed in the opinion of the Company or according to requirements
of the securities regulatory institution
□Applicable √Not Applicable
(II) Changes in shares subject to selling restrictions
√Applicable □ Not Applicable
Unit: share
Number of Increase in
Number of Number of
shares the number
shares shares
subject to of shares Date of
released subject to Reason for
Name of selling subject to release
from selling selling selling
shareholder restrictions selling from
restrictions restrictions restrictions
at the restrictions restriction
during the at the end
beginning of during the
year of the year
the year year
The lock-up
period for
the shares
of the
Company
acquired by
ASDI in the
share
ASDI
exchange
Assistance December
25,939,972 25,939,972 0 0 transaction
Direction 8, 2023
is thirty-six
S.A.S.
months
from the
delivery of
the new
shares, and
the lock-up
period has
expired.
Total 25,939,972 25,939,972 0 0 / /
II. Issuance and listing of securities
(I) Issuance of securities durin the reporting period
□Applicable √Not Applicable
Particulars on issuance of securities during the reporting period (please explain separately the bonds with
different interest rates during their duration):
□Applicable √Not Applicable
(II) Changes in the total number of shares and shareholder structure of the Company and changes
in the structure of assets and liabilities of the Company
√Applicable □ Not Applicable
121 / 285
2023 Annual Report
1. Changes in the total number of shares
During the reporting period, the Company's total shares increased by 3,127,341 shares due to exercise of
stock options and conversion of convertible bond.
2. Changes in shareholder structure
The controlling shareholder and actual controller of the Company remained unchanged. The controlling
shareholder of the Company was still USI Enterprise Limited, and its shareholding ratio was diluted from
76.30% to 76.19% due to the above change in shares. Except for the controlling shareholder, the Company
had no other shareholders holding more than 5% of the shares. The actual controllers of the Company
were still Jason C.S. Chang and Richard H.P. Chang brothers.
3. Changes in the structure of assets and liabilities of the Company
At the beginning of the reporting period, the Company had total assets of RMB 38.57 billion and total
liabilities of RMB 22.82 billion, with the asset-liability ratio of 59.17%; at the end of the reporting period,
the Company had total assets of RMB 39.31 billion and total liabilities of RMB 22.22 billion, with the
asset-liability ratio of 56.52%. The Company's asset-liability ratio decreased YoY by 2.65 percentage
points.
(III) Existing internal employee shares
□Applicable √Not Applicable
III. Shareholders and actual controllers
(I) Total number of shareholders
Total number of shareholders of ordinary shares at the end of the reporting period 36,434
Total number of shareholders of ordinary shares at the end of previous month prior
36,832
to the disclosure date of this annual report
Total number of preferred shareholders whose voting rights have been restored as
0
of the end of the reporting period
Total number of preferred shareholders at the end of the previous month prior to
0
the disclosure date of the annual report
(II) Table of shareholdings of the top ten shareholders and the top ten shareholders of shares in
circulation (or shareholders not subject to selling restrictions) at the end of the reporting period
Unit: share
Shareholdings of the top ten shareholders (Excluding share lending through refinancing business)
Change Shares held Pledge, marking or
Name of Restricte
during the by the end of freezing Nature of
shareholder % d shares
reporting the reporting Share shareholder
(full name) held Number
period period status
Foreign
USI Enterprise
0 1,683,749,126 76.19 0 None legal
Limited
person
Hong Kong
Foreign
Securities Unknow
1,430,114 64,704,857 2.93 0 legal
Clearing n
person
Company Ltd.
ASDI Foreign
ASSISTANCE -2,174,050 23,765,922 1.08 0 Pledged 1,758,914 legal
DIRECTION person
122 / 285
2023 Annual Report
China State-
Securities Unknow owned
-8,608,037 22,917,636 1.04 0
Finance Co., n legal
Ltd. person
Domestic
ASE non-state-
(Shanghai) 0 18,098,476 0.82 0 None owned
Inc. legal
person
Taikang Life
Insurance Co.,
Ltd.-
Traditional -
11,308,90 Unknow
General 12,015,400 0.54 0 Others
0 n
Insurance
Products -
019L - CT001
Shanghai
Taikang Life
Insurance Co.,
Ltd. -
Dividends - Unknow
10,931,332 0.49 0 Others
Personal n
Dividends -
019L - FH002
Shanghai
Taikang Life
Insurance
Co.,ltd. -
Investment- Unknow
8,463,900 0.38 0 Others
linked n
Insurance -
Multi-Strategy
Selection
Fuguo
Enhanced
Bond
Securities
Investment Unknow
6,700,299 0.30 0 Others
Fund - n
Industrial and
Commercial
Bank of China
limited
Taikang Life
Insurance
Co.,ltd -
Unknow
Universal - 5,491,422 0.25 0 Others
n
Personal
Universal
Products (D)
Shareholding of top 10 shareholders subject to no selling restrictions
Number of tradable shares held Type and number of shares
Name of shareholder
not subject to selling restrictions Species Number
RMB ordinary
USI Enterprise Limited 1,683,749,126 1,683,749,126
shares
Hong Kong Securities RMB ordinary
64,704,857 64,704,857
Clearing Company Ltd. shares
123 / 285
2023 Annual Report
ASDI ASSISTANCE RMB ordinary
23,765,922 23,765,922
DIRECTION shares
China Securities Finance RMB ordinary
22,917,636 22,917,636
Co., Ltd. shares
RMB ordinary
ASE (Shanghai) Inc. 18,098,476 18,098,476
shares
Taikang Life Insurance
Co., Ltd.- Traditional - RMB ordinary
12,015,400 12,015,400
General Insurance Products shares
- 019L - CT001 Shanghai
Taikang Life Insurance
Co., Ltd. - Dividends - RMB ordinary
10,931,332 10,931,332
Personal Dividends - 019L shares
- FH002 Shanghai
Taikang Life Insurance
Co.,ltd. - Investment-linked RMB ordinary
8,463,900 8,463,900
Insurance - Multi-Strategy shares
Selection
Fuguo Enhanced Bond
Securities Investment Fund
RMB ordinary
- Industrial and 6,700,299 6,700,299
shares
Commercial Bank of China
limited
Taikang Life Insurance
Co.,ltd - Universal - RMB ordinary
5,491,422 5,491,422
Personal Universal shares
Products (D)
There were 25,402,195 tradable shares not subject to selling restrictions
in the Company's special buy-back securities account at the beginning
of the reporting period and 23,345,545 shares at the end of the reporting
period, a decrease of 2,056,650 shares during the reporting period. The
details of change are as follows:
1. On February 27, 2023, 30,600 share swas transferred back from the
Particulars on the special account of 2021 Employee Stock Ownership Plan to the Company’s
buy-back securities special buy-back securities account;
account of the top ten 2. On March 3, 2023, 1,715,250 shares were transferred from the
shareholders Company's special buy-back securities account to the Company's Core
Employee Stock Ownership Plan Phase III account in the form of non-
trade transfer;
3. On November 23, 2023, 372,000 shares were transferred from the
Company's special buy-back securities account to the Company's 2023
Employee Stock Ownership Plan account in the form of non-trade
transfer.
Particulars on the above-
mentioned shareholders'
entrusting voting rights,
None
entrusted voting rights and
abstention from voting
rights
The actual controllers of the Company are Mr. Jason C.S. Chang and
Mr. Richard H.P. Chang, who are brothers and ultimately control the
Related or concert parties
Company through indirect shareholding by controlling USI Enterprise
among the shareholders
Limited and ASE (Shanghai) Inc., two of the Company’s shareholders.
above
The Company does not know whether there are related relationships
and concerted actions among other shareholders.
124 / 285
2023 Annual Report
Particulars on the
preference shareholders
None
with voting rights restored
and their shareholdings
Top ten shareholders participating in share lending through refinancing business
□Applicable √Not Applicable
Changes in the top 10 shareholders compared with the previous period
√Applicable □ Not Applicable
Unit: share
Changes in the top 10 shareholders compared with the end of the previous period
Number of shares held in
Number of shares lent
shareholders' general accounts and
New/withdr through refinancing and
credit accounts, and shares lent
Shareholder awal during not yet returned at the
through refinancing and not yet
name the reporting end of the period
returned at the end of the period
period
Proportion Proportion
Total Total
(%) (%)
Taikang Life
Insurance Co.,
Ltd.- Traditional
- General
New 0 0 12,015,400 0.54
Insurance
Products - 019L
- CT001
Shanghai
Taikang Life
Insurance Co.,
Ltd. - Dividends
- Personal New 0 0 10,931,332 0.49
Dividends -
019L - FH002
Shanghai
Taikang Life
Insurance
Co.,ltd. -
Investment- New 0 0 8,463,900 0.38
linked Insurance
- Multi-Strategy
Selection
Fuguo Enhanced
Bond Securities
Investment Fund
- Industrial and New 0 0 6,700,299 0.30
Commercial
Bank of China
limited
Taikang Life
Insurance Co.,ltd
- Universal -
New Unknown Unknown 5,491,422 0.25
Personal
Universal
Products (D)
125 / 285
2023 Annual Report
Abu Dhabi
Investment Withdrawal 0 0 Unknown Unknown
Authority
CSI 500
Exchange
Traded fund - Withdrawal 1,058,000 0.05 3,568,200 0.16
Agricultural
Bank of China
Wanjia CSI 300
Index enhanced
securities
Withdrawal 0 0 Unknown Unknown
investment fund
- Bank of
Ningbo
All China Bond
- Ninety One
Global Strategy
Withdrawal 0 0 3,590,390 0.16
Fund - Ninety
One UK Ltd. -
RQFII
ChinaAMC CSI
5G
Communication
Withdrawal 154,700 0.01 3,654,569 0.17
Theme ETF -
Bank of China
Limited
Number of shares held by the top ten shareholders subject to selling restrictions and description of the
selling restrictions
□Applicable √Not Applicable
(III) Strategic investors or general legal persons becoming the top ten shareholders because of
placing of new shares
□Applicable √Not Applicable
IV. Controlling shareholder and actual controllers
(I) Controlling shareholder
1 Legal person
√Applicable □ Not Applicable
Name USI Enterprise Limited
Person in charge of the Company or legal representative Chen-Yen Wei
Establishment date November 13, 2007
Investment consulting services and
Main businesses
warehouse management services
Equity of other domestic and overseas listed companies
None
controlled or invested during the reporting period
Particulars on other information None
2 Natural person
□Applicable √Not Applicable
126 / 285
2023 Annual Report
3 Special particulars on the Company not having controlling shareholder
□Applicable √Not Applicable
4 Changes in controlling shareholders during the reporting period
□Applicable √Not Applicable
5 The ownership structure of USI and its controlling shareholder
√Applicable □ Not Applicable
(II) Actual controller
1 Legal person
□Applicable √Not Applicable
2 Natural person
√Applicable □ Not Applicable
Name Jason C.S. Chang
Nationality Singapore
Acquire right of residence in other
No
countries or regions or not
Since 2018, Mr. Chang has served as the chairman and group
CEO of ASE Technology Holding Co., Ltd.; since 1984, he
Main job and title
has served as the chairman of Advanced Semiconductor
Engineering, Inc.
Mr. Chang currently controls 21.66% equity in ASE
Investment Holding Co., Ltd. (a company listed in Taiwan,
with the stock code of 3711), holds 32.23% equity in Hung
Ching Development & Construction Co. (a company listed in
Taiwan, with the stock code of 2527) including 26.22%
through ASE Investment Holding Co., Ltd., and controls
Shareholdings in other domestic or
48.69% equity in SINO HORIZON (a company listed in
overseas listed companies over the
Taiwan, with the stock code of 2923). He once controlled
past 10 years
Advanced Semiconductor Engineering, Inc., a company listed
on the Taiwan Stock Exchange, with the stock code of 2311,
which was terminated from listing on April 30, 2018, and held
Universal Scientific Industrial Co., Ltd., a company listed on
the Taiwan Stock Exchange, with the stock code of 2311,
which was terminated from listing on April 30, 2018.
Name Richard H.P. Chang
127 / 285
2023 Annual Report
Nationality Hong Kong, China
Acquire right of residence in other
Yes
countries or regions or not
Since 2018, has been serving as vice chairman and general
Main job and title
manager of ASE Technology Holding Co., Ltd.
As a brother of Jason C.S. Chang, holds 2.83% equity in ASE
Investment Holding Co., Ltd. (a company listed in Taiwan,
with the stock code of 3711) and 12.90% equity in Hung
Ching Development & Construction Co. (a company listed in
Shareholdings in other domestic or
Taiwan, with the stock code of 2527), and controls 48.69%
overseas listed companies over the
equity in SINO HORIZON (a company listed in Taiwan, with
past 10 years
the stock code of 2923). Once held the equity of ASE Co.,
Ltd., a company listed on the Taiwan Stock Exchange, with a
stock code of 2311, which was terminated from listing on
April 30, 2018.
3 Special particulars on the Company not having actual controllers
□Applicable √Not Applicable
4 Particulars on changes in the Company's control during the reporting period
□Applicable √Not Applicable
5 The ownership Structure of USI and its Actual Controller
√Applicable □ Not Applicable
128 / 285
2023 Annual Report
6 Control of the Company by actual controllers by way of trust or other means of asset management
□Applicable √Not Applicable
(III) Other particulars regarding the controlling shareholders and the actual controllers
□Applicable √Not Applicable
V. Shares accumulatively pledged by the Company's controlling shareholder or largest shareholder
and its persons acting in concert account for more than 80% of their shareholding in the
Company
□Applicable √Not Applicable
VI. Other legal person shareholders with more than 10% shareholdings
□Applicable √Not Applicable
VII. Particulars on restrictions on reduction of shareholding
□Applicable √Not Applicable
VIII. Specific implementation of share repurchase during the reporting period
□Applicable √Not Applicable
129 / 285
2023 Annual Report
Section VIII Information on Preferred Shares
□Applicable √Not Applicable
130 / 285
2023 Annual Report
Section IX Information on Bonds
I. Corporate bonds and debt financing instruments issued by non-financial entities
□Applicable √Not Applicable
II. Convertible corporate bonds
√Applicable □ Not Applicable
(I) Issuance of convertible bonds
√Applicable □ Not Applicable
After being approved by the China Securities Regulatory Commission with a document (Z.J.X.K.
[2021] No. 167), the Company publicly issued 34.5 million convertible corporate bonds on March
4, 2021, each with a face value of RMB 100, amounting to RMB 3,450 million in total. After being
approved by the Shanghai Stock Exchange with the Self-Regulatory Supervision Decision Letter
([2021] No. 133), the convertible corporate bonds were listed and traded on the Shanghai Stock
Exchange on April 2, 2021. The bonds are abbreviated as "USI Convertible Bonds", with the bond
code of 113045.
(II) Convertible bond holders and guarantors during the reporting period
√Applicable □ Not Applicable
Name of convertible corporate Convertible corporate bonds publicly issued by Universal
bonds Scientific Industrial (Shanghai) Co., Ltd. in 2021
Number of convertible bond
6,655
holders at the end of the period
Guarantor of the Company's
None
convertible bonds
Top ten convertible bond holders:
Name of holders of Amount of bonds held at the
Holding ratio (%)
convertible corporate bonds end of the period (RMB)
USI Enterprise Limited 983,828,000 28.52
Northwest Feilong Fund
Limited - Northwest
132,412,000 3.84
Investment Management
(Hong Kong) Limited
E Fund Stable Income Bond
Securities Investment Fund - 99,403,000 2.88
Bank of China
Tianhong Yongli Convertible
Bond Securities Investment
81,920,000 2.37
Fund - Industrial Bank
Co.,Ltd.
GF Jiyu Convertible Bond
Securities Investment Fund - 80,000,000 2.32
Industrial Bank Co.,Ltd.
Huashang Credit Enhanced
Bond Securities Investment
62,886,000 1.82
Fund - China Construction
Bank Corporation
UBS AG 58,386,000 1.69
131 / 285
2023 Annual Report
China Life AMP Asset
Management Co.,Ltd. -
Construction Bank -Life
Insurance - Mixed Portfolio
47,400,000 1.37
entrusted to China Life AMP
Asset Management Co.,Ltd.
by China Life Insurance
(Group) Company
E Fund Dual Enhanced Bond
Securities Investment Fund -
46,460,000 1.35
China Construction Bank
Corporation
Shenzhen Guosen Securities
45,924,000 1.33
Co.,Ltd.
(III) Changes in convertible bonds during the reporting period
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
Name of Change
convertible Before the After the
Converted
corporate change Redeemed Put change
into shares
bonds
Convertible
corporate
bonds
publicly
issued by
Universal 3,449,932,000 54,000 0 0 3,449,878,000
Scientific
Industrial
(Shanghai)
Co., Ltd. in
2021
Cumulative conversion of convertible bonds during the reporting period
√Applicable □ Not Applicable
Convertible corporate bonds publicly issued
Name of convertible corporate bonds by Universal Scientific Industrial (Shanghai)
Co., Ltd. in 2021
Conversion amount (RMB) during the
54,000
reporting period
Number of shares converted during the
2,776
reporting period
Cumulative number of converted shares 6,215
Proportion of cumulative number of converted
shares to the total number of shares of the 0.0003
Company issued before the conversion (%)
Unconverted amount (RMB) 3,449,878,000
Proportion of unconverted convertible bonds
99.9965
to the total convertible bonds issued (%)
(IV) Historical adjustments of conversion price
√Applicable □ Not Applicable
132 / 285
2023 Annual Report
Unit: yuan Currency: RMB
Convertible corporate bonds publicly issued by
Name of convertible corporate bonds Universal Scientific Industrial (Shanghai) Co., Ltd. in
2021
Particulars on
Conversion
Adjusted Disclosure conversion price
price adjustment Disclosure time
conversion price media adjustment
date
Note
2020 profit
June 3, 2021 19.75 June 1, 2021
distribution
2021 profit
June 13, 2022 19.49 June 7, 2022
distribution
Cancellation of
July 21, 2022 19.52 July 20, 2022 repurchased
shares
The
accumulative
Shanghai exercise of stock
December 9, December 8,
19.50 Securities News, options reached
2022 2022
China Securities the degree of
Journal, and adjusting the
Securities Times conversion price
2022 profit
May 30, 2023 19.07 May 24, 2023
distribution
The
accumulative
exercise of stock
November 29, November 28,
19.06 options reached
2023 2023
the degree of
adjusting the
conversion price
The latest conversion price as of the
19.06
end of the reporting period
(V) The Company's liabilities, changes in credit and cash arrangements for debt repayment
in future years
√Applicable □ Not Applicable
At the beginning of the reporting period, the Company had total assets of RMB 38.57 billion and
total liabilities of RMB 22.82 billion, with the asset-liability ratio of 59.17%; at the end of the
reporting period, the Company had total assets of RMB 39.31 billion and total liabilities of RMB
22.22 billion, with the asset-liability ratio of 56.52%. The Company's asset-liability ratio decreased
YoY by 2.65 percentage points.
On May 29, 2023, China Chengxin International Credit Rating Co., Ltd. issued the Tracking Rating
Report on Universal Scientific Industrial (Shanghai) Co., Ltd.'s Public Issuance of Convertible
Corporate Bonds (2023): The Company's corporate credit rating remained AA+, the credit rating
for USI Convertible Bonds remained AA+, and the rating outlook was stable.
The Company adopts the method of paying interest once a year, and repays the principal and pays
the interest of the last interest-bearing year at maturity.
133 / 285
2023 Annual Report
(VI) Particulars on other information of convertible bonds
□Applicable √Not Applicable
134 / 285
2023 Annual Report
Section X Financial Statements
I. Auditor’s report
The Company's annual financial report has been audited and given a standard unqualified opinion
by Chinese Certified Public Accountant Yuan Shouqing and Hu Ke of Deloitte Touche Tohmatsu
Certified Public Accountants LLP.
II. Financial statements and notes
Please refer to the attached financial statements and auditor’s report for more details.
135 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
Financial Statements and Auditor's Report
For the year ended 31 December 2023
136 / 285
Financial Statements and Auditor's Report
For the year ended 31 December 2023
CONTENTS PAGE(S)
AUDITOR'S REPORT 138
CONSOLIDATED BALANCE SHEET 143
BALANCE SHEET OF THE COMPANY 145
CONSOLIDATED INCOME STATEMENT 147
INCOME STATEMENT OF THE COMPANY 148
CONSOLIDATED CASH FLOW STATEMENT 149
CASH FLOW STATEMENT OF THE COMPANY 140
THE CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 151
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY OF THE COMPANY 153
NOTES TO THE FINANCIAL STATEMENTS 155
137 / 285
AUDITOR'S REPORT
De Shi Bao (Shen) Zi (24) No. P01508
(Page 1 of 5)
To the Shareholders of Universal Scientific Industrial (Shanghai) Co., Ltd.,
I. Opinion
We have audited the financial statements of Universal Scientific Industrial (Shanghai) Co., Ltd. (the
"Company"), which comprise the consolidated and Company's balance sheets as at 31 December
2023, and the consolidated and Company's income statements, the consolidated and Company's cash
flow statements and the consolidated and Company's statements of changes in shareholders' equity
for the year then ended, and the notes to the financial statements.
In our opinion, the accompanying financial statements of Universal Scientific Industrial (Shanghai)
Co., Ltd. are prepared and present fairly, in all material respects, the consolidated and Company's
financial position as at 31 December 2023, and the consolidated and the Company's results of
operations and cash flows for the year then ended in accordance with Accounting Standards for
Business Enterprises.
II. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing. Our responsibilities under
those standards are further described in the "Auditor's Responsibilities for the Audit of the Financial
Statements" section of our report. We are independent of the Company in accordance with the Code
of Ethics for Chinese Certified Public Accountants ("the Code"), and we have fulfilled our other
ethical responsibilities in accordance with the Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. We determine the followings are key audit
matters in need of communication in our report.
138 / 285
AUDITOR'S REPORT (continued)
De Shi Bao (Shen) Zi (24) No. P01508
(Page 2 of 5)
III. Key Audit Matters - continued
Cut-off of Revenue Recognition
Matter Description
As set out in Notes (V), 48 to the financial statements, the Company's operating income in 2023 in
the consolidated financial statements is RMB 60,791,909,537.87, which is significant. The
Company’s sales mainly include revenue from sale of goods , and the revenue is recognized at the
time point when the customer obtains the control over the commodity. Under different terms of sales
contracts and trades, the time point of the transfer of commodity control is different. As revenue is
one of the key performance indicators of the Company, and the time point for the transfer of control
is different for various transaction modes in relation to revenue recognition, there is a risk that
revenue is not recognized in the appropriate accounting period. Therefore, we consider whether
revenue is recorded in the appropriate accounting period as a key audit matter.
Audit Response
Our procedures in relation to above key audit matter mainly included:
1. Understand the Company's key internal control related to the cut-off of revenue recognition,
evaluate the design and implementation of relevant internal control, and test the effectiveness of its
operation;
2. Check the Company's material sales contracts, identify the contract terms and trade conditions
related to the time point of goods control transfer, and evaluate whether the time point of revenue
recognition of the Company according to the contract terms meets the provisions of the accounting
standards for business enterprises;
3. Select samples for the sales transactions recorded before and after the balance sheet date, and
check the accounting records, delivery orders, cargo right transfer documents and other supporting
documents related to revenue recognition, so as to evaluate whether the revenue is recorded in the
appropriate accounting period.
139 / 285
AUDITOR'S REPORT (continued)
De Shi Bao (Shen) Zi (24) No. P01508
(Page 3 of 5)
IV. Other Information
The management of the Company is responsible for other information. The other information
comprises the information included in the Company’s annual report of 2023, but does not include
the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of the Management and Those Charged with Governance for the Financial
Statements
The management of the Company is responsible for the preparation and fair presentation of the
financial statements in accordance with the Accounting Standards for Business Enterprises, and
designing, implementing and maintaining internal control that is necessary to enable that the
financial statements are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company's
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the management either intends to liquidate the
Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance is responsible for supervising the financial reporting process of the
Company.
140 / 285
AUDITOR'S REPORT (continued)
De Shi Bao (Shen) Zi (24) No. P01508
(Page 4 of 5)
VI. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with China Standards on Auditing will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with China Standards on Auditing, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the management.
(4) Conclude on the appropriateness of the management's use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the Company's ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditor's report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor's report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
(5) Evaluate the overall presentation (including the disclosures), structure and content of the financial
statements and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
141 / 285
AUDITOR'S REPORT (continued)
De Shi Bao (Shen) Zi (24) No. P01508
(Page 5 of 5)
VI. Auditor's Responsibilities for the Audit of the Financial Statements - continued
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
Deloitte Touche Tohmatsu CPA LLP Chinese Certified Public Accountant:
(Engagement partner)
Shanghai, China
Yuan, Shou Qing
Chinese Certified Public Accountant:
Hu, Ke
29 March 2024
The auditor's report and the accompanying financial statements are English translations of the Chinese auditor's report
and statutory financial statements prepared under accounting principles and practices generally accepted in the People’s
Republic of China. These financial statements are not intended to present the financial position and results of operations
and cash flows in accordance with accounting principles and practices generally accepted in other countries and
jurisdictions. In case the English version does not conform to the Chinese version, the Chinese version prevails.
142 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
At 31 December 2023
Consolidated Balance Sheet
Unit: RMB
ITEM Note 31/12/2023 31/12/2022
Current Assets:
Cash and bank balances (V)1 11,218,698,389.32 7,695,016,173.40
Held-for-trading financial assets (V)2 245,558,007.22 271,243,519.53
Notes receivable (V)3 65,545,008.33 45,627,553.57
Accounts receivable (V)4 10,023,562,062.11 11,119,120,760.11
Prepayments (V)5 55,649,536.45 73,390,129.45
Other receivables (V)6 208,748,837.09 137,008,284.72
Inventories (V)7 8,311,911,001.74 10,909,893,675.82
Non-current assets due within one year (V)8 123,989.32 322,815.55
Other current assets (V)9 838,262,285.94 599,581,332.72
Total Current Assets 30,968,059,117.52 30,851,204,244.87
Non-current Assets:
Long-term receivables (V)10 13,647,410.80 12,385,894.30
Long-term equity investments (V)11 498,271,541.60 611,007,676.15
Other equity instrument investments (V)12 38,935,237.58 38,420,782.40
Other non-current financial assets (V)13 193,994,862.05 170,126,278.86
Investment properties (V)14 4,324,045.51 -
Fixed assets (V)15 4,697,977,110.39 4,456,780,136.30
Construction in progress (V)16 641,030,985.98 303,432,536.69
Right-of-use assets (V)17 605,954,561.75 479,869,246.55
Intangible assets (V)18 368,303,316.37 415,104,934.14
Goodwill (V)19 607,706,955.17 576,729,182.74
Long-term prepaid expenses (V)20 212,629,008.92 175,835,331.45
Deferred tax assets (V)21 387,273,954.10 358,956,591.39
Other non-current assets (V)22 68,274,790.92 124,611,895.32
Total Non-current Assets 8,338,323,781.14 7,723,260,486.29
TOTAL ASSETS 39,306,382,898.66 38,574,464,731.16
143 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
At 31 December 2023
Consolidated Balance Sheet - continued
Unit: RMB
ITEM Note 31/12/2023 31/12/2022
Current Liabilities:
Short-term borrowings (V)24 4,378,428,691.47 4,499,463,404.21
Derivative financial liabilities (V)25 173,872.64 3,118,891.32
Accounts payable (V)26 10,574,123,769.47 11,056,190,855.43
Contract liabilities (V)27 348,380,131.33 411,898,442.43
Employee benefits payable (V)28 922,911,255.08 1,161,885,093.89
Taxes payable (V)29 355,654,414.38 388,090,724.55
Other payables (V)30 1,044,770,045.86 716,932,703.77
Non-current liabilities due within one year (V)31 3,564,025,750.56 506,820,025.23
Other current liabilities (V)32 3,944,775.07 3,661,569.01
Total Current Liabilities 21,192,412,705.86 18,748,061,709.84
Non-current Liabilities:
Long-term borrowings (V)33 47,385,951.10 59,427,538.88
Bonds payable (V)34 - 3,243,085,241.27
Lease liabilities (V)35 486,775,229.42 381,725,722.17
Long-term payables (V)36 25,526,297.84 31,113,295.71
Long-term employee benefits payable (V)37 273,605,892.45 199,342,510.02
Provisions (V)38 48,279,064.03 7,350,296.14
Deferred income (V)39 59,885,005.66 63,195,209.30
Deferred tax liabilities (V)21 81,636,655.83 87,631,726.67
Other non-current liabilities (V)40 1,046,909.26 3,692,335.61
Total Non-current Liabilities 1,024,141,005.59 4,076,563,875.77
TOTAL LIABILITIES 22,216,553,711.45 22,824,625,585.61
SHAREHOLDERS' EQUITY:
Share capital (V)41 2,209,991,580.00 2,206,864,239.00
Other equity instruments (V)42 409,890,710.14 409,897,126.04
Capital reserve (V)43 2,283,965,543.00 2,234,529,885.62
Less: Treasury shares (V)44 321,730,995.54 351,392,965.86
Other comprehensive income (V)45 261,726,655.45 111,850,168.58
Surplus reserve (V)46 966,801,754.40 862,080,832.26
Retained profits (V)47 11,179,762,376.22 10,275,564,894.22
Total owners' equity attributable to equity
16,990,407,623.67 15,749,394,179.86
holders of the Company
Minority interests 99,421,563.54 444,965.69
TOTAL SHAREHOLDERS' EQUITY 17,089,829,187.21 15,749,839,145.55
TOTAL LIABILITIES AND
39,306,382,898.66 38,574,464,731.16
SHAREHOLDERS' EQUITY
The accompanying notes form part of the financial statements.
The financial statements on pages 6 to 148 were signed by the following:
____________________ ____________________ ____________________
Head of the Company Chief Financial Officer Person in charge of the Accounting Body
144 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
At 31 December 2023
Balance Sheet of the Company
Unit: RMB
ITEM Note 31/12/2023 31/12/2022
Current Assets:
Cash and bank balances 3,166,517,228.25 2,382,458,769.33
Held-for-trading financial assets 1,470,156.89 16,418,892.46
Notes receivable (XVI)1 49,427,125.85 39,485,239.31
Accounts receivable (XVI)2 2,871,903,374.08 2,821,443,968.15
Prepayments 6,942,635.46 8,633,332.74
Other receivables (XVI)3 733,104,536.58 1,060,187,690.24
Inventories 1,654,172,789.68 2,397,469,138.27
Other current assets 34,001,587.46 71,354,221.23
Total Current Assets 8,517,539,434.25 8,797,451,251.73
Non-current Assets:
Long-term equity investments (XVI)4 6,733,236,951.63 6,211,289,445.49
Other non-current financial assets 46,933,111.53 36,593,525.36
Fixed assets 1,185,256,610.21 1,359,118,713.20
Construction in progress 15,109,116.60 40,679,185.87
Right-of-use assets 36,821,679.59 50,972,562.94
Intangible assets 9,809,422.12 10,560,811.31
Long-term prepaid expenses 46,354,232.90 56,986,536.23
Deferred tax assets 60,805,635.89 66,972,703.95
Other non-current assets 19,775,697.94 6,417,503.72
Total Non-current Assets 8,154,102,458.41 7,839,590,988.07
TOTAL ASSETS 16,671,641,892.66 16,637,042,239.80
145 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
At 31 December 2023
Balance Sheet of the Company - continued
Unit: RMB
ITEM Note 31/12/2023 31/12/2022
Current Liabilities:
Short-term borrowings 109,505,392.33 210,000,000.00
Accounts payable 3,605,760,600.86 3,338,643,535.03
Contract liabilities 39,365,501.07 72,651,784.47
Employee benefits payable 127,557,430.98 170,460,131.98
Taxes payable 23,281,137.14 40,877,633.86
Other payables 51,640,284.57 56,141,755.46
Non-current liabilities due within one year 3,396,626,721.03 364,938,654.98
Total Current Liabilities 7,353,737,067.98 4,253,713,495.78
Non-current Liabilities:
Bonds payable - 3,243,085,241.27
Lease liabilities 29,464,371.43 43,636,944.67
Deferred income 34,345,491.81 32,434,642.39
Other non-current liabilities - 576,266.50
Total Non-current Liabilities 63,809,863.24 3,319,733,094.83
TOTAL LIABILITIES 7,417,546,931.22 7,573,446,590.61
SHAREHOLDERS' EQUITY:
Share capital (V)41 2,209,991,580.00 2,206,864,239.00
Other equity instruments (V)42 409,890,710.14 409,897,126.04
Capital reserve 2,343,866,940.28 2,294,431,282.90
Less: Treasury shares (V)44 321,730,995.54 351,392,965.86
Surplus reserve (V)46 966,801,754.40 862,080,832.26
Retained profits 3,645,274,972.16 3,641,715,134.85
TOTAL SHAREHOLDERS' EQUITY 9,254,094,961.44 9,063,595,649.19
TOTAL LIABILITIES AND
16,671,641,892.66 16,637,042,239.80
SHAREHOLDERS' EQUITY
146 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2023
Consolidated Income Statement
Unit: RMB
Amount incurred in the Amount incurred in the
ITEM Note
current year prior year
I. Operating income (V)48 60,791,909,537.87 68,516,075,963.26
Less: Operating costs (V)48 54,939,136,481.69 61,327,074,531.73
Taxes and levies (V)49 95,769,988.19 55,429,927.51
Selling expenses (V)50 367,994,662.03 323,833,862.87
Administrative expenses (V)51 1,215,427,939.02 1,421,848,997.88
Research and development expenses (V)52 1,807,204,128.27 2,034,461,775.71
Financial expenses (V)53 212,029,208.10 18,865,406.63
Including: Interest expenses 400,215,716.04 234,999,925.44
Interest income 236,527,756.09 87,996,958.46
Add: Other income (V)54 90,221,824.09 56,144,655.78
Investment income (V)55 142,700,250.52 138,630,023.72
Including: Income from investments in associates
8,752,751.61 73,531,247.72
and joint ventures
Gains (losses) from changes in fair values (V)56 (27,107,751.82) 31,839,197.50
Impairment loss of credit (V)57 (21,981,473.91) (10,116,849.95)
Impairment losses of assets (V)58 (166,836,089.16) (98,869,591.53)
Gains from disposal of assets (V)59 6,334,307.77 8,615,113.60
II. Operating profit 2,177,678,198.06 3,460,804,010.05
Add: Non-operating income (V)60 18,086,136.60 25,331,702.16
Less: Non-operating expenses (V)61 6,076,478.46 8,940,490.96
III. Total profit 2,189,687,856.20 3,477,195,221.25
Less: Income tax expenses (V)62 239,978,749.21 417,205,449.46
IV. Net profit 1,949,709,106.99 3,059,989,771.79
(I) Net profit classified by operating continuity:
1. Net profit from continuing operations 1,949,709,106.99 3,059,989,771.79
2. Net profit from discontinued operations - -
(II) Net profit classified by ownership ascription:
1. Net profit attributable to owners of the Company 1,947,846,866.12 3,059,967,081.20
2. Net profit attributable to minority interests 1,862,240.87 22,690.59
V. Other comprehensive income, net of tax (V)45 150,654,063.55 195,467,967.43
Other comprehensive income attributable to owners of the
149,876,486.87 195,450,567.53
Company, net of tax
(I) Other comprehensive income that cannot be
12,172,076.30 15,832,855.55
subsequently reclassified to profit or loss
1. Changes from re-measurement of defined benefit
(14,990,727.75) 51,762,656.96
plans
2. Changes in fair values of other equity instrument
27,162,804.05 (35,929,801.41)
investments
(II) Other comprehensive income that will be reclassified
137,704,410.57 179,617,711.98
to profit or loss
1. Other comprehensive income that can be
(7,656,754.91) (35,958,792.78)
reclassified to profit or loss under the equity method
2. Translation differences of financial statements
216,849,856.44 104,279,975.58
denominated in foreign currencies
3. Hedging reserves of net investment in foreign
(71,488,690.96) 111,296,529.18
operations
Other comprehensive income attributable to minority
777,576.68 17,399.90
interests, net of tax
VI. Total comprehensive income 2,100,363,170.54 3,255,457,739.22
Total comprehensive income attributable to owners of the
2,097,723,352.99 3,255,417,648.73
Company
Total comprehensive income attributable to minority
2,639,817.55 40,090.49
interests
VII. Earnings per share
(I) Basic earnings per share (XVII)2 0.89 1.40
(II) Diluted earnings per share (XVII)2 0.87 1.35
147 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2023
Income Statement of the Company
Unit: RMB
Amount incurred in the Amount incurred in the
ITEM Note
current year prior year
I. Operating income (XVI)5 19,677,036,021.69 21,944,772,780.72
Less: Operating costs (XVI)5 17,928,507,549.98 19,816,085,335.43
Taxes and levies 28,574,670.28 13,964,679.96
Selling expenses 77,474,832.09 71,561,295.65
Administrative expenses 163,145,034.68 221,654,870.72
Research and development expenses 677,138,253.59 751,375,491.00
Financial expenses 76,585,926.77 (13,892,465.55)
Including: Interest expenses 172,202,443.99 146,896,320.84
Interest income 109,201,065.07 59,559,776.94
Add: Other income 31,164,163.32 19,864,804.92
Investment income (XVI)6 325,724,208.11 183,568,627.78
Including: Loss from investments in
(3,294,727.52) -
associates and joint ventures
Gains (losses) from changes in fair values (13,609,149.40) 12,430,908.18
Gains (losses) from impairment of credit 3,685,934.28 (3,658,149.19)
Impairment gains of assets 762,694.28 5,135,027.84
Gains from disposal of assets 3,442,727.96 865,008.94
II. Operating profit 1,076,780,332.85 1,302,229,801.98
Add: Non-operating income 2,306,506.80 233,682.62
Less: Non-operating expenses 172,287.02 4,830,131.32
III. Total profit 1,078,914,552.63 1,297,633,353.28
Less: Income tax expenses 31,705,331.20 56,871,730.31
IV. Net profit 1,047,209,221.43 1,240,761,622.97
(I) Net profit from continuing operations 1,047,209,221.43 1,240,761,622.97
(II) Net profit from discontinued operations - -
V. Other comprehensive income, net of tax - -
VI. Total comprehensive income 1,047,209,221.43 1,240,761,622.97
148 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2023
Consolidated Cash Flow Statement
Unit: RMB
Amount incurred in Amount incurred in
ITEM Note
the current year the prior year
I. Cash Flows from Operating Activities:
Cash receipts from the sale of goods and the
62,945,879,717.98 71,431,108,010.54
rendering of services
Receipts of tax refunds 332,597,175.15 529,679,759.52
Other cash receipts relating to operating activities (V)63(1) 444,054,452.60 514,112,449.77
Sub-total of cash inflows from operating
63,722,531,345.73 72,474,900,219.83
activities
Cash payments for goods purchased and services
51,127,038,702.23 63,752,163,109.99
received
Cash payments to and on behalf of employees 4,543,803,455.43 4,263,182,237.12
Payments of various types of taxes 947,833,332.58 880,937,730.02
Other cash payments relating to operating activities (V)63(1) 280,420,362.87 143,420,887.20
Sub-total of cash outflows from operating
56,899,095,853.11 69,039,703,964.33
activities
Net Cash Flow from Operating Activities (V)64(1) 6,823,435,492.62 3,435,196,255.50
II. Cash Flows from Investing Activities:
Cash receipts from disposals and recovery of
(V)63(2) 10,588,663,201.29 5,049,784,248.93
investments
Cash receipts from investment income 141,117,928.09 73,818,863.64
Net cash receipts from disposals of fixed assets,
39,129,732.67 106,121,293.40
intangible assets and other long-term assets
Other cash receipts relating to investing activities 2,214,334.90 -
Sub-total of cash inflows from investing activities 10,771,125,196.95 5,229,724,405.97
Cash payments to acquire or construct fixed assets,
1,549,925,467.96 1,671,359,617.44
intangible assets and other long-term assets
Cash payments to acquire investments (V)63(2) 10,379,130,858.29 5,055,991,050.00
Net cash payments for acquisitions of subsidiaries
270,966,057.90 26,622,070.14
and other business units
Sub-total of cash outflows from investing
12,200,022,384.15 6,753,972,737.58
activities
Net Cash Flow from Investing Activities (1,428,897,187.20) (1,524,248,331.61)
III. Cash Flows from Financing Activities:
Cash receipts from capital contributions 134,160,438.42 76,706,975.16
Including: cash receipts from capital contributions
96,336,780.30 -
from minority owners of subsidiaries
Cash receipts from borrowings 15,773,337,049.55 19,947,391,301.87
Other cash receipts relating to financing activities (V)63(3) 26,686,556.25 3,506,097.66
Sub-total of cash inflows from financing
15,934,184,044.22 20,027,604,374.69
activities
Cash repayments of borrowings 16,428,061,798.41 19,611,483,701.31
Cash payments for distribution of dividends or
1,179,079,074.37 644,400,298.70
profits or settlement of interest expenses
Other cash payments relating to financing activities (V)63(3) 163,296,399.80 274,135,571.27
Sub-total of cash outflows from financing
17,770,437,272.58 20,530,019,571.28
activities
Net Cash Flow from Financing Activities (1,836,253,228.36) (502,415,196.59)
IV. Effect of Foreign Exchange Rate Changes on Cash
(52,036,402.36) 251,318,260.11
and Cash Equivalents
V. Net Increase (Decrease) in Cash and Cash
3,506,248,674.70 1,659,850,987.41
Equivalents
Add: Opening balance of cash and cash equivalents (V)64(3) 7,678,044,104.00 6,018,193,116.59
VI. Closing Balance of Cash and Cash Equivalents (V)64(3) 11,184,292,778.70 7,678,044,104.00
149 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2023
Cash Flow Statement of the Company
Unit: RMB
Amount incurred in the Amount incurred in the
ITEM Note
current year prior year
I. Cash Flows from Operating Activities:
Cash receipts from the sale of goods and the
19,715,179,735.51 23,200,305,707.29
rendering of services
Receipts of tax refunds 88,661,201.75 134,391,059.60
Other cash receipts relating to operating activities 143,944,381.68 92,137,795.26
Sub-total of cash inflows from operating
19,947,785,318.94 23,426,834,562.15
activities
Cash payments for goods purchased and services
16,698,151,441.53 20,930,029,096.53
received
Cash payments to and on behalf of employees 625,256,609.26 639,606,738.62
Payments of various types of taxes 148,511,099.34 194,108,063.48
Other cash payments relating to operating activities 156,801,933.88 130,355,417.36
Sub-total of cash outflows from operating
17,628,721,084.01 21,894,099,315.99
activities
Net Cash Flow from Operating Activities (XVI)7 2,319,064,234.93 1,532,735,246.16
II. Cash Flows from Investing Activities:
Cash receipts from disposals and recovery of
5,094,828,000.00 3,677,246,400.00
investments
Cash receipts from investment income 329,018,935.63 237,513,927.78
Net cash receipts from disposals of fixed assets,
78,422,754.70 135,709,564.48
intangible assets and other long-term assets
Sub-total of cash inflows from investing
5,502,269,690.33 4,050,469,892.26
activities
Cash payments to acquire or construct fixed assets,
272,929,329.02 584,130,199.88
intangible assets and other long-term assets
Cash payments to acquire investments 4,486,995,119.70 3,985,803,000.00
Other cash payments relating to investing activities 817,776,000.00 1,115,219,000.00
Sub-total of cash outflows from investing
5,577,700,448.72 5,685,152,199.88
activities
Net Cash Flow from Investing Activities (75,430,758.39) (1,634,682,307.62)
III. Cash Flows from Financing Activities:
Cash receipts from capital contributions 37,823,658.12 76,706,975.16
Cash receipts from borrowings 3,486,983,652.26 2,828,328,085.47
Other cash receipts relating to financing activities 26,686,556.25 -
Sub-total of cash inflows from financing
3,551,493,866.63 2,905,035,060.63
activities
Cash repayments of borrowings 3,937,358,875.96 2,268,328,085.47
Cash payments for distribution of dividends or
975,226,652.63 579,509,379.54
profits or settlement of interest expenses
Other cash payments relating to financing activities 22,742,198.55 136,494,552.16
Sub-total of cash outflows from financing
4,935,327,727.14 2,984,332,017.17
activities
Net Cash Flow from Financing Activities (1,383,833,860.51) (79,296,956.54)
IV. Effect of Foreign Exchange Rate Changes on
(75,741,157.11) 73,650,793.61
Cash and Cash Equivalents
V. Net Increase (Decrease) in Cash and Cash
784,058,458.92 (107,593,224.39)
Equivalents
Add: Opening balance of cash and cash equivalents 2,382,458,769.33 2,490,051,993.72
VI. Closing Balance of Cash and Cash Equivalents 3,166,517,228.25 2,382,458,769.33
150 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2023
Consolidated Statement of Changes in Shareholders' Equity
Unit: RMB
2023
Attributable to owners of the Company
ITEM Other Minority Total shareholders'
Other equity Less: Treasury
Share capital Capital reserve comprehensive Surplus reserve Retained profits interests equity
instruments shares
income
I. Opening balance of the current year 2,206,864,239.00 409,897,126.04 2,234,529,885.62 (351,392,965.86) 111,850,168.58 862,080,832.26 10,275,564,894.22 444,965.69 15,749,839,145.55
II. Changes for the year
(I) Total comprehensive income - - - - 149,876,486.87 - 1,947,846,866.12 2,639,817.55 2,100,363,170.54
(II) Owners’ contributions and reduction
in capital
1. Ordinary shares contributed by
shareholders (Note V, 41 and Note 3,124,565.00 - 34,699,093.12 - - - - 96,336,780.30 134,160,438.42
VI, 1)
2. Capital contribution by owners of
2,776.00 (6,415.90) 54,888.33 - - - - - 51,248.43
other equity instruments (Note V, 42)
3. Share-based payment recognized in
- - 17,684,000.00 - - - - - 17,684,000.00
shareholders' equity (Note V, 43)
4. Transfer from treasury shares
- - 363,746.57 (364,587.57) - - - - (841.00)
(Note V, 44)
5. Others (Note V, 44) - - (3,366,070.64) 30,026,557.89 - - - - 26,660,487.25
(III) Profit distribution
1. Transfer to surplus reserve - - - - - 104,720,922.14 (104,720,922.14) - -
2. Distributions to shareholders - - - - - - (938,928,461.98) - (938,928,461.98)
III. Closing balance of the current year 2,209,991,580.00 409,890,710.14 2,283,965,543.00 (321,730,995.54) 261,726,655.45 966,801,754.40 11,179,762,376.22 99,421,563.54 17,089,829,187.21
151 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2023
Consolidated Statement of Changes in Shareholders' Equity - continued
Unit: RMB
2022
Attributable to owners of the Company
ITEM Other Minority Total shareholders'
Other equity Less: Treasury
Share capital Capital reserve comprehensive Surplus reserve Retained profits interests equity
instruments shares
income
I. Opening balance of the current year 2,210,172,782.00 409,902,116.17 2,242,456,606.22 (341,236,339.88) (83,600,398.95) 738,004,669.96 7,906,260,771.90 404,875.20 13,082,365,082.62
II. Changes for the year
(I) Total comprehensive income - - - - 195,450,567.53 - 3,059,967,081.20 40,090.49 3,255,457,739.22
(II) Owners’ contributions and reduction
in capital
1. Ordinary shares contributed by
5,985,955.00 - 70,721,020.16 - - - - - 76,706,975.16
shareholders
2. Capital contribution by owners of
2,129.00 (4,990.13) 41,144.76 - - - - - 38,283.63
other equity instruments
3. Share-based payment recognized in
- - 22,177,000.00 - - - - - 22,177,000.00
shareholders' equity
4. Treasury stock cancellations (9,296,627.00) - (101,214,178.80) 110,510,805.80 - - - - -
5. Transfer from treasury shares - - 348,293.28 (348,766.28) - - - - (473.00)
6. Others - - - (120,318,665.50) - - - - (120,318,665.50)
(III) Profit distribution
1. Transfer to surplus reserve - - - - - 124,076,162.30 (124,076,162.30) - -
2. Distributions to shareholders - - - - - - (566,586,796.58) - (566,586,796.58)
III. Closing balance of the current year 2,206,864,239.00 409,897,126.04 2,234,529,885.62 (351,392,965.86) 111,850,168.58 862,080,832.26 10,275,564,894.22 444,965.69 15,749,839,145.55
152 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2023
Statement of Changes in Shareholders' Equity of the Company
Unit: RMB
2023
ITEM Other equity Less: Treasury Total shareholders'
Share capital Capital reserve Surplus reserve Retained profits
instruments shares equity
I. Opening balance of the current year 2,206,864,239.00 409,897,126.04 2,294,431,282.90 (351,392,965.86) 862,080,832.26 3,641,715,134.85 9,063,595,649.19
II. Changes for the year
(I) Total comprehensive income - - - - - 1,047,209,221.43 1,047,209,221.43
(II) Owners’ contributions and reduction
in capital
1. Ordinary shares contributed by
3,124,565.00 - 34,699,093.12 - - - 37,823,658.12
shareholders
2. Capital contribution by owners of
2,776.00 (6,415.90) 54,888.33 - - - 51,248.43
other equity instruments
3. Share-based payment recognized
- - 17,684,000.00 - - - 17,684,000.00
in shareholders' equity
4. Transfer from treasury shares - - 363,746.57 (364,587.57) - - (841.00)
5. Others - - (3,366,070.64) 30,026,557.89 - - 26,660,487.25
(III) Profit distribution
1. Transfer to surplus reserve - - - - 104,720,922.14 (104,720,922.14) -
2. Distributions to shareholders - - - - - (938,928,461.98) (938,928,461.98)
III. Closing balance of the current year 2,209,991,580.00 409,890,710.14 2,343,866,940.28 (321,730,995.54) 966,801,754.40 3,645,274,972.16 9,254,094,961.44
153 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2023
Statement of Changes in Shareholders' Equity of the Company - continued
Unit: RMB
2022
ITEM Other equity Less: Treasury Total shareholders'
Share capital Capital reserve Surplus reserve Retained profits
instruments shares equity
I. Opening balance of the current year 2,210,172,782.00 409,902,116.17 2,302,358,003.50 (341,236,339.88) 738,004,669.96 3,091,616,470.76 8,410,817,702.51
II. Changes for the year
(I) Total comprehensive income - - - - - 1,240,761,622.97 1,240,761,622.97
(II) Owners’ contributions and reduction
in capital
1. Ordinary shares contributed by
5,985,955.00 - 70,721,020.16 - - - 76,706,975.16
shareholders
2. Capital contribution by owners of
2,129.00 (4,990.13) 41,144.76 - - - 38,283.63
other equity instruments
3. Share-based payment recognized
- - 22,177,000.00 - - - 22,177,000.00
in shareholders' equity
4. Treasury stock cancellations (9,296,627.00) - (101,214,178.80) 110,510,805.80 - - -
5. Transfer from treasury shares - - 348,293.28 (348,766.28) - - (473.00)
6. Others - - - (120,318,665.50) - - (120,318,665.50)
(III) Profit distribution
1. Transfer to surplus reserve - - - - 124,076,162.30 (124,076,162.30) -
2. Distributions to shareholders - - - - - (566,586,796.58) (566,586,796.58)
III. Closing balance of the current year 2,206,864,239.00 409,897,126.04 2,294,431,282.90 (351,392,965.86) 862,080,832.26 3,641,715,134.85 9,063,595,649.19
154 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(I) BASIC INFORMATION ABOUT THE COMPANY
1. General
Universal Scientific Industrial (Shanghai) Co., Ltd. ("Company" or "the Company") is a joint-stock limited
company changed from Universal Scientific Industrial (Shanghai) Co., Ltd. (the "Limited Company") on an
overall basis.
The Limited Company is a foreign-funded enterprise invested and established in Zhangjiang Integrated Circuit
Port, Pudong New Area, Shanghai on 2 January 2003.
On 17 June 2008, the Limited Company was approved to be changed into a foreign-invested joint-stock company
and renamed as Universal Scientific Industrial (Shanghai) Co., Ltd. in accordance with the Official Reply (Shang
Zi Pi No. [2008] 654) of the Ministry of Commerce of the People’s Republic of China. The Company's registered
capital totals RMB 2,209,991,580.00 as at 31 December 2023.
The Company was listed on the Shanghai Stock Exchange in February 2012 and publicly issued Class A Ordinary
shares in RMB in China.
The Company is headquartered in Shanghai, the People’s Republic of China, which is mainly engaged in
providing design and manufacturing services (DMS) for electronic products, designing, producing and processing
new electronic components, high-performance motherboard for computers, wireless network communication
components, mobile communication products and modules, spare parts, repairing the above products, selling self-
produced products, and providing relevant technical consulting services; wholesale, import and export of
electronic products, communication products and related spare parts, and providing relevant supporting services.
See Notes (VII), 1 for the business nature of the Company's subsidiaries.
2. Date of approval for issue of the financial statements
The Company's and consolidated financial statements were approved by the board of directors of the Company
and authorized for issue on 29 March 2024.
(II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
1. Basis of preparation
The Company and its subsidiaries (collectively referred to as the "Group") have adopted the Accounting Standards
for Business Enterprises ("ASBE") and relative regulations issued by the Ministry of Finance ("MoF"). In addition,
the Group has disclosed relevant financial information in accordance with Information Disclosure and
Presentation Rules for Companies Offering Securities to the Public No. 15 - General Provisions on Financial
Reporting (Revised in 2023).
2. Going concern
The Group assessed its ability to continue as a going concern for the 12 months from 31 December 2023 and did
not notice any events or circumstances that may cast significant doubt upon its ability to continue as a going
concern. Therefore, the financial statements have been prepared on a going concern basis.
3. Basis of accounting and principle of measurement
The Group has adopted the accrual basis of accounting. Except for certain financial instruments which are
measured at fair value, the Company adopts the historical cost as the principle of measurement in the financial
statements. Where assets are impaired, provisions for asset impairment are made in accordance with relevant
requirements.
155 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued
3. Basis of accounting and principle of measurement - continued
Where the historical cost is adopted as the measurement basis, assets are recorded at the amount of cash and cash
equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition.
Liabilities are measured at the amount of proceeds or assets received or the contractual amounts for assuming the
present obligation, or, at the amounts of cash and cash equivalents expected to be paid to settle the liabilities in
the normal course of business.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurements date, regardless of whether that price is directly observable or
estimated using valuation technique. Regardless of whether that price is directly observable or estimated using
another valuation technique, fair value for measurement and/or disclosure purposes in these financial statements
is determined on such a basis.
The capacity of market participants to realize the maximum profit of non-financial assets, or the capacity of other
participants who acquired non-financial assets to realize the maximum profit will be considered when measuring
fair values of such non-financial assets.
For a financial asset taking the transaction price as its fair value on initial recognition and using valuation
techniques involving unobservable inputs in subsequent measurement of fair value, such valuation technique is
corrected in the valuation process, as to ensure that the initial recognition result determined by valuation
techniques is equal to the transaction price.
Fair value measurements are categorised into Level 1, 2 or 3 based on degree to which the inputs to the fair value
measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which
are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date;
Level 2 inputs are inputs, other than inputs included within Level 1, that are observable for the asset or
liability, either directly or indirectly;
Level 3 inputs are unobservable inputs for the asset or liability.
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
1. Statement of Compliance the Accounting Standards for Business Enterprises ("ASBE")
The financial statements of the Company have been prepared in accordance with ASBE, and present truly and
completely, the Company's and consolidated financial position as of 31 December 2023, and the Company's and
consolidated results of operations, changes in the shareholders' equity and cash flows for the year then ended.
2. Accounting period
The Group has adopted the calendar year as its accounting year, i.e. from 1 January to 31 December.
3. Operating cycle
An operating cycle refers to the period since when an enterprise purchases assets for processing purpose till the
realization of those assets in cash or cash equivalents. The Group's operating cycle is less than 12 months, and the
Group takes 12 months as the criteria for determining liquidity of assets and liabilities.
156 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
4. Functional currency
Renminbi ("RMB") is the currency of the primary economic environment in which the Company and its domestic
subsidiaries operate. Therefore, the functional currency of the Company is RMB. The Company's domestic
subsidiaries choose RMB as their functional currency, except those adopt USD as their functional currency as
their sales of goods, purchase of raw materials and other expenses are settled in USD and their financing is made
in USD. The Company's foreign subsidiary chooses USD, JYP, TWD, PLN, EUR or TND as its functional
currency on the basis of the primary economic environment in which it operates. The Group adopts RMB to
prepare its financial statements.
5. Determining method and selecting basis of significance criterion
ITEM Significance criterion
Significant construction in progress for the period RMB 70 million
Significant non-wholly-owned subsidiary for the period RMB 70 million
Significant joint venture and associate for the period RMB 70 million
6. Accounting treatment of business combinations not involving enterprises under common control
6.1 Business combinations not involving enterprises under common control and goodwill
A business combination not involving enterprises under common control is a business combination in which all
of the combining enterprises are not ultimately controlled by the same party or parties before and after the
combination.
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets given, liabilities
incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree. The
intermediary expenses incurred by the acquirer in respect of auditing, legal services, valuation and consultancy
services, etc. and other associated administrative expenses attributable to the business combination are recognized
in profit or loss when they are incurred.
The acquiree's identifiable assets, liabilities and contingent liabilities, acquired by the acquirer in a business
combination, that meet the recognition criteria shall be measured at fair value at the acquisition date.
When the business combination contract provides that, upon the occurrence of multiple future contingencies, the
acquirer shall pay an additional or request for recovery of part of the previously paid consideration for the
combination, such contingent consideration as set out in the contract shall be recognized as a liability or asset by
the Group as a part of the aggregate consideration transferred in the business combination, and be included in the
cost of combination at the fair value at the acquisition date. Within twelve months after the acquisition, if the
contingent consideration needs to be adjusted as new or further evidences are obtained in respect of circumstances
existed as of the acquisition date, the amount preciously included in the goodwill shall be adjusted. A change in
or adjustment to the contingent consideration under other circumstances shall be measured in accordance with the
Accounting Standards for Business Enterprises No. 22 – Financial Instruments: Recognition and Measurement
and the Accounting Standards for Business Enterprises No. 13 – Contingencies. Any change or adjustment is
included in profit or loss for the current period.
157 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
6. Accounting treatment of business combinations not involving enterprises under common control - continued
6.1 Business combinations not involving enterprises under common control and goodwill - continued
Where the cost of combination exceeds the acquirer's interest in the fair value of the acquiree's identifiable net
assets, the difference is treated as an asset and recognized as goodwill, which is measured at cost on initial
recognition. Where the cost of combination is less than the acquirer's interest in the fair value of the acquiree's
identifiable net assets, the acquirer firstly reassesses the measurement of the fair values of the acquiree's
identifiable assets, liabilities and contingent liabilities and measurement of the cost of combination. If after that
reassessment, the cost of combination is still less than the acquirer's interest in the fair value of the acquiree's
identifiable net assets, the acquirer recognizes the remaining difference immediately in profit or loss for the
current period.
If either the fair values of identifiable assets, liabilities and contingent liabilities acquired in a combination or the
cost of business combination can be determined only provisionally by the end of the period in which the business
combination was effected, the acquirer recognizes and measures the combination using those provisional values.
Any adjustments to those provisional values within twelve months after the acquisition date are treated as if they
had been recognized and measured on the acquisition date.
Goodwill arising on a business combination is measured at cost less accumulated impairment losses, and is
presented separately in the consolidated financial statements.
7. Criteria of control and preparation of consolidated financial statements
7.1 Criteria of control
Control is the power over the investee, exposures or rights to variable returns from its involvement with the
investee, and the ability to use its power over the investee to affect the amount of the investor's returns. If changes
of related facts and situations lead to changes of related elements of control, the Group will conduct reassessment.
7.2 Preparation of consolidated financial statements
The scope of consolidation in the consolidated financial statements is determined on the basis of control.
The combination of subsidiaries begins with the Group's control over the subsidiary, and ceases with the Group's
losing control of the subsidiary.
For a subsidiary disposed by the Group, the operating results and cash flows before the date of disposal (the date
when control is lost) are included in the consolidated income statement and consolidated statement of cash flows,
as appropriate.
For a subsidiary acquired through a business combination not involving enterprises under common control[or the
combined party under combination by merge, the operating results and cash flows from the acquisition date (the
date when control is obtained) are included in the consolidated income statement and consolidated statement of
cash flows, as appropriate.
No matter when the business combination occurs in the reporting period, subsidiaries acquired through a business
combination involving enterprises under common control are included in the Group's scope of consolidation as if
they had been included in the scope of consolidation from the date when they first came under the common control
of the ultimate controlling party. Their operating results and cash flows from the beginning of the earliest reporting
period or from the date when they first came under the common control of the ultimate controlling party are
included in the consolidated income statement and consolidated statement of cash flows, as appropriate.
158 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
7. Criteria of control and preparation of consolidated financial statements - continued
7.2 Preparation of consolidated financial statements - continued
The significant accounting policies and accounting periods adopted by the subsidiaries are determined based on
the uniform accounting policies and accounting periods set out by the Company.
Influence over the consolidated financial statements arising from significant intra-group transactions are
eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as minority interests and
presented as "minority interests" in the consolidated balance sheet within shareholders' equity. The portion of net
profits or losses of subsidiaries for the period attributable to minority interests is presented as "Profit or loss
attributable to minority interests" in the consolidated income statement below the "net profit" line item.
When the amount of loss for the period attributable to the minority shareholders of a subsidiary exceeds the
minority shareholders' portion of the opening balance of owners' equity of the subsidiary, the excess amount is
still allocated against minority interests.
Acquisition of minority interests or disposal of interest in a subsidiary that does not result in the loss of control
over the subsidiary is accounted for as equity transactions. The carrying amounts of the Company's interests and
minority interests are adjusted to reflect the changes in their relative interests in the subsidiary. The difference
between the amount by which the minority interests are adjusted and the fair value of the consideration paid or
received is adjusted to capital reserve under owners' equity. If the capital reserve is not sufficient to absorb the
difference, the excess are adjusted against retained profits.
8. Classification of joint arrangements and accounting treatments of joint operations
A joint arrangement is classified into joint operation and joint venture, depending on the rights and obligations of
the parties to the arrangement, which is assessed by considering the structure and the legal form of the arrangement,
the terms agreed by the parties in the contractual arrangement and, when relevant, other facts and circumstances.
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights
to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement
whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement.
The Group accounts for investments in joint ventures using equity method. Refer to Note (III) 17.3.2 "Long-term
equity investments accounted for using the equity method" for details.
9. Recognition criteria of cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are the
Group's short-term (generally refers to expiration within three months from the date of purchase), highly liquid
investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk
of changes in value.
159 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Translation of transactions and financial statements denominated in foreign currencies
10.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying an exchange rate that approximates
the actual spot exchange rate on the date of transaction. The exchange rate that approximates the actual spot
exchange rate on the date of transaction is calculated and determined according to the middle price of the market
exchange rate at the beginning of the month in which the transaction occurs.
At the balance sheet date, foreign currency monetary items are translated into functional currency using the spot
exchange rates at the balance sheet date. Exchange differences arising from the differences between the spot
exchange rates prevailing at the balance sheet date and those on initial recognition or at the previous balance sheet
date are recognized in profit or loss for the period, except that (1) exchange differences related to a specific-
purpose borrowing denominated in foreign currency that qualify for capitalization are capitalized as part of the
cost of the qualifying asset during the capitalization period; (2) exchange differences related to hedging
instruments for the purpose of hedging against foreign currency risks are accounted for using hedge accounting;
(3) exchange differences arising from changes in the carrying amounts (other than the amortized cost) of monetary
items at fair value through other comprehensive income are recognized as other comprehensive income.
When the consolidated financial statements include foreign operation(s), if there is foreign currency monetary
item constituting a net investment in a foreign operation, exchange difference arising from changes in exchange
rates are recognized as "exchange differences arising on translation of financial statements denominated in foreign
currencies " in other comprehensive income, and in profit and loss for the period upon disposal of the foreign
operation.
Foreign currency non-monetary items measured at historical cost are translated to the amounts in functional
currency at the spot exchange rates on the dates of the transactions. Foreign currency non-monetary items
measured at fair value are re-translated at the spot exchange rate on the date the fair value is determined.
Difference between the re-translated functional currency amount and the original functional currency amount is
treated as changes in fair value (including changes of exchange rate) and is recognized in profit and loss or as
other comprehensive income.
10.2 Translation of financial statements denominated in foreign currencies
For the purpose of preparing the consolidated financial statements, financial statements of a foreign operation are
translated from the foreign currency into RMB using the following method: assets and liabilities on the balance
sheet are translated at the spot exchange rate prevailing at the balance sheet date; shareholders' equity items are
translated at the spot exchange rates at the dates on which such items arose; all items in the income statement as
well as items reflecting the distribution of profits are translated at an exchange rates that approximate the actual
spot exchange rates on the dates of the transactions; The difference between the translated assets and the aggregate
of liabilities and shareholders' equity items is recognized as other comprehensive income and included in
shareholders' equity.
Cash flows arising from a transaction in foreign currency and the cash flows of a foreign subsidiary are translated
at an exchange rate which approximates the spot exchange rate on the date of the cash flows. The effect of
exchange rate changes on cash and cash equivalents is regarded as a reconciling item and presented separately in
the cash flow statement as "effect of exchange rate changes on cash and cash equivalents".
The closing balances and the actual amounts of previous year are presented at the translated amounts in the
previous year's financial statements.
160 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Translation of transactions and financial statements denominated in foreign currencies - continued
10.2 Translation of financial statements denominated in foreign currencies - continued
On disposal of the Group's entire interest in a foreign operation, or upon a loss of control over a foreign operation
due to disposal of certain equity investments or other reasons, the Group transfers the accumulated exchange
differences arising on translation of financial statements of this foreign operation attributable to the owners' equity
of the Company and presented under owners' equity, to profit or loss in the period in which the disposal occurs.
In case of a disposal of part equity investments or other reason leading to lower interest percentage in foreign
operations but does not result in the Group losing control over a foreign operation, the proportionate share of
accumulated exchange differences arising on translation of financial statements are re-attributed to minority
interests and are not recognized in profit and loss. For partial disposals of equity interests in foreign operations
which are associates or joint ventures, the proportionate share of the accumulated exchange differences arising on
translation of financial statements of foreign operations is reclassified to profit or loss.
11. Financial instruments
Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual
provisions of the instrument.
For financial assets purchased or sold in a regular way, the Company recognises assets acquired and liabilities
assumed on a trade date basis, or derecognises the assets sold on a trade date basis.
Financial assets and financial liabilities are initially measured at fair value. For financial assets and financial
liabilities at fair value through profit or loss, transaction costs are immediately recognized in profit or loss. For
other financial assets and financial liabilities, transaction costs are included in their initial recognized amounts.
Upon initial recognition of accounts receivable that does not contain significant financing component or without
considering the financing component included in the contract with a term not exceeding one year under the
Accounting Standards for Business Enterprises No. 14 - Revenue ("Revenue Standards"), the Group adopts the
transaction price as defined in the Revenue Standards for initial measurement.
The effective interest method is a method that is used in the calculation of the amortized cost of a financial asset
or a financial liability and in the allocation of the interest income or interest expense in profit or loss over the
relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash flows through the expected life
of the financial asset or financial liability to the carrying amount of the financial asset or to the amortized cost of
the financial liability. When determining the effective interest rate, the Group estimates future cash flows by
considering all contractual terms of the financial asset or financial liability including early repayment, extension,
call option or other similar options etc. without considering future credit losses.
The amortised cost of a financial asset or a financial liability is the amount of a financial asset or a financial
liability initially recognised net of principal repaid, plus or less the cumulative amortised amount arising from
amortisation of the difference between the amount initially recognised and the amount at the maturity date using
the effective interest method, net of cumulative loss allowance (only applicable to financial assets).
161 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.1 Classification, recognition and measurement of financial assets - continued
After initial recognition, the Group's financial assets of various types are subsequently measured at amortized
cost, at fair value through other comprehensive income ("FVTOCI") or at fair value through profit or loss
("FVTPL"), respectively.
If contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding, and the financial asset is held within a business model
whose objective is to hold financial assets in order to collect contractual cash flows, such asset is classified into
financial assets measured at amortized cost, which include cash and bank balances, notes receivable, accounts
receivable, other receivables, non-current assets due within one year and long-term receivables and etc.
Financial assets are subsequently measured at FVTOCI when (1) the financial asset is held within a business
model whose objective is achieved by both collecting contractual cash flows and selling; and (2) the contractual
terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding. Such financial assets due over one year since acquisition are presented as other debt
investments. Other debt investments due within one year (inclusive) since the balance sheet date are presented as
non-current assets due within one year. Accounts receivable and notes receivable at FVTOCI since acquisition
are presented as factoring with receivables, other items due within one year (inclusive) are presented as other
current assets.
On initial recognition, the Group may irrevocably designate non-trading equity instruments, other than contingent
consideration recognized through business combination not involving enterprises under common control, as
financial assets at FVTOCI on an individual basis. Such financial assets at FVTOCI are presented as other equity
instrument.
A financial asset is classified as held-for-trading if any of the following criteria is satisfied:
It has been acquired principally for the purpose of selling it in near term.
On initial recognition, it is part of a portfolio of identifiable financial instruments that the Group manages
together and there is objective evidence that the Group has a recent actual pattern of short-term profit-taking.
It is a derivative that is neither a financial guarantee contract nor designated as an effective hedging
instrument.
Financial assets at FVTPL include financial assets classified as at FVTPL and financial assets designated as at
FVTPL:
Any financial assets that does not qualify for amortized cost measurement or measurement at FVTOCI or
designated at FVTOCI are classified into financial assets at FVTPL.
Upon initial recognition, in order to eliminate or significantly reduce accounting mismatch and qualified
hybrid financial instrument combines financial asset with embedded derivatives, the Group will irrevocably
designate it as financial liabilities at FVTPL.
Financial assets at FVTPL assets other than derivative financial assets are presented as "held-for-trading financial
assets". Such financial assets at FVTPL which may fall due more than one year (or without fixed term) since the
balance sheet date and will be held more than one year are presented as other non-current financial assets.
162 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.1 Classification, recognition and measurement of financial assets - continued
11.1.1 Financial assets at amortized cost
The financial assets measured at amortized cost are subsequently measured at amortized cost using the effective
interest method. Gain or loss arising from impairment or derecognition is recognized in profit or loss.
The Group recognizes interest income from financial assets classified as financial assets at amortized cost using
the effective interest method. The Group calculates and recognizes interest income through account balance of
financial assets multiplying effective interest, except for the following circumstances:
For purchased or originated credit-impaired financial assets, the Group calculates and recognizes its interest
income based on amortized cost of the financial asset and the effective interest through credit adjustment
since initial recognition.
For purchased or originated financial assets without credit impairment incurred while with credit
impairment incurred in subsequent periods, the Group calculates and recognizes its interest income based
on amortized cost of the financial asset and the effective interest in subsequent periods. If the credit risk of
the financial asset is reduced during subsequent periods and credit impairment does not exist, and the
improvement can be related to an event occurring after application of aforesaid provisions, the Group shall
calculate and recognize interest income through account balance of financial assets multiplying effective
interest.
11.1.2 Financial assets at FVTOCI
Impairment losses or gains related to financial assets at FVTOCI, interest income measured using effective interest
method and exchange gains or losses are recognized into profit or loss for the current period, except for the above
circumstances, changes in fair value of the financial assets are included in other comprehensive income. Amounts
charged to profit or loss for every period equal to the amount charged to profit or loss as it is measured at amortized
costs. When the financial asset is derecognized, the cumulative gains or losses previously recognized in other
comprehensive income shall be removed from other comprehensive income and recognized in profit or loss.
Changes in fair value of non-held-for-trading equity instrument investments designated as financial assets at
FVTOCI are recognized in other comprehensive income. When the financial asset is derecognized, the cumulative
gains or losses previously recognized in other comprehensive income are transferred and included in retained
earnings. During the period in which the Group holds the non-trading equity instrument, revenue from dividends
is recognized in profit or loss for the period when (1) the Group has established the right of collecting dividends;
(2) it is probable that the associated economic benefits will flow to the Group; and (3) the amount of dividends
can be measured reliably.
11.1.3 Financial assets at FVTPL
Financial assets at FVTPL are subsequently measured at fair value, with gains or losses on fair value changes and
related dividends and interest income included in profit or loss for the period.
163 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.2 Impairment of financial instruments
The Group makes accounting treatment on impairment and recognizes loss allowance for expected credit losses
("ECL") on financial assets measured at amortized cost, financial assets classified as at FVTOCI and lease
receivables.
The Group makes a loss allowance against amount of lifetime ECL of notes receivable and accounts receivable
arising from transactions adopting the Revenue Standard as well as lease receivables arising from transactions
adopting ASBE No. 21- Leases.
For other financial instruments, except for the purchased or originated credit-impaired financial assets, at each
balance sheet date, the Group assess changes in credit risk of relevant financial instruments since initial
recognition. If the credit risk of the above financial instruments has increased significantly since initial recognition,
the Group measures loss allowance based on the amount of full lifetime; if credit risk of the financial instrument
has not increased significantly since initial recognition, the Group recognizes loss allowance based on 12-month
ECL of the financial instrument. Increase in or reversal of credit loss allowance is included in profit or loss as
loss/gain on impairment, except for financial assets classified as at fair value through other comprehensive income.
For the financial assets classified as at FVTOCI, the Group recognizes credit loss allowance in other
comprehensive income and recognizes the loss/gain on impairment in profit or loss, while the Group does not
decrease the carrying amount of such financial assets in the balance sheet.
In the previous accounting period, the Group has measured the loss allowance according to the amount of ECL
for the entire period of the financial instrument, but on the current balance sheet date, the financial instrument is
no longer a significant increase in credit risk since the initial recognition. The Group measures the loss allowance
for the financial instrument on the balance sheet date based on the amount of ECL in the next 12 months. The
reversal amount of the loss allowance formed is recognized in profit and loss for the period as an impairment gain.
11.2.1 Significant increase in credit risk
In assessing whether the credit risk has increased significantly since initial recognition, the Group compares the
risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring
on the financial instrument as at the date of initial recognition.
In particular, the following information is taken into account when assessing whether credit risk has increased
significantly:
(1) Significant changes in internal price indicators as a result of a change in credit risk.
(2) Significant changes in external market indicators of credit risk for a particular financial instrument or
similar financial instruments with the same expected life. Changes in market indicators of credit risk include,
but are not limited to: (i) the credit spread; (ii) the credit default swap prices for the borrower; (iii) the
length of time or the extent to which the fair value of a financial asset has been less than its amortized cost;
and (iv) other market information related to the borrower, such as changes in the price of a borrower's debt
and equity instruments.
(3) An actual or expected significant change in the financial instrument's external credit rating;
(4) An actual or expected decrease in the internal credit rating for the debtor;
(5) Adverse changes in business, financial or economic conditions that are expected to cause a significant
decrease in the debtor's ability to meet its debt obligations;
(6) An actual or expected significant change in the operating results of the debtor;
(7) Significant adverse changes in regulatory, economic, or technological environment of the debtor;
(8) Significant changes in circumstances expected to reduce the debtor's economic incentive to make scheduled
contractual payments;
164 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.2 Impairment of financial instruments - continued
11.2.1 Significant increase in credit risk - continued
In particular, the following information is taken into account when assessing whether credit risk has increased
significantly: - continued
(9) Significant changes in expected performance and repayment of the debtor;
(10) Changes in the Group's credit management approach in relation to the financial instrument;
No matter whether credit risk has increased significantly or not subsequent to aforementioned assessment, the
Group considers credit risk of financial instruments has increased significantly when contractual payments of
financial instruments past due over 30 days (inclusive).
The Group assumes that the credit risk on a financial instrument has not increased significantly since initial
recognition if the financial instrument is determined to have lower credit risk at the balance sheet date. A financial
instrument is determined to have lower credit risk if: i) it has a lower risk of default, ii) the borrower has a strong
capacity to meet its contractual cash flow obligations in the near term and iii) adverse changes in economic and
business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its
contractual cash flow obligations.
11.2.2 Credit-impaired financial assets
When the Group expected occurrence of one or more events which may cause adverse impact on future cash flows
of a financial asset, the financial asset will become a credit-impaired financial assets. Objective evidence that a
financial asset is impaired includes but not limited to the following observable events:
(1) Significant financial difficulty of the issuer or debtor;
(2) Breach of contract by the debtor, such as a default or delinquency in interest or principal payments;
(3) The creditor, for economic or contractual reasons relating to the debtor's financial difficulty, has granted to
the debtor a concession that the creditor would not otherwise consider;
(4) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation;
(5) Purchase or originate a financial asset with a large scale of discount, which reflects facts of credit loss
incurred.
Whatever the aforementioned assessment results are, the Group presumes that the financial instruments has
defaulted when contractual payments of financial instruments past due over 90 days (inclusive).
11.2.3 Determination of expected credit loss
Lease receivables are assessed for ECL individually by the Group. In addition, the Group uses provision matrix
to calculate ECL for accounts receivable based on aging. According to the Group's assessment of the credit risk
of accounts receivable, the aging information can reflect the customer's ability of repayment at the maturity of
accounts receivable.
For other receivables, the credit loss of relevant financial instruments shall be determined on a portfolio basis in
addition to those individually significant. The Group classifies financial instruments into different groups based
on common risk characteristics. Common credit risk characteristics include the date of initial recognition,
remaining contractual maturity, etc.
165 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.2 Impairment of financial instruments - continued
11.2.3 Determination of expected credit loss - continued
The Group determines the ECL of relevant financial instruments using the following method:
For a financial asset and a lease receivable, a credit loss is the present value of the difference between the
contractual cash flows that are due to the Group under the contract and the cash flows that the Group expects
to receive;
For credit-impaired financial assets other than the purchased or originated credit-impaired financial assets
at the balance date, credit loss is difference between the carrying amount of financial assets and the present
value of expected future cash flows discounted at original effective interest rate.
The factors reflected in methods of measurement of expected credit losses include an unbiased and probability-
weighted amount that is determined by evaluating a range of possible outcomes; time value of money; reasonable
and supportable information about past events, current conditions and forecasts on future economic status at
balance sheet date without unnecessary additional costs or efforts.
11.2.4 Write-down of financial assets
When the Group will no longer reasonably expect that the contractual cash flows of financial assets can be
collected in aggregate or in part, the Group will directly write down the carrying amount of the financial asset,
which constitutes derecognition of relevant financial assets.
11.3 Transfer of financial assets
The Group will derecognize a financial asset if one of the following conditions is satisfied: (i) the contractual
rights to the cash flows from the financial asset expire; (ii) the financial asset has been transferred and substantially
all the risks and rewards of ownership of the financial asset is transferred to the transferee; or (iii) although the
financial asset has been transferred, the Group neither transfers nor retains substantially all the risks and rewards
of ownership of the financial asset but has not retained control of the financial asset.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset,
and it retains control of the financial asset, the Group will recognize the financial asset to the extent of its
continuing involvement in the transferred financial asset and recognize an associated liability. The Group will
measure relevant liabilities as follows:
For transferred financial assets carried at amortized cost, the carrying amount of relevant liabilities is the
carrying amount of financial assets transferred with continuing involvement less amortized cost of the
Group's retained rights (if the Group retains relevant rights upon transfer of financial assets) with addition
of amortized cost of obligations assumed by the Group (if the Group assumes relevant obligations upon
transfer of financial assets). Relevant liabilities are not designated as financial liabilities at fair value
through profit or loss.
For transferred financial assets carried at fair value, the carrying amount of relevant financial liabilities is
the carrying amount of financial assets transferred with continuing involvement less fair value of the
Group's retained rights (if the Group retains relevant rights upon transfer of financial assets) with addition
of fair value of obligations assumed by the Group (if the Group assumes relevant obligations upon transfer
of financial assets). Accordingly, the fair value of relevant rights and obligations shall be measured on an
individual basis.
166 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.3 Transfer of financial assets - continued
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the difference between (1)
the carrying amount of the financial asset transferred at the derecognition date; and (2) the sum of the
consideration received from the transfer of financial assets and any cumulative gain or loss allocated to the part
derecognized which has been previously recognized in other comprehensive income, is recognized in profit or
loss. If the financial assets transferred by the Group are designated as equity instrument investments at fair value
through other comprehensive income that are not held for trading, the cumulative gains or losses previously
recognized in other comprehensive income are transferred out and included in retained earnings.
If a part of the transferred financial asset qualifies for derecognition, the overall carrying amount of the financial
asset prior to transfer is allocated between the part that continues to be recognized and the part that is derecognized,
based on the respective fair value of those parts at the date of transfer. The difference between (1) the carrying
amount allocated to the part derecognized on the date of derecognition; and (2) the sum of the consideration
received for the part derecognized and any cumulative gain or loss allocated to the part derecognized which has
been previously recognized in other comprehensive income, is recognized in profit or loss. If the financial assets
transferred by the Group are designated as equity instrument investments at fair value through other
comprehensive income that are not held for trading, the cumulative gains or losses previously recognized in other
comprehensive income are transferred out and included in retained earnings.
For a transfer of a financial asset in its entirety that does not satisfy the derecognition criteria, the Group will
continue to recognize the transferred financial asset in its entirety and recognize the consideration received as
financial liabilities.
11.4 Classification of financial liabilities and equity instruments
The Group classifies the financial instrument or its components into financial liabilities or equity instruments at
initial recognition on the basis of the terms of the contract of the financial instruments, the economic substance
as well as legal form reflected, and the definition of financial liabilities or equity instruments.
11.4.1 Classification, recognition and measurement of financial liabilities
On initial recognition, financial liabilities are classified into financial liabilities at FVTPL and other financial
liabilities.
11.4.1.1 Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading (including derivatives that are financial
liabilities) and financial liabilities designated as at FVTPL. Except that the derivative financial liability is
presented separately, financial liabilities at FVTPL are presented as financial liabilities held-for-trading.
167 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.4 Classification of financial liabilities and equity instruments - continued
11.4.1 Classification, recognition and measurement of financial liabilities - continued
11.4.1.1 Financial liabilities at FVTPL - continued
A financial liability is classified as held-for-trading if any of the following criteria is satisfied:
It has been incurred principally for the purpose of repurchasing it in the near term.
On initial recognition, it is part of a portfolio of identified financial instruments that the Group manages
together and there is objective evidence that the Group has a recent actual pattern of short-term profit-taking.
It is a derivative that is neither a financial guarantee contract nor designated as an effective hedging
instrument.
On initial recognition, financial liabilities that meet one of the following conditions are designated as financial
liabilities at FVTPL: (1) Such designation eliminates or significantly reduces accounting mismatch; (2) The
financial liability forms part of a group of financial liabilities or a group of financial assets and financial liabilities,
which is managed and its performance is evaluated on a fair value basis, in accordance with the documented risk
management or investment strategy, and information about the grouping is reported to key management personnel
on that basis; (3) The qualified hybrid financial instrument combines financial liability with embedded derivatives.
Held-for-trading financial liabilities are subsequently measured at fair value, and any gains or losses arising from
changes in fair value and any dividend or interest income earned on the financial liabilities are recognized in
profit or loss.
For a financial liability designated as at FVTPL, the amount of changes in the fair value of the financial liability
that are attributable to changes in the credit risk of that liability shall be presented in other comprehensive income,
while other changes in fair values are included in profit or loss for the current period. Upon the derecognition of
such financial liability, the accumulated amount of changes in fair value that are attributable to changes in the
credit risk of that liability, which was recognized in other comprehensive income, is transferred to retained
earnings. Any dividend or interest expense on the financial liabilities is recognized in profit or loss. If the
accounting treatment for the impact of the change in credit risk of such financial liability in the above ways would
create or enlarge an accounting mismatch in profit or loss, the Group shall present all gains or losses on that
liability (including the effects of changes in the credit risk of that liability) in profit or loss for the period.
11.4.1.2 Other financial liabilities
Other financial liabilities except for the financial liabilities arising from the transferred financial assets that do not
qualify for derecognition or financial liabilities arising from continuing involvement in the transferred financial
asset are classified as financial liabilities measured at amortized cost, and are subsequently measured at amortized
cost, with gain or loss arising from derecognition or amortization recognized in profit or loss.
If the Group modifies or renegotiates the contract with the counterparty and the financial liability subsequently
measured at amortized cost is not derecognized, but the cash flow of the contract changes, the Group shall re-
calculate the carrying amount of the financial liability and recognize the relevant gains or losses in profit or loss
of the period. The re-calculated carrying amount of the financial liability shall be determined by the Group
according to the cash flow of the renegotiated or modified contract based on the present value discounted at the
original effective interest rate of the financial liability. For all the costs or expenses arising from the modification
or renegotiation of the contract, the Group shall adjust the modified carrying amount of the financial liability and
amortize them within the remaining term of the financial liability.
168 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.4 Classification of financial liabilities and equity instruments - continued
11.4.2 Derecognition of financial liabilities
The Group recognizes a financial liability (or part of it) only when the underlying present obligation (or part of
it) is discharged. An agreement between the Group (an existing borrower) and an existing lender to replace the
original financial liability with a new financial liability with substantially different terms is accounted for as an
extinguishment of the original financial liability and the recognition of a new financial liability.
When the Group derecognizes a financial liability or a part of it, it recognizes the difference between the carrying
amount of the financial liability (or part of the financial liability) derecognized and the consideration paid
(including any non-cash assets transferred or new financial liabilities assumed) in profit or loss.
11.4.3 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting
all of its liabilities. Equity instruments issued (including refinanced), repurchased, sold and cancelled by the
Group are recognized as changes of equity. Change of fair value of equity instruments is not recognized by the
Group. Transaction costs related to equity transactions are deducted from equity.
The Group recognizes the distribution to holders of the equity instruments as distribution of profits, and dividends
paid do not affect total amount of shareholders equity.
11.5 Derivatives and embedded derivatives
Derivative financial instruments include forward exchange contracts, resale option and early redemption option
for convertible bonds, etc. Derivatives are initially measured at fair value at the date when the derivative contracts
are entered into and are subsequently re-measured at fair value.
Derivatives embedded in hybrid contracts that contain financial asset hosts are not separated. The entire hybrid
contract is classified and subsequently measured in its entirety as either amortized cost or fair value as appropriate.
If the host contract included in the hybrid contract is not a financial asset and meet all of the following criteria,
the embedded derivative shall be separated from the hybrid contract by the Group and treated as a stand-alone
derivative.
(1) The economic characteristics and risks of the embedded derivative are not highly related to the economic
characteristics and risks of the host contract;
(2) A separate instrument with the same terms as the embedded derivative would meet the definition of a
derivative; and
(3) The hybrid instrument is not designated as a financial asset or financial liability at FVTPL.
If the embedded derivative is separated from the hybrid contract, the host contract shall be accounted for in
accordance with the applicable standards. If the Group is unable to measure reliably the fair value of an embedded
derivative on the basis of its terms and conditions, the fair value of the embedded derivative is the difference
between the fair value of the hybrid contract and the fair value of the host contract. If the Group is still unable to
measure the fair value of the embedded derivative separately either at acquisition or at a subsequent balance sheet
date after the above methods are applied, it designates the entire hybrid contract as a financial instrument at fair
value through profit or loss.
169 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.6 Offsetting financial assets and financial liabilities
Where the Group has a legal right that is currently enforceable to set off the recognized financial assets and
financial liabilities, and intends either to settle on a net basis, or to realize the financial asset and settle the financial
liability simultaneously, a financial asset and a financial liability shall be offset and the net amount is presented
in the balance sheet. Except for the above circumstances, financial assets and financial liabilities shall be presented
separately in the balance sheet and shall not be offset.
11.7 Compound instruments
Convertible bonds issued by the Group that contain both the liability, the conversion option, the resale option and
early redemption option are classified separately into respective items on initial recognition. Conversion option
that is settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the
Company's own equity instruments is an equity instrument. At the date of issue, the liability, resale option
derivatives and early redemption option derivatives are initially measured at fair value. The difference between
the gross proceeds of the issue of the convertible bonds and the fair value assigned to the liability, resale option
derivatives and early redemption option derivatives, representing the conversion option for the holder to convert
the bonds into equity instrument, is included in other equity instruments.
In subsequent periods, the liability component of the convertible bonds is carried at amortized cost using the
effective interest method. The resale option derivatives and early redemption option derivatives are measured at
fair value with changes in fair value recognized in profit or loss. The conversion option classified as equity
instruments remains in equity instruments. No gain or loss is recognized in profit or loss upon conversion or
expiration of the option.
Transaction costs incurred for the issue of the convertible bonds are allocated to the liability, equity instruments,
resale option derivative components and early redemption option derivative components in proportion to their
respective fair values. Transaction costs relating to the resale option derivative components and early redemption
option are charged to profit or loss. Transaction costs relating to the liability component are included in the
carrying amount of the liability component and amortized over the period of the convertible loan notes using the
effective interest method. Transaction costs relating to the equity instruments component are charged directly to
equity instruments.
12. Notes receivable
12.1 Determination method and accounting treatment for expected credit loss of notes receivable
The Group believes that the credit risk of the bank acceptances held by the Group was insignificant due to the
high credit rating of the accepting banks. Therefore, no provision for credit loss was made.
13. Accounts receivable
13.1 Determination method and accounting treatment for expected credit loss of accounts receivable
The Group determines the expected credit loss on accounts receivable in accordance with Note (III), 11.2.3.
Increase in or reversal of provision for credit loss is included in profit or loss as loss or gain on impairment.
13.2 Aging calculation method for portfolio of credit risk characteristics recognized based on aging
The Group uses the aging of accounts receivable as a credit risk characteristic to determine its credit loss using
an impairment matrix. The aging is calculated from the date of initial recognition.
170 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
13. Accounts receivable - continued
13.3 Judgement criteria for bad debt provision assessed on an individual basis
The Group determines the expected credit loss of accounts receivable on an individual asset basis, taking into
account the significant financial difficulties of the debtor.
14. Other receivables
14.1 Determination method and accounting treatment for expected credit loss of other receivables
The Group determines the expected credit loss on other receivables in accordance with Note (III), 11.2.3. Increase
in or reversal of provision for credit loss is included in profit or loss as loss or gain on impairment.
14.2 Categories of portfolios for which bad debt provision is assessed on a portfolio basis according to credit risk
characteristics and the basis for determination
The Group classifies financial instruments into different groups based on common risk characteristics. Common
credit risk characteristics include the date of initial recognition, remaining contractual maturity, etc.
15. Inventories
15.1 Categories of inventories, valuation method of inventories upon delivery, inventory count system and
amortization method for low cost and short-lived consumable items and packaging materials
15.1.1 Categories of inventories
The Group's inventories mainly include raw materials, work in progress, finished goods, reusable materials, etc.
Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of conversion
and other expenditures incurred in bringing the inventories to their present location and condition.
15.1.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
15.1.3 Inventory count system
The perpetual inventory system is maintained for stock system.
15.1.4 Amortization method for other reusable materials
Other reusable materials are amortized using the multiple-stage amortization method.
15.2 Recognition criteria and provision methods for decline in value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net realizable value. If the net
realizable value is below the cost of inventories, a provision for decline in value of inventories is made.
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion, the estimated costs necessary to make the sale and relevant taxes. Net realizable value is determined
on the basis of clear evidence obtained, and takes into consideration the purposes of holding inventories and effect
of post balance sheet events.
171 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
15. Inventories - continued
15.2 Recognition criteria and provision methods for decline in value of inventories - continued
After the provision for decline in value of inventories is made, if the circumstances that previously caused
inventories to be written down below cost no longer exist so that the net realizable value of inventories is higher
than their cost, the original provision for decline in value is reversed and the reversal is included in profit or loss
for the period.
16. Held-for-sale non-current assets or disposal groups
16.1 Recognition criteria and accounting treatment of non-current assets or disposal groups classified as held-for-
sale
Non-current assets and disposal groups are classified as held for sale category when the Group recovers the book
value through a sale (including an exchange of non-monetary assets that has commercial substance) rather than
continuing use.
Non-current assets or disposal groups classified as held for sale are required to satisfy the following conditions:
(1) the asset or disposal group is available for immediate sale in its present condition subject only to terms that
are usual and customary for sales of such asset or disposal group; (2) the sale is highly probable, i.e. the Group
has made a resolution about selling plan and obtained a confirmed purchase commitment and the sale is expected
to be completed within one year.
The Group measures the no-current assets or disposal groups classified as held for sale at the lower of their
carrying amount and fair value less costs to sell. Where the carrying amount is higher than the net amount of fair
value less costs to sell, the carrying amount should be reduced to the net amount of fair value less costs to sell,
and such reduction is recognized in impairment loss of assets and included in profit or loss for the period.
Meanwhile, provision for impairment of held-for-sale assets are made. When there is increase in the net amount
of fair value of non-current assets held for sale less costs to sell at the balance sheet date, the original deduction
should be reversed in impairment loss of assets recognized after the classification of held-for-sale category, and
the reverse amount is included in profit or loss for the period. Losses of assets that are classified as held for sale
are not reversed.
Non-current assets classified as held-for-sale or disposal groups are not depreciated or amortized, interest and
other costs of liabilities of disposal group classified as held for sale continue to be recognized.
All or part of equity investments in an associate or joint venture are classified as held-for-sale assets. For the part
that is classified as held-for-sale, it is no longer accounted for using the equity method since the date of the
classification.
17. Long-term equity investments
17.1 Determination criteria of joint control and significant influence
Control is achieved when the Group has the power over the investee, is exposed or, has the rights to, variable
returns from its involvement with the investee; and has the ability to use its power to affect its return. Joint control
is the contractually agreed sharing of control over an economic activity, and exists only when the strategic
financial and operating policy decisions relating to the activity require the unanimous consent of the parties
sharing control. Significant influence is the power to participate in the financial and operating policy decisions of
the investee but is not control or joint control over those policies. When determining whether an investing
enterprise is able to exercise control or significant influence over an investee, the effect of potential voting rights
of the investee (for example, warrants and convertible debts) held by the investing enterprises or other parties that
are currently exercisable or convertible shall be considered.
172 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
17. Long-term equity investments - continued
17.2 Determination of initial investment cost
For a long-term equity investment acquired through business combination not involving enterprises under
common control, the investment cost of the long-term equity investment is the cost of acquisition at the date of
combination.
The expenses incurred by the acquirer or in respect of auditing, legal services, valuation and consultancy services
and other associated administrative expenses attributable to the business combination are recognized in profit or
loss when they are incurred.
Long-term equity investment acquired otherwise than through a business combination is initially measured at its
cost. When the entity is able to exercise significant influence or joint control (but not control) over an investee
due to [additional investment], the cost of long-term equity investments is the sum of the fair value of previously-
held equity investments determined in accordance with Accounting Standard for Business Enterprises No.22 -
Financial Instruments; Recognition and Measurement (CAS 22) and the additional investment cost.
17.3 Subsequent measurement and recognition of profit or loss
17.3.1 Long-term equity investment accounted for using the cost method
The Company's separate financial statements adopted cost method to account for the long-term equity investments
of subsidiaries. A subsidiary is an investee that is controlled by the Group.
Under the cost method, a long-term equity investment is measured at initial investment cost. When additional
investment is made or the investment is recouped, the cost of the long-term equity investment is adjusted
accordingly. Investment income is recognised in the period in accordance with the attributable share of cash
dividends or profit distributions declared by the investee.
17.3.2 Long-term equity investment accounted for using the equity method
The Group accounts for investment in associates and joint ventures using the equity method. An associate is an
entity over which the Group has significant influence and a joint venture is an entity over which the Group
exercises joint control along with other investors.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds the Group's
share of the fair value of the investee's identifiable net assets at the time of acquisition, no adjustment is made to
the initial investment cost. Where the initial investment cost is less than the Group's share of the fair value of the
investee's identifiable net assets at the time of acquisition, the difference is recognised in profit or loss for the
period, and the cost of the long-term equity investment is adjusted accordingly.
173 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
17. Long-term equity investments - continued
17.3 Subsequent measurement and recognition of profit or loss - continued
17.3.2 Long-term equity investment accounted for using the equity method - continued
Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensive income
of the investee for the period as investment income and other comprehensive income for the period. Meanwhile,
carrying amount of long-term equity investment is adjusted: the carrying amount of long-term equity investment
is decreased in accordance with its share of the investee's declared profit or cash dividends; Other changes in
owners' equity of the investee other than net profit or loss and other comprehensive income are correspondingly
adjusted to the carrying amount of the long-term equity investment, and recognized in the capital reserve. The
Group recognizes its share of the investee's net profit or loss based on the fair value of the investee's individual
identifiable assets, etc. at the acquisition date after making appropriate adjustments. When the investors'
accounting policies and accounting period are inconsistent with those of the Company, the Company recognizes
investment income and other comprehensive income after making appropriate adjustments to conform to the
Company's accounting policies and accounting period. However, unrealized gains or losses resulting from the
Group's transactions with its associates and joint ventures, which do not constitute a business, are eliminated
based on the proportion attributable to the Group and then investment gains or losses or is recognized. However,
unrealized losses are not eliminated if they result from the Group's transactions with its associates and joint
ventures which represent impairment losses on the transferred assets.
The Group discontinues recognizing its share of net losses of the investee after the carrying amount of the long-
term equity investment together with any long-term interests that in substance form part of its net investment in
the investee is reduced to zero. If the Group has incurred obligations to assume additional losses of the investee,
a provision is recognized according to the expected obligation, and recorded as investment loss for the period.
Where net profits are subsequently made by the investee, the Group resumes recognizing its share of those profits
only after its share of the profits exceeds the share of losses previously not recognized.
17.4 Disposal of long-term equity investments
On disposal of a long term equity investment, the difference between the proceeds actually received and receivable
and the carrying amount is recognized in profit or loss for the period.
18. Investment properties
Investment property is property held to earn rentals or for capital appreciation or both, including land use rights
leased out. It includes a land use right held for transfer upon capital appreciation and a building that is leased out.
An investment property is measured initially at cost. Subsequent expenditures incurred for such investment
property are included in the cost of the investment property if it is probable that economic benefits associated
with an investment property will flow to the Group and the subsequent expenditures can be measured reliably.
Other subsequent expenditures are recognized in profit or loss in the period in which they are incurred.
174 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
18. Investment properties - continued
The Group uses the cost model for subsequent measurement of investment property, and adopts the straight-line
method for depreciation over its useful life. The depreciation method, depreciation period, estimated residual
value rate and annual depreciation rate of each category of investment properties are as follows:
Annual
Depreciation Depreciation period Residual value rate
Category depreciation rate
method (years) (%)
(%)
Straight-line
Buildings 35 years - 2.86
method
An investment property is derecognized upon disposal or when the investment property is permanently withdrawn
from use and no future economic benefits are expected from its disposals.
When an investment property is sold, transferred, retired or damaged, the Group recognizes the amount of any
proceeds on disposal net of the carrying amount and related taxes in profit or loss for the period.
19. Fixed Assets
19.1 Recognition criteria
Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental to
others, or for administrative purposes, and have useful lives of more than one accounting year. A fixed asset is
recognized only when it is probable that economic benefits associated with the asset will flow to the Group and
the cost of the asset can be measured reliably. Fixed assets are initially measured at cost.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it is probable
that economic benefits associated with the asset will flow to the Group and the subsequent expenditures can be
measured reliably. Meanwhile the carrying amount of the replaced part is derecognized. Other subsequent
expenditures are recognized in profit or loss in the period in which they are incurred.
19.2 Depreciation method
Land operated overseas is not depreciated. A fixed asset other than land operated overseas is depreciated over its
useful life using the straight-line method since the month subsequent to the one in which it is ready for intended
use.
The useful life, estimated net residual value rate and annual depreciation rate of each category of fixed assets are
as follows:
Depreciation period Annual depreciation
Category Residual value rate (%)
(years) rate (%)
Buildings 12-35 years - 2.86-8.33
Machinery and equipment 3-8 years - 12.50-33.33
Transportation vehicles 2-6 years - 16.67-50.00
Electronic equipment,
3-10 years - 10.00-33.33
appliances and furniture
Renovation costs 3-10 years - 10.00-33.33
Estimated net residual value of a fixed asset is the estimated amount that the Group would currently obtain from
disposal of the asset, after deducting the estimated costs of disposal, if the asset was already of the age and in the
condition expected at the end of its useful life.
175 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
19. Fixed Assets - continued
19.3 Other descriptions
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or
disposal, the fixed asset is derecognised. When a fixed asset is sold, transferred, retired or damaged, the amount
of any proceeds on disposal of the asset net of the carrying amount and related taxes is recognised in profit or loss
for the period.
The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation method
applied at least once at each financial year-end, and account for any change as a change in an accounting estimate.
20. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various construction expenditures
during the construction period, borrowing costs capitalised before it is ready for intended use and other relevant
costs. Construction in progress is not depreciated.
Construction in progress is transferred to a fixed asset when it is ready for intended use. The criteria and time
points for the transfer of various types of construction in progress to fixed assets are as follows:
Time points for transfer to
Category Criteria for transfer to fixed assets
fixed assets
(1) The main construction works and
ancillary works have been completed
(2) The construction works have reached
the intended design requirements and
completed acceptance
Buildings (3) The construction works that are ready Ready for intended use
for intended use but have not been
finalized are transferred to fixed assets
at their estimated value based on the
actual cost of the works from the date
of ready for intended use
(1) Relevant equipment and other
Machinery and equipment, supporting facilities have been
electronic equipment, fixtures installed
Ready for intended use
and furniture, transportation (2) The equipment can maintain normal
vehicles, etc. to be installed and stable operation for a period of time
after commissioning
21. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset are
capitalized when expenditures for such asset and borrowing costs are incurred and activities relating to the
acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or
sale have commenced. Capitalization of borrowing costs ceases when the qualifying asset being acquired,
constructed or produced becomes ready for its intended use or sale. Other borrowing costs are recognized as an
expense in the period in which they are incurred.
176 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
21. Borrowing costs - continued
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is the
actual interest expense incurred on that borrowing for the period less any bank interest earned from depositing
the borrowed funds before being used on the asset or any investment income on the temporary investment of those
funds. Where funds are borrowed under general-purpose borrowings, the Group determines the amount of interest
to be capitalized on such borrowings by applying a capitalization rate to the weighted average of the excess of
cumulative expenditures on the asset over the amounts of specific-purpose borrowings. The capitalization rate is
the weighted average of the interest rates applicable to the general-purpose borrowings.
22. Intangible assets
22.1 Determination basis, estimation, amortization method and review procedure of useful life
Intangible assets include software, patents, trademarks, land use rights and customer relations, etc.
An intangible asset is measured initially at cost. When an intangible asset with a finite useful life is available for
use, its original cost less net residual value and any accumulated impairment losses is amortized over its estimated
useful life using the straight-line method. An intangible asset with an indefinite useful life is not amortized.
The amortization methods, useful lives, and estimated net residual value rates of each class of fixed assets are as
follows:
Category Amortization method Useful life (Years) Residual value rate (%)
Land use right Straight-line method 50 years -
Software Straight-line method 3-10 years -
Patents Straight-line method 3-20 years -
Trademarks Straight-line method 10 years -
Customer relation Straight-line method 16 years -
For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method at the
end of the year, and makes adjustments when necessary.
22.2 Attribution scope and related accounting treatments of research and development expenditure
Expenditure during the research phase is recognised as an expense in the period in which it is incurred.
Expenditure during the development phase that meets all of the following conditions at the same time is
recognised as intangible asset. Expenditure during development phase that does not meet the following conditions
is recognised in profit or loss for the period.
(1) it is technically feasible to complete the intangible asset so that it will be available for use or sale;
(2) the Company has the intention to complete the intangible asset and use or sell it;
(3) the Company can demonstrate the ways in which the intangible asset will generate economic benefits,
including the evidence of the existence of a market for the output of the intangible asset or the intangible
asset itself or, if it is to be used internally, the usefulness of the intangible asset;
(4) the availability of adequate technical, financial and other resources to complete the development and the
ability to use or sell the intangible asset; and
(5) the expenditure attributable to the intangible asset during its development phase can be reliably measured.
177 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
22. Intangible assets - continued
22.2 Attribution scope and related accounting treatments of research and development expenditure - continued
If the expenditures cannot be distinguished between the research phase and development phase, the Group
recognizes all of them in profit or loss for the period. The cost of intangible assets formed in internal development
activities only includes the total amount of expenditures from the time point when the capitalization conditions
are met to the time when the intangible assets reach the predetermined uses. For the same intangible asset, the
expenditures that have been expensed into profit and loss before the capitalization conditions are met in the
development process will not be adjusted.
23. Impairment of long-term assets
The Group reviews the long-term equity investments, fixed assets, construction in progress, and intangible assets
with a finite useful life at each balance sheet date to determine whether there is any indication that they have
suffered an impairment loss. If an impairment indication exists, the recoverable amount is estimated. Intangible
assets with an indefinite useful life and not yet available for use are tested for impairment annually, irrespective
of whether there is any indication that the assets may be impaired.
Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of
an individual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. The
recoverable amount of an asset or asset group is the higher of its fair value less costs of disposal and the present
value of the future cash flows expected to be derived from the asset or asset group.
If such recoverable amount is less than its carrying amount, a provision for impairment losses in respect of the
deficit is recognized in profit or loss for the period.
Goodwill is tested for impairment at least at the end of each year. For the purpose of impairment testing, goodwill
is considered together with the related assets group(s), i.e., goodwill is reasonably allocated to the related assets
group(s) or each of assets group(s) expected to benefit from the synergies of the combination. An impairment loss
is recognized if the recoverable amount of the assets group or sets of assets groups (including goodwill) is less
than its carrying amount. The impairment loss is firstly allocated to reduce the carrying amount of any goodwill
allocated to such assets group or sets of assets groups, and then to the other assets of the group on the pro-rata
basis of the carrying amount of each asset (other than goodwill) in the group.
Once an impairment loss of the above-mentioned assets is recognised, it will not be reversed in any subsequent
period.
24. Long-term prepaid expenses
Long-term prepaid expenses represent expenses incurred that should be borne and amortized over the current and
subsequent periods (together of more than one year). Long-term prepaid expenses are amortized using the
straight-line method over the expected periods in which benefits are derived.
25. Contract liabilities
A contract liability represents the Group's obligation to transfer goods or services to a customer for which the
Group has received consideration (or an amount of consideration is due) from the customer.
178 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
26. Employee benefits
26.1 Accounting treatment of short-term benefits
Actually occurred short-term employee benefits are recognized as liabilities, with a corresponding charge to the
profit or loss for the period or in the costs of relevant assets in the accounting period in which employees provide
services to the Group. Staff welfare expenses incurred by the Group are recognized in profit or loss for the period
or the costs of relevant assets based on the actually occurred amounts when it actually occurred. Non-monetary
staff welfare expenses are measured at fair value.
Payment made by the Group of social security contributions for employees such as premiums or contributions on
medical insurance, work injury insurance and maternity insurance, etc. and payments of housing funds, as well
as trade union fund and employee education fund provided in accordance with relevant requirements, are
calculated according to prescribed bases and percentages in determining the amount of employee benefits and
recognized as relevant liabilities, with a corresponding charge to the profit or loss for the period or the costs of
relevant assets in the accounting period in which employees provide services.
26.2 Accounting treatment of post-employment benefits
Post-employment benefits are classified into defined contribution plans and defined benefit plans.
During the accounting period of rendering service to employees of the Group, amount which should be paid
according to defined contribution plans is recognized as liabilities, and recognized in profit or loss or related costs
of assets.
For defined benefit plans, the Group calculates defined benefit plan obligations using projected unit credit method
and the service cost resulting from employee service in the current period is recorded in profit or loss or the cost
of relevant assets. Defined benefit costs are categorized as follows:
service cost (including current service cost, past service cost, as well as gains and losses on settlements);
net interest of net liabilities or assets of defined benefit plan(including interest income of planned assets,
interest expenses of defined benefit plan liabilities and effect of asset ceiling); and
changes arising from re-measurement of net liabilities or net assets of defined benefit plans.
Service costs and net interest of net liabilities and net assets of defined benefit plans are recognized in profit or
loss of current period or costs of related assets. Re-measurements of the net defined benefit liability (asset)
(including actuarial gains and losses, the return on plan assets, excluding amounts included in net interest on the
net defined benefit liability (asset), and any change in the effect of the asset ceiling, excluding amounts included
in net interest on the net defined benefit liability (asset)) are recognized in other comprehensive income.
Deficit or surplus from present value of obligation of defined benefit plans less fair value of planned asset of
defined benefit plans are recognized as net liabilities or net assets of a defined benefit plan.
26.3 Accounting treatment of termination benefits
A liability for a termination benefit is recognized in profit or loss for the period at the earlier of when the Group
cannot unilaterally withdraw from the termination plan or the redundancy offer and when the Group recognizes
any related restructuring costs or expenses.
179 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
27. Provisions
Provisions are recognized when the Group has a present obligation related to a contingency such as products
quality assurance, it is probable that an outflow of economic benefits will be required to settle the obligation, and
the amount of the obligation can be measured reliably.
The amount recognized as a provision is the best estimate of the consideration required to settle the present
obligation at the balance sheet date, taking into account factors pertaining to a contingency such as the risks,
uncertainties and time value of money. Where the effect of the time value of money is material, the amount of the
provision is determined by discounting the related future cash outflows.
28. Share-based payments
A share-based payment is a transaction which the Group grants equity instruments, or incurs liabilities for amounts
that are determined based on the price of equity instruments, in return for services rendered by employees. The
Group's share-based payments are equity-settled share-based payments.
28.1 Equity-settled share-based payments
Equity-settled share-based payments granted to employees
Equity-settled share-based payments in exchange for services rendered by employees are measured at the fair
value of the equity instruments granted to employees at the grant date. Such amount is recognized as related costs
or expenses on a straight-line basis over the vesting period, based on the best estimate of the number of equity
instruments expected to vest, with a corresponding increase in capital reserve.
28.2 Accounting treatment related to implementation, modification and termination of share-based payment
arrangement
At each balance sheet date during the vesting period, the Group makes the best estimate according to the
subsequent latest information of change in the number of employees who are granted with options that may vest,
etc. and revises the number of equity instruments expected to vest. The effect of the above estimate is recognized
as related costs or expenses, with a corresponding adjustment to capital reserve.
In case the Group modifies a share-based payment arrangement, if the modification increases the fair value of the
equity instruments granted, the Group will include the incremental fair value of the equity instruments granted in
the measurement of the amount recognized for services received. If the modification increases the number of the
equity instruments granted, the Group will include the fair value of additional equity instruments granted in the
measurement of the amount recognized for services received. The increase in the fair value of the equity
instruments granted is the difference between fair value of the equity instruments before and after the modification
on the date of the modification. If the Group modifies the terms or conditions of the share-based payment
arrangement in a manner that reduces the total fair value of the share-based payment arrangement, or is not
otherwise beneficial to the employee, the Group will continue to account for the services received as if that
modification had not occurred (other than a cancellation of some or all the equity instruments granted).
If cancellation of the equity instruments granted occurs during the vesting period, the Group will account for the
cancellation of the equity instruments granted as an acceleration of vesting, and recognize immediately the amount
that otherwise would have been recognized over the remainder of the vesting period in profit or loss for the period,
with a corresponding recognition in capital reserve. When the employee or counterparty can choose whether to
meet the non-vesting condition but the condition is not met during the vesting period, the Group treats it as a
cancellation of the equity instruments granted.
180 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
29. Revenue
29.1 Accounting policies for revenue recognition and measurement disclosed by business types
When (or as) a performance obligation in a contract is satisfied, i.e., when (or as) the customer obtains control of
relevant goods or services, the Group recognizes as revenue the amount of the transaction price that is allocated
to that performance obligation. A performance obligation is the Group's promise to transfer to a customer a good
or service (or a bundle of goods or services) that is distinct, in a contract with the customer.
The transaction price is the amount of consideration to which the Group expects to be entitled in exchange for
transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties and
amounts expected to be refunded to a customer. In determining the transaction price, the Group considers the
impact of variable consideration, significant financing elements present in the contract, non-cash consideration,
consideration payable to the customer and other factors.
If there are two or more of performance obligations included in the contract, at the contract inception, the Group
allocates the transaction price to each single performance obligation based on the proportion of stand-alone selling
price of goods or services promised in each stand-alone performance obligation. However, if there is conclusive
evidence indicating that the contract discount or variable consideration is only relative with one or more (not the
whole) performance obligations in the contract, the Group will allocate the contract discount or variable
consideration to relative one or more performance obligations. Stand-alone selling price refers to the price of a
single sale of goods or services. If the stand-alone selling price cannot be observed directly, the Group estimates
the stand-alone selling price through comprehensive consideration of all relative information that can be
reasonably acquired and maximum use of observable inputs.
For contracts that contain variable consideration, the Group estimates the amount of consideration to which it will
be entitled using either (a) the expected value method or (b) the most likely amount. The estimated amount of
variable consideration is included in the transaction price only to the extent that it is highly probable that such an
inclusion will not result in a significant revenue reversal in the future when the uncertainty associated with the
variable consideration is subsequently resolved. At each balance sheet date, the Group updates the estimated
transaction price.
For sales with sales return terms attached, as the customer obtains ownership of related goods, the Group
recognizes revenue in accordance with the consideration (excluding expected refund amounts due to sales returns)
that the Group is expected to charge due to the transfer of goods to the customer, and recognizes liabilities in
accordance with expected refund amounts due to sales returns. Meanwhile, the carrying amount at the time of
transfer of goods expected to be returned, subsequent to deduction of expected costs from collecting the goods
(including the decrease in value of the returned goods), is recognized as an asset and carried forward to cost at
the carrying amount at which goods are transferred, net of the cost of asset.
For sales with warranties, if the warranties are separate services to the customer other than serving as an assurance
that the products sold comply with agreed-upon specifications, the warranties constitute single performance
obligations. Otherwise, the Group accounts for warranties in accordance with the Accounting Standards for
Business Enterprises No. 13 – Contingencies (ASBE No.13).
The Group determines whether it is a principal or an agent at the time of the transaction based on whether it owns
the "control" of the goods or services before the transfer of such goods or services to the customer. The Group is
a principal if it controls the specified good or service before that good or service is transferred to a customer, and
the revenue shall be recognized based on the total consideration received or receivable; otherwise, the Group is
an agent, and the revenue shall be recognized based on the amount of commission or handling fee that is expected
to be charged, and such amount is determined based on the net amount of the total consideration received or
receivable after deducting the prices payable to other related parties or according to the established commission
amount.
181 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
29. Revenue - continued
Where payment is received in advance, the advance payment received shall be recorded as a liability and
recognized as revenue when the relevant performance obligation is satisfied.
30. Contract costs
Costs of obtaining a contract
If the incremental costs (costs that will not occur if no contract obtained) incurred for obtaining the contract are
expected to be recovered, the Company recognizes it as an asset and the asset shall be amortized on a basis that
is consistent with the transfer to the customer of the goods or services to which the asset relates and recognized
in profit or loss for the period. If the amortization period of the asset does not exceed one year, it is recognized in
profit or loss for the period in which it occurs. Other expenses incurred by the Company for obtaining the contract
are recognized in profit or loss for the period in which it occurs, except as expressly borne by the customer.
Costs to fulfill a contract
If the costs incurred in fulfilling a contract are not within the scope of any standards other than Revenue Standards,
the Group recognizes an inventory from the costs incurred to fulfill a contract only if those costs meet all of the
following criteria: (1) the costs relate directly to a contract or to an anticipated contract that the Group can
specifically identify; (2) the costs generate or enhance resources of the Group that will be used in satisfying
performance obligations in the future; and (3) the costs are expected to be recovered. The asset mentioned above
shall be amortized on a basis that is consistent with the revenue recognition of the goods or services to which the
asset relates and recognized in profit or loss for the period.
31. Government grants
Government grants are monetary assets and non-monetary assets from the government to the Group at no
consideration. A government grant is recognized only when the Group can comply with the conditions attaching
to the grant and the Group will receive the grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or
receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair
value cannot be reliably determined, it is measured at a nominal amount. A government grant measured at a
nominal amount is recognized immediately in profit or loss for the period.
31.1 Determination basis and accounting treatment of government grants related to assets
See Notes (V), 39 for details of the Group's government grants related to assets.
A government grant related to an asset is recognized as deferred income and included in profit or loss over the
useful life of the related asset with the straight-line method.
31.2 Determination basis and accounting treatment of government grants related to income
See Notes (V), 54 for details of the Group's government grants related to income. The Group classifies government
grants that are difficult to be distinguished as government grants related to income aggregately.
For a government grant related to income, if the grant is a compensation for related expenses or losses to be
incurred in subsequent periods, the grant is recognized as deferred income over the periods in which the related
costs or losses are recognized; If the grant is a compensation for related expenses or losses already incurred, the
grant is recognized immediately in profit or loss.
182 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
31. Government grants - continued
31.2 Determination basis and accounting treatment of government grants related to income - continued
A government grant related to the Group's daily activities is recognized in other income based on the nature of
economic activities; a government grant not related to the Group's daily activities is recognized in non-operating
income and expenses.
32. Leases
A lease is a contract whereby the lessor conveys to the lessee in return for a consideration the right to use an asset
for an agreed period of time.
The Group assesses whether a contract is or contains a lease at inception date. Such contract will not be reassessed
unless the terms and conditions of the contract are subsequently changed.
32.1 The Group as lessee
32.1.1 Right-of-use assets
Except for short-term leases and leases of low-value assets, at the commencement date of the lease, the Group
recognizes a right-of-use assets. The commencement date of the lease is the date on which a lessor makes an
underlying asset available for use by the Group. The Group measures the right-of-use assets at cost. The cost of
the right-of-use assets comprises:
the amount of the initial measurement of the lease liabilities;
any lease payments made at or before the commencement date, less any lease incentives received;
any initial direct costs incurred by the Group;
an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring
the site on which it is located or restoring the underlying asset to the condition required by the terms and
conditions of the lease.
The Group depreciates right-of-use assets by reference to the relevant depreciation provisions of Accounting
Standards for Business Enterprises No. 4 - Fixed Assets. The right-of-use assets are depreciated over the
remaining useful lives of the leased assets where the Group is reasonably certain to obtain ownership of the
underlying assets at the end of the lease term. Otherwise, right-of-use assets are depreciated over the shorter of
the lease term and the remaining useful lives of the leased assets.
The Group applies ASBE No. 8 Impairment of Assets, to determine whether the right-of-use assets are impaired
and perform accounting treatment to identified impairment loss.
183 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
32. Leases - continued
32.1 The Group as lessee - continued
32.1.2 Lease liabilities
Except for short-term leases and leases of low-value assets, at the commencement date of the lease, the Group
measures the lease liabilities at the present value of the lease payments that are not paid at that date. If the interest
rate implicit in the lease cannot be readily determined, the lessee shall use the lessee's incremental borrowing rate.
Lease payments refer to payments relating to the right to use leased assets during the lease term which are made
by the Group to the lessor, including:
fixed payments and in-substance fixed payments, less any lease incentives receivable (if any);
the exercise price of a purchase option reasonably certain to be exercised by the Group;
payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to
terminate the lease; and
amounts expected to be paid under residual value guarantees provided by the Group.
After the commencement date of the lease, the Group calculates interest expenses of lease liabilities for each
period of the lease term based on fixed periodic rate, and recognizes such expenses in profit or loss or cost of
related assets.
After the commencement date of the lease, the Group re-measures the lease liabilities and adjusts the right-of-use
assets accordingly in the following cases. If the book value of the right-of-use asset has been reduced to zero, but
the lease liability needs to be reduced further, the Group will recognize the difference in profit or loss for the
period:
there is a change in the lease term, or in the assessment of an option to purchase the underlying asset, in
which case the related lease liability is remeasured by discounting the revised lease payments using a
revised discount rate at the date of reassessment.;
there is a change in the amounts expected to be payable under a residual value guarantee, or in future lease
payments resulting from a change in an index or a rate used to determine those payments, the Group re-
measures the lease liabilities, on the basis of the revised lease payments and the unchanged discount rate.
32.1.3 Determination basis and accounting treatment of short-term leases and leases of low-value assets treated
under a simplified method as lessee
For short-term leases of machinery and equipment and leases of low-value assets to which the recognition
exemption is applied by the Group, right-of-use assets and lease liabilities are not recognized. A short-term lease
refers to a lease that, at the commencement date, has a lease term of 12 months or less and do not contain a
purchase option. A lease of low value asset refers to a single lease asset, when new, is of low value. Lease
payments on short-term leases and leases of low-value assets are recognized in profit or loss or the cost of
underlying assets on a straight-line basis over the lease term.
184 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
32. Leases - continued
32.1 The Group as lessee - continued
32.1.4 Lease modifications
The Group accounts for a lease modification as a separate lease if:
the lease modification expanded the scope of the lease by adding the right-of-use of one or more lease assets;
and
the increased consideration is equivalent to the amount of stand-alone price of the expanded lease scope
adjusted according to the contract.
If the lease modification is not accounted for as an individual lease, on the effective date of the lease modification,
the Group reallocates the consideration of the contract after the change, re-determines the lease term, and re-
measures lease liabilities based on the changed lease payments and the present value calculated by the revised
discount rate.
If the lease modification results in a reduction in the lease scope or lease term, the carrying amount of the right-
of-use assets will be reduced, and the gains or losses relevant to the lease partially of fully terminated will be
included in profit or loss for the period; for other lease modifications resulting in the re-measurement of lease
liabilities, the carrying amount of right-of-use assets is adjusted accordingly.
32.2 The Group as lessor
32.2.1 Classification criteria and accounting treatment of leases as lessor
Leases are classified as finance leases whenever the terms of the leased assets transfer substantially all the risks
and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Group as lessor under operating leases
The Group recognizes lease payments from operating leases as income on a straight-line basis. The Group
capitalizes initial direct costs incurred in obtaining an operating lease and recognizes those costs as an expense
over the lease term on the same basis as the lease income.
32.2.2 Subleases
As the lessor of a sublease, the Group accounts for the original lease contract and the sublease contract as two
separate contracts. The Group classifies the subleases based on the right-of-use assets generating from the original
lease rather than the underlying assets of the original lease.
33. Deferred tax assets/ deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
33.1 Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are measured
at the amount expected to be paid (or recovered) according to the requirements of tax laws.
185 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
33. Deferred tax assets/ deferred tax liabilities - continued
33.2 Deferred tax assets and deferred tax liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and their tax base, or
between the nil carrying amount of those items that are not recognised as assets or liabilities and their tax base
that can be determined according to tax laws, deferred tax assets and liabilities are recognised using the balance
sheet liability method.
Deferred tax is generally recognized for all temporary differences. Deferred tax assets for deductible temporary
differences are recognized to the extent that it is probable that taxable profits will be available against which the
deductible temporary differences can be utilized. However, for temporary differences associated with the initial
recognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a business
combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of
transaction, no deferred tax asset or liability is recognized.
For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the extent
that it is probable that future taxable profits will be available against which the deductible losses and tax credits
can be utilized.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the timing of
the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such
investments and interests are only recognized to the extent that it is probable that there will be taxable profits
against which to utilize the benefits of the temporary differences and they are expected to reverse in the
foreseeable future.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates, according to tax laws,
that are expected to apply in the period in which the asset is realised or the liability is settled.
Current and deferred tax expenses or income are recognized in profit or loss for the period, except when they arise
from transactions or events that are directly recognized in other comprehensive income or in shareholders' equity,
in which case they are recognized in other comprehensive income or in shareholders' equity; and when they arise
from business combinations, in which case they adjust the carrying amount of goodwill.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longer
probable that sufficient taxable profits will be available in the future to allow the benefit of deferred tax assets to
be utilized. Such reduction in amount is reversed when it becomes probable that sufficient taxable profits will be
available.
33.3 Income tax offsetting
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realize the
assets and settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented
on a net basis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assets
and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable
entity or different taxable entities which intend either to settle current tax assets and liabilities on a net basis or to
realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax
assets or liabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and
presented on a net basis.
186 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
34. Hedge accounting
34.1 Basis for using hedge accounting and accounting treatment method
Certain financial instruments are used as hedging instruments by the Group for the purpose of managing the risk
exposure arising from specific risk, such as exchange rate risk, etc. The Group applies hedging accounting for a
hedge that satisfies the prescribed conditions. Hedging activities of the Group include hedges of net investment
in foreign operations.
At the inception of hedging, the Group officially designated hedging instruments and hedged items, and prepared
written documents recording the nature of hedging instruments, hedged items, hedged risks, and hedge
effectiveness evaluation methods (including the analysis of the causes of invalid hedges and methods to determine
the hedge ratio).
The Group will discontinue hedge accounting when one of the following conditions occurs:
Due to changes in risk management objectives, the hedging relationship no longer meets the risk
management objectives.
The hedging instrument expires, or is sold, terminated or exercised.
There is no longer an economic relationship between the hedged item and the hedging instruments, or in
the changes of the value arising from the economic relationship between the hedged item and the hedging
instrument, the impact of credit risk begins to dominate.
The hedging relationship no longer meets other conditions for using the hedge accounting methods.
Hedges for net investment in foreign operations
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss
on the hedging instrument relating to the effective portion of the hedge is recognized in other comprehensive
income. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss.
When disposing of all or part of foreign operations, the profits or losses of the above hedging instruments included
in other comprehensive income shall be reclassified in the current profits and losses.
34.2 Methods of assessing effectiveness of hedges
The Group continuously evaluates whether the hedging relationship meets the requirements of hedging
effectiveness on and after the inception date of hedging. If the hedging meets the following conditions at the same
time, the Group will determine that the hedging relationship meets the requirements for hedging effectiveness:
There is an economic relationship between hedged items and hedging instruments.
Among the value changes caused by the economic relationship between hedged items and hedging
instruments, the impact of credit risk does not dominate.
The hedging ratio of the hedging relationship will be equal to the ratio of the actual number of the Group's
hedging items to the actual number of hedging instruments.
If the hedging relationship no longer meets the requirement of hedging effectiveness due to the hedging ratio, but
the risk management objectives of the hedging relationship have not changed, the Group will rebalance the
hedging relationship. The number of hedged items or hedging instruments in the hedging relationship is adjusted
so that the hedging ratio meets the requirements of hedging effectiveness again.
187 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
35. Accounting treatment in relation to the repurchase of equity instruments
The consideration and transaction costs paid to repurchase own equity instruments are deducted from equity. No
gain or loss is recognized in profit or loss on the repurchase, sale or cancellation of the Company's equity
instruments.
36. Critical Judgments in Applying Accounting Policies and Key Assumptions and Uncertainties in
Accounting Estimate
In the application of the Group's accounting policies, which are described in Note (III), the Group is required to
make judgments, estimates and assumptions about the carrying amounts of items in the financial statements that
cannot be measured accurately, due to the internal uncertainty of the operating activities. These judgments,
estimates and assumptions are based on historical experiences of the Group's management as well as other factors
that are considered to be relevant. Actual results may differ from these estimates.
The aforementioned judgments, estimates and assumptions are reviewed regularly on a going concern basis. The
effect of a change in accounting estimate is recognized in the period of the change, if the change affects that period
only; or recognized in the period of the change and future periods, if the change affects both.
- Key assumptions and uncertainties in accounting estimates
At the balance sheet date, the key assumptions and uncertainties that are probable to cause significant adjustments
to the carrying amounts of assets and liabilities in future periods include:
Impairment of accounts receivables
The Group's accounts receivable arise from transactions under the Revenue Standards and contain no significant
financing component. When evaluating the provision for ECL of the accounts receivable, the management needs
to collect the existing information and use significant accounting estimates, as well as collect information
including historical bad debt records, default or delayed payment, as well as aging of accounts receivable and
other factors to estimate and review the amount of lifetime ECL of the accounts receivable. As of 31 December
2023, the balance of the Group's provision for credit losses of accounts receivable was RMB 43,964,811.88 (31
December 2022: RMB 20,564,388.62).
Inventories
The Group makes provision for the decline in the value of inventory according to the difference between the
inventory costs beyond its net realizable value. The recognition of the net realizable value of inventories requires
the estimation of the expected sales in the future and the estimation of the costs, expenses and taxes to be incurred.
The differences (if any) between the re-estimated value and the current estimate will impact the carrying amount
of the inventories over the period in which the estimate is changed. As of 31 December 2023, the balance of the
Group's provision for the decline in the value of inventories was RMB 331,096,345.17 (31 December 2022: RMB
159,032,019.03).
Deferred tax assets
The benefit of the deferred tax assets may depend on the future taxable profits and the expected tax rate when
associated deductible temporary differences is realized. If future taxable profits or actual tax rate is less than
expected, the carrying amounts of deferred tax assets will be reduced and the reduction will be reversed to profits
or losses in the corresponding period. As of 31 December 2023, the Group had recognized the deferred tax assets
of RMB 490,796,164.94 (31 December 2022: RMB 367,993,139.04).
188 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(III). SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
36. Critical Judgments in Applying Accounting Policies and Key Assumptions and Uncertainties in Accounting
Estimate - continued
- Key assumptions and uncertainties in accounting estimates - continued
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of
the present value of the future expected cash flows from the asset groups or set of asset groups to which the
goodwill is allocated. Estimating the present value requires the Group to make an estimate of the expected future
cash flows from the asset groups or set of asset groups and also choose a suitable discount rate in order to calculate
the present value of those cash flows. When considering future cash flow and discount rate, changes in key
assumptions such as the discount rate and long-term growth rate adopted by the Group may have significantly
impacts on the present value of the future cash flow used in impairment testing.
Useful life and estimated net residual value of fixed assets
As disclosed in Note (III) 19, the Group reviews the useful life and estimated net residual value of a fixed asset
at least once at each financial year-end. Both scientific and technological innovation and intense competition
within the industry significantly impact the estimation of useful life. The Group's management did not find
anything that might shorten or extend the useful life of fixed assets of the Group or require changing the estimated
net residual value.
37. Changes in significant accounting policies and accounting estimates
37.1 Changes in significant accounting policies
Interpretation No.16 of the Accounting Standards for Business Enterprises
The Interpretation No. 16 of the Accounting Standards for Business Enterprises (the "Interpretation No. 16") was
issued by the Ministry of Finance on 30 November 2022, which stipulated the accounting treatment concerning
the deferred income tax relating to assets and liabilities arising from a single transaction to which the exemption
of initial recognition does not apply. Interpretation No. 16 revised the coverage of exemption of the initial
recognition of deferred income tax in the Accounting Standards for Business Enterprises No. 18 - Income Tax,
and specified that the relevant provisions on the exemption of initial recognition of deferred tax liabilities and
deferred tax assets are not applicable to a single transaction (not a business combination) that affects neither the
accounting profit nor taxable income (or deductible losses) at the time of transaction, and where the assets and
liabilities initially recognized generate equal taxable temporary differences and deductible temporary differences.
The Interpretation became effective from 1 January 2023 and could be early applied. The Group early applied the
Interpretation on 1 January 2023.
The Group considers that the adoption of this Interpretation has no significant impact on the financial statements
of the Group.
189 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(IV) TAXES
1. Major categories of taxes and tax rates
Category of tax Basis of tax computation Tax rate
VAT payable is the balance of output tax less deductible input tax of
taxable income such as product sales income, service income, interest 13%, 9%, 6%, 5%
Value-added tax-Chinese
income and lease income. The Company and its domestic subsidiaries are and 3%
(Note 1)
general VAT taxpayers
Non-resident enterprises obtain commission income within China 6%
VAT payable is the balance of output tax less deductible input tax of
Value-added tax-French 20%
taxable income such as product sales income, service income
VAT payable is the balance of output tax less deductible input tax of
Value-added tax-German 19%
taxable income such as product sales income, service income
VAT payable is the balance of output tax less deductible input tax of
Value-added-Tunisian 19%
taxable income such as product sales income, service income
Taxable income Note 2
Enterprise income tax Non-resident enterprises obtain investment income and property transfer
10%
income from within China
Residual value after deducting 30% from the original value of the property
1.2%
Property tax at one time
Rental income 12%
City maintenance and
Turnover tax actually paid 7% and 5%
construction tax
Education surcharge Turnover tax actually paid 3%
Local education surcharge Turnover tax actually paid 2%
Note 1: The Company and its subsidiaries in China shall apply the measures for the administration of VAT
exemption, credit and tax refund for the export of self-produced goods. The export tax refund rate is
different according to the scope of export goods.
Note 2: Description of enterprise income tax rate of main companies of the Group:
Name of taxpayer Income tax rate
Universal Scientific Industrial (Shanghai) Co., Ltd. 15%(Note 1)
USI Electronics (Shenzhen) Co., Ltd. 25%
Universal Global Technology (Kunshan) Co., Ltd. 15%(Note 2)
Universal Global Technology (Shanghai) Co., Ltd. 15%(Note 3)
Universal Global Electronics (Shanghai) Co., Ltd. 25%
Universal Global Technology (Huizhou) Co., Ltd. 15%(Note 4)
Universal Global Technology Co., Limited 16.5% (Note 5)
Universal Global Industrial Co., Ltd. 16.5% (Note 5)
Universal Global Electronics Co., Ltd. 16.5% (Note 5)
Universal Global Scientific Industrial Co., Ltd. Note 6
Universal Scientific Industrial Co., Ltd. Note 6
USI Japan Co., Ltd. 30% (Note 7)
USI America.Inc. 21% (Note 8)
Universal Scientific Industrial De México S.A. De C.V. 30% (Note 9)
Universal Scientific Industrial Poland Sp. z o.o. 19%(Note 10)
Universal Scientific Industrial (France) 25%(Note 11)
Universal Scientific Industrial Vietnam Company Limited 20%(Note 12)
Asteelflash Suzhou Co., Ltd. 15%(Note 13)
FINANCIRE AFG S.A.S. ("FAFG") 25%(Note 14)
USI Science and Technology (Shenzhen) Co., Ltd. 20%(Note 15)
Hirschmann Car Communication Holding S.a.r.l. ("Hirschmann ") 24.94%(Note 16)
The enterprise income tax rate applicable to the Company and its subsidiaries in China is 25%.
190 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(IV) TAXES - continued
1. Major categories of taxes and tax rates - continued
Note 1: The Company was approved as a high-tech enterprise by Science and Technology Commission of
Shanghai Municipality, Shanghai Municipal Finance Bureau, Shanghai Municipal Office of the State
Administration of Taxation and Shanghai Municipal Bureau of Local Taxation in 2023, and obtained the
High-tech Enterprise Certificate (Certificate No. is GR202331006257), which was valid for 3 years. The
Company applies the enterprise income tax rate of 15% from 2023 to 2025.
Note 2: Universal Global Technology (Kunshan) Co., Ltd. was approved as a high-tech enterprise by Jiangsu
Provincial Department of Science and Technology, Department of Finance of Jiangsu Province, Jiangsu
Provincial Office of State Administration of Taxation and Jiangsu Provincial Bureau Local Taxation in
2022, and obtained the High-tech Enterprise Certificate (Certificate No.: GR202232008811), which was
valid for 3 years. Universal Global Technology (Kunshan) Co., Ltd. applies the enterprise income tax
rate of 15% from 2022 to 2024.
Note 3: Universal Global Technology (Shanghai) Co., Ltd. was approved as a high-tech enterprise by Science and
Technology Commission of Shanghai Municipality, Shanghai Municipal Finance Bureau, Shanghai
Municipal Office of the State Administration of Taxation and Shanghai Municipal Bureau of Local
Taxation in 2022, and obtained the High-tech Enterprise Certificate (Certificate No.: GR202231007023),
which was valid for 3 years. Universal Global Technology (Shanghai) Co., Ltd. applies the enterprise
income tax rate of 15% from 2022 to 2024.
Note 4: Universal Global Technology(Huizhou) Co., Ltd. was approved as a high-tech enterprise by Department
of Science and Technology of Guangdong Province, Department of Finance of Guangdong Province,
Guangdong Provincial Tax Service, State Taxation Administration in 2022, and obtained the High-tech
Enterprise Certificate (Certificate No.: GR202244008509), which is valid for 3 years. Universal Global
Technology(Huizhou) Co., Ltd. applies the enterprise income tax rate of 15% from 2022 to 2024.
Note 5: Universal Global Technology Co., Limited, Universal Global Industrial Co., Ltd. and Universal Global
Electronics Co., Ltd. (“UGE”) are companies in Hong Kong, China. The applicable enterprise income
tax rate is 8.25% for the part with operating profits not exceeding HKD 2 million; and 16.5% for the part
with operating profits exceeding HKD 2 million.
Note 6: Universal Global Scientific Industrial Co., Ltd. (“UGSI”) and the Universal Scientific Industrial Co., Ltd.
(“USI”) are registered and established in Taiwan, China. According to the income tax regulations in
China's Taiwan region, (1) the enterprises with profit taxable income less than TWD 120,000 is exempt
from profit tax; (2) the enterprises with the annual taxable income more than TWD 120,000 shall be
levied at 20% of its total taxable income. But its taxable amount shall not exceed half of the taxable
income of a profit-making enterprise exceeding TWD 120,000. At the same time, the income tax law in
Taiwan stipulates that an additional 10% income tax shall be levied on the undistributed surplus of the
current year, which shall be listed as the income tax expense of the year decided by the board of directors.
Note 7: USI Japan Co., Ltd. is established and registered in Japan and is subject to the national tax law of Japan.
According to the provisions of Japan's national tax law, the applicable tax rate is 30% to enterprises
taking the taxable income as the tax base. If the taxable income of an enterprise is negative and is reported
with a cyan E-Tax return (i.e. self-accounting, self-reporting and self-taxation), the accumulated
deductible loss can be deducted within 9 years after the year in which the loss occurs.
Note 8: USI America. Inc. is incorporated and registered in the United States, and the applicable enterprise income
tax rate is 21%. According to the tax law of California where the enterprise is registered, even if there is
no profit in establishing or engaging in commercial activities in the state, it is required to pay California
Regional Income Tax of USD 800 per year according to the Alternative Minimum Tax.
191 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(IV) TAXES - continued
1. Major categories of taxes and tax rates - continued
Note 9: Universal Scientific Industrial De México S.A. De C.V. is registered and established in Mexico, and the
applicable enterprise income tax rate is 30%.
Note 10: Universal Scientific Industrial Poland Sp. z o.o. (formerly known as "Chung Hong Electronics Poland
sp. z o.o.", hereinafter referred to as "USI Poland") is established and registered in Poland. The applicable
enterprise income tax rate is 19%. As it is located in a special economic region, it enjoys the tax
preference of temporarily exempting enterprise income tax within 40% of the initial investment in 2026
and previous years.
Note 11: Universal Scientific Industrial (France) ("USI France") is established and registered in France, and the
applicable enterprise income tax rate is 25% (2022: 25%).
Note 12: Universal Scientific Industrial Vietnam Company Limited is established and registered in Vietnam, and
the applicable enterprise income tax rate is 20%.
Note 13: Asteelflash Suzhou Co., Ltd. was approved as a high-tech enterprise by Jiangsu Provincial Department
of Science and Technology, Department of Finance of Jiangsu Province, Jiangsu Provincial Office of
State Administration of Taxation and Jiangsu Provincial Bureau Local Taxation in 2023, and obtained
the High-tech Enterprise Certificate (Certificate No.: GR202332016930), which was valid for 3 years.
Asteelflash Suzhou Co., Ltd. applies the enterprise income tax rate of 15% from 2023 to 2025.
Note 14: FINANCIRE AFG S.A.S. (“FAFG”) is established and registered in France, and the applicable
enterprise income tax rate is 25% (2022: 25%). The corporate income tax rate applicable to German
subsidiary is 30% (2022: 30%). The enterprise income tax rate applicable to the Tunisian subsidiary is
15% (2022: 15%). The corporate income tax rate applicable to its U.S. subsidiaries is 21% (2022: 21%).
Note 15: USI Science and Technology (Shenzhen) Co., Ltd. is a small low profit enterprise, and according to
Article 1 of the Announcement of the Ministry of Finance and the State Taxation Administration on the
Preferential Income Tax Policies for Micro and Small Enterprises and Individual Industrial and
Commercial Households (Caishui [2023] No. 6), the portion of the small low-profit enterprise's annual
taxable income not more than RMB 1 million shall be included in its taxable income at the reduced rate
of 25%, with the applicable enterprise income tax rate of 20%.
Note 16: Hirschmann is established and registered in Luxembourg, and the applicable enterprise income tax rate
is 24.94%.
192 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank balances
Unit: RMB
31/12/2023 31/12/2022
ITEM Exchange Exchange
Foreign currency RMB Foreign currency RMB
rate rate
Cash:
RMB 549.32 2,003.85
USD 2,524.00 7.0827 17,876.73 11,928.76 6.9646 83,079.04
EUR 6,970.06 7.8264 54,550.48 10,605.37 7.4284 78,780.93
HKD 269.00 0.9062 243.77 3,449.00 0.8933 3,080.99
JPY 47,000.00 0.0502 2,359.40 - 0.0524 -
GBP 596.59 9.0057 5,372.71 137.31 8.3941 1,152.59
MXN 30,000.00 0.4193 12,579.00 200,703.05 0.3597 72,192.89
PLN 8,575.50 1.8107 15,527.66 4,477.49 1.5878 7,109.36
TND 2,192.99 2.3010 5,046.07 8,696.94 2.2430 19,507.24
CZK 4,612.00 0.3165 1,459.70 15,684.00 0.3080 4,830.67
Bank balances:
RMB 5,452,876,386.47 3,718,260,388.65
USD 578,752,731.52 7.0827 4,099,131,971.54 446,239,359.35 6.9646 3,107,878,642.13
EUR 56,940,875.16 7.8264 445,642,065.35 31,555,392.28 7.4284 234,406,076.01
HKD 2,273,083.08 0.9062 2,059,867.89 2,281,680.22 0.8933 2,038,224.94
JPY 158,795,833.00 0.0502 7,971,550.82 317,627,468.00 0.0524 16,643,679.32
GBP 1,941,353.30 9.0057 17,483,245.41 869,074.26 8.3941 7,295,096.25
MXN 22,032,456.68 0.4193 9,238,209.09 34,274,075.98 0.3597 12,328,385.13
TWD 4,386,124,749.00 0.2307 1,011,878,979.59 2,093,161,717.00 0.2268 474,729,077.42
SGD 24,736.69 5.3772 133,014.13 15,173.92 5.1831 78,647.94
TND 1,836,432.91 2.3010 4,225,632.13 4,123,497.82 2.2430 9,249,005.61
CZK - 0.3165 - 1,501,264.14 0.3080 462,389.36
PLN 48,243,800.71 1.8107 87,355,049.95 49,092,880.80 1.5878 77,949,676.13
VND 153,937,471,634.00 0.0003 46,181,241.49 54,843,591,825.00 0.0003 16,453,077.55
Other currency funds:
RMB 3,000,000.00 4,500,000.00
TWD 45,000,000.00 0.2307 10,380,118.50 45,000,000.00 0.2268 10,205,374.50
PLN - 1.8107 - 1,394,584.30 1.5878 2,214,334.90
JPY 1,000,000.00 0.0502 50,210.00 1,000,000.00 0.0524 52,360.00
USD 2,961,481.09 7.0827 20,975,282.12 - 6.9646 -
Total 11,218,698,389.32 7,695,016,173.40
Including: Balance kept in a
3,597,054,385.03 2,136,105,405.28
foreign country
As at 31 December 2023, the Group's restricted cash and bank balances included in other cash and bank balances
equivalent to RMB 34,405,610.62 (31 December 2022: RMB 16,972,069.40), of which RMB 13,430,328.50 (31
December 2022: RMB 14,757,734.50) was the customs deposit and RMB 20,975,282.12 (31 December 2022: nil)
was the investment deposit. The foreign exchange margin was nil for the year (31 December 2022: RMB
2,214,334.90). The restricted other cash and bank balances aforementioned are not included in cash and cash
equivalents in the preparation of the cash flow statements.
2. Held-for-trading financial assets
Unit: RMB
ITEM 31/12/2023 31/12/2022
Financial Assets at Fair Value through Profit or Loss
245,558,007.22 271,243,519.53
("FVTPL")
Including: Accounts receivable factoring (Note 1) 223,401,570.22 135,812,841.71
Contingent consideration (Note 2) - 99,372,192.22
Derivative financial assets (Note 3) 22,156,437.00 36,058,485.60
193 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
2. Held-for-trading financial assets - continued
Note 1: The accounts receivable are classified as financial assets at fair value through profit or loss since the
Group manages accounts receivable from certain specific customers only for the purpose of selling such
financial assets through factoring.
Note 2: On 12 December 2019, the Company established USI France through its wholly-owned subsidiary
Universal Global Technology Co., Limited and entered a Share Purchase Agreement with shareholders
of FAFG, SPFH Holding Korlatolt Felelossegu Tarsasag, ASDI and Arkéa Capital Investissement S.A.,
for the purpose of acquisition of 100% of its equity interest. As agreed by both parties, in accordance
with FAFG's audited accumulated financial results from 1 January 2021 to 31 December 2022, from the
recovery of contingent consideration from the original shareholders of FAFG, an amount of EUR
3,752,294.35 (equivalent to RMB29,366,894.59) was not yet recovered as at 31 December 2023. It was
recovered subsequent to the period. Refer to Note (V), 6 for details.
Note 3: The derivative financial assets held by the Group are foreign exchange forward contract.
3. Notes receivable
(1) Categories of notes receivable
Unit: RMB
Category 31/12/2023 31/12/2022
Bank acceptances 65,545,008.33 45,627,553.57
(2) As at 31 December 2023, the Group had no notes receivable that have been pledged as security.
(3) As at 31 December 2023, the Group had no notes receivable that have been endorsed or discounted and
were not yet matured at the balance sheet date.
(4) As at 31 December 2023, the Group made no provision for credit loss since the Group considered that
the accepting banks of the bank acceptances held by it were of high ratings and no significant credit
risk was expected to exist.
(5) In 2023, the Group had no notes receivable that have been actually written off.
4. Accounts receivable
(1) Categories of accounts receivable
Unit: RMB
Category 31/12/2023 31/12/2022
Accounts receivable arising from contracts with customers 10,067,526,873.99 11,139,685,148.73
Less: Bad debt provision 43,964,811.88 20,564,388.62
Total 10,023,562,062.11 11,119,120,760.11
194 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Accounts receivable - continued
(2) Disclosure of accounts receivable by aging
Unit: RMB
Aging 31/12/2023 31/12/2022
Within the credit term 9,196,939,905.88 10,263,555,132.43
1-30 days overdue 645,623,766.37 713,540,293.51
31-60 days overdue 111,023,244.93 103,786,907.81
61-90 days overdue 40,083,422.87 36,934,282.12
90-180 days overdue 19,353,226.81 16,957,415.00
More than 180 days overdue 54,503,307.13 4,911,117.86
Total 10,067,526,873.99 11,139,685,148.73
(3) Disclosure by category of bad debt provision method
Unit: RMB
31/12/2023 31/12/2022
Book value Bad debt provision Book value Bad debt provision
Category
Amount Proporti Amount Proportion of Carrying amount Amount Proportion Amount Proportion of Carrying amount
on (%) provision (%) (%) provision (%)
Bad debt provision on
71,829,986.74 0.71 26,767,777.12 60.88 45,062,209.62 - - - - -
an individual basis
Bad debt provision on a
9,995,696,887.25 99.29 17,197,034.76 39.12 9,978,499,852.49 11,139,685,148.73 100.00 20,564,388.62 100.00 11,119,120,760.11
portfolio basis
Total 10,067,526,873.99 100.00 43,964,811.88 100.00 10,023,562,062.11 11,139,685,148.73 100.00 20,564,388.62 100.00 11,119,120,760.11
Bad debt provision on an individual basis
Unit: RMB
31/12/2023
Company name Bad debt Proportion of Reason for provision
Book value
provision provision (%)
Due to the customer's financial difficulties
and poor realization of assets, the specific
Company A 30,723,213.17 939,792.13 3.06 provision is made based on the risk
assessment and judgement of the
management.
Due to the customer's financial difficulties
and poor realization of assets, the specific
Company B 20,560,132.35 20,560,132.35 100.00 provision is made based on the risk
assessment and judgement of the
management.
Due to the customer's financial difficulties
and poor realization of assets, the specific
Company C 14,208,833.83 2,098,949.96 14.77 provision is made based on the risk
assessment and judgement of the
management.
Due to the customer's financial difficulties
and poor realization of assets, the specific
Company D 6,337,807.39 3,168,902.68 50.00 provision is made based on the risk
assessment and judgement of the
management.
Total 71,829,986.74 26,767,777.12 37.27
Bad debt provision on a portfolio basis
As part of the Group's credit risk management, the expected credit losses on accounts receivable are assessed using
the aging analysis approach. According to the Group's assessment on credit risk, the aging reflects the solvency of
customers when the receivables are due.
195 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Accounts receivable - continued
(3) Disclosure by category of bad debt provision method - continued
At 31 December 2023, the credit risk and expected credit losses on accounts receivable were as follows:
Unit: RMB
31/12/2023
Aging Expected average loss rate
(%)
Book value Bad debt provision Carrying amount
Within credit period 0.01 9,181,331,401.42 1,361,522.66 9,179,969,878.76
Overdue for 1-30 days 0.10 643,088,509.46 640,718.58 642,447,790.88
Overdue 31-60 days 0.49 105,845,863.32 520,695.94 105,325,167.38
61-90 days overdue 0.91 37,560,177.81 341,939.13 37,218,238.68
90-180 days overdue 7.41 14,622,655.71 1,083,878.92 13,538,776.79
More than 180 days overdue 100.00 13,248,279.53 13,248,279.53 -
Total 0.17 9,995,696,887.25 17,197,034.76 9,978,499,852.49
At 31 December 2022, the credit risk and expected credit losses on accounts receivable were as follows:
Unit: RMB
1/1/2023
Aging Expected average loss rate
(%)
Book value Bad debt provision Carrying amount
Within credit period 0.02 10,263,555,132.43 2,226,378.22 10,261,328,754.21
Overdue for 1-30 days 0.31 713,540,293.51 2,236,844.84 711,303,448.67
Overdue 31-60 days 3.75 103,786,907.81 3,891,754.82 99,895,152.99
61-90 days overdue 12.66 36,934,282.12 4,674,454.00 32,259,828.12
90-180 days overdue 15.47 16,957,415.00 2,623,838.88 14,333,576.12
More than 180 days overdue 100.00 4,911,117.86 4,911,117.86 -
Total 0.18 11,139,685,148.73 20,564,388.62 11,119,120,760.11
The expected average loss rate mentioned above is based on the historical actual credit loss rates and the current
conditions as well as the forecast of future economic conditions. In 2023, the Group's valuation method remains
unchanged.
(4) Changes in bad debt provision
Unit: RMB
Changes for the year
Translation
differences arising
Category 31/12/2022 Provision in the on translation of 31/12/2023
Write-off
current year financial statements
denominated in
foreign currencies
Provision for expected credit loss by
20,564,388.62 21,981,473.91 - 1,418,949.35 43,964,811.88
aging matrix
Changes in bad debt provision for accounts receivable:
Unit: RMB
Provision for credit loss Lifetime ECL
At 1 January 2023 20,564,388.62
ECL accrued 21,981,473.91
Effect of changes in exchange rate 1,418,949.35
At 31 December 2023 43,964,811.88
196 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Accounts receivable - continued
(5) There are no accounts receivable that have been actually written off in the year.
(6) Top five accounts receivable at 31 December 2023 categorized by debtor
Unit: RMB
Percentage to total accounts
Accounts receivable at 31 Bad debt provision at 31
Company name receivable at 31 December
December 2023 December 2023
2023 (%)
Company E 2,404,929,295.79 23.89 355,929.54
Company F 899,248,907.86 8.93 133,088.84
Company G 796,186,099.99 7.91 117,835.54
Company H 528,221,680.81 5.24 78,176.81
Company I 455,806,057.90 4.53 67,459.30
Total 5,084,392,042.35 50.50 752,490.03
5. Prepayments
(1) Aging analysis of prepayments is as follows:
Unit: RMB
31/12/2023 31/12/2022
Aging Proportio Proportio
Amounts Amounts
n (%) n (%)
Within 1 year 45,932,130.14 82.54 62,954,404.18 85.78
1-2 years 9,717,406.31 17.46 10,435,725.27 14.22
Total 55,649,536.45 100.00 73,390,129.45 100.00
(2) Top five balances of prepayments categorized by receivers
Unit: RMB
Proportion to total
Relationship with
Company name Book value prepayments at 31
the Company December 2023(%)
Company J Third party 4,154,569.17 7.47
Company K Third party 4,096,984.58 7.36
Company L Third party 3,115,098.16 5.60
Company M Third party 2,195,308.55 3.94
Company N Third party 2,151,976.74 3.87
Total 15,713,937.20 28.24
197 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables
(1) Summary of other receivables
Unit: RMB
Book value at 31 Book value at 31
ITEM
December 2023 December 2022
Dividends receivable - 27,195,000.00
Other receivables 208,748,837.09 109,813,284.72
Total 208,748,837.09 137,008,284.72
(2) Dividends receivable
Unit: RMB
Book value at 31 Book value at 31
ITEM
December 2023 December 2022
SUMA-USI Electronics Co., Ltd. - 27,195,000.00
(3) Disclosure of other receivables by aging
Unit: RMB
31/12/2023
Aging Proportion of
Amounts Bad debt provision
provision (%)
Within 1 year 208,748,837.09 - -
(4) Classification by the nature of other receivables
Unit: RMB
Book value at 31 Book value at 31
Nature of other receivables
December 2023 December 2022
Advances for third parties 94,510,940.45 44,945,200.51
Service and purchase rebates receivable 51,566,605.35 39,076,544.54
Contingent consideration receivable 29,366,894.59 -
Advance payments for employees 7,559,285.63 6,849,785.04
Others 25,745,111.07 18,941,754.63
Total 208,748,837.09 109,813,284.72
(5) No allowance for expected credit losses has been made and no allowance for expected credit losses has
been reversed or collected due to the low probability that the Company's other receivables will not be
collected.
(6) As at 31 December 2023, there are no other receivables that have been actually written off by the Group.
(7) Top five other receivables at 31 December 2023 categorized by debtor
Unit: RMB
Proportion to total
Nature of the Bad debt provision at
Company name 31/12/2023 other receivables at 31 Aging
amount 31 December 2023
December 2023(%)
Contingent Within 1 year
ASDI Assistance
29,366,894.59 14.07 consideration -
Direction
receivable
Company O 18,427,807.53 8.83 Advances Within 1 year -
Company P 10,165,750.27 4.87 Advances Within 1 year -
Company Q 8,534,760.00 4.09 Advances Within 1 year -
Company R 5,636,367.92 2.70 Advances Within 1 year -
Total 72,131,580.31 34.56 -
(8) As at 31 December 2023, there were no other receivables presented for centralized management of funds.
198 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
7. Inventories
(1) Categories of inventories
Unit: RMB
31/12/2023 31/12/2022
Provision for Provision for
ITEM
Book value decline in value Carrying amount Book value decline in value Carrying amount
of inventories of inventories
Raw
5,301,445,240.86 282,382,106.86 5,019,063,134.00 6,591,417,312.15 94,633,307.33 6,496,784,004.82
materials
Work in
1,162,814,912.86 - 1,162,814,912.86 1,731,962,683.33 - 1,731,962,683.33
progress
Finished
2,073,127,009.34 48,714,238.31 2,024,412,771.03 2,649,029,354.35 64,398,711.70 2,584,630,642.65
goods
Reusable 105,620,183.85
- 105,620,183.85 96,516,345.02 - 96,516,345.02
materials
Total 8,643,007,346.91 331,096,345.17 8,311,911,001.74 11,068,925,694.85 159,032,019.03 10,909,893,675.82
(2) Provision for decline in value of inventories
Unit: RMB
Decrease in the year Exchange
differences arising
ITEM 31/12/2022 Provision 31/12/2023
Reversal Write-off on translation of
foreign currencies
Raw
94,633,307.33 408,530,265.55 225,230,524.78 3,930,208.52 8,379,267.28 282,382,106.86
materials
Finished
64,398,711.70 54,768,138.38 71,231,789.99 140,630.10 919,808.32 48,714,238.31
goods
Total 159,032,019.03 463,298,403.93 296,462,314.77 4,070,838.62 9,299,075.60 331,096,345.17
Reasons for reversal/write-off of
ITEM Specific determination basis of net realizable value provision for decline in value of
inventories
The higher of the estimated selling price of raw materials less estimated
Raw costs of sales and related taxes and the estimated selling price of Sold or net realizable value
materials finished goods less estimated costs of completion and estimated costs recovered
necessary to make the sale as well as related taxes
Work in Value of estimated selling price less estimated costs of completion and Sold or net realizable value
progress estimated costs necessary to make the sale as well as related taxes recovered
Finished Value of estimated selling price less estimated costs necessary to make Sold or net realizable value
goods the sale as well as related taxes recovered
8. Non-current assets due within one year
Unit: RMB
ITEM 31/12/2023 31/12/2022
Lease receivables 123,989.32 322,815.55
9. Other current assets
Unit: RMB
ITEM 31/12/2023 31/12/2022
Input taxes to be deducted 371,315,725.27 282,278,855.44
Tax refunds receivable 201,905,394.74 125,929,179.23
FPC expenses to be amortized 138,201,479.43 129,461,256.93
Prepaid income tax 102,930,242.78 24,922,506.88
Mold costs to be amortized 15,688,151.48 28,488,417.12
Others 8,221,292.24 8,501,117.12
Total 838,262,285.94 599,581,332.72
199 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
10. Long-term receivables
(1) Long-term receivables
Unit: RMB
ITEM 31/12/2023 31/12/2022
Lease receivables 130,008.71 193,997.66
Employee borrowings for house purchasing 13,517,402.09 12,191,896.64
Total 13,647,410.80 12,385,894.30
(2) As at 31 December 2023, no provision for expected credit loss has been made as the Group's long-term
receivables are less likely to be uncollectable.
(3) As at 31 December 2023, there are no long-term receivables that have been actually written off by the
Group.
200 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Long-term equity investments
Unit: RMB
Changes for the year
Exchange
differences
Investment arising on
Other Impairment
profit or loss Other Cash dividends translation of
Name of investee 1/1/2023 Additional Reduction in
recognized
comprehensive
equity or profit
Impairment
financial
31/12/2023 provision at
investment investment income provision 31/12/2023
under equity changes declared statements
adjustments
method denominated
in foreign
currencies
I. Joint ventures
SUMA-USI Electronics Co., Ltd. (Note
110,844,032.98 - (110,844,032.98) - - - - - - - -
1)
MUtek Electronics Co., Ltd. (Note 2) 6,030,425.80 - - (2,540,207.83) - - - - 56,832.79 3,547,050.76 -
II. Associates
M-Universe Investments Pte. Ltd. (Note
474,133,217.37 - - 14,551,719.94 (7,656,754.91) - (11,274,179.59) - 8,265,215.55 478,019,218.36 -
3)
Questyle Audio Technology Co., Ltd.
20,000,000.00 - - (3,294,727.52) - - - - - 16,705,272.48 -
(Note 4)
Total 611,007,676.15 - (110,844,032.98) 8,716,784.59 (7,656,754.91) - (11,274,179.59) - 8,322,048.34 498,271,541.60 -
Note 1: In April 2019, Universal Global Technology (Kunshan) Co., Ltd., the Company's wholly-owned subsidiary, established a joint venture, SUMA-USI Electronics Co., Ltd.
("SUMA-USI") with Cancon Information Industry Co., Ltd. ("Cancon"). According to the Shareholder Agreement, Universal Global Technology (Kunshan) Co., Ltd.
intends to contribute RMB 107,800,000, with a capital contribution of 49%. As at 31 December 2019, according to the articles of association of SUMA-USI, the board
of directors is composed of 5 directors, 2 of whom are appointed by Universal Global Technology (Kunshan) Co., Ltd., and ordinary resolutions need to be approved by
more than half of the directors attending the board meeting while special matters need to obtain the unanimous consent of all directors. Special matters include: deciding
the Company's business plan and investment scheme, formulating the Company's annual financial budget plan and final accounting plan, formulating the Company's
profit distribution plan and loss recovery plan, etc. In shareholders' meeting, approval for ordinary resolutions require assent by shareholders representing over voting
rights, while approval for special resolutions require assent by shareholders representing over voting rights. Therefore, SUMA-USI is a joint venture of Universal
Global Technology (Kunshan) Co., Ltd., and the Group accounts for it under the equity method. The Company entered into an Agreement on Transfer of Equity of
SUMA-USI Electronics Co., Ltd on 19 January 2023 with Cancon, an independent third party, to transfer all of its equity in SUMA-USI to Cancon.
201 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Long-term equity investments - continued
Note 2: In April 2022, Universal Global Scientific Industrial Co., Ltd., the Company's wholly-owned subsidiary, established a joint venture, MUtek Electronics Co., Ltd. ("MUtek
Electronics") with Merry Electronics Co., Ltd. ("Merry Electronics"). Under Joint-Venture Agreement, Universal Global Scientific Industrial Co., Ltd. intends to
contribute TWD 191,100,000.00 (RMB 43,338,816.67), with a capital contribution of 49%. As at 31 December 2023, the accumulated capital contribution paid up by
Universal Global Scientific Industrial Co., Ltd. totals TWD 29,400,000.00 (RMB 7,044,079.28), with a capital contribution of 49%. It is stipulated in the Joint-Venture
Agreement that the financial and operating plans of MUtek Electronics shall be submitted to the Board of Directors for approval only when a joint resolution by Universal
Global Scientific Industrial Co., Ltd. and Merry Electronics is achieved. According to the articles of association of MUtek Electronics, the board of directors is composed
of 4 directors, 2 of whom are appointed by Universal Global Scientific Industrial Co., Ltd. Therefore, MUtek Electronics is a joint venture of Universal Global Scientific
Industrial Co., Ltd., and the Group accounts for it under the equity method.
Note 3: In July 2019, Universal Global Technology Co., Limited, the Company's wholly-owned subsidiary, made an additional contribution of SGD 79,862,500 to M-Universe
Investments Pte. Ltd. ("M-Universe"), a sub-subsidiary of it established in Singapore, to publicly acquire the ordinary shares of Memtech International Ltd. ("Memtech"),
a company listed in Singapore. Pursuant to the Equity Acquisition Agreement, M-Universe acquired 42.23% of Memtech's equity interest at the market price of SGD
1.35 per share on 30 June 2019, meanwhile, M-Universe issued new shares at the same subscription price to Keytech Investment Pte. Ltd. ("Keytech"), the original
shareholder of Memtech, i.e., M-Universe exchanged its 57.77% equity interest in Memtech for the same percentage of shares held by Keytech. As a result, Universal
Global Technology Co., Limited's shareholding in M-Universe was reduced from 100 % to 42.23%. According to the Shareholder Agreement of M-Universe, the board
of directors is composed of 3 directors, 2 of which are appointed by Keytech and 1 by Universal Global Technology Co., Limited, and the resolutions need to be approved
by the majority of the directors attending the board meeting, so it is accounted for under the equity method.
Note 4: In November 2022, the Company made an additional contribution of RMB 20,000,000.00 to Questyle Audio Technology Co., Ltd. ("Questyle Audio Technology"), to
acquire 6.6667% of equity interests of Questyle Audio Technology upon the capital contribution according to the Capital Increase Agreement. As at 29 November 2022,
the additional capital contribution has been paid up. According to the Shareholder Agreement of Questyle Audio Technology, the board of directors is composed of 3
directors, 1 of which is appointed by the Company, being responsible to develop its annual budget and resolutions in relation to substantial modifications of corporate
accounting policy or fiscal year need to be approved by the majority of the directors attending the board meeting. The meeting of shareholders is allowed to be held when
attended by shareholders representing more than a half of the voting rights, involving investors of previous and current rounds. Ordinary resolution requires the approval
of shareholders representing more than a half of the voting rights, which mainly includes the approvals of corporate's management principle and investment plan, annual
financial budget plan and final accounts plan and plans of profit distribution and losses recovery. Therefore, the Company has significant influence on Questyle Audio
Technology, which is an associate of the Company, and the Group accounts for it under the equity method.
202 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Other equity instrument investments
(1) Other equity instrument investments
Unit: RMB
Changes for the year Reasons for
Translation designation as
differences Accumulated at fair value
Gains (losses)
arising on Dividend gains (losses) through other
Addit recognized in
translation of income recognized in comprehensive
ITEM 31/12/2022 ional Reduction in other 31/12/2023
financial recognized in other income
inves investment comprehensive
statements the year comprehensive
tment income in the
denominated in income
period
foreign
currencies
Non-trading
equity
investments
TriKnight that the
Capital Group does
38,420,782.40 - 27,680,312.65 27,162,804.05 1,031,963.78 38,935,237.58 - 1,927,776.76
Corporation not expect to
(Note) dispose of in
the
foreseeable
future
Note: The Group invested in TriKnight Capital Corporation in 2016, accounting for 5% of the equity interests
in the investee.
(2) There were no other equity instrument investment derecognized in the year.
13. Other non-current financial assets
Unit: RMB
ITEM 31/12/2023 31/12/2022
PHI FUND, L.P.(Note X, 4) 147,061,750.52 100,510,388.15
Senscomm Semiconductor Co., Ltd. (Note X, 4) 23,483,780.53 24,752,828.36
Suzhou Yaotu Equity Investment Partnership (Note X, 4 and
23,449,331.00 11,840,697.00
Note XIII, 1(1))
GaN System Inc.(Note X, 4) (Note) - 33,022,365.35
Total 193,994,862.05 170,126,278.86
Note: GaN Systems Inc., invested by Universal Global Technology Co., Limited, a wholly-owned subsidiary
of the Group, was disposed of in October 2023, with the proceeds from the disposal amounting to USD
6,910,747.27 (RMB 49,604,652.83) received.
203 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Investment properties
(1) Investment properties measured using cost model
Unit: RMB
ITEM Buildings
I. Original carrying amount
1. 31/12/2022 -
2. Increase in the year 11,507,908.40
(1) Transfer from fixed assets 11,507,908.40
3. Decrease in the year -
4. Translation differences arising from
-
translation denominated in foreign currencies
5. 31/12/2023 11,507,908.40
II. Accumulated depreciation
1. 31/12/2022 -
2. Increase in the year 7,183,862.89
(1) Provision 139,878.71
(2) Transfer from fixed assets 7,043,984.18
3. Decrease in the year -
4. Translation differences arising from -
translation denominated in foreign currencies
5. 31/12/2023 7,183,862.89
III. Provision for impairment losses
31/12/2022 & 31/12/2023 -
IV. Carrying amount
1. 31/12/2023 4,324,045.51
2. 31/12/2022 -
(2) As of 31 December 2023, the Group had no investment properties for which certificates of title have
not been obtained.
204 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Fixed Assets
(1) Fixed assets
Unit: RMB
Land operated Machinery and Electronic equipment,
ITEM Buildings Transportation vehicles Renovation costs Total
overseas equipment appliances and furniture
I. Original carrying amount
1. 1/1/2023 241,526,211.47 1,700,238,721.86 6,708,980,966.33 16,182,833.60 538,537,517.86 286,027,543.69 9,491,493,794.81
2. Increase in the year 3,966,749.23 86,329,117.82 826,891,444.66 3,469,363.89 94,837,555.32 95,981,228.78 1,111,475,459.70
(1) Purchase - - 19,842,519.86 1,922,245.32 16,529,014.94 813,637.40 39,107,417.52
(2) Transfer from construction in
- 66,707,951.14 717,393,031.06 1,230,027.55 77,042,173.36 95,167,591.38 957,540,774.49
progress
(3) Additions due to business
3,966,749.23 19,621,166.68 89,655,893.74 317,091.02 1,266,367.02 - 114,827,267.69
combination
3. Decrease in the year - 11,507,908.40 158,360,538.98 1,097,052.49 50,457,206.20 7,807,166.37 229,229,872.44
(1) Disposal or retirement - - 158,360,538.98 1,097,052.49 50,457,206.20 7,807,166.37 217,721,964.04
(2) Transfer to investment
- 11,507,908.40 - - - - 11,507,908.40
properties
4. Translation differences arising
from translation denominated in 5,933,348.55 22,710,516.87 61,267,473.09 351,360.53 8,186,940.86 3,480,422.75 101,930,062.65
foreign currencies
5. 31/12/2023 251,426,309.25 1,797,770,448.15 7,438,779,345.10 18,906,505.53 591,104,807.84 377,682,028.85 10,475,669,444.72
II. Accumulated depreciation
1. 1/1/2023 - 491,421,104.81 4,016,829,552.15 11,851,363.29 328,314,155.16 136,457,518.37 4,984,873,693.78
2. Increase in the year - 54,417,710.33 740,601,946.26 1,516,446.97 80,757,473.76 41,798,654.70 919,092,232.02
(1) Provision - 54,417,710.33 740,601,946.26 1,516,446.97 80,757,473.76 41,798,654.70 919,092,232.02
3. Decrease in the year - 7,043,984.18 147,383,930.43 1,074,400.67 49,244,784.32 7,807,166.37 212,554,265.97
(1) Disposal or retirement - - 147,383,930.43 1,074,400.67 49,244,784.32 7,807,166.37 205,510,281.79
(2) Transfer to investment
- 7,043,984.18 - - - - 7,043,984.18
properties
4. Translation differences arising
from translation denominated in - 1,734,609.78 29,061,514.82 138,060.58 4,175,062.53 1,233,016.21 36,342,263.92
foreign currencies
5. 31/12/2023 - 540,529,440.74 4,639,109,082.80 12,431,470.17 364,001,907.13 171,682,022.91 5,727,753,923.75
III. Provision for impairment losses
1. 1/1/2023 - 49,839,964.73 - - - - 49,839,964.73
2. Increase in the year - - - - - - -
(1) Provision - - - - - - -
3. Decrease in the year - - - - - - -
(1) Disposal or retirement - - - - - - -
4. Translation differences arising
from translation denominated in - 98,445.85 - - - - 98,445.85
foreign currencies
5. 31/12/2023 - 49,938,410.58 - - - - 49,938,410.58
IV. Carrying amount
1. 31/12/2023 251,426,309.25 1,207,302,596.83 2,799,670,262.30 6,475,035.36 227,102,900.71 206,000,005.94 4,697,977,110.39
2. 1/1/2023 241,526,211.47 1,158,977,652.32 2,692,151,414.18 4,331,470.31 210,223,362.70 149,570,025.32 4,456,780,136.30
205 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Fixed assets - continued
(2) As at 31 December 2023, the Group had no significant temporarily idle fixed asset.
(3) As at 31 December 2023, the Group had no fixed assets of which certificates of title have not been
obtained.
(4) As at 31 December 2023, the Group had no fixed assets that have been pledged.
(5) Impairment assessment of fixed assets
USI Science and Technology (Shenzhen) Co., Ltd. a subsidiary of the Group, has been notified by
Nanshan District Government of Shenzhen City that its existing plant and land are included in the "2019
Shenzhen Nanshan District Urban Renewal Unit Plan Fourth Batch Plan" and need to be demolished and
rebuilt. Therefore, the Group has set aside RMB 44,090,553.55 for impairment of fixed assets of houses
and buildings.
Due to its long service life and repeated earthquakes, the main structure of the building A, B and C of
Caotun No. 1 Plant of the Group's subsidiary, Universal Global Scientific Industrial Co., Ltd., has been
damaged and needs to be dismantled and rebuilt. Therefore, the Group has set aside RMB 5,847,857.03
for impairment of fixed assets of building A, B and C.
16. Construction in progress
(1) Construction in progress
Unit: RMB
31/12/2023 31/12/2022
Provision Provision
ITEM Carrying
Book value for Book value for Carrying amount
amount
impairment impairment
Shengxia factory-Chip
1,024,368.86 - 1,024,368.86 6,507,916.38 - 6,507,916.38
module production project
Veitnam factory-Wearable
6,404,156.87 - 6,404,156.87 394,121.84 - 394,121.84
device production project
Huizhou factory-Electronic
6,111,984.67 - 6,111,984.67 24,302,863.46 - 24,302,863.46
product production project
Mexico factory-New
construction of the second 359,629,706.09 - 359,629,706.09 34,594,399.14 - 34,594,399.14
factory project
Poland factory project 81,472,620.08 - 81,472,620.08 - - -
Other construction,
decoration and uninstalled 186,388,149.41 - 186,388,149.41 237,633,235.87 - 237,633,235.87
equipment
Total 641,030,985.98 - 641,030,985.98 303,432,536.69 - 303,432,536.69
206 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Construction in progress - continued
(2) Changes in construction in progress
Unit: RMB
Amo
unt Intere
Amount Includ
Exchange of st
injected ing:
differences arising accu capita
Transferred to as a capita
Additions due to on translation of mulat lizatio
Increase in the Transfer to long-term prepaid proportio lized Source of
Item name Budget 31/12/2022 year
business
fixed assets expenses in the
financial 31/12/2023 n of
ed
intere
n rate
funds
combination statements capit for
year budget st for
denominated in alize the
amount the
foreign currencies d year
(%) year
intere (%)
st
Shengxia
Self-owned
factory-Chip
funds /
module 842,830,100.00 6,507,916.38 3,627,218.24 - (6,650,765.76) (2,460,000.00) - 1,024,368.86 79% - - - Raised
production
funds
project
Self-owned
Veitnam factory-
funds /
Wearable device 1,400,000,000.00 394,121.84 124,702,065.69 - (118,732,957.21) - 40,926.55 6,404,156.87 54% - - - Raised
production project
funds
Self-owned
Huizhou factory-
funds /
Electronic product 1,350,000,000.00 24,302,863.46 61,693,473.87 - (79,884,352.66) - - 6,111,984.67 54% - - - Raised
production project
funds
Mexico factory- Self-owned
New construction funds /
of the second
662,221,825.95 34,594,399.14 413,623,041.68 - (90,999,425.22) - 2,411,690.49 359,629,706.09 62% - - - Raised
factory project funds
Poland factory Self-owned
project
88,855,860.24 - 83,083,768.95 - (7,528,679.40) - 5,917,530.53 81,472,620.08 94% - - - funds
Other
construction,
Self-owned
decoration and NA 237,633,235.87 669,525,518.96 37,070,089.15 (653,744,594.24) (108,354,718.83) 4,258,618.50 186,388,149.41 NA - - - funds
uninstalled
equipment
Total 303,432,536.69 1,356,255,087.39 37,070,089.15 (957,540,774.49) (110,814,718.83) 12,628,766.07 641,030,985.98
(3) As at 31 December 2023, the Group had no construction in progress that requires provision for
impairment losses.
207 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
17. Right-of-use assets
(1) Right-of-use assets
Unit: RMB
Machinery and Transportation
ITEM Buildings Others Total
equipment equipment
I. Original carrying amount
1. 1/1/2023 834,020,158.45 1,048,499.73 10,359,904.23 2,379,011.77 847,807,574.18
2. Increase in the year 267,345,673.30 1,290,002.40 4,993,142.61 588,188.57 274,217,006.88
(1) Increase 237,791,830.46 832,090.65 3,213,443.30 588,188.57 242,425,552.98
(2) Additions due to
29,553,842.84 457,911.75 1,779,699.31 - 31,791,453.90
business combination
3. Decrease in the year 34,742,153.07 319,700.98 647,045.18 737,733.14 36,446,632.37
(1) Disposal or
34,742,153.07 319,700.98 647,045.18 737,733.14 36,446,632.37
retirement
4. Translation
differences arising from
15,855,602.42 56,697.66 601,711.27 51,566.33 16,565,577.68
translation denominated
in foreign currencies
5. 31/12/2023 1,082,479,281.10 2,075,498.81 15,307,712.93 2,281,033.53 1,102,143,526.37
II. Accumulated depreciation
1. 1/1/2023 361,638,362.68 865,004.37 4,145,929.80 1,289,030.78 367,938,327.63
2. Increase in the year 135,278,210.66 286,718.06 3,429,801.91 581,633.99 139,576,364.62
(1) Provision 135,278,210.66 286,718.06 3,429,801.91 581,633.99 139,576,364.62
3. Decrease in the year 15,933,510.48 319,700.98 557,970.12 737,733.14 17,548,914.72
(1) Disposal or
15,933,510.48 319,700.98 557,970.12 737,733.14 17,548,914.72
retirement
4. Translation
differences arising from
5,898,436.76 24,548.98 272,080.74 28,120.61 6,223,187.09
translation denominated
in foreign currencies
5. 31/12/2023 486,881,499.62 856,570.43 7,289,842.33 1,161,052.24 496,188,964.62
III. Provision for impairment
losses
1/1/2023 & 31/12/2023 - - - - -
IV. Carrying amount
1. 31/12/2023 595,597,781.48 1,218,928.38 8,017,870.60 1,119,981.29 605,954,561.75
2. 1/1/2023 472,381,795.77 183,495.36 6,213,974.43 1,089,980.99 479,869,246.55
The Group has leased a number of assets, including office, plants, dormitories, machinery equipment and
transportation equipment, with a lease term ranging from 2 to 10 years.
In 2023, the short-term lease expenses included in the profit or loss for the current period and treated under a
simplified method is RMB 24,250,481.19 (2022: RMB 18,867,022.49), and the cash outflows related to leases
are RMB 186,457,187.69 (2022: RMB 172,129,856.01).
The assets leased in shall not be used as collateral for borrowings.
The Group's potential future cash flows not included in the measurement of lease liabilities are mainly derived
from the rentals that will be adjusted to the market levels upon renewal of the lease contracts relating to buildings.
As at 31 December 2023, the Group had no leases committed but not yet commenced.
(2) As at 31 December 2023, the Group had no right-of-use asset that requires provision for impairment
losses.
208 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Intangible assets
(1) Intangible assets
Unit: RMB
ITEM Software Patents Trademarks Land use right Customer relation Total
I. Original carrying amount
1. 1/1/2023 457,907,806.82 2,080,818.66 410,137.84 130,798,786.63 166,955,335.81 758,152,885.76
2. Increase in the year 28,356,471.16 - - 1,285,358.98 - 29,641,830.14
(1) Purchase 28,356,471.16 - - 1,285,358.98 - 29,641,830.14
3. Decrease in the year 6,126,358.67 - - 1,277,911.74 - 7,404,270.41
(1) Disposal or retirement 6,126,358.67 - - 1,277,911.74 - 7,404,270.41
4. Translation differences
arising from translation
12,002,275.49 34,025.67 3,832.73 2,035,700.62 8,943,785.71 23,019,620.22
denominated in foreign
currencies
5. 31/12/2023 492,140,194.80 2,114,844.33 413,970.57 132,841,934.49 175,899,121.52 803,410,065.71
II. Accumulated amortization
1. 1/1/2023 303,188,607.33 2,080,818.66 410,137.84 15,790,008.76 21,578,379.03 343,047,951.62
2. Increase in the year 75,333,177.34 - - 3,274,109.26 10,711,338.27 89,318,624.87
(1) Provision 75,333,177.34 - - 3,274,109.26 10,711,338.27 89,318,624.87
3. Decrease in the year 4,776,100.21 - - 35,091.43 - 4,811,191.64
(1) Disposal or retirement 4,776,100.21 - - 35,091.43 - 4,811,191.64
4. Translation differences
arising from translation
5,936,222.35 34,025.67 3,832.73 126,817.83 1,450,465.91 7,551,364.49
denominated in foreign
currencies
5. 31/12/2023 379,681,906.81 2,114,844.33 413,970.57 19,155,844.42 33,740,183.21 435,106,749.34
III. Provision for impairment
losses
1/1/2023 & 31/12/2023 - - - - - -
IV. Carrying amount
1. 31/12/2023 112,458,287.99 - - 113,686,090.07 142,158,938.31 368,303,316.37
2. 1/1/2023 154,719,199.49 - - 115,008,777.87 145,376,956.78 415,104,934.14
(2) As at 31 December 2023, the Group had no land use rights of which certificates of title have not been obtained.
(3) As at 31 December 2023, the Group had no intangible asset that requires provision for impairment losses.
209 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
19. Goodwill
(1) Original book value of goodwill
Unit: RMB
Changes for the year
Translation
differences arising
Name of investee 31/12/2022 Arising from 31/12/2023
on translation of
business
financial statements
combination
denominated in
foreign currencies
USI Poland 28,453,036.29 - 482,483.36 28,935,519.65
FAFG 548,276,146.45 - 29,371,114.99 577,647,261.44
Hirschmann - 1,139,331.87 (15,157.79) 1,124,174.08
Total 576,729,182.74 1,139,331.87 29,838,440.56 607,706,955.17
(2) Impairment provision of goodwill
As at 31 December 2023, there is no impairment provision of goodwill.
(3) Relative information of asset group or a set of asset groups where the goodwill is related
Composition of the asset
Is it consistent with previous
Name group or a set of asset groups Operating segment and its basis
years
and its basis
FAFG – Company in
Mainland China Mainland China
FAFG China Yes
Cash flow generated Manufacturing location
independently
FAFG - Company in Europe
European region
FAFG Europe Cash flow generated Yes
Manufacturing location
independently
USI Poland
European region
USI Poland Cash flow generated Yes
Manufacturing location
independently
Hirschmann
European region
Hirschmann (Note) Cash flow generated N/A
Manufacturing location
independently
Note: Hirschmann is located in Luxembourg and mainly engages in the design and manufacture of connectors
and sensors. This acquisition is part of the Group's global industrial layout and is of strategic importance
to the Group. When the financial statement for 2023 was publicly disclosed, the Group had not yet
obtained an assessment report, therefore, the fair values of identifiable assets, liabilities and contingent
liabilities acquired in a combination or the cost of business combination can be determined only
provisionally, the Group recognizes and measures the combination using those provisional values.
210 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
19. Goodwill
(4) Specific method of determining the recoverable amount
Recoverable amount determined by the present value of the estimated future cash flows.
Unit: RMB
Key Basis to Basis to
Amount Key
parameters determine the determine the
Recoverable of Projection parameters
ITEM Carrying amount for parameters for key parameters
amount impairme period for steady
projection projection for steady
nt period
period period period
Growth
Discount Long-term
rate of the Growth forecast
rate and discount rate
FAFG projection based on itself
1,933,767,216.50 1,974,800,033.98 - 5 years long-term and average
China period and and relevant
growth growth rate of
profit industries
rate the industry
margin
Growth
Discount Long-term
rate of the Growth forecast
rate and discount rate
FAFG projection based on itself
1,646,408,428.70 1,927,735,157.17 - 5 years long-term and average
Europe period and and relevant
growth growth rate of
profit industries
rate the industry
margin
Growth
Discount Long-term
rate of the Growth forecast
rate and discount rate
projection based on itself
USI Poland 402,700,628.91 637,953,456.90 - 5 years long-term and average
period and and relevant
growth growth rate of
profit industries
rate the industry
margin
Total 3,982,876,274.11 4,540,488,648.05
20. Long-term prepaid expenses
Unit: RMB
Translation of
Transfer from
Increase in the Amortization financial statements
ITEM 31/12/2022 construction in 31/12/2023
year for the year denominated in
progress
foreign currencies
Leased-in plant
175,835,331.45 469,912.51 110,814,718.83 76,621,504.00 2,130,550.13 212,629,008.92
decoration works
21. Deferred tax assets/ deferred tax liabilities
(1) Deferred tax assets that are not offset
Unit: RMB
31/12/2023 31/12/2022
Deductible Deductible
ITEM
temporary Deferred tax assets temporary Deferred tax assets
differences differences
Provision for impairment of
349,082,227.15 68,671,893.65 208,062,389.07 31,887,923.33
assets
Provision for credit loss 40,837,701.20 6,996,575.28 15,676,029.63 3,497,503.49
Deferred income 58,185,280.57 8,728,331.08 60,443,410.66 9,066,511.61
Employee benefits payable 263,238,805.17 40,813,544.17 351,822,136.42 52,882,512.01
Defined benefit plans 131,600,416.30 31,828,838.11 124,981,766.96 29,645,702.88
Depreciation differences 5,058,455.04 887,662.10 3,782,236.82 567,335.52
Provisions 54,423,688.91 11,683,937.24 622,851.27 93,427.69
Unrealized profit 68,178,132.14 12,438,968.17 70,059,384.65 13,081,751.13
Deductible losses 323,379,248.56 69,535,131.21 414,036,219.02 84,693,112.30
Sales discount 458,680,034.68 81,787,688.20 471,651,001.33 84,235,913.19
Lease liabilities 441,145,480.48 93,761,901.35 4,485,110.49 584,949.23
Others 264,590,855.95 63,661,694.38 243,920,840.71 57,756,496.66
Total 2,458,400,326.15 490,796,164.94 1,969,543,377.03 367,993,139.04
211 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
21. Deferred tax assets/ deferred tax liabilities - continued
(2) Deferred tax liabilities that are not offset
Unit: RMB
31/12/2023 31/12/2022
ITEM Taxable temporary Deferred tax Taxable temporary Deferred tax
differences liabilities differences liabilities
Depreciation differences in
research and development 30,215,661.25 4,575,432.53 33,801,264.60 5,070,189.69
equipment tax credits
Right-of-use assets 417,724,474.58 89,196,889.01 4,111,128.03 474,680.94
Fair value adjustment for
business combination
312,084,381.21 79,961,737.10 345,346,062.78 87,631,726.67
involving enterprise not under
common control
Others 35,219,714.85 11,424,808.03 9,110,065.15 3,491,677.02
Total 795,244,231.89 185,158,866.67 392,368,520.56 96,668,274.32
(3) Deferred tax assets and deferred tax liabilities that are presented at the net amount after offset
Unit: RMB
31/12/2023 31/12/2022
Offset amount Offset amount
ITEM between deferred tax Deferred tax assets or between deferred tax Deferred tax assets or
assets and liabilities at liabilities after offset assets and liabilities at liabilities after offset
the end of the year the end of the year
Deferred tax assets (103,522,210.84) 387,273,954.10 (9,036,547.65) 358,956,591.39
Deferred tax liabilities 103,522,210.84 81,636,655.83 9,036,547.65 87,631,726.67
Deferred tax assets are recognized for deductible temporary differences and deductible losses as the Group
believes that it is probable that sufficient taxable profits will be available in the future.
(4) Deferred tax assets not recognized
Unit: RMB
ITEM 31/12/2023 31/12/2022
Deductible temporary differences 6,680,749.95 8,449,752.27
Deductible losses 280,875,884.29 167,659,979.97
Total 287,556,634.24 176,109,732.24
(5) Deductible losses, for which no deferred tax assets are recognized, will expire in the following years
Unit: RMB
Year 31/12/2023 31/12/2022
No time limit 280,875,884.29 167,659,979.97
No deferred tax assets are recognized for deductible temporary differences and deductible losses due to the
uncertainty in certain subsidiaries whether sufficient taxable profits will be available in the future.
22. Other non-current assets
Unit: RMB
ITEM 31/12/2023 31/12/2022
Prepayment for equipment 47,404,680.89 113,538,490.61
Prepayment for platform fee 10,179,323.04 -
Guarantee and deposit 9,576,400.85 10,487,765.93
Prepayment for enterprise income tax 1,114,386.14 155,287.50
Others - 430,351.28
Total 68,274,790.92 124,611,895.32
212 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
23. Assets with restrictions on ownership or use rights
Unit: RMB
31/12/2023 31/12/2022
ITEM Carrying Restriction Restriction Book value Carrying Restriction Restriction
Book value
amount type case amount type case
Other cash and Investment Investment Customs Customs
20,975,282.12 20,975,282.12 14,757,734.50 14,757,734.50
bank balances deposit deposit deposit deposit
Foreign Foreign
Other cash and Customs Customs
13,430,328.50 13,430,328.50 2,214,334.90 2,214,334.90 exchange exchange
bank balances deposit deposit
margin margin
Total 34,405,610.62 34,405,610.62 16,972,069.40 16,972,069.40
24. Short-term borrowings
(1) Categories of short-term borrowings:
Unit: RMB
ITEM 31/12/2023 31/12/2022
Credit loans 4,378,428,691.47 4,499,463,404.21
As at 31 December 2023, the Group's short-term borrowings are all composed of credit loans with no pledged,
mortgaged or guaranteed borrowings.
(2) As at 31 December 2023, the Group has no short-term borrowings overdue but not yet repaid.
25. Derivative financial liabilities
Unit: RMB
ITEM 31/12/2023 31/12/2022
Financial liabilities at FVTPL 173,872.64 3,118,891.32
Including: Derivative financial instruments (Note) 173,872.64 3,118,891.32
Note: The derivative financial liabilities held by the group are foreign exchange forward contract.
26. Accounts payable
(1) Accounts payable
Unit: RMB
ITEM 31/12/2023 31/12/2022
Payable for materials 10,075,200,190.46 10,295,963,612.28
Payable for assets 177,402,797.98 352,221,507.19
Expenses payable 321,520,781.03 408,005,735.96
Total 10,574,123,769.47 11,056,190,855.43
(2) As at 31 December 2023, the Group has no significant accounts payable aged more than one year.
213 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
27. Contract liabilities
(1) Contract liabilities
Unit: RMB
ITEM 31/12/2023 31/12/2022
Receipts in advance 348,380,131.33 411,898,442.43
The Group's revenue from sales of goods is recognized when the control over related goods is transferred to the
customer. A contract liability is recognized at the time of the transaction for goods paid for in advance by the
customer until the goods are shipped to or delivered to the customer, i.e. when control is transferred to the
customer.
The carrying amount of contract liabilities of RMB 411,898,442.43 at the beginning of the year has been
recognized as revenue in the current year, while that of RMB 348,380,131.33 at the end of the year is expected to
be recognized as revenue in 2024.
28. Employee benefits payable
(1) Employee benefits payable
Unit: RMB
Exchange
differences arising
Additions due to
on translation of
ITEM 31/12/2022 business Additions Disposals 31/12/2023
financial statements
combination
denominated in
foreign currencies
1. Short-term benefits 1,106,270,951.67 39,471,973.14 3,932,967,955.02 4,199,552,194.46 14,255,553.27 893,414,238.64
2. Post-employment
benefits-defined 26,622,538.88 1,156,500.03 248,141,707.59 247,538,609.38 704,136.19 29,086,273.31
contribution plan
3. Long-term
employee benefits
15,578,087.34 - 16,749,790.68 31,908,844.17 (8,290.72) 410,743.13
payable due within one
year
4. Termination benefits 13,413,516.00 - 10,378,581.00 23,792,097.00 - -
Total 1,161,885,093.89 40,628,473.17 4,208,238,034.29 4,502,791,745.01 14,951,398.74 922,911,255.08
(2) Short-term employee benefits
Unit: RMB
Exchange differences
Additions due to arising on translation of
ITEM 31/12/2022 business Additions Disposals financial statements 31/12/2023
combination denominated in foreign
currencies
1. Wages or salaries,
bonuses, allowances 1,036,408,739.69 39,459,368.49 3,273,219,972.92 3,541,699,689.48 11,724,994.64 819,113,386.26
and subsidies
2. Staff welfare 20,251,084.80 - 292,377,411.81 289,455,832.11 1,179,731.03 24,352,395.53
3. Social security
42,402,128.80 - 275,055,916.39 275,091,368.01 1,250,424.04 43,617,101.22
contributions
Including: Medical
34,568,797.29 - 192,093,557.15 192,633,998.61 1,008,035.95 35,036,391.78
insurance
Work injury
7,274,685.88 - 52,039,772.84 51,749,412.22 151,857.83 7,716,904.33
insurance
Maternity
35,536.04 - 1,635,978.13 1,631,694.75 625.85 40,445.27
insurance
Overseas
comprehensive
523,109.59 - 29,286,608.27 29,076,262.43 89,904.41 823,359.84
insurance
expenses
4. Housing funds 6,165,312.10 12,604.65 81,455,834.01 82,569,943.41 85,256.50 5,149,063.85
5. Union running costs
and employee 1,043,686.28 - 10,858,819.89 10,735,361.45 15,147.06 1,182,291.78
education cost
Total 1,106,270,951.67 39,471,973.14 3,932,967,955.02 4,199,552,194.46 14,255,553.27 893,414,238.64
214 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
28. Employee benefits payable - continued
(3) Defined contribution plan (Note)
Unit: RMB
Exchange
differences arising
Additions due to
on translation of
ITEM 31/12/2022 business Additions Disposals 31/12/2023
financial statements
combination
denominated in
foreign currencies
1. Basic pensions 26,203,757.37 1,156,500.03 232,422,846.31 231,829,353.04 694,603.12 28,648,353.79
2. Unemployment -
418,781.51 15,718,861.28 15,709,256.34 9,533.07 437,919.52
insurance
Total 26,622,538.88 1,156,500.03 248,141,707.59 247,538,609.38 704,136.19 29,086,273.31
Note: The Group participates, as required, in the pension insurance and unemployment plan established by
Chinese government authorities, Mexican authorities and French authorities. According to such plans,
the Group contributes monthly to such plans based on corresponding percentages of contribution base.
Except for above monthly contributions, the Group does not assume further payment obligations. The
related expenditures are either included in cost of related assets or charged to profit or loss in the period
when they are incurred.
In this year, the Group should contribute pension insurance and unemployment plans amounting to RMB
232,422,846.31 and RMB 15,718,861.28 (2022: RMB 220,035,658.76 and RMB 13,331,790.43). As at
31 December 2023, the Group has outstanding contributions to pension insurance and unemployment
plans that are accrued but not yet paid in the current reporting period amounting to RMB 28,648,353.79
and RMB 437,919.52 (31 December 2022: RMB 26,203,757.37 and RMB 418,781.51). The outstanding
contributions have been paid after the reporting period.
29. Taxes payable
Unit: RMB
ITEM 31/12/2023 31/12/2022
Enterprise income tax 155,394,883.50 239,183,763.40
Withholding of income tax 105,052,473.58 71,203,696.31
Value-added taxes ("VAT") 52,031,278.71 45,323,905.31
Individual income tax 15,701,551.89 7,935,318.38
Surcharges 16,369,181.10 17,025,179.34
Stamp duty 5,491,534.27 7,123,546.41
Withholding of VAT and levies 28,017.34 -
Others 5,585,493.99 295,315.40
Total 355,654,414.38 388,090,724.55
30. Other payables
(1) Other payables
Unit: RMB
ITEM 31/12/2023 31/12/2022
Interest payable - 20,270,005.36
Other payables 1,044,770,045.86 696,662,698.41
Total 1,044,770,045.86 716,932,703.77
215 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
30. Other payables - continued
(2) Interest payable
Unit: RMB
ITEM 31/12/2023 31/12/2022
Interest payables of short-term borrowings - 14,059,324.30
Interest payables of long-term borrowings - 482,848.75
Interest payables of bonds - 5,727,832.31
Total - 20,270,005.36
As at 31 December 2023, the Group has no significant interest payables due.
(3) Other payables by nature
Unit: RMB
ITEM 31/12/2023 31/12/2022
Collection on behalf of third parties 357,810,180.31 327,342,648.15
Customer deposit 292,519,736.99 200,960,766.77
Outstanding payment for equity purchases (Note (VI), 1) 147,199,754.10 -
Accrued expenses 133,266,647.54 53,493,020.82
Professional service fee 31,132,851.27 45,785,605.37
Miscellaneous fees 22,388,211.91 9,900,940.43
Utilities, storage and transportation costs 9,601,794.55 25,010,517.18
Procurement of non-raw materials 1,659,108.02 1,858,465.18
Others 49,191,761.17 32,310,734.51
Total 1,044,770,045.86 696,662,698.41
As at 31 December 2023, the Group has no significant other payables aged more than one year.
31. Non-current liabilities due within one year
Unit: RMB
ITEM 31/12/2023 31/12/2022
Bonds payable due within one year (Note (V). 34) 3,381,278,375.98 -
Lease liabilities due within one year (Note (V). 35) 166,945,559.82 141,963,140.51
Long-term borrowings due within one year (Note (V). 33) 15,801,814.76 364,856,884.72
Total 3,564,025,750.56 506,820,025.23
32. Other current liabilities
Unit: RMB
ITEM 31/12/2023 31/12/2022
Relocation expense of Shenzhen plant 3,944,775.07 3,661,569.01
216 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
33. Long-term borrowings
Details of long-term borrowings
Unit: RMB
ITEM 31/12/2023 31/12/2022
Credit loans (Note) 63,187,765.86 424,284,423.60
Less: Long-term borrowings included in non-current liabilities
due within one year 15,801,814.76 364,856,884.72
(Note (V). 31)
Total 47,385,951.10 59,427,538.88
Note: In November 2022, FAFG, a subsidiary of the Group, borrowed EUR 10,000,000.00 from the bank,
equivalent to RMB 74,284,423.60. The repayment method is EUR 500,000.00 per quarter starting from
February 2023, and the final repayment date is November 2027, with the interest rate of 3.9% fixed. As
of 31 December 2023, the balance of the above borrowings of EUR 2,000,000.00, equivalent to RMB
15,652,767.00 and its interest of RMB 149,047.76, totaling RMB 15,801,814.76 is included in the non-
current liabilities due within one year.
As at 31 December 2023, the Group had no long-term borrowings that were due but not yet repaid.
34. Bonds payable
(1) Bonds payable
Unit: RMB
ITEM 31/12/2023 31/12/2022
Convertible corporate bonds - 3,243,085,241.27
(2) Movements in bonds payable
Unit: RMB
Amount
recognized in
Interest Amortization of
Nominal Date of Issued in this Swap to non-current 31/12/202 Default or
Name of bonds Term Issue amount 31/12/2022 accrued as per premiums or
value issue period equity liabilities due 3 not
nominal value discounts within one year
(Note)
Universal
Global
Convertibl 4 March 6 3,450,000,000. 3,243,085,241. 139,416,505.8 3,381,278,375.
100 - 18,308,308.90 51,341.46 - No
e Bonds 2021 years 00 27 1 98
(SH:11304
5)
Note: According to the terms of selective resale in the prospectus of the Company's public offering of convertible
bonds: when the convertible bonds have been issued for three years, the holders of the convertible bonds
have the right to sell back at one time, that is, they have the right to sell back all or part of the convertible
bonds held by them to the company at 102.00% (including the interest of the third year). After the
conditions for the option of resale terms are met, the holders of convertible bonds may carry out resale
within the reporting period for the option of resale after the announcement of the company; Those who
do not carry out resale within the reporting period of selective resale shall no longer enjoy the rights
agreed in the terms of selective resale. As of 31 December 2023, all of the above bonds payable are
recognized in non-current liabilities due within one year (including the interest payables of bonds: RMB
17,136,279.26).
217 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
34. Bonds payable - continued
(3) Description on issuing, conversion condition and conversion time of convertible corporate bonds
As approved by CSRC with "Zheng Jian Xu Ke [2021] No. 167", the Company issued 34,500,000 convertible
bonds at nominal value of RMB 100, with annual coupon rate of 0.1%, 0.2%, 0.6%, 1.3%, 1.8% and 2.0%,
respectively for the 1st year, 2nd year, 3rd year, 4th year, 5th year and 6th year, and the annual interest is payable
at the date of each full year from the first date of issue of the convertible bonds in this issue. If such day is a legal
holiday or a rest day, it will be postponed to the next trading day, bearing no interest during the postponed period.
The convertible bonds in this issue is allowed to swap to equity from the first trading date in the 10th month
subsequent to the closing date of this issue (namely 10 March 2021) to the expiry date of convertible bonds.
Within five trading days after the expiration of the convertible bonds issued, the Company will redeem the
convertible bonds not converted into shares at the price of 108.00% (including the last interest) of the face value
of the bonds.
During the conversion period of this issuance of convertible bonds, if the closing price of the Company's shares
on at least 20 trading days in any 30 consecutive trading days is not less than 130% (including 130%) of the
current conversion price, with the approval of relevant regulatory authorities (if necessary), the Company has the
right to redeem all or part of the convertible bonds that have not been converted according to the face value of the
bonds plus the accrued interest in the current period. If the Company's share conversion price is adjusted due to
ex rights and ex dividend on the above trading days, it shall be calculated according to the share conversion price
and closing price before the adjustment on the trading day before the adjustment, and according to the adjusted
share conversion price and closing price on the trading day after the adjustment. In addition, when the total face
value of the convertible bonds not converted into shares issued is less than RMB 30 million, the Company has the
right to redeem all the convertible bonds not converted into shares at the price of face value plus accrued interest
in the current period.
In the last two interest bearing years of the issuance of convertible bonds, if the closing price of the company's
shares on any consecutive 30 trading days is lower than 70% of the current conversion price, the holders of
convertible bonds have the right to resell all or part of the convertible bonds to the Company at the price of face
value plus accrued interest for the current period. If the conversion price has been adjusted due to bonus shares,
conversion to share capital, issuance of new shares, allotment of shares or distribution of cash dividends
(excluding the increased share capital due to the conversion of convertible bonds into shares), it shall be calculated
according to the conversion price and closing price before the adjustment on the trading day before the adjustment,
and according to the conversion price and closing price after the adjustment on the trading day after the adjustment.
In case of downward correction of the conversion price, the above "Thirty consecutive trading days" shall be
recalculated from the first trading day after the conversion price adjustment. In the last two interest bearing years
of the convertible bonds issued this time, the holders of the convertible bonds can exercise the resale right once
according to the above agreed conditions after the resale conditions are met for the first time. If the holders of the
convertible bonds fail to declare and implement the resale within the resale reporting period announced by the
Company at that time, the resale right shall not be exercised in the interest bearing year, and the holders of the
convertible bonds cannot exercise part of the resale right multiple times.
During the duration of the convertible bonds issued this time, if the company is deemed to change the purpose of
the raised funds or recognized by the CSRC as changing the purpose of the raised funds in accordance with the
relevant provisions of the CSRC, the holders of the convertible bonds have the right to sell back at one time. The
holders of convertible bonds have the right to resell all or part of the convertible bonds held by them to the
company at the price of the face value of the bonds plus the accrued interest of the current period. After the
additional resale conditions are met, the holders of convertible bonds may carry out the resale within the additional
resale reporting period after the announcement of the company. If the resale is not carried out during the additional
resale reporting period, they shall not exercise the additional resale right.
218 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
34. Bonds payable - continued
(3) Description on issuing, conversion condition and conversion time of convertible corporate bonds -
continued
When the convertible bonds have been issued for three years, the holders of the convertible bonds have the right
to sell back at one time, that is, they have the right to sell back all or part of the convertible bonds held by them
to the company at 102.00% (including the interest of the third year). After the conditions for the option of resale
terms are met, the holders of convertible bonds may carry out resale within the reporting period for the option of
resale after the announcement of the company; Those who do not carry out resale within the reporting period of
selective resale shall no longer enjoy the rights agreed in the terms of selective resale.
The initial conversion price of convertible bonds issued this time is RMB 20.25 per share. According to the
resolution of the general meeting of shareholders on 23 April 2021, the Company distributed cash dividends to
all shareholders, with a cash dividend of RMB 5.00 per 10 shares. Therefore, as of 31 December 2021, the
conversion price was adjusted to RMB 19.75 per share. In accordance with the resolution of the general meeting
of shareholders on 19 April 2022, the Company will pay a cash dividend of RMB 2.6 per 10 shares to all
shareholders. Therefore, the conversion price is adjusted to RMB 19.49 per share. At the same time, according to
the resolution of the general meeting of shareholders on 19 April 2022, the Company cancellations the 9,296,627
shares purchased in 2019 that have not been used, so the conversion price is adjusted to RMB 19.52 per share.
According to the prospectus for the Public Offering of Convertible Bonds of Universal Scientific Industrial
(Shanghai) Co., Ltd., the price of convertible bonds to equity should be adjusted due to changes in the total share
capital caused by the exercise of stock options of the company. Therefore, the price of convertible bonds to equity
is adjusted to RMB 19.50 per share. In accordance with the resolution of the general meeting of shareholders on
24 April 2023, the Company will pay a cash dividend of RMB 4.3 per 10 shares to all shareholders. Therefore,
the conversion price is adjusted to RMB 19.07 per share. On 28 November 2023, according to the prospectus for
the Public Offering of Convertible Bonds of Universal Scientific Industrial (Shanghai) Co., Ltd., the price of
convertible bonds to equity is adjusted to RMB 19.06 per share due to the reaching of conversion price adjustment
criteria for cumulative stock option exercises.
When the convertible corporate bonds issued by the company are initially measured, the amount of the fair value
of the corresponding liability component after deducting the issuance expenses to be apportioned is RMB
3,010,541,240.32, which is included in the bonds payable; The corresponding amount of redemption right and put
back right is RMB 6,900,000.00, which is included in derivative financial liabilities; The amount of issuance
expenses to be apportioned for the derivative financial liabilities is RMB 45,397.90, which is included in the
current profit and loss; The fair value of the corresponding equity part after deducting the apportioned issuance
expenses is RMB 409,905,205.31, which is included in other equity instruments. The amortized cost of the
adjusted liability is RMB 139,416,505.81 withdrawn according to the effective interest rate method in the current
period.
As of 31 December 2023, the Company has convertible bonds with face value of RMB 122,000 (book value of
RMB 113,272.01) converted into A-share ordinary shares, and the number of shares converted is 6,215 shares.
Among them, in 2023, convertible bonds with a face value of RMB 54,000 (book value of RMB 51,341.46) were
converted into A-share ordinary shares, the number of shares converted was 2,776 shares, and RMB 93.03 was
paid for commissions.
219 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
35. Lease liabilities
(1) Details of lease liabilities
Unit: RMB
ITEM 31/12/2023 31/12/2022
Lease liabilities 653,720,789.24 523,688,862.68
Less: Lease liabilities included in non-current liabilities due within
166,945,559.82 141,963,140.51
one year (Note (V). 31)
Total 486,775,229.42 381,725,722.17
The following is the maturity analysis for lease liabilities which is based on undiscounted remaining contractual
obligations:
Unit: RMB
Within 1 year 1-5 years Over 5 years Total
31/12/2023 171,679,696.45 329,233,957.90 217,512,341.22 718,425,995.57
31/12/2022 146,788,462.63 339,833,985.72 67,277,656.29 553,900,104.64
36. Long-term payables
Unit: RMB
ITEM 31/12/2023 31/12/2022
Software licensing fee (Note) 31,646,041.98 44,878,564.09
Less: Long-term payables due within one year 6,119,744.14 13,765,268.38
Total 25,526,297.84 31,113,295.71
Note: It refers to software licensing fee payable by the Group, of which the portion due within one year is
recognized in accounts payable.
37. Long-term employee benefits payable
(1) Long-term employee benefits payable
Unit: RMB
ITEM 31/12/2023 31/12/2022
1. Post-employment benefits- net liability of defined benefit plans 264,679,080.96 195,627,020.11
2. termination benefits 8,926,811.49 3,715,489.91
Total 273,605,892.45 199,342,510.02
(2) Changes in defined benefit plans
Net liability of defined benefit plans
Unit: RMB
ITEM 2023 2022
I. 31/12/2022 211,205,107.45 307,160,168.23
II. Additions due to business combination (Note (VI), 1) 42,393,319.88 -
III. Defined benefits costs recognized in profit or loss for the year 13,489,424.98 8,415,658.22
IV. Defined benefits costs recognized in other comprehensive
19,541,638.43 (67,885,313.64)
income
V. Amount contributed and paid during the year (31,908,844.17) (38,194,655.22)
VI. Exchange differences arising on translation of foreign
10,369,177.52 1,709,249.86
currencies
VII. 31/12/2023 265,089,824.09 211,205,107.45
Less: Long-term employee benefits payable due within one year 410,743.13 15,578,087.34
Long-term employee benefits payable paid after one year 264,679,080.96 195,627,020.11
220 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
37. Long-term employee benefits payable - continued
(2) Changes in defined benefit plans - continued
Contents of defined benefit plans and related risks, and its impact over the Group's future cash flows, timing and
uncertainty:
UGSI and USI, the Group's subsidiaries, provide retirement benefit plan for full-time regular employees hired
before 1 July 2005. The Group acquired FAFG in 2020. FAFG provides retirement benefit plan for its employees,
which provides a pension for some employees who have worked for more than 10 years according to the working
years and certain rate of their salaries in recent 10 years, and a pension for some employees who have worked for
more than 2 years according to the working years and certain rate of their salaries in recent 12 months.
The defined benefit plans expose the Group to actuarial risks such as discount rate, future salary growth rate, etc.
The Group hired Towers Watson Business Management Consulting Co., Ltd. to estimate the present value of
retirement benefit plan of UGSI and USI by actuary in accordance with the projected unit credit method. Future
salary growth rate and mortality rate are used to estimate the future cash outflows to recognize the present value
of the plan at a discounted rate which is determined in accordance with the market interest rate of high-quality
corporate bonds at the balance sheet date. In countries where there is no market for such bonds, the market interest
rate for government bonds (at the balance sheet date) shall be used. Since the Group's post-employment benefit
obligations remain effective for 9 to 10 years, the discount rate is determined by reference to the bonds with a
similar duration to the post-employment benefit obligations. Therefore, the average interest rate for government
bonds with a duration of 9 years or more is referenced. The Group recognizes liabilities based on the actuarial
result, with gains or losses arising from actuary recognized in other comprehensive income and not to be reversed
to profit or loss in subsequent accounting periods. Past service cost is included in profit or loss for the period
when the modification to the plan is made. And net interest is recognized as the amount of net liabilities or assets
of the defined benefit plan multiplying by an appropriate discount rate.
The following table lists the significant actuarial assumptions used by UGSI and USI in determining the present
value of the defined benefit plan obligations:
31/12/2023 31/12/2022
Discount rate 1.40% 1.80%
Future salary growth rate 2.25% 2.25%
Assumptions made Assumptions made
based on the sixth based on the sixth
Mortality rate
Mortality Table in Mortality Table in
Taiwan Taiwan
Sensitive analysis as below is based on reasonable changes of corresponding assumptions at the end of the reporting
period (all other assumptions remain unchanged):
When the discount rate is up (down) 0.5%, the present value of defined benefit plan obligations of UGSI
and USI will be decreased by RMB 8,082,652.27 (increased by RMB 8,659,556.19) and RMB448,421.12
(increased by RMB 476,332.10), respectively.
When the future salary growth rate is up (down) 0.5%, the present value of defined benefit plan obligations
of UGSI and USI will be increased by RMB 8,543,760.20 (decreased by RMB 8,057,509.32) and RMB
470,104.03 (decreased by RMB 447,037.10), respectively.
The Group hired Confera to estimate the present value of retirement benefit plan obligation of FAFG by actuary
in accordance with the projected unit credit method. Future salary growth rate is used to estimate the future cash
outflows to recognize the present value of the plan at a discounted rate.
221 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
37. Long-term employee benefits payable - continued
(2) Changes in defined benefit plans - continued
The following table lists the significant actuarial assumptions used by FAFG in determining the present value of
the defined benefit plan obligations:
31/12/2023 31/12/2022
Discount rate 3.15%-3.75 % 3.75%
Future salary growth rate 2.25%-2.6 % 1.5%-2.25 %
Life expectancy table Life expectancy table
Mortality rate of local National of local National
Bureau of Statistics Bureau of Statistics
Sensitive analysis as below is based on reasonable changes of corresponding assumptions at the end of the
reporting period (all other assumptions remain unchanged):
When the discount rate is up (down) 0.5%, the present value of defined benefit plan obligations of FAFG
will be decreased by RMB 8,034,353.99 (increased by RMB 8,715,210.22).
When the future salary growth rate is up (down) 0.5%, the present value of defined benefit plan obligations
of FAFG will be increased by RMB 2,818,233.74 (decreased by RMB 2,660,868.65).
As it is unlikely that an assumption can change in an isolated manner due to correlations among certain
assumptions, the sensitivity analysis above may not reflect actual changes in present value of defined benefit
plans.
In sensitivity analysis above, the method used to calculate net liabilities of defined benefit plans at the end of the
period is the same with that used to recognize related liabilities in balance sheet.
Compared with previous years, methods and assumptions adopted to analyze sensitivity remain unchanged.
38. Provisions
Unit: RMB
ITEM 31/12/2023 31/12/2022
Products quality assurance 41,946,064.03 7,350,296.14
Return of government grants (Note (VIII), 1) 6,333,000.00 -
Total 48,279,064.03 7,350,296.14
39. Deferred income
(1) Details of deferred income
Unit: RMB
Translation
differences arising
on translation of
ITEM 31/12/2022 Additions Disposals financial 31/12/2023 Reason
statements
denominated in
foreign currencies
Government grants 60,913,501.65 21,000,000.00 23,915,752.34 109,192.63 58,106,941.94 Note (VIII), 1
Subsidies for purchase
2,281,707.65 52,681.35 626,489.54 70,164.26 1,778,063.72
of fixed assets
Total 63,195,209.30 21,052,681.35 24,542,241.88 179,356.89 59,885,005.66
222 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
40. Other non-current liabilities
Other non-current liabilities refer to guarantee deposits and margins received from suppliers.
41. Share capital
Unit: RMB
Changes for the year
31/12/2022 Convertible bond to equity 31/12/2023
New shares issued(Note 1)
swap (Note 2)
Total shares 2,206,864,239.00 3,124,565.00 2,776.00 2,209,991,580.00
Note 1: In November 2015, the Company implemented the Stock Option Incentive Plan of Universal Scientific
Industrial (Shanghai) Co., Ltd. granting qualified employees a certain number of stock options to
subscribe for the Company's ordinary shares. In 2023, 64,467 common shares were vested at a price of
RMB 15.54 per share. In November 2019, the Company implemented the 2019 Stock Option Incentive
Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. to grant eligible employees a certain number
of stock options to subscribe for shares of the Company's common stock. In 2023, 376,350 and 2,683,748
ordinary shares granted by the Company were exercised at RMB 12.41 and RMB 11.98 respectively and
registered with the Shanghai Branch of China Securities Depositories and Clearing Co., LTD. The total
increase in capital stock is RMB 3,124,565.00 and capital reserve is RMB 34,699,093.12.
Note 2: See Note V, 34 for convertible bond to equity swap.
42. Other equity instruments
Unit: RMB
31/12/2022 Additions Disposals 31/12/2023
Outstanding financial
Carrying Carrying Carrying Carrying
instruments Qty. Qty. Qty. Qty.
amount amount amount amount
Convertible corporate
34,499,320 409,897,126.04 - - 540.00 6,415.90 34,498,780.00 409,890,710.14
bonds
Note: Other equity instruments are formed by the equity part of convertible corporate bonds issued. For the
details, see Note (V), 34.
43. Capital reserve
Unit: RMB
ITEM 31/12/2022 Additions Disposals 31/12/2023
Share premium 2,075,432,435.94 61,472,254.03 3,366,070.64 2,133,538,619.33
Including: Share capital invested by investors
3,161,126,600.33 34,699,093.12 - 3,195,825,693.45
(Note V. (41))
Purchase of minority interests (4,405,590.07) - - (4,405,590.07)
Differences resulting from combination
involving enterprise under common (5,621,108.53) - - (5,621,108.53)
control
Transfer of capital reserve to share
(1,087,961,790.00) - - (1,087,961,790.00)
capital
Share-based payment exercise included
118,492,564.42 26,354,526.01 - 144,847,090.43
in owners' equity
Treasury shares transferred out (Note
(106,264,417.99) 363,746.57 3,366,070.64 (109,266,742.06)
(V). 44)
Exercise of convertible bonds (Note (V).
66,177.78 54,888.33 - 121,066.11
34)
Other capital reserve 159,097,449.68 17,684,000.00 26,354,526.01 150,426,923.67
Total 2,234,529,885.62 79,156,254.03 29,720,596.65 2,283,965,543.00
223 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
44. Treasury shares
Unit: RMB
Increase in the year Decrease in the year
ITEM 31/12/2022 31/12/2023
(Note 1) (Note 2)
Employee stock ownership plan 351,392,965.86 364,587.57 30,026,557.89 321,730,995.54
Note 1: In 2023, 30,600 Treasury shares will be returned to the Group in accordance with the 2020 Employee
Stock Ownership Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. among which RMB
363,746.57 will be included in the capital reserve, and related taxes and commissions of RMB 841.00
will be paid.
Note 2: In 2023, in accordance with the 2019 Employee Stock Ownership Plan of Universal Scientific Industrial
(Shanghai) Co., Ltd., the Motion to Amend the Core Employee Share Ownership Plan of Universal
Scientific Industrial (Shanghai) Co., Ltd. (Revised) and its summary and the Motion of 2023 Employee
Stock Ownership Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. and its summary, the Group
used 1,715,250 shares of treasury stock for the exercise of options under the Employee Stock Ownership
Plan and 372,000 shares of treasury stock were transferred to the account of the Company's Employee
Stock Ownership Plan. A total of 2,087,250 shares of treasury stock were transferred out for a total of
RMB 30,026,557.89. The Group received RMB 26,686,556.25 from employees for the exercise of shares
under the Employee Stock Ownership Plan, among which RMB 3,366,070.64 was reduced to capital
reserve and RMB 26,069.00 was paid for related taxes and commissions.
45. Other comprehensive income
Unit: RMB
Amount incurred in the current year
Less: Amount
previously
included in
Amount Attributable to Attributable
other
ITEM 31/12/2022 incurred for Less: Income owners of the to minority 31/12/2023
comprehensive
current year tax expenses company after interests
income and
before tax tax after tax
transferred to
profit or loss
for the period
I. Other comprehensive income that cannot be
(26,999,602.49) 7,621,165.62 - (4,546,957.50) 12,172,076.30 (3,953.18) (14,827,526.19)
subsequently reclassified to profit or loss
Including: Recalculation of the changes in
(1,764,575.20) (19,541,638.43) - (4,546,957.50) (14,990,727.75) (3,953.18) (16,755,302.95)
defined benefit plans
Fair value changes in other equity
(25,235,027.29) 27,162,804.05 - - 27,162,804.05 - 1,927,776.76
instruments investment
II. Other comprehensive income that will be
138,849,771.07 138,485,940.43 - - 137,704,410.57 781,529.86 276,554,181.64
reclassified to profit or loss
Including: Other comprehensive income that
can be reclassified to profit or loss under (14,471,287.68) (7,656,754.91) - - (7,656,754.91) - (22,128,042.59)
equity method
Exchange differences on translation
of financial statements denominated 3,401,475.38 217,631,386.30 - - 216,849,856.44 781,529.86 220,251,331.82
in foreign currencies
Hedges for net investment in foreign
149,919,583.37 (71,488,690.96) - - (71,488,690.96) - 78,430,892.41
operations
Total other comprehensive income 111,850,168.58 146,107,106.05 - (4,546,957.50) 149,876,486.87 777,576.68 261,726,655.45
46. Surplus reserve
Unit: RMB
ITEM 31/12/2022 Additions Disposals 31/12/2023
Statutory surplus reserve
862,080,832.26 104,720,922.14 - 966,801,754.40
(Note)
Note: According to the Articles of Association, Universal Scientific Industrial (Shanghai) Co., Ltd. is required
to transfer 10% of its net profit in 2023 to the statutory surplus reserve. Statutory surplus reserve can be
used to cover the Company's losses, expand the Company's production and operation or increase the
Company's capital.
224 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
47. Retained profits
Unit: RMB
ITEM 2023 2022
Retained profits at the end of prior year 10,275,564,894.22 7,906,260,771.90
Add: Net profit attributable to owners of the Company for the
1,947,846,866.12 3,059,967,081.20
year
Less: Appropriation to statutory surplus reserve (Note 1) 104,720,922.14 124,076,162.30
Dividends on ordinary shares payable (Note 2) 938,928,461.98 566,586,796.58
Retained profits at the end of the year (Note 3) 11,179,762,376.22 10,275,564,894.22
(1) Appropriation to statutory surplus reserve
According to the Articles of Association, the Company is required to transfer 10% of its net profit to the statutory
surplus reserve. The transfer may be ceased if the balance of the statutory surplus reserve has reached 50% of the
Company's registered capital.
(2) Profit distribution approved in shareholders' meeting during the year
As proposed by the resolution of the Twentieth Meeting of the Fifth Session of the Board of Directors of the
Company held on 31 March 2023, and approved by the Annual General Meeting on 24 April 2023, a cash dividend
of RMB 4.30 (including tax) per 10 shares will be distributed on the basis of the total share capital registered at
the equity registration date less the number of the shares repurchased by the Company from special accounts,
with no bonus issue and no increase in share capital.
(3) Profit distribution decided after the balance sheet date
As proposed by the resolution of the Tenth Meeting of the Sixth Session of the Board of Directors of the Company
held on 29 March 2024, a cash dividend of RMB 2.70 (including tax) per 10 shares will be distributed on the
basis of the total share capital at the equity registration date less the number of the shares repurchased by the
Company from special accounts, with no bonus issue and no increase in share capital. The above proposal
regarding dividends distribution is yet to be approved in a shareholders' meeting.
(4) Appropriation to surplus reserve by subsidiaries
As at 31 December 2023, the balance of the Group's retained profits include appropriation to surplus reserve by
subsidiaries amounting to RMB 1,395,095,817.26 (31 December 2022: RMB 1,296,513,372.15).
225 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
48. Operating income and operating costs
(1) Details of operating income and operating costs
Unit: RMB
Amount incurred in the current year Amount incurred in the prior year
ITEM
Revenue Cost Revenue Cost
Principal operating
60,729,838,575.32 54,935,760,001.34 68,470,093,860.59 61,323,766,793.99
activities
Other operating
62,070,962.55 3,376,480.35 45,982,102.67 3,307,737.74
activities
Total 60,791,909,537.87 54,939,136,481.69 68,516,075,963.26 61,327,074,531.73
(2) Analysis of principal operating income and principal operating costs by product categories:
Unit: RMB
Amount incurred in the prior year
Amount incurred in the current year
(restated)
ITEM
Principal operating Principal operating
Revenue Revenue
costs costs
Communication
21,799,269,805.02 20,103,196,795.12 25,624,979,063.69 23,211,611,845.63
products
Consumer electronic
19,254,189,286.98 17,728,131,621.69 21,728,941,113.99 19,901,381,324.59
products
Industrial products 8,164,460,442.66 6,982,306,047.58 8,656,421,000.15 7,265,264,364.72
Cloud and storage
5,378,779,152.02 4,518,126,147.87 6,991,437,378.04 5,920,727,473.01
products
Automotive
5,137,439,831.33 4,721,705,037.54 4,662,922,798.27 4,252,380,090.12
electronic products
Medical products 376,027,790.19 350,579,209.65 202,191,045.99 181,900,362.57
Others 619,672,267.12 531,715,141.89 603,201,460.46 590,501,333.35
Total 60,729,838,575.32 54,935,760,001.34 68,470,093,860.59 61,323,766,793.99
(3) Other operating income and other operating costs:
Unit: RMB
Amount incurred in the current year Amount incurred in the prior year
ITEM Other operating Other operating
Other operating costs Other operating costs
income income
Scrap income 53,239,459.39 - 39,603,898.97 -
Others 8,831,503.16 3,376,480.35 6,378,203.70 3,307,737.74
Total 62,070,962.55 3,376,480.35 45,982,102.67 3,307,737.74
(4) Fulfillment of contractual obligations:
The Group's sales include domestic sales and export sales. The Group's performance obligation is to provide
goods to customers, including communication products, consumer electronic products, cloud and storage products,
industrial products, automotive electronic products, medical products and other products.
The Group recognizes revenue at the time when the customer obtains control of the goods. The Group recognizes
sales revenue from domestic sales at the time when the goods are delivered to the warehouse designated by the
customer and the customer signs for them on the receipt, while that from export sales is recognized when the
goods leave the factory, when the goods are delivered to the carrier, when the goods are delivered to the port,
when the goods are loaded onto an aircraft or ship, or when the goods are delivered to the customer or to a location
designated by the customer, respectively, according to the specific trading terms agreed in the contract.
226 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
49. Taxes and levies
Unit: RMB
Amount incurred in Amount incurred in
ITEM
the current year the prior year
City maintenance and construction tax 26,088,040.95 13,786,022.43
Educational surcharge 23,413,277.40 10,030,738.56
Housing property Tax 18,777,242.42 2,609,568.22
Stamp duty 20,308,111.04 23,111,161.47
Urban land use tax 864,618.59 781,817.57
Others 6,318,697.79 5,110,619.26
Total 95,769,988.19 55,429,927.51
50. Selling expenses
Unit: RMB
Amount incurred in Amount incurred in
ITEM
the current year the prior year
Staff costs 258,156,410.38 255,654,011.92
After-sales service fee 26,710,213.12 6,423,251.42
Depreciation and amortization 16,504,412.59 14,990,838.78
Labor costs 14,242,897.36 9,845,031.41
Insurance 12,865,317.46 5,982,096.06
Traveling expenses 10,010,174.36 6,943,197.17
Material consumption 8,717,711.11 7,733,595.28
Entertainment expenses 3,715,932.13 2,010,997.40
Utilities 2,290,917.38 2,109,667.22
Share-based payments 1,123,494.86 -
Commission 494,454.41 727,094.30
Royalty fees 115,357.28 36,434.00
Others 13,047,369.59 11,377,647.91
Total 367,994,662.03 323,833,862.87
51. Administrative expenses
Unit: RMB
Amount incurred in Amount incurred in
ITEM
the current year the prior year
Staff costs 733,392,318.30 995,101,343.39
Labor costs and professional services fee 163,770,021.83 140,189,347.74
Depreciation and amortization 118,434,053.03 106,547,071.59
Renovation costs 41,479,606.89 26,776,629.63
Software costs 31,191,025.01 24,156,832.67
Traveling expenses 23,849,101.79 12,558,944.40
Utilities 16,061,160.20 18,997,396.45
Insurance 15,487,901.30 8,115,188.86
Share-based payments 11,401,068.29 22,177,000.00
Material consumption 8,662,138.73 14,877,018.63
Others 51,699,543.65 52,352,224.52
Total 1,215,427,939.02 1,421,848,997.88
227 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
52. Research and development expenses
Unit: RMB
Amount incurred in Amount incurred in
ITEM
the current year the prior year
Staff costs 858,849,931.21 911,057,638.21
Material and sample costs 637,590,081.04 834,966,158.21
Depreciation and amortization 150,773,895.37 113,851,353.98
Software costs 24,471,359.74 17,122,097.78
Renovation costs 21,913,004.84 15,076,582.91
Utilities 20,542,686.36 27,167,208.87
Mold costs 15,042,616.72 33,643,778.88
Consumables and miscellaneous 14,493,723.19 13,395,678.45
Labor costs 11,603,187.49 19,904,668.08
Traveling expenses 10,517,776.73 3,691,357.13
Share-based payments 3,823,834.77 -
Others 37,582,030.81 44,585,253.21
Total 1,807,204,128.27 2,034,461,775.71
53. Financial expenses
Unit: RMB
Amount incurred in Amount incurred in
ITEM
the current year the prior year
Interest expenses 400,215,716.04 234,999,925.44
Including: Interest expenses on lease liabilities 18,068,930.94 19,293,314.43
Interest expenses on issue of convertible bonds 139,416,505.81 133,932,428.47
Less: Interest income 236,527,756.09 87,996,958.46
Exchange differences 32,024,532.96 (136,338,140.35)
Others 16,316,715.19 8,200,580.00
Total 212,029,208.10 18,865,406.63
54. Other income
Unit: RMB
Amount included in
Amount incurred in Amount incurred in
Classified by the nature non-recurring profit or
the current year the prior year
loss for the period
Government grants 89,396,536.73 56,144,655.78 71,813,784.39
Additional value-added tax credit 825,287.36 - -
Total 90,221,824.09 56,144,655.78 71,813,784.39
228 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
55. Investment income
(1) Details of investment income
Unit: RMB
Amount incurred in Amount incurred in
ITEM
the current year the prior year
Income from long-term equity investments under equity
8,716,784.59 73,531,247.72
method
Investment income on disposal of long-term equity
35,967.02 -
investments
Investment income from other equity instruments during the
- 17,034,226.73
hold period
Investment income of other non-current financial assets
8,455,456.44 5,020,325.97
during the hold period
Investment income on disposal of held-for-trading financial
111,775,513.07 43,044,223.30
assets
Investment income on disposal of other non-current
13,716,529.40 -
financial assets
Total 142,700,250.52 138,630,023.72
56. Gains (losses) from changes in fair values
Unit: RMB
Amount incurred in Amount incurred in
Source resulting in gains from changes in fair values
the current year the prior year
Held-for-trading financial assets (32,979,655.61) 23,949,712.86
Including: Derivative financial instruments (32,979,655.61) 23,949,712.86
Derivative financial liabilities 2,945,018.68 (2,317,400.67)
Other non-current financial assets 2,926,885.11 10,206,885.31
Total (27,107,751.82) 31,839,197.50
57. Impairment loss of credit
Unit: RMB
Amount incurred in Amount incurred in
ITEM
the current year the prior year
Losses from bad debts of accounts receivable (21,981,473.91) (10,116,849.95)
Total (21,981,473.91) (10,116,849.95)
58. Impairment losses of assets
Unit: RMB
Amount incurred in Amount incurred in
ITEM
the current year the prior year
Impairment losses of inventories (166,836,089.16) (49,017,247.96)
Impairment losses of fixed assets - (49,852,343.57)
Total (166,836,089.16) (98,869,591.53)
229 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
59. Gains from disposal of assets
Unit: RMB
Amount included in
Amount incurred in Amount incurred in
ITEM non-recurring profit or
the current year the prior year
loss for the period
Gains from disposal of non-
9,671,649.96 14,057,238.37 9,671,649.96
current assets
Less: Losses from disposal of non-
3,337,342.19 5,442,124.77 3,337,342.19
current assets
Total 6,334,307.77 8,615,113.60 6,334,307.77
60. Non-operating income
Unit: RMB
Amount included in
Amount incurred in Amount incurred in
ITEM non-recurring profit or
the current year the prior year
loss for the period
Sporadic income 18,086,136.60 25,331,702.16 18,086,136.60
61. Non-operating expenses
Unit: RMB
Amount included in
Amount incurred in Amount incurred in
ITEM non-recurring profit or
the current year the prior year
loss for the period
Losses on retirement of non-
907,053.77 5,890,183.57 907,053.77
current assets
Others 5,169,424.69 3,050,307.39 5,169,424.69
Total 6,076,478.46 8,940,490.96 6,076,478.46
62. Income tax expenses
(1) Statement of income tax expenses
Unit: RMB
Amount incurred in Amount incurred in
ITEM
the current year the prior year
Current income tax expenses 342,953,512.21 500,693,610.57
Annual filing differences of income tax (79,209,205.14) (21,961,470.70)
Deferred income tax expenses (23,765,557.86) (61,526,690.41)
Total 239,978,749.21 417,205,449.46
230 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
62. Income tax expenses - continued
(2) Reconciliation of income tax expenses to the accounting profit
Unit: RMB
Amount incurred in Amount incurred in
the current year the prior year
Profit before tax 2,189,687,856.20 3,477,195,221.25
Applicable tax rate 15% 15%
Income tax expenses accounted at an applicable tax rate 328,453,178.43 521,579,283.19
Effect of non-deductible cost, expense and loss 3,174,705.79 1,535,699.03
Effect of deemed sales on income taxes 4,868.66 2,481,730.54
Effect of non-taxable income (7,924,742.71) (11,614,249.60)
Tax effect of additional deductible expenses (119,266,234.38) (144,195,037.69)
Effect of deductible temporary difference or deductible loss
17,181,991.50 3,384,353.42
not recognized for deferred tax assets for the current year
Effect of utilizing deductible temporary differences or
deductible loss not recognized for deferred tax assets for (464,956.20) (5,037,046.92)
prior period
Additional levy on undistributed surplus of Taiwan
24,129,623.96 -
subsidiaries
Equity incentive 2,339,623.13 (1,623,227.59)
Annual filing differences of income tax (79,209,205.14) (21,961,470.70)
Effect of different tax rates applied by subsidiaries 73,877,533.67 68,733,454.00
Effect of changes in income tax rates of subsidiaries on the
(7,776,934.75) 4,488,031.20
opening balance of deferred tax assets
Others 5,459,297.25 (566,069.42)
Income tax expenses 239,978,749.21 417,205,449.46
63. Items in the cash flow statement
(1) Cash relating to operating activities
Other cash receipts relating to operating activities
Unit: RMB
Amount incurred in Amount incurred in
ITEM
the current year the prior year
Interest income 246,972,796.68 94,342,090.81
Subsidy income 93,639,071.75 60,118,380.37
Customer deposit 91,558,970.22 200,960,766.77
Customs deposit received 1,500,000.00 -
Advanced payment - 151,945,946.64
Others (Note) 10,383,613.95 6,745,265.18
Total 444,054,452.60 514,112,449.77
Note: It mainly refers to sporadic income.
Other cash payments relating to operating activities
Unit: RMB
Amount incurred in Amount incurred in
the current year the prior year
Other expenses paid 261,322,155.09 137,350,952.30
Payment of advances 19,098,207.78
Payment of customs deposit - 6,069,934.90
Total 280,420,362.87 143,420,887.20
231 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
63. Items in the cash flow statement - continued
(2) Cash relating to investing activities
Cash receipts relating to significant investing activities
Unit: RMB
Amount incurred in Amount incurred in
the current year the prior year
Principal of financial products 10,325,000,000.00 5,035,000,000.00
Disposal of joint ventures 110,880,000.00 -
Settlement of contingent consideration 75,498,235.81 -
Disposal of non-current financial assets 49,604,652.83 -
Reduction of investments in other equity instrument 27,680,312.65 -
Recovery of fund investments - 14,784,248.93
Total 10,588,663,201.29 5,049,784,248.93
Cash payments relating to significant investing activities
Unit: RMB
Amount incurred in Amount incurred in
the current year the prior year
Principal of financial products 10,325,000,000.00 5,035,000,000.00
Fund investments 54,130,858.29 20,991,050.00
Total 10,379,130,858.29 5,055,991,050.00
Other cash payments relating to investing activities
Unit: RMB
Amount incurred in Amount incurred in
ITEM
the current year the current year
Foreign exchange margin received 2,214,334.90 -
(3) Cash relating to financing activities
Other cash receipts relating to financing activities
Unit: RMB
Amount incurred in Amount incurred in
ITEM
the current year the prior year
Shareholding plan exercise payment 26,686,556.25 -
Long-term loan deposit - 3,506,097.66
Total 26,686,556.25 3,506,097.66
Other cash payments relating to financing activities
Unit: RMB
Amount incurred in Amount incurred in
ITEM
the current year the prior year
Payment of lease principal and interest 162,206,706.50 153,262,833.52
Repurchase of treasury shares - 120,319,138.50
Others 1,089,693.30 553,599.25
Total 163,296,399.80 274,135,571.27
232 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
64. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
Unit: RMB
Supplementary Information 2023 2022
1. Reconciliation of net profit to cash flow from
operating activities:
Net profit 1,949,709,106.99 3,059,989,771.79
Add: Losses on impairment of assets 166,836,089.16 98,869,591.53
Impairment loss of credit 21,981,473.91 10,116,849.95
Depreciation of investment properties 139,878.71 -
Depreciation of fixed assets 919,092,232.02 779,218,741.24
Depreciation of right-of-use assets 139,576,364.62 129,725,980.42
Amortization of intangible assets 89,318,624.87 85,207,775.92
Amortisation of long-term prepaid expenses 76,621,504.00 75,146,058.96
Amortization of deferred income (18,209,241.88) (20,543,921.46)
Gains on disposal of fixed assets, intangible assets
(6,334,307.77) (8,615,113.60)
and other long-term assets
Losses on retirement of fixed assets 907,053.77 5,890,183.57
Gains (losses) on changes in fair values 27,107,751.82 (31,839,197.50)
Financial expenses 506,491,993.18 158,347,264.83
Investment income (142,700,250.52) (138,630,023.72)
Share-based payments settled by equity 17,684,000.00 22,177,000.00
Increase in deferred tax assets (18,723,957.98) (53,431,234.36)
Decrease in deferred tax liabilities (5,041,599.88) (8,095,456.05)
Decrease (increase) in inventories 2,652,192,570.73 (1,929,242,538.88)
Decrease in receivables from operating activities 1,154,349,482.14 1,634,270,188.99
Decrease in payables from operating activities (707,563,275.27) (433,365,666.13)
Net Cash Flow from Operating Activities 6,823,435,492.62 3,435,196,255.50
2. Significant investing and financing activities that do
not involve cash receipts and payments:
Acquisition of long-term assets with debt 419,828,350.96 403,741,556.33
3. Net changes in cash and cash equivalents:
Cash at the end of the year 11,184,292,778.70 7,678,044,104.00
Less: Cash at the beginning of the year 7,678,044,104.00 6,018,193,116.59
Add: Closing balance of cash equivalents - -
Less: Opening balance of cash equivalents - -
Net increase in cash and cash equivalents 3,506,248,674.70 1,659,850,987.41
233 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
64. Supplementary information to the cash flow statement - continued
(2) Net cash payments for acquisitions of subsidiaries in the period
Unit: RMB
ITEM Amounts
Cash and cash equivalents paid in the period for business
297,177,480.00
combination occurred in the period
Less: Cash and cash equivalents held by subsidiaries at the
26,211,422.10
acquisition date
Add: Cash and cash equivalents paid in the period for
-
business combination occurred in the previous period
Net cash paid for acquisitions of subsidiaries 270,966,057.90
(3) Composition of cash and cash equivalents
Unit: RMB
ITEM 31/12/2023 31/12/2022
I. Cash 11,184,292,778.70 7,678,044,104.00
Including: Cash on hand 115,564.84 271,737.56
Bank deposits that can be readily withdrawn
11,184,177,213.86 7,677,772,366.44
on demand
II. Cash equivalents - -
III. Closing balance of cash and cash equivalents 11,184,292,778.70 7,678,044,104.00
(4) Cash and bank balances not included in cash and cash equivalents
Unit: RMB
ITEM 31/12/2023 31/12/2022 Reasons
Other cash and bank
20,975,282.12 - Investment deposit
balances
Other cash and bank
13,430,328.50 14,757,734.50 Customs deposit
balances
Other cash and bank -
2,214,334.90 Foreign exchange margin
balances
Total 34,405,610.62 16,972,069.40
234 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
65. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
Closing balance of Closing balance of
ITEM Exchange rate
foreign currency RMB equivalent
Cash and bank balances
Including: RMB 34,662,297.39 1.0000 34,662,297.39
USD 326,882,463.31 7.0827 2,315,210,422.89
EUR 2,759,379.43 7.8264 21,596,007.17
HKD 2,273,352.08 0.9062 2,060,111.66
JPY 34,137,466.00 0.0502 1,713,700.79
GBP 10,434.16 9.0057 93,966.91
MXN 22,062,456.68 0.4193 9,250,788.09
SGD 24,736.69 5.3772 133,014.13
CZK 4,612.00 0.3165 1,459.70
TND 1,838,625.90 2.3010 4,230,678.20
VND 153,937,471,634.00 0.0003 46,181,241.49
Accounts receivable
Including: USD 918,375,938.33 7.0827 6,504,581,258.41
EUR 5,588,198.06 7.8264 43,735,473.30
MXN 529,127.75 0.4193 221,863.27
Other receivables
Including: USD 3,114,078.05 7.0827 22,056,080.60
EUR 22,508.03 7.8264 176,156.85
MXN 9,396,102.33 0.4193 3,939,785.71
VND 1,169,923,804.00 0.0003 350,977.14
JPY 2,944,729.00 0.0502 147,825.40
Short-term borrowings
Including: USD 54,943,774.53 7.0827 389,150,271.86
EUR 386,500,000.00 7.8264 3,024,903,600.00
VND 30,700,000,000.00 0.0003 9,210,000.00
Accounts payable
Including: USD 982,773,675.30 7.0827 6,960,691,110.05
EUR 2,886,956.78 7.8264 22,594,478.54
HKD 783,501.84 0.9062 710,009.37
JPY 512,860,595.00 0.0502 25,745,601.87
VND 73,028,317,081.00 0.0003 21,908,495.12
CHF 29,013.51 7.8428 227,547.16
Other payables
Including: USD 40,769,707.77 7.0827 288,759,609.22
EUR 2,462,963.23 7.8264 19,276,135.42
HKD 139,877.90 0.9062 126,757.35
VND 8,141,509,459.00 0.0003 2,442,452.84
235 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
65. Foreign currency monetary items - continued
(2) Description of overseas operating entities
Principal
Functional
Full name of subsidiary operation Choosing basis
currency
place
Universal Global Technology Co., Limited Major currencies used in operating and
Hong Kong USD
("UGT") financing activities
Universal Global Industrial Co., Limited Major currencies used in operating
Hong Kong USD
("UGI") activities
Universal Global Electronics Co., Limited Major currencies used in operating
Hong Kong USD
("UGE") activities
Universal Global Scientific Industrial Co., Ltd. Taiwan TWD Currency in major economic environment
Universal Scientific Industrial Co., Ltd. Taiwan TWD Currency in major economic environment
USI America Inc. USA USD Currency in major economic environment
USI Japan Co., Ltd. Japan JPY Currency in major economic environment
Universal Scientific Industrial De México S.A. Major currencies used in operating and
Mexico USD
De C.V. financing activities
Universal Scientific Industrial Poland Sp. z o.o. Poland PLN Currency in major economic environment
Universal Scientific Industrial (France) France EUR Currency in major economic environment
Universal Scientific Industrial Vietnam Major currencies used in operating
Vietnam USD
Company Limited activities
Hirschmann Car Communication Holding Currency in major economic environment
Luxembourg EUR
S.a.r.l.
ASTEELFLASH (BEDFORD) LIMITED England GBP Currency in major economic environment
ASTEELFLASH FRANCE France EUR Currency in major economic environment
ASTEELFLASH TUNISIE S.A. Tunisia EUR Currency in major economic environment
ASTEELFLASH MEXICO S.A. de C.V. Mexico USD Major currencies used in operating and
financing activities
ASTEELFLASH GERMANY GmbH Germany EUR Currency in major economic environment
ASTEELFLASH PLZEN S.R.O. Czech EUR Currency in major economic environment
Republic
ASTEELFLASH TECHNOLOGIE France EUR Currency in major economic environment
ASTEELFLASH BRETAGNE France EUR Currency in major economic environment
ASTEELFLASH HERSFELD GmbH Germany EUR Currency in major economic environment
ASTEELFLASH DESIGN SOLUTIONS
Germany EUR Currency in major economic environment
HAMBOURG GmbH
ASTEELFLASH USA CORP. USA USD Currency in major economic environment
66. Hedge
Disclose by category the following information of hedge items and related hedging instruments, the qualitative
and quantitative information of hedged risks:
The Group acquired FAFG through USI France under Universal Global Technology Co., Limited, its wholly-
owned subsidiary, in order to expand its global operations and market layout in electronic design and
manufacturing. The Group's net investment in FAFG's foreign operations with EUR as the functional currency is
exposed to risks of exchange rate changes in EUR. The Group uses loan contracts in EUR to manage the foreign
exchange risk of the net investment in FAFG's foreign operations. The Group's foreign borrowings are in EUR,
which is also the functional currency of FAFG. The exchange rate of EUR is the basic variable for both the
hedging instrument (short-term borrowings) and the hedged item (the Group's net investment in foreign operations
of FAFG). The Group designates the overall foreign exchange risk component of short-term as the hedging
instrument and designates a portion of the Group's net investment in foreign operations of FAFG as the hedged
item, which are equal in quantity. The Group uses hedges for net investment in foreign operations.
236 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
66. Hedge - continued
Hedging instrument
A summary of hedging instrument:
Unit: EUR
31/12/2023
Hedging instrument After 12
Within 6 months 6 to 12 months
months
Hedges for net investment in foreign operations (Note (V). 24)
Foreign exchange risk -Short-term borrowings in Nominal
272,500,000.00 - -
EUR amount
Unit: RMB
31/12/2023 31/12/2023 2023
Items presented for
Carrying amount of the hedging Changes in fair
assets and liabilities
Nominal amount of the instrument value of the
that include hedging
hedging instrument invalid part of
ASSETS Liabilities instruments
hedge
Hedges for net investment in
foreign operations
Foreign exchange risk -Short- Short-term
2,132,689,503.75 - 2,132,689,503.75 -
term borrowings in EUR borrowings
Details of hedged items:
Unit: RMB
Carrying amount of hedged items Changes in fair
Items presented for Hedge reserve for
at 31/12/2023 value of the
assets and liabilities net investment in
invalid part of
that include hedged foreign operations
ASSETS Liabilities hedged items
instruments at 31/12/2023
in 2023
Hedges for net investment in foreign
operations
The Group's net
Foreign exchange risk 2,132,689,503.75 - investment in FAFG's - 78,430,892.41
foreign operations
Hedge effect
Unit: RMB
2023 2023
Changes in Amount
hedge reserves reclassified
for net from hedge
The invalid part Items listed in the Items listed in the
investment in reserves for net
of hedge income statement income statement
Hedges for net investment in foreign foreign investment in
included in including invalid including
operations operations of foreign
profit or loss part of hedge reclassification
hedging operations to
for the current recognized adjustment
instruments profit or loss
period for the current
included in other
comprehensive period in 2023
income
Foreign exchange risk -Short-term
(71,488,690.96) - NA NA NA
borrowings in EUR
237 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(VI) CHANGES IN SCOPE OF CONSOLIDATION
1. Business combinations not involving enterprises under common control
(1) Business combinations not involving enterprises under common control occurred in the period
Unit: RMB
Equity Net profit of Cash flows of
Determin Revenue of the
acquisit Equity the acquiree the acquiree
ation acquiree from
Name of the Equity acquisition Equity ion acquisit Acquisiti from the from the
basis of the acquisition
acquiree date acquisition cost proport ion on date acquisition acquisition
acquisitio date to period
ion method date to period date to period
n date end
(%) end end
Hirschmann Car
27/10/20 Obtain of
Communication 27/10/2023 446,362,010.60 100.00 Cash 242,475,011.15 10,427,247.00 86,056,334.29
23 control
Holding S.a.r.l.
Note: On 17 March 2023, based on the resolutions of the board meeting, the Company established a special
purpose vehicle ("SPV") through Universal Global Technology Co., Limited ("UGT"), a wholly-owned
subsidiary, together with Ample Trading, Co., Ltd ("Ample Trading"), an unrelated party, with a
registered capital of USD 53 million, of which UGT contributes USD 39.803 million (RMB
290,557,919.70), accounting for 75.1% of the SPV shares, and Ample Trading contributes USD 13.197
million (RMB 96,336,780.30), accounting for the remaining 24.9% of the SPV shares. The SPV acquired
the automotive wireless business unit ("Target Business", "Hirschmann") from an unrelated party, TE
Connectivity Ltd., and acquired 100% equity interest in Hirschmann. The acquisition price of USD 48
million will be subject to adjustment based on net debt and net working capital (including acquisition
price adjustment) of the Target Business on the closing date and will be settled in cash.
(2) Cost of combination and goodwill
Unit: RMB
Cost of combination Hirschmann
Cost of combination (Note) 446,362,010.60
Including: Cash paid 297,177,480.00
Less: Shares in fair value of identifiable net assets acquired 445,222,678.73
Goodwill 1,139,331.87
Note: As of 31 December 2023, the actual acquisition price of USD 41,400,000.00 (RMB 297,177,480.00) has
been paid. An amount of USD 6,600,000.00 and an estimated acquisition price adjustment of USD
14,183,000.00 (RMB 147,199,754.10) remains unpaid. The difference is due to the effect of exchange
rate changes.
238 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(VI) CHANGES IN SCOPE OF CONSOLIDATION - continued
1. Business combinations not involving enterprises under common control - continued
(3) Identifiable assets and liabilities of the acquiree on the acquisition date
The fair values of identifiable assets, liabilities and contingent liabilities acquired in a combination or the cost of
business combination can be determined only provisionally as the Group had not yet obtained an assessment
report at the end of the year in which the business combination related to Hirschmann occurred, therefore, the
Group recognizes and measures the combination of Hirschmann using those provisional values.
Unit: RMB
Hirschmann
Carrying amount at the
Provisional value
acquisition date
Assets:
Cash and bank balances 26,211,422.10 26,211,422.10
Accounts receivable 181,962,085.32 181,962,085.32
Inventories 230,345,061.40 230,345,061.40
Other current assets 56,784,983.16 56,784,983.16
Fixed Assets 114,827,267.69 114,827,267.69
Construction in progress 37,070,089.15 37,070,089.15
Right-of-use assets 31,791,453.90 31,791,453.90
Other non-current assets 3,032,553.62 3,032,553.62
Liabilities:
Accounts payable 81,721,936.87 81,721,936.87
Employee benefits payable 40,628,473.17 40,628,473.17
Other current liabilities 49,400,186.44 49,400,186.44
Long-term employee benefits payable 42,393,319.88 42,393,319.88
Other non-current Liabilities 22,658,321.25 22,658,321.25
Net assets 445,222,678.73 445,222,678.73
Less: Minority interests - -
Net assets acquired 445,222,678.73 445,222,678.73
239 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(VII) EQUITY IN OTHER ENTITIES
1. Equity in major subsidiaries
(1) Composition of enterprise group
Curre Registered capital Proportion of
Princip
ncy of shareholding
al Acquisition
Full name of subsidiary registe Place of incorporation Nature of business (%)
operatio method
red Dire Indire
n place
capital ct ct
Universal Global Production and sales, product Acquisition
Shangh No.501 Long Gui Road, China (Shanghai) Pilot Free Trade
Electronics (Shanghai) Co., RMB 1,330,000,000.00 design and research 100 - through
ai Zone
Ltd. development establishment
Universal Global Acquisition
Kunsha No.497 Huangpu Road, Qiandeng Town, Kunshan City, Jiangsu
Technology (Kunshan) Co., RMB 550,000,000.00 Production and sales 100 - through
n Province
Ltd. establishment
Production and sales, product Acquisition
Universal Global Scientific No. 141, Lane 351, Sec. 1, Taiping Road, Caotun Town, Nantou
Taiwan TWD 1,980,000,000.00 design and research - 100 through
Industrial Co., Ltd County, Taiwan
development establishment
Acquisition
through
business
Universal Scientific No. 141, Lane 351, Sec. 1, Taiping Road, Caotun Town, Nantou Production and sales, product combinations
Taiwan TWD 1,399,727,400.00 - 100
Industrial Co., Ltd County, Taiwan maintenance involving
enterprises
under common
control
Acquisition
Universal Global Hong Room A, 7th Floor, Yuen Long Hi-Tech Centre, No. 11Wang
USD 480,803,000.00 Trade and investment 100 - through
Technology Co., Limited Kong Yip Street West, Yuen Long, New Territories, Hong Kong
establishment
Acquisition
Universal Global Industrial Hong Room 2702-3, 27th Floor, Bank of East Asia Harbour Centre,
USD 31,000,000.00 Trade and investment - 100 through
Co., Limited Kong No. 56 Gloucester Road, Wanchai, Hong Kong
establishment
Acquisition
through
business
USI Electronics (Shenzhen) Shenzh Huanxu Electronics Park, North of Hi-Tech Park , Nanshan combinations
USD 75,000,000.00 Production and sales 50 50
Co., Ltd. en District, Shenzhen City, Guangdong Province involving
enterprises
under common
control
Acquisition
through
business
Sumitomo Fudosan Shin-yokohama Bldg.
Product maintenance and related combinations
USI Japan Co., Ltd. Japan JPY 95,000,000.00 10F 2-5-5. Shin-yokohama, - 100
services involving
Kouhoku-ku, Yokohama, Japan
enterprises
under common
control
Acquisition
through
business
Universal Scientific Contractual manufacturing,
Anillo Periferico Manuel Gomez Morin No. 656 Jardines de combinations
Industrial De Mexico MXN 2,293,299,926.00 product maintenance and related - 100
Santa Isabel CP44300, Guadalajara, Jalisco, México involving
México S.A. De C.V. services
enterprises
under common
control
Universal Global Production and sales Acquisition
Huizho
Technology (Huizhou) Co., RMB 800,000,000.00 No.369 Xinhe Avenue, Daya Wan, Huizhou 100 - through
u
Ltd. establishment
Investment Acquisition
Universal Scientific
France EUR 321,374,822.00 95 rue La Boetie 75008 Paris, France - 100 through
Industrial (France)
establishment
Production and sales Acquisition
through
business
Universal Scientific
Biskupice Podgórne ul. Innowacyjna 4, combinations
Industrial Poland PLN 80,852,300.00 - 100
55-040, Wrocaw, Polska not involving
Poland Sp. Z o.o.
enterprises
under common
control
Universal Scientific Land Plot CN4.1H, Dinh Vu Industrial Production and sales, product Acquisition
Industrial Vietna Zone, Dinh Vu – Cat Hai Economic design and research through
USD 105,000,000.00 - 100
Vietnam Company m Zone, Dong Hai 2 Ward, Hai An development establishment
Limited District, Hai Phong City, Vietnam
USI Science and 101 Huanxu Electronics Factory, Gaoxin North District, Product design and research Acquisition
Shenzh
Technology (Shenzhen) RMB 15,000,000.00 Songpingshan North Ring Road, Songpingshan Community, development, Real estate - 100 through
en
Co., Ltd. Xili Street, Nanshan District, Shenzhen development and operation establishment
Acquisition
through
business
6 Rue Vincent Van Gogh 93360 10.4 combinations
FINANCIRE AFG S.A.S. France EUR 79,847,636.00 Production and sales 89.58
Neuilly-Plaisance 2 not involving
enterprises
under common
control
Acquisition
through
business
Asteelflash Suzhou Co., 8 Gutang Road, Wujiang Economic and Technological combinations
Suzhou USD 18,000,000.00 Production and sales - 100
Ltd. Development Zone not involving
enterprises
under common
control
(2) The Group has no significant non-wholly subsidiaries.
240 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(VII) EQUITY IN OTHER ENTITIES - continued
2. Equity in joint ventures or associates
(1) Significant associates
Proportion of Accounting
Principal
shareholding (%) treatments for
Name of joint venture operation Place of incorporation Nature of business
investments in joint
place Direct Indirect
ventures or associates
I. Associate
Singap 1 Marina Boulevard #28-00,
M-Universe Production and sales - 42.23 Equity method
ore Singapore
(2) Major financial information of significant associates
Unit: RMB
M-Universe
31/12/2023/Amount 31/12/2022/Amount
incurred in the incurred in the prior
current year year
Current Assets 1,114,604,499.00 1,125,514,183.00
Including: Cash and cash equivalent 163,539,543.00 183,419,705.60
Non-current assets 506,122,125.29 505,757,960.45
TOTAL ASSETS 1,620,726,624.29 1,631,272,143.45
Current Liabilities 411,136,569.60 455,094,822.40
Non-current Liabilities 76,408,317.54 51,897,871.25
TOTAL LIABILITIES 487,544,887.14 506,992,693.65
Minority interests 1,239,472.50 1,539,176.60
Equity attributable to shareholders of the Company 1,131,942,264.65 1,122,740,273.20
Share of net assets calculated based on shareholding proportion 478,019,218.36 474,133,217.37
Carrying amount of equity investments in associates 478,019,218.36 474,133,217.37
Fair value of equity investments in joint ventures where there is
N/A N/A
quoted price
Operating income 1,236,501,118.60 1,414,915,124.78
Net profit attributable to owners of the Company 34,458,252.29 119,244,906.96
Other comprehensive income attributable to owners of the
(18,131,079.59) (85,149,876.34)
Company, net of tax
Total comprehensive income attributable to owners of the
16,327,172.70 34,095,030.62
Company
Dividends declared from associates in the current period (Note
11,274,179.59 8,720,087.64
(V). 11)
241 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(VII) EQUITY IN OTHER ENTITIES - continued
2. Equity in joint ventures or associates - continued
(3) Summary financial information of insignificant joint ventures and associates
Unit: RMB
31/12/2023/Amount 31/12/2022/Amount
Joint ventures: MUtek Electronics incurred in the incurred in the
current year prior year
Total book value of investment 3,547,050.76 6,030,425.80
The sum of the following items in proportion to their shareholding (2,540,207.83) (1,294,846.51)
Net loss (2,540,207.83) (1,294,846.51)
Other comprehensive income - -
Total comprehensive income (2,540,207.83) (1,294,846.51)
Associates: Questyle Audio Technology Co., Ltd.
Total book value of investment 16,705,272.48 20,000,000.00
The sum of the following items in proportion to their shareholding
Net loss (3,294,727.52) -
Other comprehensive income - -
Total comprehensive income (3,294,727.52) -
(4) There is no significant limitations over the ability of joint ventures or associates to transfer funds to the
Group.
(5) According to the Joint Investment Contract signed by UGSI and Merry Electronics, UGSI proposed to
contribute TWD 191,100,000.00, but actually contributed TWD 29,400,000.00, which the contribution
not yet paid in full is TWD 161,700,000.00, equivalent to RMB 37,299,221.30 (Note (XIII). 1).
(6) The Group has no contingent liabilities relating to investments in joint ventures and associates.
242 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(VIII) Government grants
1. Liabilities items involving government grants
Unit: RMB
Exchange
differences
arising on
Amount
translation of
Increase in the recognized in Other changes Asset-related /
ITEM 31/12/2022
year (Note 1)
financial 31/12/2023
other income of Income-related
statements
the year
denominated in
foreign
currencies
Technology reform item for
ultra-thin communication
23,425,215.24 10,800,000.00 7,044,996.62 - - 27,180,218.62 Asset-related
module deep intelligent
production line
Government grants for the
sixth batch of high quality
special projects 10,632,700.87 - 2,989,803.69 - - 7,642,897.18 Asset-related
(technological
transformation)
Display and touch chip
module technology
research and development 9,003,605.63 - 1,838,332.44 - - 7,165,273.19 Asset-related
and industrialization
projects
Government grant income
from matching funds for
key transformation projects
8,598,375.00 - 2,417,625.00 - - 6,180,750.00 Asset-related
for the automation of the
production of smart
wearable products
2022 Provincial Special
project fund for Intelligent
4,911,719.37 - 1,158,222.44 - - 3,753,496.93 Asset-related
Manufacturing
Demonstration Plant
Upgrading subsidies for -
1,431,773.68 - 1,211,454.14 109,192.63 329,512.17 Asset-related
Poland technology
Huizhou Daya Bay Economic
and Technological
Development Zone
1,842,648.28 4,100,000.00 (390,351.72) (6,333,000.00) - - Asset-related
Industry and Trade
Development Bureau
subsidy income
Kunshan Bureau of Industry
and Information
Technology Suzhou Smart 943,727.23 - 226,102.92 - - 717,624.31 Asset-related
Factory government
subsidy
Industrialization technology -
123,736.35 - 118,346.39 - 5,389.96 Asset-related
upgrading project
Suzhou industrial enterprises
effective investment award - 4,700,000.00 865,893.32 - - 3,834,106.68 Asset-related
projects
Government grants for the
twelfth batch of high
quality special projects - 1,400,000.00 102,327.10 - - 1,297,672.90 Asset-related
(technological
transformation)
Total 60,913,501.65 21,000,000.00 17,582,752.34 (6,333,000.00) 109,192.63 58,106,941.94
Note 1: Universal Global Technology (Huizhou) Co., Ltd., a wholly-owned subsidiary of the Company, was
reassessed in 2023 and is expected to fail to meet the subsidy requirement of the project " subsidy income
from Huizhou Daya Bay Economic and Technological Development Zone Industry and Trade
Development Bureau". As of 31 December 2023, RMB 6,333,000.00 was recognized in provisions.
243 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(VIII) Government grants - continued
2. Government grants included in profit or loss for the period
Unit: RMB
Amount incurred in the Amount incurred in the
Item
current year prior year
Industry and Trade Development Bureau subsidy 28,122,309.00 -
Development support fund 13,080,000.00 -
Supporting funds for securing and nurturing businesses 4,595,500.00 -
French government grants for science and technology research 3,773,695.98 2,448,279.86
First demonstration and extension of application-new generation
3,250,000.00 -
communication
Import interest subsidies 3,233,353.00 5,766,250.00
Social security subsidy 2,478,720.29 1,235,541.62
Kunshan City Bureau of Commerce provincial processing trade
1,279,400.00 3,991,200.00
subsidies
Healthy development of foreign trade enterprises and
1,206,100.00 -
stabilization of the total size fund
Government grants for zero-carbon factories 1,000,000.00 -
Individual tax service fee refund 976,302.15 668,806.79
Government subsidies for production during the pandemic 850,000.00 -
Special subsidies for enterprise industry scale upgrade 800,000.00 -
Special subsidies for the promotion of investment and upgrading
700,000.00 -
of industrial energy level
Special subsidies for business development 673,700.00 -
Job stabilization subsidy 658,745.00 1,258,945.51
Subsidy for named class of Kunshan 616,000.00 -
Municipal energy saving technical improvement supporting
474,500.00 -
funds
One-off training allowance for workers 379,550.00 -
VAT deduction for enterprises employing poor people with
378,300.00 123,750.86
established cards
Special subsidies for provincial business development 303,100.00 -
2021 Economic grants by Shanghai Head Office - 4,180,000.00
Epidemic prevention subsidy - 3,133,500.00
2022 Pudong financial support and subsidies for securing and
- 2,686,600.00
nurturing businesses during the "14th Five-Year Plan" period
Nanshan Bureau of Industry and Information Technology 2021
- 2,142,500.00
subsidies for stable industrial growth
One-off training allowance for workers - 1,986,505.00
Green energy saving renovation project subsidized by Kunshan
- 980,000.00
Industry and Information Technology Bureau
Foreign trade support subsidy of Shenzhen Municipal Bureau of
- 960,700.00
Commerce
Special subsidies for industrial energy conservation and contract
- 729,500.00
energy management
Skill recognition subsidy - 656,950.00
Subsidy for named class of Kunshan Human Resource
- 520,000.00
Management Service Center
Kunshan Bureau of Industry and Information Technology
- 500,000.00
Cultivating benchmarking demonstration project subsidy
Shenzhen Social Security Bureau job stabilization subsidy - 308,799.04
Shenzhen government subsidies for commercial and industrial
- 303,708.89
electricity consumption
Others 2,984,508.97 1,617,003.66
Sub-total 71,813,784.39 36,198,541.23
Amortization of government grants related to assets (Note (VIII),
17,582,752.34 19,946,114.55
1)
Total 89,396,536.73 56,144,655.78
244 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(IX) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS
The Group's major financial instruments include cash and bank balances, held-for-trading financial assets, notes
receivable, accounts receivable, other receivables, other current assets, non-current assets due within one year,
long-term receivables, other equity instrument investment, other non-current financial assets, other non-current
assets, borrowings, derivative financial liabilities, accounts payable, other payables, non-current liabilities due
within one year, long-term payables and other non-current liabilities, etc. Details of these financial instruments
are disclosed in Note (V). Risks associated with these financial instruments and the policies on how to mitigate
these risks are set out below. Management manages and monitors these exposures to ensure the risks are monitored
at a certain level.
Unit: RMB
31/12/2023 31/12/2022
Financial assets
At FVTPL
Held-for-trading financial assets 245,558,007.22 271,243,519.53
Other non-current financial assets 193,994,862.05 170,126,278.86
Sub-total 439,552,869.27 441,369,798.39
Measured at fair value through other comprehensive income
Other equity instrument investments 38,935,237.58 38,420,782.40
Sub-total 38,935,237.58 38,420,782.40
Measured at amortized cost
Cash and bank balances 11,218,698,389.32 7,695,016,173.40
Notes receivable 65,545,008.33 45,627,553.57
Accounts receivable 10,023,562,062.11 11,119,120,760.11
Other receivables 208,748,837.09 137,008,284.72
Non-current assets due within one year 123,989.32 322,815.55
Long-term receivables 13,647,410.80 12,385,894.30
Other non-current assets 9,576,400.85 10,487,765.93
Sub-total 21,539,902,097.82 19,019,969,247.58
Total financial assets 22,018,390,204.67 19,499,759,828.37
Financial liabilities
At FVTPL
Derivative financial liabilities 173,872.64 3,118,891.32
Measured at amortized cost
Short-term borrowings 4,378,428,691.47 4,499,463,404.21
Accounts payable 10,574,123,769.47 11,056,190,855.43
Other payables 811,049,464.22 624,898,695.64
Non-current liabilities due within one year 3,397,080,190.74 364,856,884.72
Long-term borrowings 47,385,951.10 59,427,538.88
Bonds payable - 3,243,085,241.27
Long-term payables 25,526,297.84 31,113,295.71
Other non-current liabilities 1,046,909.26 3,692,335.61
Sub-total 19,234,641,274.10 19,882,728,251.47
Total financial liabilities 19,234,815,146.74 19,885,847,142.79
245 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(IX) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
The Group adopts sensitivity analysis technique to analyze how the profit and loss for the period and shareholders'
equity would have been affected by reasonably possible changes in the relevant risk variables. As it is unlikely
that risk variables will change in an isolated manner, and the interdependence among risk variables will have
significant effect on the amount ultimately influenced by the changes in a single risk variable, the following are
based on the assumption that the change in each risk variable is on a stand-alone basis.
1. Risk management objectives and policies
The Group's risk management objectives are to achieve a proper balance between risks and yield, minimize the
adverse impacts of risks on the Group's operation performance, and maximize the benefits of the shareholders and
other stakeholders. Based on these risk management objectives, the Group's basic risk management strategy is to
identify and analyze the Group's exposure to various risks, establish an appropriate maximum tolerance to risk,
implement risk management, and monitors regularly and effectively these exposures to ensure the risks are
monitored at a certain level.
1.1 Market risk
1.1.1 Currency risk
Currency risk is the risk that losses will occur because of changes in foreign exchange rates. The Group's exposure
to the currency risk is primarily associated with USD and EUR. The Group's subsidiaries located in China have
some purchases, sales and financing activities denominated in USD and EUR while other principal activities are
denominated and settled in RMB; The Group's subsidiaries located in Taiwan have some purchases and sales
denominated in USD and EUR while other principal activities are denominated and settled in TWD; The Group's
subsidiaries located in Japan have some purchases and sales denominated in USD while other principal activities
are denominated and settled in JPY; The Group's subsidiaries located in Hong Kong have some financing
activities denominated in EUR while other principal activities are denominated and settled in USD; The Group's
subsidiary, USI Poland, located in Europe has some purchases and sales denominated in USD and EUR while
other principal activities are denominated and settled in PLN; The Group's other subsidiaries located in Europe
have principal activities denominated and settled in EUR; The Group's subsidiaries located in America and
Mexico have activities denominated and settled in USD. As at 31 December 2023 and 31 December 2022, the
balance of the Group's significant assets and liabilities set out below are both denominated in foreign currencies
(non-functional currency and translated to RMB). Currency risk arising from the assets and liabilities denominated
in foreign currencies may have impact on the Group's performance.
Unit: RMB’000
ITEM 31/12/2023 31/12/2022
USD
Cash and bank balances 2,315,210 1,833,439
Accounts receivable 6,504,581 7,789,872
Other receivables 22,056 9,163
Short-term borrowings (389,150) (654,725)
Accounts payable (6,960,691) (6,713,353)
Other payables (288,760) (300,765)
Sub-total 1,203,246 1,963,631
246 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(IX) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
1.1 Market risk - continued
1.1.1. Currency risk - continued
Unit: RMB’000
ITEM 31/12/2023 31/12/2022
EUR
Cash and bank balances 21,596 28,322
Accounts receivable 43,735 41,371
Other receivables 176 1,136
Short-term borrowings (3,024,904) (2,774,507)
Accounts payable (22,594) (29,362)
Other payables (19,276) (9,505)
Sub-total (3,001,267) (2,742,545)
The Group closely monitors the effects of changes in the foreign exchange rates on the Group's currency risk
exposures, and uses foreign currency forward contracts to reduce part of the currency exposures.
Sensitivity analysis on currency risk
Where all other variables are held constant, reasonably possible changes in the foreign exchange rate may have
the following pre-tax effect on the profit or loss for the year and shareholders' equity:
Unit: RMB’000
2023 2022
Effect on Effect on
ITEM Change in exchange rate
Effect on profit shareholders' Effect on profit shareholders'
equity equity
USD 5% appreciation against RMB (11,645) (11,645) 23,540 23,540
USD 5% depreciation against RMB 11,645 11,645 (23,540) (23,540)
USD 5% appreciation against TWD 69,348 69,348 71,810 71,810
USD 5% depreciation against TWD (69,348) (69,348) (71,810) (71,810)
USD 5% appreciation against EUR 783 783 938 938
USD 5% depreciation against EUR (783) (783) (938) (938)
USD 5% appreciation against PLN 1,621 1,621 1,874 1,874
USD 5% depreciation against PLN (1,621) (1,621) (1,874) (1,874)
USD 5% appreciation against JPY 2 2 2 2
USD 5% depreciation against JPY (2) (2) (2) (2)
USD 5% appreciation against GBP 53 53 - -
USD 5% depreciation against GBP (53) (53) - -
EUR 5% appreciation against RMB 390 390 1,366 1,366
EUR 5% depreciation against RMB (390) (390) (1,366) (1,366)
EUR 5% appreciation against TWD (87) (87) (276) (276)
EUR 5% depreciation against TWD 87 87 276 276
EUR 5% appreciation against USD (45,844) (45,844) (37,935) (37,935)
EUR 5% depreciation against USD 45,844 45,844 37,935 37,935
EUR 5% appreciation against PLN 2,109 2,109 865 865
EUR 5% depreciation against PLN (2,109) (2,109) (865) (865)
EUR 5% appreciation against GBP 3 3 59 59
EUR 5% depreciation against GBP (3) (3) (59) (59)
247 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(IX) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
1.1 Market risk - continued
1.1.2. Interest rate risk - risk of changes in cash flows
The Group's cash flow interest rate risk of financial instruments relates primarily to variable-rate bank borrowings
(see Note (V). 24 & 33 for details). The Group closely monitors the effects of changes in the interest rates on the
Group's interest rate risk exposures. It is the Group's policy to keep its borrowings at floating rate of interests with
no other arrangements such as interest rate swaps.
Sensitivity analysis on interest rate risk
Where all other variables are held constant, reasonably possible changes in the interest rate may have the following
pre-tax effect on the profit or loss for the year and shareholders' equity:
Unit: RMB’000
2023 2022
Changes in
ITEM Effect on Effect on
interest rate Effect on profit Effect on profit
shareholders' equity shareholders' equity
Financial
instruments at 1% appreciation (16,623) (16,623) (16,908) (16,908)
floating interest rate
Financial
instruments at 1% depreciation 16,623 16,623 16,908 16,908
floating interest rate
1.1.3. Other price risk
The price risk of the group mainly arises from trading equity instrument investment and other equity instrument
investment. The group reduces the price risk of equity instrument investment by holding a variety of equity
securities portfolio.
1.2 Credit risk
As at 31 December 2023, the Group's maximum exposure to credit risk which will cause a financial loss to the
Group due to failure to discharge an obligation by the counterparties is arising from: cash and bank balances (Note
(V). 1), held-for-trading financial assets (Note (V). 2), notes receivable (Note (V). 3), accounts receivable (Note
(V). 4), other receivables (Note (V). 6), non-current assets due within one year (Note (V). 8), other current assets
(Note (V). 9), long-term receivables (Note (V). 10), other non-current assets (Note (V). 22) and non-current
financial assets at FVTPL that are not included in the impairment assessment (Note (V). 13). As at the balance
sheet date, the carrying amount of the Group's financial assets is its maximum exposure to credit risk.
In order to minimize the credit risk, the Group has delegated a team responsible for determination of credit limits,
credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts.
In addition, the Group reviews the recoverable amount of financial assets at each balance sheet date to ensure that
adequate provision for credit loss is made for relevant financial assets. In this regard, the management of the
Group considers that the Group's credit risk is significantly reduced.
The credit risk on cash and bank balances is limited because they are deposited with banks with high credit ratings.
As of 31 December 2023, the balance of bank acceptance bills held by the group was RMB 65,545,008.33, of
which all issuing banks were banks with high credit rating. Therefore, the management of the Group believes that
the credit risk of relevant bank acceptance bills is low.
248 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(IX) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
1.2 Credit risk - continued
As at 31 December 2023, the balance of accounts receivable of the Group's top 5 customers was RMB
5,084,392,042.35 (31 December 2022: RMB 5,979,305,884.74), accounting for 50.50% (31 December 2022:
53.68%) of the Group's accounts receivable. Except for that, the Group has no other significant credit risk
exposures concentrated on a single financial asset or a portfolio of financial assets with similar characteristics.
1.3. Liquidity risk
In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents
deemed adequate by the management to finance the Group's operations and mitigate the effects of fluctuations in
cash flows. The management monitors the utilization of bank borrowings and ensures compliance with loan
covenants.
The Group relies on cash generated from production and operations and bank borrowings as significant sources
of liquidity.
The following is the maturity analysis for liabilities held by the Group which is based on undiscounted remaining
contractual obligations:
Unit: RMB
Within 1 year 1-5 years Over 5 years Total
Short-term
4,402,321,743.04 - - 4,402,321,743.04
borrowings
Accounts payable 10,574,123,769.47 - - 10,574,123,769.47
Other payables 811,049,464.22 - - 811,049,464.22
Long-term
18,147,742.00 50,595,066.43 - 68,742,808.43
borrowings
Long-term payables 6,551,306.97 26,205,227.87 - 32,756,534.84
Bonds payable 3,518,875,560.00 - - 3,518,875,560.00
Lease liabilities 171,679,696.45 329,233,957.90 217,512,341.22 718,425,995.57
Other current
3,944,775.07 - - 3,944,775.07
liabilities
Other non-current
- 1,046,909.26 - 1,046,909.26
liabilities
Derivative financial
173,872.64 - - 173,872.64
liabilities
249 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(X) DISCLOSURE OF FAIR VALUE
1. Closing fair value of assets and liabilities measured at fair value
Unit: RMB
31/12/2023
ITEM
Level 1 Level 2 Level 3 Total
I. Continuous fair value measurement
(I) Financial assets at FVTPL
1. Derivative financial assets - 22,156,437.00 - 22,156,437.00
2. Fund investment - - 170,511,081.52 170,511,081.52
3. Accounts receivable factoring - - 223,401,570.22 223,401,570.22
4. Equity instrument investment - - 23,483,780.53 23,483,780.53
(II) Financial assets at FVTOCI
1. Equity instrument investment - - 38,935,237.58 38,935,237.58
Total assets continuously measured at fair value 22,156,437.00 456,331,669.85 478,488,106.85
(III) Derivative financial liabilities
1. Financial liabilities at FVTPL - 173,872.64 - 173,872.64
2. Basis for determining the market price of continuous and non-continuous level 1 fair value measurement
items
The fair value of continuous level 1 fair value measurement items is derived from quotes in an active market.
3. Valuation techniques and qualitative and quantitative information of key parameters adopted for level 2
fair value measurement items
Unit: RMB
Fair value at 31
Valuation technique Inputs
December 2023
Method of discounted cash
Derivative financial assets (Note (V). 2) 22,156,437.00 Forward exchange rate
flow analysis
Derivative financial liabilities (Note (V). Method of discounted cash
173,872.64 Forward exchange rate
25) flow analysis
4. Valuation techniques and qualitative and quantitative information of key parameters adopted for level 3
fair value measurement items
Unit: RMB
Fair value at 31
Valuation technique Significant unobservable inputs
December 2023
Accounts receivable factoring (Note (V). Method of discounted cash Discount rate reflecting credit risk
223,401,570.22
2) flow analysis of counterparties
Fund investment (Note (V). 13) 170,511,081.52 Market approach Liquidity discount
Equity instrument investments (Note
62,419,018.11 Market approach Liquidity discount
(V). 12 & 13)
5. Reconciliation between opening and closing carrying amounts for continuous level 3 fair value
measurement items
Unit: RMB
Translation of Changes in
Recognized in
financial unrealized gains or
Recognized in other 31 December
ITEM 1 January 2023 statements Purchase /Increase Settlement losses for assets held
profit or loss comprehensive 2023
denominated in at the end of the
income
foreign currencies reporting period
(I) Financial assets at
FVTPL
1. Financial
- 60,903,020.88 - - 10,325,000,000.00 10,385,903,020.88 - -
products
2. Accounts
receivable 135,812,841.71 - - 9,424,644.28 1,309,113,715.53 1,230,949,631.30 223,401,570.22 -
factoring
3. Fund
112,351,085.15 11,320,678.01 - 1,163,916.51 54,130,858.29 8,455,456.44 170,511,081.52 2,865,221.57
investment
4. Equity
instrument 57,775,193.71 13,778,192.94 - 1,535,046.71 - 49,604,652.83 23,483,780.53 61,663.54
investment
5. Contingent
99,372,192.22 (71,257.46) - 5,564,195.64 - 104,865,130.40 - (17,653,478.47)
consideration
(II) Financial assets at
FVTOCI
Other equity
38,420,782.40 - 27,162,804.05 1,031,963.78 - 27,680,312.65 38,935,237.58 -
instruments
250 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(X) DISCLOSURE OF FAIR VALUE - continued
6. There are no changes in valuation techniques in the year.
7. Fair value of financial assets and financial liabilities not measured at fair value
The Group's management has assessed cash and bank balances, notes receivable, accounts receivable, other
receivables, other current assets, non-current assets due within one year, long-term receivables, short-term
borrowings, accounts payable, other payables, non-current liabilities due within one year, lease liabilities, long-
term borrowings, bonds payable, long-term payables, other non-current liabilities, etc. and considers that their
carrying amount approximates to the fair value of these assets and liabilities.
(XI) Related party relationship and transactions
1. Parent of the Company
Proportion to
Proportion to
Company's
Nature of Company's voting
Name of the parent Place of incorporation Registered capital ownership interest
business power held by the
held by the parent
parent (%)
(%)
Room A, 7/F, Yuen Long
Technology Centre, No. 11
USI Enterprise Investment
Wang Yip Street West, USD 210,900,000.00 76.19 77.00
Limited holding
Yuen Long, New
Territories, Hong Kong
The ultimate controlling party of the Company is ASE Investment Holding Limited, which is listed on the Taiwan
Stock Exchange with the listing code as 3711.
2. Subsidiaries of the Company
The details of the subsidiaries of the Company are set out in Note (VII). 1.
3. Associates and joint ventures of the Company
The details of the associates and joint ventures of the Company are set out in Note (VII). 2.
251 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XI) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
4. Other related parties of the Company
Relationship between other related
Name of other related party
parties and the Company
USI Inc. Indirect holding company
ASE (Shanghai) Inc. The same ultimate holding company
ASE Inc. The same ultimate holding company
ASE Assembly & Test (Shanghai) Limited The same ultimate holding company
ASE (US) Inc. The same ultimate holding company
ASE Electronics Inc. The same ultimate holding company
ISE Labs, Inc. The same ultimate holding company
Advanced Semiconductor Engineering (China) Ltd. The same ultimate holding company
ASE Corporate Services (Shanghai) Limited The same ultimate holding company
ASE Marketing & Service Japan Co.,Ltd. The same ultimate holding company
SHANGHAI DINGXU PROPERTY MANAGEMENT CO., LTD The same ultimate holding company
Wuxi Tongzhi Microelectronics Co., Ltd. The same ultimate holding company
ISE labs, China. Ltd. The same ultimate holding company
Siliconware Precision Industries Co., Ltd. The same ultimate holding company
Company controlled by key
DECELECT SOISSONS
management
Company controlled by key
DECELECT SAINT VIT
management
Company controlled by key
ASDI Assistance Direction
management
Taitech Precision Electronic (Kunshan) Co., Ltd. Subsidiary of an associate
Memtech Development (H.K.) Co., Limited Subsidiary of an associate
Dongguan Memtech Electronics Co., Ltd. Subsidiary of an associate
Nantong Memtech Technologies Co., Ltd. Subsidiary of an associate
Jian Memtech Precision Electronic Co., Ltd. Subsidiary of an associate
Memtech (Vietnam) Technologies Co., Ltd. Subsidiary of an associate
SUMA-USI Electronics Co., Ltd. (Note) Joint ventures
Note: In 2023, Universal Global Technology (Kunshan) Co., Ltd., the Company's subsidiary, sold all of its
shares in SUMA-USI Electronics Co., Ltd. to an independent third party.
252 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XI) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions
(1) Sales and purchase of goods, provision and receipt of services
Purchase of goods/receipt of services
Unit: RMB
Details of related Amount incurred Amount incurred in
Related party
party transaction in the current year the prior year
Taitech Precision Electronic (Kunshan) Co., Purchase of
46,368,452.98 43,581,619.52
Ltd. materials
Purchase of
ASE Electronics Inc. 29,677,474.40 97,972,675.19
materials
Purchase of
Memtech Development (H.K.) Co., Limited 17,046,337.06 47,620,077.85
materials
Purchase of
Dongguan Memtech Electronics Co., Ltd. 13,019,265.84 32,882,673.95
materials
Purchase of
Jian Memtech Precision Electronic Co., Ltd. 1,875,659.20 284,858.86
materials
Purchase of
Nantong Memtech Technologies Co., Ltd. 1,150,835.88 1,508,030.70
materials
Purchase of
ASE Inc. 912,483.25 191,922.60
materials
Purchase of
DECELECT SAINT VIT 526,761.46 962,465.31
materials
Purchase of
Memtech (Vietnam) Technologies Co., Ltd. 119,720.21 -
materials
Purchase of
SUMA-USI Electronics Co., Ltd. , 2,836.49 631,478.90
materials
Purchase of
Siliconware Precision Industries Co., Ltd - 182,526.08
materials
Total 110,699,826.77 225,818,328.96
ASE Inc. Receipt of services 873,041,344.61 1,378,101,275.00
ASE (Shanghai) Inc. Receipt of services 32,385,810.78 37,378,276.83
ASE Corporate Services (Shanghai) Limited Receipt of services 4,390,614.74
USI Enterprise Limited Receipt of services 3,606,371.52 4,077,439.51
Siliconware Precision Industries Co., Ltd Receipt of services 2,808,188.73 19,736,988.58
SHANGHAI DINGXU PROPERTY
Receipt of services 2,025,901.89 1,899,206.09
MANAGEMENT CO., LTD
ASE Marketing & Service Japan Co.,Ltd. Receipt of services 725,317.20 738,817.20
Taitech Precision Electronic (Kunshan) Co.,
Receipt of services 190,517.92 70,877.96
Ltd.
SUMA-USI Electronics Co., Ltd. , Receipt of services 171,799.14 45,928.00
Dongguan Memtech Electronics Co., Ltd. Receipt of services 66,000.00 33,300.00
ASE (US) Inc. Receipt of services 36,860.41 18,654.08
Memtech Development (H.K.) Co., Limited Receipt of services 22,988.95 -
USI Inc. Receipt of services - 14,893,753.64
Total 919,471,715.89 1,456,994,516.89
The above transactions are executed at the prices agreed on by both parties.
253 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XI) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(1) Sales and purchase of goods, provision and receipt of services - continued
Sales of goods/provision of services
Unit: RMB
Details of related party Amount incurred in Amount incurred in the
Related party
transaction the current year prior year
ASE Inc. Sales of goods 6,222,160.06 5,032,944.09
DECELECT SOISSONS Sales of goods 103,537.96 746,217.18
SUMA-USI Electronics Co., Ltd. Sales of goods 9,140.27 801,777.06
Total 6,334,838.29 6,580,938.33
ASE Inc. Provision of services 17,647,309.98 1,976,377.18
ISE labs, China. Ltd. Provision of services 959,723.55 1,048,388.07
Taitech Precision Electronic (Kunshan) Co., Ltd. Provision of services 211,137.44
SUMA-USI Electronics Co., Ltd. , Provision of services 13,580.00 365,458.00
Total 18,831,750.97 3,390,223.25
The above transactions are executed at the prices agreed on by both parties.
(2) Leases with related parties
Leases where the Group is the lessor
Unit: RMB
Lease income Lease income
Name of lessee Type of leased assets recognized in the recognized in the prior
current year year
ASE Inc. Plant 3,534,211.90 3,537,429.24
Leasing of business
ISE Labs, Inc. 1,896,397.55 938,891.46
premises
Wuxi Tongzhi Microelectronics Co., Ltd. Machinery and
19,359.06 33,186.96
equipment
Total 5,449,968.51 4,509,507.66
The above transactions are executed at the prices agreed on by both parties.
Leases where the Group is the lessee
Unit: RMB
Interest expenses incurred on lease Right-of-use assets
Rent paid
liabilities increased
Type of leased
Name of lessor Amount for Amount for
assets Amount for the Amount for the Amount for the Amount for
the current the prior
current year prior year current year the prior year
year year
ASE Assembly &
Leasing of
Test (Shanghai) 15,087,539.74 15,484,454.05 2,392,528.09 3,080,155.98 - -
business premises
Limited
Advanced
Semiconductor Leasing of
16,148,148.36 16,148,148.99 781,229.60 1,360,700.68 - -
Engineering business premises
(China) Ltd.
Leasing of
USI Inc. 32,069,145.12 31,970,817.81 1,890,692.32 2,490,668.71 - -
business premises
Leasing of
ISE Labs, Inc. 371,833.44 331,357.70 35,276.85 10,052.26 - -
business premises
Total 63,676,666.66 63,934,778.55 5,099,726.86 6,941,577.63 - -
The above transactions are executed at the prices agreed on by both parties.
254 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XI) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
5. Related party transactions - continued
(3) Assets transfer/debt restructuring with related parties
Unit: RMB
Details of related Amount incurred in Amount incurred in the
Related party
party transaction the current year prior year
ISE labs, China. Ltd. Sales of fixed assets - 46,507,299.26
Total - 46,507,299.26
Taitech Precision Electronic (Kunshan) Purchase of fixed
4,603,350.00 2,225,983.40
Co., Ltd. assets
Advanced Semiconductor Engineering Purchase of fixed - 697,841.37
(China) Ltd. assets
Dongguan Memtech Electronic Product Purchase of fixed - 275,840.20
Co., Ltd. assets
Total 4,603,350.00 3,199,664.97
The above transactions are executed at the prices agreed on by both parties.
(4) Interest expenses with related parties
Unit: RMB
Details of related party Amount incurred in Amount incurred in
Related party
transaction the current year the prior year
Interest expenses on
USI Enterprise Limited 46,206,386.54 89,992,084.14
convertible bonds
Interest expenses on
ASE (Shanghai) Inc. - 807,565.60
convertible bonds
Total 46,206,386.54 90,799,649.74
(5) Compensation for key management personnel
Unit: RMB
Amount incurred in Amount incurred in
Item name
the current year the prior year
Compensation for key management personnel 28,238,630.96 33,842,802.87
6. Amounts due from / to related parties
(1) Amounts due from related parties
Unit: RMB
31/12/2023 31/12/2022
Item name Related party Bad debt
Book value provision
Book value Bad debt provision
Accounts
ASE Inc. 4,205,124.03 - 1,105,963.97 -
receivable
Accounts
ISE Labs, Inc. 158,851.95 - 156,203.13 -
receivable
Accounts
DECELECT SOISSONS - - 256,983.70 -
receivable
Accounts SUMA-USI Electronics Co., Ltd. ,
- - 65,915.83 -
receivable
Total 4,363,975.98 - 1,585,066.63 -
255 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XI) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from / to related parties - continued
(1) Amounts due from related parties - continued
Unit: RMB
31/12/2023 31/12/2022
Item name Related party Bad debt
Book value Book value Bad debt provision
provision
Other receivables ASDI Assistance Direction 29,366,894.59 - - -
Other receivables ASE Inc. 439,240.89 - 467,694.55 -
Other receivables ISE labs, China. Ltd. 141,696.00 - 217,389.11 -
Other receivables USI Inc. 24,642.40 - 26,583.86 -
Total 29,972,473.88 - 711,667.52 -
Unit: RMB
31/12/2023 31/12/2022
Item name Related party Bad debt
Book value Book value Bad debt provision
provision
Other non-current Advanced Semiconductor Engineering
1,384,151.73 - 1,412,962.98 -
assets (China) Ltd.
Other non-current
ASE Inc. 680,474.35 - -
assets
Other non-current
ASE Assembly & Test (Shanghai) Limited 401,473.74 - -
assets
Other non-current
ISE Labs, Inc. 23,995.34 - 23,643.98 -
assets
Total 2,490,095.16 - 1,436,606.96 -
(2) Amounts due to related parties
Unit: RMB
Item name Related party 31/12/2023 31/12/2022
Accounts payable ASE Inc. 283,616,382.55 378,720,024.57
Accounts payable Taitech Precision Electronic (Kunshan) Co., Ltd. 23,465,072.03 24,064,742.13
Accounts payable USI Inc. 11,834,518.15 11,535,713.72
Accounts payable ASE Electronics Inc. 6,726,853.62 9,680,346.48
Accounts payable Dongguan Memtech Electronic Product Co., Ltd. 5,773,388.48 11,371,236.29
Accounts payable Memtech Development (H.K.) Co., Limited 4,323,660.34 17,830,266.60
Accounts payable Jian Memtech Precision Electronic Co., Ltd. 1,928,215.49 43,875.68
Accounts payable Siliconware Precision Industries Co., Ltd. 782,215.65 4,126,324.34
Accounts payable USI Enterprise Limited 288,411.43 343,925.43
Accounts payable Nantong Memtech Technologies Co., Ltd. 131,479.58 578,807.02
Accounts payable Memtech (Vietnam) Technologies Co., Ltd. 70,031.61 -
Accounts payable ASE (US) Inc. 31,244.61 18,728.45
Accounts payable DECELECT SAINT VIT - 190,493.86
Accounts payable SUMA-USI Electronics Co., Ltd. - 48,683.68
Accounts payable DECELECT SOISSONS - 9,582.69
Total 338,971,473.54 458,562,750.94
Unit: RMB
Item name Related party 31/12/2023 31/12/2022
Other payables ASE Corporate Services (Shanghai) Limited 4,476,073.82 -
Other payables ASE (Shanghai) Inc. 748,323.19 5,154,066.18
Other payables Memtech Development (H.K.) Co., Limited 659,923.10 -
Other payables ASE Inc. 421,373.94 372,620.33
SHANGHAI DINGXU PROPERTY MANAGEMENT
Other payables 285,740.90 160,708.88
CO., LTD.
Other payables Dongguan Memtech Electronic Product Co., Ltd. 33,335.00 -
Other payables USI Inc. 10,518.52 6,712.87
Other paya USI Enterprise Limited - 2,398,445.06
Total 6,635,288.47 8,092,553.32
Unit: RMB
Item name Related party 31/12/2023 31/12/2022
Long-term payables USI Inc. 25,526,297.84 31,113,295.71
256 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XI) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from / to related parties - continued
(2) Amounts due to related parties - continued
Unit: RMB
Item name Related party 31/12/2023 31/12/2022
Bonds payable USI Enterprise Limited 967,638,439.87 1,364,243,289.23
Unit: RMB
Item name Related party 31/12/2023 31/12/2022
Lease liabilities USI Inc. 85,282,357.96 114,059,901.22
Lease liabilities ASE Assembly & Test (Shanghai) Limited 44,489,167.71 57,933,008.48
Advanced Semiconductor Engineering (China)
Lease liabilities 14,745,019.34 28,698,975.12
Ltd.
Total 144,516,545.01 200,691,884.82
7. Related party commitments
As at 31 December 2023, there are no related party commitments.
257 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XII) SHARE-BASED PAYMENTS
1. Summary of share-based payments
Unit: share
Stock Option Stock Option Core Employee Stock Option Core Employee Stock Option Employee Share
Incentive Plan of Incentive Plan of Share Ownership Incentive Plan of Share Ownership Incentive Plan of Ownership Plan of
Universal Universal Plan of Universal Universal Plan of Universal Universal Universal
Scientific Scientific Scientific Scientific Scientific Scientific Scientific
2023
Industrial Industrial Industrial Industrial Industrial Industrial Industrial
(Shanghai) Co., (Shanghai) Co., (Shanghai) Co., (Shanghai) Co., (Shanghai) Co., (Shanghai) Co., (Shanghai) Co.,
Ltd. in 2015 Ltd. in 2019 (Note Ltd. in 2019 (Note Ltd. in 2020 (Note Ltd. in 2021 (Note Ltd. in 2023 (Note Ltd. in 2023 (Note
(Note 1) 2) 3) 4) 5) 6) 7)
Total number of the Company's
equity instruments outstanding at 11,974,530 7,677,700 1,715,250 594,000 268,900 - -
the beginning of the year
Total number of the Company's
equity instruments granted during - - - - - 14,506,000 372,000
the year
Total number of the Company's
equity instruments vested during 64,467 3,060,098 1,715,250 - 250,600 - -
the period
Total number of the Company's
equity instruments lapsed during 260,983 1,253,602 - 297,000 18,300 88,000 -
the period
Total number of the Company's
equity instruments outstanding at 11,649,080 3,364,000 - 297,000 - 14,418,000 372,000
the end of the year
Total number of equity instruments
11,649,080 3,364,000 - 297,000 - - -
exercisable at the end of the year
Range of exerciseExercise prices of
RMB 15.54 RMB 11.98 N/A RMB 20.46 N/A RMB 14.54 RMB 14.54
prices and stock options
remaining
contractual life of
the Company's Remaining
stock options About 2 years About 1 years N/A About 1 years N/A About 3 years About 3 years
contractual life
outstanding at the
end of the year
Note 1: In November 2015, in order to further improve the corporate governance structure of the Company, to
promote the Company to establish and improve the incentive and restraint mechanism, to fully mobilize
the enthusiasm of the Company's middle-level managers and employees, effectively combine the
interests of shareholders, the Company and the personal interests of operators, and to make all parties
jointly focus on the long-term development of the Company, the Company formulated the "Stock Option
Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd." to grant qualified employees a
certain number of stock options to subscribe for the Company's general shares. During the service period
of the employees granted stock options for the Group, the fair value of the corresponding equity
instruments shall be included in the costs or expenses of the Group on a straight-line basis during the
vesting period, and the capital reserve shall be increased accordingly.
Plan No. Granted by Grant date Vesting period Exercise period
Universal
Stock Option Incentive
Scientific 25 November 2015 25 November 2017
Plan of Universal
Industrial 25 November 2015 to 24 November to 24 November
Scientific Industrial
(Shanghai) Co., 2020 2025
(Shanghai) Co., Ltd.
Ltd.
The optionee of the stock options can exercise the right in proportions according to the following time
points after being granted the stock options for two years and meeting the performance assessment at
the company and individual level.
Accumulated
maximum vested
proportion
2 years after the grant date 40%
3 years after the grant date 60%
4 years after the grant date 80%
5 years after the grant date 100%
258 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XII) SHARE-BASED PAYMENTS - continued
1. Summary of share-based payments - continued
Note 1: - continued
If the stock options are not exercised 10 years after the grant date, the options will lapse. If the incentive
recipient leaves the Company due to resignation or layoffs, the stock options that have been approved to
exercise but have not been exercised by the incentive recipient shall be terminated and the unapproved
options will be null and void on the date thereof. If the incentive recipient leaves the Company due to
retirement, the incentive recipient shall continue to retain the exercise right for the stock options that
have been approved to exercise but have not been exercised, and the options that have not been approved
to exercise shall be invalidated on the date thereof.
Note 2: In November 2019, in order to establish and improve the Company's long-term incentive, assessment and
restraint mechanism, to attract and retain excellent talents, to fully mobilize the enthusiasm of the
Company's directors (excluding independent directors), senior managers, core managers, middle-level
managers and core business (technical) staff, and to effectively combine the interests of shareholders, the
Company and the personal interests of the core team, as well as to make all parties jointly focus on the
long-term development of the Company, the Company formulated the Stock Option Incentive Plan of
Universal Scientific Industrial (Shanghai) Co., Ltd. to grant qualified employees a certain number of
stock options to subscribe for the Company's general shares. During the service period of the employees
granted stock options for the Group, the fair value of the corresponding equity instruments shall be
included in the costs or expenses of the Group on a straight-line basis during the vesting period, and the
capital reserve shall be increased accordingly.
According to the 2019 Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co.,
Ltd., from the date of announcement of the draft incentive plan to the date when the incentive object
completes the exercise of stock options, if the company converts capital reserve into share capital,
distributes stock dividends, allotments, dividends and other matters, the exercise price of stock options
will be adjusted accordingly. The First Meeting of the Sixth Session of the Board of Directors held on
25 April 2023 approved the proposal on adjusting and canceling some rights and interests related to the
first grant of stock option incentive plan in 2019, and the exercise price was adjusted from RMB 12.41
per share to RMB 11.98 per share.
Plan No. Granted by Grant date Vesting period Exercise period
Universal
Stock Option Incentive
Scientific 28 November 2019 28 November 2021
Plan of Universal
Industrial 28 November 2019 to 27 November to 27 November
Scientific Industrial
(Shanghai) Co., 2023 2024
(Shanghai) Co., Ltd.
Ltd.
The optionee of the stock options can exercise the right in proportions according to the following time
points after being granted the stock options for two years and meeting the performance assessment at
the company and individual level.
Accumulated
maximum vested
proportion
2 years after the grant date 40%
3 years after the grant date 70%
4 years after the grant date 100%
If the stock options are not exercised 5 years after the grant date, the options will lapse. If the incentive
recipient leaves the Company due to resignation or layoffs, the stock options that have been approved to
exercise but have not been exercised by the incentive recipient shall be terminated and the unapproved
options will be null and void on the date thereof. If the incentive recipient leaves the Company due to
retirement, the incentive recipient shall continue to retain the exercise right for the stock options that
have been approved to exercise but have not been exercised, and the options that have not been approved
to exercise shall be invalidated on the date thereof.
259 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XII) SHARE-BASED PAYMENTS - continued
1. Summary of share-based payments - continued
Note 3: In November 2019, in order to enrich the salary system of employees, establish and improve the benefit
sharing mechanism between workers and owners, realize the consistency of the interests of the Company,
shareholders and employees, and promote all parties to jointly focus on the long-term development of
the Company, so as to bring more efficient and lasting returns to shareholders; to further improve the
corporate governance structure, improve the Company's long-term and effective incentive and restraint
mechanism, and ensure the long-term and stable development of the Company; to effectively mobilize
the enthusiasm of managers and employees, attract and retain excellent management talents and business
backbones, and improve the cohesion of employees and the competitiveness of the Company, the
Company formulated the Core Employee Share Ownership Plan of Universal Scientific Industrial
(Shanghai) Co., Ltd. to grant qualified directors (excluding independent directors), supervisors, senior
managers, middle-level managers and core employees (including those for research and development,
sales, production and management, etc.) of the Company and its holding subsidiaries a certain number
of stock options to subscribe for the general shares of the Company. During the service period of the
employees granted stock options for the Group, the fair value of the corresponding equity instruments
shall be included in the costs or expenses of the Group on a straight-line basis during the vesting period,
and the capital reserve shall be increased accordingly.
According to the Core Employee Share Ownership Plan of Universal Scientific Industrial (Shanghai)
Co., Ltd. (Revised), the price of transfer for the Core Employee Share Ownership Plan will be adjusted
accordingly in the event of any capitalization of capital reserves, issue of stock dividends, allotment of
shares or distribution of dividends by the Company from the date of announcement of this draft employee
share ownership plan to the implementation of the second and third phases of the Employee Share
Ownership Plan.
Plan No. Granted by Grant date Vesting period Exercise period
Core Employee Share Universal
Ownership Plan of Scientific 18 November 2019
30 April 2020 to 30
Universal Scientific Industrial 18 November 2019 to 17 November
April 2024
Industrial (Shanghai) (Shanghai) Co., 2022
Co., Ltd. Ltd.
The optionee of the stock options can exercise the right in proportions according to the following time
points after being granted the stock options for one year and meeting the performance assessment in
the company level.
Accumulated
maximum vested
proportion
1 years after the grant date 20%
2 years after the grant date 55%
3 years after the grant date 100%
The current stock options that fails to be exercised by the incentive recipient shall be terminated after the
end of each exercise period of the stock options. If the incentive recipient leaves the Company due to
resignation or layoffs, the stock options that have been approved to exercise but have not been exercised
by the incentive recipient shall be terminated and the unapproved options will be null and void on the
date thereof. If the incentive recipient leaves the Company due to retirement, the incentive recipient shall
continue to retain the exercise right for the stock options that have been approved to exercise but have
not been exercised, and the options that have not been approved to exercise shall be invalidated on the
date thereof.
260 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XII) SHARE-BASED PAYMENTS - continued
1. Summary of share-based payments - continued
Note 4: In September 2020, in order to establish and improve the Company's long-term incentive, assessment
and restraint mechanism, to attract and retain excellent talents, to fully mobilize the enthusiasm of the
Company's directors (excluding independent directors), senior managers, core managers, middle-level
managers and core business (technical) staff, and to effectively combine the interests of shareholders, the
Company and the personal interests of the core team, as well as to make all parties jointly focus on the
long-term development of the Company, the Company formulated the Stock Option Incentive Plan of
Universal Scientific Industrial (Shanghai) Co., Ltd. to grant qualified employees a certain number of
stock options to subscribe for the Company's general shares. During the service period of the employees
granted stock options for the Group, the fair value of the corresponding equity instruments shall be
included in the costs or expenses of the Group on a straight-line basis during the vesting period, and the
capital reserve shall be increased accordingly.
According to the 2019 Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co.,
Ltd., from the date of announcement of the draft incentive plan to the date when the incentive object
completes the exercise of stock options, if the company converts capital reserve into share capital,
distributes stock dividends, allotments, dividends and other matters, the exercise price of stock options
will be adjusted accordingly. The First Meeting of the Sixth Session of the Board of Directors held on
25 April 2023 approved the proposal on adjusting and canceling some rights and interests related to the
first grant of stock option incentive plan in 2019, and the exercise price of the portion of the grant
reserved was adjusted from RMB 20.89 per share to RMB 20.46 per share.
Plan No. Granted by Grant date Vesting period Exercise period
Universal
Stock Option Incentive
Scientific
Plan of Universal 9 September 2020 to 8 9 November 2021 to 8
Industrial 9 September 2020
Scientific Industrial November 2023 November 2024
(Shanghai) Co.,
(Shanghai) Co., Ltd.
Ltd.
The optionee of the stock options can exercise the right in proportions according to the following time
points after being granted the stock options for 14 months and meeting the performance assessment at
the company and individual level.
Accumulated
maximum vested
proportion
14 months after the grant date 40%
26 months after the grant date 70%
38 months after the grant date 100%
The stock options that fails to be exercised by the incentive recipient will be lapsed after the end of each
exercise period of the stock options. If the incentive recipient leaves the Company due to resignation or
layoffs, the stock options that have been approved to exercise but have not been exercised by the
incentive recipient shall be terminated and the unapproved options will be null and void on the date
thereof. If the incentive recipient leaves the Company due to retirement, the incentive recipient shall
continue to retain the exercise right for the stock options that have been approved to exercise but have
not been exercised, and the options that have not been approved to exercise shall be invalidated on the
date thereof.
261 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XII) SHARE-BASED PAYMENTS - continued
1. Summary of share-based payments - continued
Note 5: In September 2021, in order to enrich the salary system of employees, establish and improve the benefit
sharing mechanism between workers and owners, realize the consistency of the interests of the Company,
shareholders and employees, and promote all parties to jointly focus on the long-term development of
the Company, so as to bring more efficient and lasting returns to shareholders; to further improve the
corporate governance structure, improve the Company's long-term and effective incentive and restraint
mechanism, and ensure the long-term and stable development of the Company; to implement the
development strategies of the Company, effectively mobilize the enthusiasm of employees, and retain
excellent key technical talents and business backbones, and improve the cohesion of employees and the
competitiveness of the Company, the Company formulated the Employee Share Ownership Plan of
Universal Scientific Industrial (Shanghai) Co., Ltd. to grant the qualified core talents who hold key
positions in the Mexico Plant, Vietnam Plant and Huizhou Plant as designated by the Company with a
certain number of stock options to subscribe for the general shares of the Company. During the service
period of the employees granted stock options for the Group, the fair value of the corresponding equity
instruments shall be included in the costs or expenses of the Group on a straight-line basis during the
vesting period, and the capital reserve shall be increased accordingly.
Plan No. Granted by Grant date Vesting period Exercise period
Core Employee Share
Ownership Plan of Universal Scientific
13 September 2021 to 13 January 2023 to 13
Universal Scientific Industrial (Shanghai) 13 September 2021
12 January 2023 September 2023
Industrial (Shanghai) Co., Co., Ltd.
Ltd.
The optionee of the stock options can exercise the right in proportions according to the following time
points after being granted the stock options for 16 months and meeting the individual performance
assessment.
Accumulated
maximum vested
proportion
16 months after the grant date 100%
The current stock options that fails to be exercised by the incentive recipient shall be terminated after the
end of each exercise period of the stock options. If the incentive recipient leaves the Company due to
resignation or layoffs of the Company, the qualification to participate in the employee share ownership
plan will be canceled, and the corresponding shares will be transferred back to the special account for
repurchase of the Company. The shares derived from the distribution of share dividends and the transfer
of capital reserve by the listed company will be reversed to the special account for repurchase of the
Company. If cash dividends are obtained, they will be returned to the Company. If the incentive recipient
leaves the company due to retirement, the rights and interests will retain unchanged.
Note 6: In October 2023, in order to establish and improve the Company's long-term incentive, assessment and
restraint mechanism, to attract and retain excellent talents, to fully mobilize the enthusiasm of the
Company's middle-level managers and core business and technical staff, and to effectively combine the
interests of shareholders, the Company and the personal interests of the core team, as well as to make all
parties jointly focus on the long-term development of the Company, the Company formulated the Stock
Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. to grant qualified employees
a certain number of stock options to subscribe for the Company's general shares. During the service
period of the employees granted stock options for the Group, the fair value of the corresponding equity
instruments shall be included in the costs or expenses of the Group on a straight-line basis during the
vesting period, and the capital reserve shall be increased accordingly.
262 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XII) SHARE-BASED PAYMENTS - continued
1. Summary of share-based payments - continued
Note 6: - continued
According to the 2023 Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd.,
from the date of announcement of the draft incentive plan to the date when the incentive object completes
the exercise of stock options, if the company converts capital reserve into share capital, distributes stock
dividends, allotments, dividends and other matters, the exercise price of stock options will be adjusted
accordingly.
Plan No. Granted by Grant date Vesting period Exercise period
Stock Option Incentive Universal Scientific
Plan of Universal Industrial 13 October 2023 to 13 14 October 2024 to 13
13 October 2023
Scientific Industrial (Shanghai) Co., October 2024 October 2026
(Shanghai) Co., Ltd. Ltd.
The optionee of the stock options can exercise the right in proportions according to the following time
points after being granted the stock options for 12 months and meeting the performance assessment at
the company and individual level.
Accumulated
maximum vested
proportion
12 months after the grant date 50%
24 months after the grant date 100%
The stock options that fails to be exercised by the incentive recipient will be lapsed after the end of each
exercise period of the stock options. If the incentive recipient leaves the Company due to resignation,
downsizing, non-renewal of employment contract, termination of employment contract or employment
agreement by negotiation, or dismissal by the company, the stock options that have been approved to
exercise but have not been exercised by the incentive recipient shall be terminated and canceled by the
Company, and the unapproved options will be invalidated and canceled by the Company on the date
thereof. If the incentive recipient retires normally in accordance with national laws and regulations and
the Company's regulations, the incentive recipient shall continue to retain the exercise right for the stock
options that have been approved to exercise but have not been exercised, and the options that have not
been approved to exercise shall be invalidated and canceled by the Company on the date thereof.
Note 7: In November 2023, in order to enrich the salary system of employees, establish and improve the benefit
sharing mechanism between workers and owners, realize the consistency of the interests of the Company,
shareholders and employees, and promote all parties to jointly focus on the long-term development of
the Company, so as to bring more efficient and lasting returns to shareholders; to further improve the
corporate governance structure, improve the Company's long-term and effective incentive and restraint
mechanism, and ensure the long-term and stable development of the Company; to implement the
development strategies of the Company, effectively mobilize the enthusiasm of employees, and retain
excellent key management, technical and business talents, and motivate employees to create value for
the Company and enhance the competitiveness of the Company in the industry, the Company formulated
the Employee Share Ownership Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2023 to
grant the qualified core talents with a certain number of stock options to subscribe for the general shares
of the Company. During the service period of the employees granted stock options for the Group, the fair
value of the corresponding equity instruments shall be included in the costs or expenses of the Group on
a straight-line basis during the vesting period, and the capital reserve shall be increased accordingly.
263 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XII) SHARE-BASED PAYMENTS - continued
1. Summary of share-based payments - continued
Note 7: - continued
Plan No. Granted by Grant date Vesting period Exercise period
Employee Share
Universal Scientific
Ownership Plan of
Industrial 23 November 2023 to 23 24 November 2024 to
Universal Scientific 23 November 2023
(Shanghai) Co., November 2025 23 November 2026
Industrial (Shanghai) Co., Ltd.
Ltd.
The optionee of the stock options can exercise the right in proportions according to the following time
points after being granted the stock options for 12 months and meeting the performance assessment at
the company and individual level.
Accumulated
maximum vested
proportion
12 months after the grant date 50%
24 months after the grant date 100%
Holders whose participation status has been revoked shall have their corresponding shares withdrawn by
the Management Committee, and the shares corresponding to their withdrawn shares shall be sold in the
secondary market, and the Management Committee shall distribute the shares to the holders according
to the lower of the amount obtained after the sale of such shares and the consideration paid for the
underlying shares corresponding to the shares held by the holders under the Employee Stock Ownership
Plan, and the Management Committee shall be responsible for determining the principles of distribution
of the excess portion, if any, and shall further distribute the same to the holders. The Management
Committee shall be responsible for determining the principles of allocation and further distribution of
the excess portion, if any. If a holder retires in accordance with the Company's regulations, its rights and
interests in the Employee Stock Ownership Plan shall remain unchanged.
264 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XII) SHARE-BASED PAYMENTS - continued
2. Equity-settled share-based payments
Unit: RMB
Stock Option Stock Option Employee Share
Core Employee Core Employee
Incentive Plan of Stock Option Stock Option Incentive Plan of Ownership Plan of
Share Ownership Share Ownership
Universal Incentive Plan of Incentive Plan of Universal Scientific Universal Scientific
Plan of Universal Plan of Universal
Scientific Universal Scientific Universal Scientific Industrial (Shanghai) Industrial (Shanghai)
Scientific Industrial Scientific Industrial
Industrial Industrial (Shanghai) Industrial (Shanghai) Co., Ltd. in 2023 Co., Ltd. in 2023
(Shanghai) Co., Ltd. (Shanghai) Co., Ltd.
(Shanghai) Co., Co., Ltd. in 2019 Co., Ltd. in 2020
in 2019 in 2021
Ltd. in 2015
The method of Binomial Tree Binomial Tree Binomial Tree Binomial Tree
determining the fair Model Model Model Model
Black Scholes Binomial Tree Binomial Tree
value of equity
Model Model Model
instruments at the
grant date
When the optionee
When the optionee When the optionee When the optionee When the optionee
reaches the exercise When the optionee When the optionee
reaches the exercise reaches the exercise reaches the exercise reaches the exercise
period in the stock reaches the exercise reaches the exercise
period in the stock period in the stock period in the stock period in the stock
options plan and period in the stock period in the stock
options plan and options plan and options plan and options plan and
meets the options plan and options plan and
meets the meets the meets the meets the
The basis of determining performance meets the meets the
performance performance performance performance
the number of equity assessment at the performance performance
assessment at the assessment at the assessment at the assessment at the
instruments expected company and assessment in the assessment in the
company and company and company and company and
to be vested individual level, company level, and individual level, and
individual level, and individual level, and individual level, and individual level, and
and the the corresponding the corresponding
the corresponding the corresponding the corresponding the corresponding
corresponding equity instrument is equity instrument is
equity instrument is equity instrument is equity instrument is equity instrument is
equity instrument is that expected to be that expected to be
that expected to be that expected to be that expected to be that expected to be
that expected to be vested vested
vested vested vested vested
vested
Reasons for the
significant difference
between the estimate None None None None None N/A N/A
in the current year and
that in the prior year
Amounts of equity-
settled share-based
payments 139,923,402.85 107,201,000.00 743,000.00 7,087,000.00 2,952,000.00 8,380,000.00 -
accumulated in capital
reserve
Total expenses
recognized arising
- 8,643,000.00 - 770,000.00 (109,000.00) 8,380,000.00 -
from equity-settled
share-based payments
Method of determining the fair value of equity instruments: Fair values are calculated by using Black-Scholes
Model or Binomial Tree Model and the inputs to the model at the grant date are as follows:
Stock Option
Core Employee Core Employee
Incentive Plan of Stock Option Stock Option Stock Option Employee Share
Share Ownership Share Ownership
Universal Incentive Plan of Incentive Plan of Incentive Plan of Ownership Plan of
Plan of Universal Plan of Universal
Scientific Universal Scientific Universal Scientific Universal Scientific Universal Scientific
Scientific Industrial Scientific Industrial
Industrial Industrial (Shanghai) Industrial (Shanghai) Industrial (Shanghai) Industrial (Shanghai)
(Shanghai) Co., Ltd. (Shanghai) Co., Ltd.
(Shanghai) Co., Co., Ltd. in 2019 Co., Ltd. in 2020 Co., Ltd. in 2023 Co., Ltd. in 2023
In 2019 in 2021
Ltd. in 2015
Weighted average share
RMB 15.54 RMB 13.34 RMB 13.34 RMB 21.65 RMB 0 RMB 14.54 RMB 14.54
price
Weighted average
RMB 15.54 RMB 13.34 RMB 13.34 RMB 21.65 RMB 0 RMB 14.54 RMB 14.54
exercise price
Expected volatility 40.33%~45.00% 45.07%~51.8% 47.77% 48.14%~53.57% 47.15% 38.51%~39.09% 36.56%~38.77%
6 years ~ 7.5 1.5 years ~ 3.5 2.17 years ~ 4.17
Expected life 3 years ~ 5 years 1.33 years 1 years ~ 2 years 1 years ~ 2 years
years years years
Risk-free interest rate 3.06%~3.13% 2.80%-2.97% 2.7% 2.80%-2.99% 2.34% 2.35%-2.45% 2.33%-2.44%
Expected dividend yield 0.87% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Expected volatility is calculated based on the volatility of the share prices of similar companies during the past
certain years. Expected life used in the model is based on the best estimate of management after the adjustments
of the effects of inconvertibility, exercise restriction and exercise pattern.
3. In this year, the Group has no cash-settled share-based payments.
4. In this year, the Group has no modification to or termination of share-based payments.
265 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XIII) COMMITMENTS AND CONTINGENCIES
1. Significant commitments
(1) Capital commitments
Unit: RMB’000
31/12/2023 31/12/2022
Capital commitments that have been entered into but have
not been recognised in the financial statements:
- Commitment for acquisition and construction of long-term
359,557 874,884
assets
- External investment commitment (Note) 193,499 98,171
Total 553,056 973,055
Note: For the commitment of foreign investment, according to the partnership agreement concluded between
the Company and Suzhou Yaotu Equity Investment Partnership, the Company needs to pay a total
subscription amount of RMB 30,000,000.00, of which the amount of RMB 9,000,000.00 has been paid
this period. As at 31 December 2023, the Group has paid RMB 21,000,000.00 in total; but remains a
subscription amount of RMB 9,000,000.00 unpaid.
For the commitment of foreign investment, according to the partnership agreement concluded between
the UGSI and Merry Electronics, UGSI needs to pay a total subscription amount of TWD 191,100,000.00.
As at 31 December 2023, the Group has paid TWD 29,400,000.00, equivalent to RMB 7,044,079.28 in
total; but remains a subscription amount of TWD 161,700,000.00, equivalent to RMB 37,299,221.30
unpaid.
Pursuant to the Share and Asset Purchase Agreement entered into by UGT, Ample Trading and
Hirschmann, UGT and Ample Trading need to pay the capital contribution of USD 48,000,000.00, which
will be adjusted accordingly based on net debt and net working capital (including acquisition price
adjustment) of the Target Business on the closing date and will be settled in cash. As of 31 December
2023, the Group has paid USD 41,400,000.00, equivalent to RMB 297,177,480.00; but remains the
amount of USD 6,600,000.00 and an estimated acquisition price adjustment of USD 14,183,000.00,
equivalent to RMB 147,199,754.10, unpaid.
2. CONTINGENCIES
The Group has no significant contingencies to be disclosed.
(XIV) EVENTS AFTER THE BALANCE SHEET DATE
1. Profit appropriation
As proposed by the resolution of the Tenth Meeting of the Sixth Session of the Board of Directors of the Company
held on 29 March 2024, a cash dividend of RMB 2.70 (including tax) per 10 shares will be distributed on the basis
of the total share capital at the equity registration date less the number of the shares repurchased by the Company
from special accounts, with no bonus issue and no increase in share capital. The above proposal regarding
dividends distribution is yet to be approved in a shareholders' meeting.
266 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XIV) EVENTS AFTER THE BALANCE SHEET DATE - continued
2. Convertible bonds
On 4 March 2024, the Company disclosed the Announcement on the Redemption Option of "Universal Global
Convertible Bonds (SH:113045)" (Announcement No. 2024-014), and disclosed its informative announcements
on 5 March 2024, 12 March 2024, 13 March 2024, 14 March 2024, and 15 March 2024 (Announcement No.
2024-015, 2024-017, 2024-018, 2024-019, 2024-020). The redemption application for the "Universal Global
Convertible Bonds (SH:113045)" has been closed after the closing of the Shanghai Stock Exchange on 15 March
2024.
The redemption application period for "Universal Global Convertible Bonds (SH:113045)" is from 11 March
2024 to 15 March 2024, with a redemption price of RMB 102.00 per bond. According to the data provided by the
Shanghai Branch of China Securities Depositories and Clearing Co., LTD., during the redemption application
period of the "Universal Global Convertible Bonds (SH:113045)", the effective number of redemption
applications is 0, and the redemption amount is RMB 0.
(XV) OTHER SIGNIFICANT EVENTS
1. Segment reporting
(1) Determination basis and accounting policies of reporting segments
Based on the Group's internal organization structure, management requirements and internal reporting system,
the operations of the Group are classified into 4 reporting segments according to the manufacturing location,
which are Chinese mainland, APAC (exclude Mainland China), Europe and other countries/regions. At the same
time, the products are divided into communication products, consumer electronics products, cloud and storage
products, industrial products, automotive electronics products and other products according to categories in each
region. These report segments are recognized on the basis of manufacturing location and product category. The
Group's management periodically evaluates the operating results of these reporting segments to make decisions
about resources to be allocated to the segments and assess their performance.
Segment information is disclosed in accordance with the accounting policies and measurement criteria adopted
by each segment when reporting to management. The measurement criteria are consistent with the accounting
and measurement criteria in the preparation of the financial statements. Due to the changes in the Group's internal
product categories in 2023, which resulted in changes in the composition of reporting segments, the Group restated
the previous data.
267 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XV) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Financial information of reporting segments
2023:
Unit: RMB’000
Mainland China APAC European region Other countries/regions Inter-segment offsetting Total
Operating Operating Sub-total of Operating Operating Sub-total of Operating Operating Sub-total of Operating Operating Sub-total of Operating Operating Sub-total of Operating Operating Total of the
income costs the segment income costs the segment income costs the segment income costs the segment income costs the segment income costs segment
Communication products 15,115,896 13,832,549 1,283,347 6,919,039 6,663,962 255,077 25,692 28,529 (2,837) 12,537 11,815 722 (273,894) (433,658) 159,764 21,799,270 20,103,197 1,696,073
Consumer electronic
15,367,363 14,030,711 1,336,652 5,014,228 4,731,103 283,125 253,066 237,301 15,765 8,606 9,907 (1,301) (1,389,074) (1,280,890) (108,184) 19,254,189 17,728,132 1,526,057
products
Cloud and storage products 2,440,817 2,014,077 426,740 3,489,246 3,103,827 385,419 260,752 249,332 11,420 397,270 359,096 38,174 (1,209,306) (1,208,206) (1,100) 5,378,779 4,518,126 860,653
Industrial products 3,154,753 2,766,770 387,983 3,072,600 2,659,156 413,444 2,698,637 2,479,370 219,267 1,446,391 1,365,961 80,430 (2,207,921) (2,288,951) 81,030 8,164,460 6,982,306 1,182,154
Automotive electronic
1,121,896 994,607 127,289 480,844 483,590 (2,746) 1,035,302 846,584 188,718 2,515,140 2,409,623 105,517 (15,742) (12,699) (3,043) 5,137,440 4,721,705 415,735
products
Medical products 11,061 8,062 2,999 - - - 365,496 344,656 20,840 330 298 32 (859) (2,437) 1,578 376,028 350,579 25,449
Others 252,218 283,156 (30,938) 491,059 189,427 301,632 348,394 187,126 161,268 97,724 39,423 58,301 (569,722) (167,417) (402,305) 619,673 531,715 87,958
Principal operating
37,464,004 33,929,932 3,534,072 19,467,016 17,831,065 1,635,951 4,987,339 4,372,898 614,441 4,477,998 4,196,123 281,875 (5,666,518) (5,394,258) (272,260) 60,729,839 54,935,760 5,794,079
income/cost of the segment
Other operating income/cost
92,202 256 91,946 7,317 3,064 4,253 27,683 57 27,626 5,925 - 5,925 (71,057) - (71,057) 62,070 3,377 58,693
of the segment
Total operating income/cost
37,556,206 33,930,188 3,626,018 19,474,333 17,834,129 1,640,204 5,015,022 4,372,955 642,067 4,483,923 4,196,123 287,800 (5,737,575) (5,394,258) (343,317) 60,791,909 54,939,137 5,852,772
of the segment
Less: Taxes and levies 80,262 1,396 8,750 5,362 - 95,770
Selling expenses 213,912 106,250 66,293 46,430 (64,890) 367,995
Administrative
388,977 558,040 258,798 137,623 (128,010) 1,215,428
expenses
Research and
1,269,426 561,706 84,819 27,182 (135,929) 1,807,204
development expenses
Financial expenses 76,879 72,008 (21,291) 89,795 (5,362) 212,029
Including: Interest
217,844 166,903 51,501 117,275 (153,307) 400,216
expenses
Interest income 249,048 113,907 16,453 5,425 (148,305) 236,528
Add: Other income 83,570 28 6,624 - - 90,222
Investment income 57,352 44,098 41,250 - - 142,700
Including: Income from
investments
in associates (3,259) 12,012 - - - 8,753
and joint
ventures
Gains (losses) from
(10,763) 17,116 (33,461) - - (27,108)
changes in fair values
Gains (losses) on
1,390 1,906 (23,198) (2,078) - (21,980)
impairment of credit
Gains (losses) from
(5,065) (110,374) (52,304) 907 - (166,836)
assets impairment
Gains (losses) from
5,397 66 871 - - 6,334
disposal of assets
Operating profit 1,728,443 293,644 184,480 (19,763) (9,126) 2,177,678
Net profit 1,566,374 287,650 177,129 (46,269) (35,175) 1,949,709
268 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XV) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Financial information of reporting segments - continued
2022 (restated)
Unit: RMB’000
Mainland China APAC European region Other countries/regions Inter-segment offsetting Total
Operating Operating Sub-total of Operating Operating Sub-total of Operating Operating Sub-total of Operating Operating Sub-total of Operating Operating Sub-total of Operating Operating Total of the
income costs the segment income costs the segment income costs the segment income costs the segment income costs the segment income costs segment
Communication products 16,378,602 14,694,376 1,684,226 9,400,421 8,785,813 614,608 74,716 80,240 (5,524) 15,214 15,447 (233) (243,974) (364,264) 120,290 25,624,979 23,211,612 2,413,367
Consumer electronic
18,660,706 17,020,810 1,639,896 4,169,586 3,962,081 207,505 267,061 255,684 11,377 62,970 67,775 (4,805) (1,431,382) (1,404,969) (26,413) 21,728,941 19,901,381 1,827,560
products
Cloud and storage products 4,760,525 4,107,830 652,695 4,153,783 3,774,252 379,531 231,058 221,886 9,172 136,574 118,894 17,680 (2,290,503) (2,302,135) 11,632 6,991,437 5,920,727 1,070,710
Industrial products 3,899,800 3,431,389 468,411 4,192,218 3,626,202 566,016 2,068,750 1,816,800 251,950 1,579,930 1,431,205 148,725 (3,084,277) (3,040,332) (43,945) 8,656,421 7,265,264 1,391,157
Automotive electronic
1,231,639 1,060,654 170,985 473,704 373,017 100,687 745,870 675,172 70,698 2,220,442 2,163,991 56,451 (8,732) (20,454) 11,722 4,662,923 4,252,380 410,543
products
Medical products 15,652 8,460 7,192 - - - 185,694 172,600 13,094 845 840 5 - - - 202,191 181,900 20,291
Others 311,777 300,918 10,859 521,226 222,848 298,378 112,834 94,627 18,207 186,567 148,907 37,660 (529,202) (176,797) (352,405) 603,202 590,503 12,699
Principal operating
45,258,701 40,624,437 4,634,264 22,910,938 20,744,213 2,166,725 3,685,983 3,317,009 368,974 4,202,542 3,947,059 255,483 (7,588,070) (7,308,951) (279,119) 68,470,094 61,323,767 7,146,327
income/cost of the segment
Other operating income/cost
40,927 438 40,489 7,045 3,036 4,009 18,651 - 18,651 1,454 - 1,454 (22,095) (166) (21,929) 45,982 3,308 42,674
of the segment
Total operating income/cost
45,299,628 40,624,875 4,674,753 22,917,983 20,747,249 2,170,734 3,704,634 3,317,009 387,625 4,203,996 3,947,059 256,937 (7,610,165) (7,309,117) (301,048) 68,516,076 61,327,075 7,189,001
of the segment
Less: Taxes and levies 54,963 1,392 (1,946) 1,021 - 55,430
Selling expenses 165,324 116,802 35,545 45,684 (39,521) 323,834
Administrative
581,932 653,258 165,523 123,364 (102,228) 1,421,849
expenses
Research and
1,586,715 557,384 996 18,609 (129,242) 2,034,462
development expenses
Financial expenses (120,183) 67,602 32,606 39,574 (735) 18,864
Including: Interest
166,294 - 33,280 5 35,421 235,000
expenses
Interest income 93,928 - 7,798 - (13,729) 87,997
Add: Other income 50,968 200 4,977 - - 56,145
Investment income 21,633 113,200 3,797 - - 138,630
Including: Income from
investments
in associates 23,809 49,722 - - - 73,531
and joint
ventures
Gains (losses) from
11,621 (795) 21,013 - - 31,839
changes in fair values
Gains (losses) on
(6,354) (3,476) (1) (286) - (10,117)
impairment of credit
Gains (losses) from
(52,532) (40,317) 13,510 (19,531) - (98,870)
assets impairment
Gains (losses) from
6,348 725 1,431 111 - 8,615
disposal of assets
Operating profit 2,437,686 843,833 199,628 8,979 (29,322) 3,460,804
Net profit 2,222,971 691,676 176,142 190 (30,989) 3,059,990
269 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XV) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Financial information of reporting segments - continued
31/12/2023
Unit: RMB’000
Other
Mainland European Inter-segment
APAC countries/regio Total
China region offsetting
ns
Total assets of the
21,476,495 15,750,225 4,143,541 4,920,666 (7,618,396) 38,672,531
segment
Total liabilities of
11,645,840 12,121,625 2,615,823 3,816,469 (7,983,203) 22,216,554
the segment
31/12/2022
Unit: RMB’000
Other
Mainland European Inter-segment
APAC countries/regio Total
China region offsetting
ns
Total assets of the
24,068,401 13,851,252 4,028,528 2,876,723 (6,830,329) 37,994,575
segment
Total liabilities of
13,507,297 11,683,792 2,526,013 2,232,858 (7,125,334) 22,824,626
the segment
External revenue by geographical area of source and non-current assets by geographical location of assets
Unit: RMB
Amount incurred in Amount incurred in
ITEM
the current year the prior year
External revenue from Chinese mainland 2,174,577,497.88 1,733,001,923.45
External revenue outside Chinese mainland 58,617,332,039.99 66,783,074,039.81
Total 60,791,909,537.87 68,516,075,963.26
Unit: RMB
Item (Note) 31/12/2023 31/12/2022
Non-current assets located in Chinese mainland 3,298,301,655.30 4,130,752,349.05
Non-current assets located in Mexico 1,083,804,720.92 597,971,635.46
Non-current assets located in Taiwan, China 977,522,778.25 879,674,910.08
Non-current assets located in France 923,206,293.87 783,616,987.49
Non-current assets located in the Vietnam 533,589,551.93 477,280,704.05
Non-current assets located in Hong Kong 485,962,476.30 111,106,156.13
Non-current assets located in Poland 204,342,401.10 127,510,885.44
Non-current assets located in the United States 125,234,459.05 35,275,209.48
Non-current assets located in Hungary 71,587,791.19 -
Non-current assets located in Japan 920,188.70 182,102.16
Total 7,704,472,316.61 7,143,370,939.34
Note: The above non-current assets exclude long-term receivables, investments in other equity instruments,
other non-current financial assets and deferred tax assets.
270 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XV) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Financial information of reporting segments - continued
Degree of reliance on major customers
Information of major customers whose revenue accounts for 10% or more of the total revenue
Unit: RMB
Amount incurred in the current year Amount incurred in the prior year
Proportion in total Proportion in total
Customer name Total operating Total operating
operating income operating income
income income
(%) (%)
Company E 17,131,143,558.73 28.18 17,352,642,463.15 25.33
Company F 7,582,474,674.51 12.47 9,003,192,184.06 13.14
Total 24,713,618,233.24 40.65 26,355,834,647.21 38.47
Inter-segment transfers are measured on the basis of actual transaction prices. Segment revenue and segment
expenses are determined on the basis of actual revenue and expenses of each segment. Segment assets and
liabilities are allocated according to the attributable assets employed by a segment in its operating activities and
the attributable liabilities resulting from the operating activities of a segment.
(XVI) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS
1. Notes receivable
(1) Categories of notes receivable
Unit: RMB
Category 31/12/2023 31/12/2022
Bank acceptances 49,427,125.85 39,485,239.31
(2) As at 31 December 2023, the Company had no notes receivable that have been pledged as security.
(3) As at 31 December 2023, the Company had no notes receivable that have been endorsed or discounted
and were not yet matured at the balance sheet date.
(4) As at 31 December 2023, the Company made no provision for credit loss since the Company considered
that the accepting banks of the bank acceptances held by it were of high ratings and no significant credit
risk was expected to exist.
(5) As at 31 December 2023, the Company had no notes receivable that have been actually written off.
271 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XVI) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS- continued
2. Accounts receivable
(1) Categories of accounts receivable
Unit: RMB
Category 31/12/2023 31/12/2022
Accounts receivable arising from contracts with customers 2,871,941,596.58 2,825,168,124.93
Less: Bad debt provision 38,222.50 3,724,156.78
Total 2,871,903,374.08 2,821,443,968.15
(2) Disclosure of accrual method for credit loss
As part of the Company's credit risk management, the expected credit losses on accounts receivable are assessed
using the aging analysis approach. According to the Company's assessment on credit risk, there is no significant
difference in the losses among different customer groups, and the aging reflects the solvency of customers when
the receivables are due.
At 31 December 2023, the credit risk and expected credit losses on accounts receivable were as follows:
Unit: RMB
31/12/2023
Aging Expected average loss rate
Book value Bad debt provision Carrying amount
(%)
Within credit
period
0.00 2,759,534,669.89 22,387.86 2,759,512,282.03
Overdue for 1-30
days
0.01 112,113,841.06 14,592.63 112,099,248.43
Overdue 31-60
days
0.39 279,158.03 1,078.52 278,079.51
60-90 days
overdue
0.87 13,884.93 120.82 13,764.11
90-180 days
- - - -
overdue
More than 180
100.00 42.67 42.67 -
days overdue
Total 0.00 2,871,941,596.58 38,222.50 2,871,903,374.08
At 31 December 2022, the credit risk and expected credit losses on accounts receivable were as follows:
Unit: RMB
1/1/2023
Aging Expected average loss rate
Book value Bad debt provision Carrying amount
(%)
Within credit
0.02 2,707,985,122.08 620,333.97 2,707,364,788.11
period
Overdue for 1-30
0.44 107,499,766.35 470,944.46 107,028,821.89
days
Overdue 31-60
10.41 6,262,253.85 651,595.61 5,610,658.24
days
60-90 days
40.89 2,435,808.79 996,108.88 1,439,699.91
overdue
90-180 days
100.00 170,800.05 170,800.05 -
overdue
More than 180
100.00 814,373.81 814,373.81 -
days overdue
Total 0.13 2,825,168,124.93 3,724,156.78 2,821,443,968.15
The expected average loss rate mentioned above is based on the historical actual credit loss rates and the current
conditions as well as the forecast of future economic conditions. In 2023, the Company's valuation method and
significant assumptions remain unchanged.
272 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XVI) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS- continued
2. Accounts receivable - continued
(3) Changes in bad debt provision
Unit: RMB
Changes for the year
Category 31/12/2022 Provision for (reversal 31/12/2023
Write-off
of) the year
Bad debt provision by
3,724,156.78 (3,685,934.28) - 38,222.50
aging matrix
(4) There are no accounts receivable that have been actually written off in the year.
(5) Top five accounts receivable at 31 December 2023 categorized by debtor
Unit: RMB
Proportion to total accounts
Accounts receivable at 31 Bad debt provision at 31
Company name receivable at 31 December
December 2023 December 2023
2023 (%)
Company F 829,212,283.50 28.87 6,727.33
Company E 802,740,155.94 27.95 6,512.56
Company I 364,569,794.59 12.70 2,957.72
Company S 280,039,723.85 9.75 2,271.94
Company T 78,364,031.83 2.73 635.76
Total 2,354,925,989.71 82.00 19,105.31
(6) As at 31 December 2023, there is no accounts receivable recognized due to the transfer of financial assets.
(7) As at 31 December 2023, there is no amount of assets and liabilities arising from transfer of accounts
receivable and continuing involvement.
3. Other receivables
(1) Disclosure of other receivables by aging
Unit: RMB
31/12/2023
Aging Bad debt Proportion of
Amounts
provision provision (%)
Within 1 year 733,104,536.58 - -
(2) Classification by the nature of other receivables
Unit: RMB
Book value at 31 Book value at 31
Nature of other receivables
December 2023 December 2022
Cash pooling receivables from related- party 687,443,000.00 1,022,345,000.00
Amounts due from related parties 29,624,196.07 24,416,766.00
Advances for third parties 11,239,025.85 9,316,988.52
Advance payments for employees 710,649.65 1,638,532.17
Others 4,087,665.01 2,470,403.55
Total 733,104,536.58 1,060,187,690.24
(3) No allowance for expected credit losses has been made and no allowance for expected credit losses has
been reversed or collected due to the low probability that the Company's other receivables will not be
collected.
(4) There were no other receivables actually written off in the year.
273 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XVI) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS- continued
3. Other receivables - continued
(5) As at 31 December 2023, there were no other receivables related to government grants.
(6) As at 31 December 2023, there were no other receivables derecognized due to the transfer of financial
assets.
(7) As at 31 December 2023, there was no amount of assets and liabilities arising from transfer of other
receivables and continuing involvement.
4. Long-term equity investments
Details of long-term equity investments:
Unit: RMB
Changes for the year Explanation of the
Proporti
Proportion inconsistency
on to
Accoun to between the
voting
ting Gains or losses Increase from ownership proportions of the Cash dividends
Name of investee 31/12/2022 Increase in the Decrease in the 31/12/2023 power
method arising from stock option interest held ownership interest for this year
year yea held in
ology investments grants (Note) in investee and the voting
investee
(%) power in the
(%)
investee
Universal Global
Cost
Technology Co., 2,796,631,857.00 510,995,119.70 - - 34,873.08 3,307,661,849.78 100 100 NA -
method
Limited
The remaining
50% equity
interest is held by
USI Electronics Universal Global
Cost
(Shenzhen) Co., 395,631,561.16 - - - 767,798.51 396,399,359.67 50 100 Technology Co., 300,000,000.00
method
Ltd. Limited, the
Company's
wholly-owned
subsidiary.
Universal Global
Technology Cost
269,830,008.88 - - - (532,761.26) 269,297,247.62 100 100 NA -
(Kunshan) Co., method
Ltd.
Universal Global
Technology Cost
1,350,239,073.32 - - - 1,166,895.33 1,351,405,968.65 100 100 NA -
(Shanghai) Co., method
Ltd.
Universal Global
Electronics Cost
50,000,000.00 - - - - 50,000,000.00 100 100 NA -
(Shanghai) Co., method
Ltd.
The 100% equity
interest is held by
Universal Global Universal Global
Scientific Technology Co.,
NA 139,694,532.49 - - - 12,630,130.75 152,324,663.24 NA NA -
Industrial Co., Limited, the
Ltd. Company's
wholly-owned
subsidiary.
Universal Global
Technology Cost
795,920,090.82 - - - 180,177.55 796,100,268.37 100 100 NA -
(Huizhou) Co., method
Ltd.
The remaining
89.58% equity
interest is held by
Universal Global
Cost
FAFG 393,342,321.82 - - - - 393,342,321.82 10.42 100 Technology Co., -
method
Limited, the
Company's
wholly-owned
subsidiary.
The company
holds 1/3 voting
Questyle Audio
Equity rights on the board
Technology Co., 20,000,000.00 - - (3,294,727.52) - 16,705,272.48 6.67 33.33 -
method of directors of
Ltd.
Questyle Audio
Technology
Total 6,211,289,445.49 510,995,119.70 - (3,294,727.52) 14,247,113.96 6,733,236,951.63 300,000,000.00
Note: The amount refers to the cumulative amount related to share-based payments settled under equity arising
from the stock option incentive plan offered by the Company to relevant personnel of Universal Global
Technology Co., Limited, Universal Global Technology (Huizhou) Co., Ltd., USI Electronics (Shenzhen)
Co., Ltd., Universal Global Technology (Kunshan) Co., Ltd., Universal Global Technology (Shanghai)
Co., Ltd. and UGSI.
As at 31 December 2023, the ability of the investee, in which the Company holds long-term equity investments,
to transfer funds to the Company is not restricted.
274 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XVI) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS- continued
5. Operating income and operating costs
(1) Details of operating income and operating costs
Unit: RMB
Amount incurred in the current year Amount incurred in the prior year
ITEM
Income Cost Income Cost
Principal operating
19,672,244,261.31 17,928,390,978.31 21,940,574,129.19 19,815,647,848.13
activities
Other operating
4,791,760.38 116,571.67 4,198,651.53 437,487.30
activities
Total 19,677,036,021.69 17,928,507,549.98 21,944,772,780.72 19,816,085,335.43
(2) Analysis of principal operating income and principal operating costs by product categories:
Unit: RMB
Amount incurred in the current year Amount incurred in the prior year
ITEM Principal operating Principal operating Principal operating Principal operating
income costs income costs
Communication
13,985,075,540.53 12,854,145,906.44 15,191,008,208.22 13,667,867,543.85
products
Consumer
4,686,934,977.87 4,318,789,072.02 5,717,448,527.15 5,359,883,891.18
electronic products
Automotive
499,366,698.83 458,272,964.04 516,433,717.74 449,999,555.30
electronic products
Cloud and storage
456,149,216.68 269,492,190.63 476,467,425.39 319,730,739.42
products
Others 44,717,827.40 27,690,845.18 39,216,250.69 18,166,118.38
Total 19,672,244,261.31 17,928,390,978.31 21,940,574,129.19 19,815,647,848.13
(3) Other operating income and other operating costs:
Unit: RMB
Amount incurred in the current year Amount incurred in the prior year
ITEM Other operating Other operating Other operating Other operating
income costs income costs
Scrap income 4,468,634.64 - 3,529,375.67 -
Others 323,125.74 116,571.67 669,275.86 437,487.30
Total 4,791,760.38 116,571.67 4,198,651.53 437,487.30
6. Investment income
Details of investment income
Unit: RMB
Amount incurred in Amount incurred in
ITEM
the current year the prior year
Cash dividends of subsidiaries 300,000,000.00 200,000,000.00
Investment income (loss) on disposal of held-for-trading
25,724,208.11 (16,431,372.22)
financial assets
Total 325,724,208.11 183,568,627.78
275 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XVI) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued
7. Supplementary information to the cash flow statement
Unit: RMB
Supplementary Information 2023 2022
1. Reconciliation of net profit to cash flow from operating
activities:
Net profit 1,047,209,221.43 1,240,761,622.97
Add: Impairment losses of assets (762,694.28) (5,135,027.84)
Impairment losses of credit (3,685,934.28) 3,658,149.19
Depreciation of fixed assets 331,922,920.67 325,404,686.37
Depreciation of right-of-use assets 12,886,975.02 13,245,317.94
Amortization of intangible assets 1,420,371.19 1,671,457.54
Amortisation of long-term prepaid expenses 13,092,303.33 15,118,605.25
Amortization of deferred income (8,889,150.58) (7,777,540.47)
Losses (gains) on disposal of fixed assets, intangible assets
(3,442,727.96) 3,869,844.98
and other long-term assets
Losses (gains) on changes in fair values 13,609,149.40 (12,430,908.18)
Financial expenses 229,400,529.75 88,163,427.23
Investment income (325,724,208.11) (183,568,627.78)
Share-based payments settled by equity 3,436,886.04 4,639,049.25
Decrease (increase) in deferred tax assets 6,167,068.06 (18,278,697.09)
Decrease (increase) in inventories 744,059,042.87 (469,566,071.14)
Decrease in receivables from operating activities 23,253,741.74 1,136,828,855.87
Increase (decrease) in payables from operating activities 235,110,740.64 (603,868,897.93)
Net Cash Flow from Operating Activities 2,319,064,234.93 1,532,735,246.16
2. Significant investing and financing activities that do not
involve cash receipts and payments:
Acquisition of long-term assets with debt 36,089,136.32 80,278,018.89
3. Net changes in cash and cash equivalents:
Cash at the end of the year 3,166,517,228.25 2,382,458,769.33
Less: Cash at the beginning of the year 2,382,458,769.33 2,490,051,993.72
Add: Closing balance of cash equivalents - -
Less: Opening balance of cash equivalents - -
Net increase (decrease) in cash and cash equivalents 784,058,458.92 (107,593,224.39)
8. Related party relationship and transactions
(1) Related parties of the Company
The details of the subsidiaries of the Company are set out in Note (VII). 1. The details of the associates and joint
ventures of the Company are set out in Note (VII). 2. The details of other related parties are set out in Note (XI).
4.
276 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XVI) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS- continued
8. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
(2) Related party transactions
(2.1) Sales and purchase of goods, provision and receipt of services
Purchase of goods/receipt of services
Unit: RMB
Details of related Amount incurred in the Amount incurred in the prior
Related party
party transaction current year year
Purchase of
Universal Global Technology Co., Limited 487,984,241.65 564,271,324.02
materials
Purchase of
ASE Electronics Inc. 6,397,414.33 6,991,678.67
materials
Universal Global Technology (Kunshan) Purchase of
2,356,645.35 756,062.09
Co., Ltd. materials
Universal Scientific Industrial Purchase of
2,084,595.41 2,219,919.09
De México S.A. De C.V. materials
Purchase of
ASE Inc. 579,589.26 -
materials
Purchase of
Universal Global Industrial Co., Ltd. 556,170.63 283,743.20
materials
Universal Global Technology (Shanghai) Purchase of
64,831.28 691,999.45
Co., Ltd. materials
Universal Global Technology (Huizhou) Purchase of
21,872.33 857.24
Co., Ltd. materials
Purchase of
USI Electronics (Shenzhen) Co., Ltd. - 25,235.86
materials
Taitech Precision Electronic (Kunshan) Purchase of
- 18,750.00
Co., Ltd. materials
Universal Scientific Industrial Purchase of
- 24.75
Vietnam Company Limited materials
Total 500,045,360.24 575,259,594.37
Universal Global Scientific Industrial Co.,
Test service fee 44,775,763.39 39,094,987.33
Ltd.
Universal Global Scientific Industrial Co.,
Commissions 44,775,763.39 34,805,569.75
Ltd.
ASE (Shanghai) Inc. Receipt of services 22,324,382.22 25,186,628.73
Universal Global Technology Co., Limited Receipt of services 19,874,185.00 16,119,880.00
Universal Global Technology (Shanghai) Receipt of services
11,795,403.60 17,945,841.10
Co., Ltd.
USI Science and Technology (Shenzhen) Receipt of services
4,339,622.69 3,867,924.58
Co., Ltd.
ASE Corporate Services (Shanghai) Receipt of services
3,193,692.63 -
Limited
SHANGHAI DINGXU PROPERTY Receipt of services
2,025,901.89 1,899,206.09
MANAGEMENT CO., LTD.
Asteelflash Suzhou Co., Ltd. Receipt of services 1,316,749.53 173,673.77
USI Japan Co.,Ltd. Receipt of services 20,439.18 85,853.67
ASE Inc. Receipt of services - 990.42
Total 154,441,903.52 139,180,555.44
The above transactions are executed at the prices agreed on by both parties.
277 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XVI) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS- continued
8. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
(2) Related party transactions - continued
(2.1) Sales and purchase of goods, provision and receipt of services - continued
Sales of goods/provision of services
Unit: RMB
Details of related Amount incurred in the Amount incurred in the
Related party
party transaction current year prior year
Universal Global Industrial Co., Ltd. Sales of goods 1,037,257,474.99 652,865,047.32
Universal Global Technology Sales of goods
86,461,083.52 117,936,343.91
(Shanghai) Co., Ltd.
Universal Scientific Industrial Sales of goods
1,295,848.43 -
Vietnam Company Limited
Universal Global Technology Sales of goods
846,713.73 1,195,481.14
(Kunshan) Co., Ltd.
Universal Scientific Industrial De Sales of goods
559,747.07 385,896.66
México S.A. De C.V.
Universal Global Technology Sales of goods
312,956.68 61,130.81
(Huizhou) Co., Ltd.
FINANCIRE AFG S.A.S. Sales of goods 184,746.74 -
ASE Inc. Sales of goods 96,752.87 -
Universal Global Technology Co., Sales of goods
13,291.12 486,427.96
Limited
USI Electronics (Shenzhen) Co., Ltd. Sales of goods - 96,137.78
Total 1,127,028,615.15 773,026,465.58
Universal Global Technology Provision of
10,385,172.24 10,188,814.82
(Kunshan) Co., Ltd. services
Provision of
FINANCIRE AFG S.A.S. 3,564,683.59 3,304,239.50
services
Provision of
ISE labs, China. Ltd. 959,723.55 1,048,388.07
services
Universal Scientific Industrial Provision of
348,144.77 -
Vietnam Company Limited services
Universal Global Technology Provision of
301,499.81 431,331.00
(Shanghai) Co., Ltd. services
Universal Scientific Industrial De Provision of
215,475.53 14,381.27
México S.A. De C.V. services
Provision of
Asteelflash Suzhou Co., Ltd. - 10,645.96
services
Universal Global Scientific Industrial Provision of
- 10,631.75
Co., Ltd. services
Total 15,774,699.49 15,008,432.37
The above transactions are executed at the prices agreed on by both parties.
278 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XVI) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS- continued
8. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
(2) Related party transactions - continued
(2.2) Leases with related parties
Leases where the Company is the lessor
Unit: RMB
Lease income Lease income
Type of leased
Name of lessee recognized in the recognized in the
assets
current year prior year
Machinery and
Wuxi Tongzhi Microelectronics Co.,Ltd. 19,359.06 33,186.96
equipment
Universal Global Technology (Shanghai) Machinery and
- 165,236.06
Co., Ltd. equipment
Total 19,359.06 198,423.02
The above transactions are executed at the prices agreed on by both parties.
Leases where the Company is the lessee
Unit: RMB
Type of leased Right-of-use assets Lease interest for the
Name of lessor
assets leased in this yearyear
Leasing of
ASE Assembly & Test (Shanghai) Limited - 2,392,528.09
business premises
The above transactions are executed at the prices agreed on by both parties.
Unit: RMB
Right-of-use
Type of leased Lease interest for
Name of lessor assets leased in
assets prior year
prior year
Leasing of
ASE Assembly & Test (Shanghai) Limited - 3,080,155.98
business premises
The above transactions are executed at the prices agreed on by both parties.
279 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XVI) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS- continued
8. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
(2) Related party transactions - continued
(2.3) Borrowings/loans with related parties
Unit: RMB
Amount at the end of
Amount incurred in the current year
the year
Related party Annual interest rate Amount
Amount lent collected Amounts
(Note)
Lent to - Cash pool trading (Note)
One month Term
Universal Scientific Industrial Vietnam
SOFR +40 basis - 313,407,000.00 -
Company Limited
points
One month Term
Universal Scientific Industrial De México
SOFR +40 basis 358,524,000.00 284,154,000.00 283,308,000.00
S.A. De C.V.
points
One month Term
Universal Global Technology Co.,
SOFR +40 basis 359,252,000.00 5,117,000.00 354,135,000.00
Limited
points
Universal Global Technology (Huizhou)
2.40% 100,000,000.00 550,000,000.00 50,000,000.00
Co., Ltd.
Note: The amount repaid from cash pool trading for the year include exchange differences at the period end.
Unit: RMB
Amount at the end of
Amount incurred in the prior year
the prior year
Related party Annual interest rate Amount
Amount lent collected Amounts
(Note)
Lent to - Cash pool trading (Note)
Universal Scientific Industrial Vietnam One month Libor
406,815,000.00 526,955,600.00 313,407,000.00
Company Limited +40 basis points
Universal Scientific Industrial De México One month Libor
208,404,000.00 190,737,000.00 208,938,000.00
S.A. De C.V. +40 basis points
Universal Global Technology (Huizhou)
2.40% 500,000,000.00 - 500,000,000.00
Co., Ltd.
Note: The amount repaid from cash pool trading for the year include exchange differences at the period end.
The interest income for 2023 is RMB 28,239,145.20 (2022: RMB 15,133,142.87), and the interest not received
at the end of the year is RMB 760,833.33 (31 December 2022: RMB 2,224,305.55).
Note: The Company entered into a cash pool entrustment loan agreement with the bank for entrusted loans in
which the Company is the leading party and Universal Global Technology (Shanghai) Co., Ltd., USI
Electronics (Shenzhen) Co., Ltd., Universal Global Technology Co., Limited, Universal Global
Technology (Kunshan) Co., Ltd., Universal Global Technology (Huizhou) Co., Ltd., Universal Scientific
Industrial Vietnam Company Limited and Universal Scientific Industrial De México S.A. De C.V. are
participants.
280 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XVI) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS- continued
8. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
(2) Related party transactions - continued
(2.4) Assets transfer with related parties
Unit: RMB
Details of related Amount incurred in the Amount incurred in the
Related party
party transaction current year prior year
Universal Global Technology Purchase of fixed
16,418,450.70 1,260,282.87
(Shanghai) Co., Ltd. assets
Universal Global Technology (Huizhou) Purchase of fixed
6,987.16 -
Co., Ltd. assets
Universal Global Technology (Kunshan) Purchase of fixed
- 18,762.80
Co., Ltd. assets
Total 16,425,437.86 1,279,045.67
Universal Scientific Industrial Sales of fixed
28,061,445.85 8,243,515.42
Vietnam Company Limited assets
Universal Global Scientific Sales of fixed
4,435,846.69 18,160,515.88
Industrial Co., Ltd. (Note) assets
Universal Global Technology Sales of fixed
2,485,862.82 34,547,905.39
(Shanghai) Co., Ltd. assets
Sales of fixed
ISE labs, China. Ltd. - 46,507,299.26
assets
Total 34,983,155.36 107,459,235.95
Note: Purchase fixed assets on behalf of Universal Global Industrial Co., Limited.
The above transactions are executed at the prices agreed on by both parties.
(2.5) Interest expenses with related parties
Unit: RMB
Details of related Amount incurred in the Amount incurred in the
Related party
party transaction current year prior year
Interest expenses on
USI Enterprise Limited 46,206,386.54 89,992,084.14
convertible bonds
Interest expenses on
ASE (Shanghai) Inc. - 807,565.60
convertible bonds
Total 46,206,386.54 90,799,649.74
(2.6) Compensation for key management personnel
Unit: RMB
Amount incurred in Amount incurred in
Item name
the current year the prior year
Compensation for key management personnel 28,238,630.96 33,842,802.87
281 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XVI) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS- continued
8. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
(2) Related party transactions - continued
(2.7) Others
The Company offers stock option incentive plan for relevant personnel of USI Electronics (Shenzhen) Co., Ltd.,
Universal Global Technology (Kunshan) Co., Ltd., Universal Global Technology (Shanghai) Co., Ltd., Universal
Global Scientific Industrial Co., Ltd., Universal Global Technology (Huizhou) Co., Ltd. and Universal Global
Technology Co., Limited. See Note (XVI) 4 for details.
(3) Amounts due from / to related parties
(3.1) Amounts due from related parties
Unit: RMB
31/12/2023 31/12/2022
Item name Related party
Book value Book value
Accounts receivable Universal Global Industrial Co., Ltd. 397,763,118.99 218,657,223.78
Accounts receivable Universal Global Technology (Shanghai)
10,412,340.68 39,773,753.37
Co., Ltd.
Accounts receivable Universal Scientific Industrial Vietnam
1,157,559.23 -
Company Limited
Accounts receivable Universal Global Technology (Kunshan)
353,956.15 559,780.66
Co., Ltd.
Accounts receivable Universal Scientific Industrial
294,391.83 244,884.82
De México S.A. De C.V.
Accounts receivable Asteelflash Suzhou Co., Ltd. 117,167.51 12,029.93
Accounts receivable ASE Inc. 78,150.65 -
Accounts receivable Universal Global Technology (Huizhou)
18,639.90 19,324.78
Co., Ltd.
Accounts receivable Universal Global Scientific Industrial Co.,
- 56,152,778.81
Ltd.
Accounts receivable Universal Global Technology Co., Limited - 484,931.23
Total 410,195,324.94 315,904,707.38
Unit: RMB
31/12/2023 31/12/2022
Item name Related party
Book value Book value
Universal Global Technology Co., Limited
Other receivables 354,135,000.00 -
(Note)
Universal Scientific Industrial
Other receivables 283,308,000.00 208,938,000.00
De México S.A. De C.V. (Note)
Universal Global Technology (Huizhou)
Other receivables 50,760,833.33 502,224,305.55
Co., Ltd. (Note)
Universal Scientific Industrial
Other receivables 27,650,228.43 313,407,000.00
Vietnam Company Limited
Other receivables FINANCIRE AFG S.A.S. 1,058,863.66 964,123.43
Other receivables ISE labs, China. Ltd. 141,696.00 217,389.11
Universal Global Technology (Kunshan)
Other receivables 10,164.01 -
Co., Ltd.
Universal Global Technology (Shanghai)
Other receivables 2,410.64 2,749,908.77
Co., Ltd.
Other receivables Universal Global Industrial Co., Ltd. - 18,261,039.14
Total 717,067,196.07 1,046,761,766.00
282 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XVI) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS- continued
8. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
(3) Amounts due from / to related parties - continued
(3.1) Amounts due from related parties - continued
Note: The Company entered into a cash pool entrustment loan agreement with the bank for entrusted loans in
which the Company is the leading party and Universal Global Technology (Shanghai) Co., Ltd., USI
Electronics (Shenzhen) Co., Ltd., Universal Global Technology Co., Limited, Universal Global
Technology (Kunshan) Co., Ltd., Universal Global Technology (Huizhou) Co., Ltd., Universal Scientific
Industrial Vietnam Company Limited and Universal Scientific Industrial De México S.A. De C.V. are
participants.
Unit: RMB
31/12/2023 31/12/2022
Item name Related party
Book value Book value
Other non-current
ASE Assembly & Test (Shanghai) Limited 401,473.74 -
assets
(3.2) Amounts due to related parties
Unit: RMB
Item name Related party 31/12/2023 31/12/2022
Accounts payable Universal Global Technology Co., Limited 197,113,366.75 159,659,364.67
Accounts payable Universal Global Scientific Industrial Co.,
7,154,263.62 192,671.97
Ltd.
Accounts payable Universal Global Technology (Kunshan)
1,706,236.34 183,493.39
Co., Ltd.
Accounts payable ASE Electronics Inc. 1,166,743.89 1,015,416.04
Accounts payable Universal Scientific Industrial
916,294.01 26,900.92
De México S.A. De C.V.
Accounts payable ASE Inc. 574,406.96 -
Accounts payable Universal Global Industrial Co., Ltd. 304,137.66 193,507.72
Accounts payable Universal Global Technology (Huizhou) Co.,
7,749.50 310.34
Ltd.
Accounts payable Universal Global Technology (Shanghai) Co.,
- 4,714,248.90
Ltd.
Accounts payable USI Science and Technology (Shenzhen) Co.,
- 2,210,000.00
Ltd.
Accounts payable FINANCIRE AFG S.A.S. - 184,094.20
Accounts payable USI Electronics (Shenzhen) Co., Ltd. - 61.46
Total 208,943,198.73 168,380,069.61
283 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XVI) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS- continued
8. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
(3) Amounts due from / to related parties - continued
(3.2) Amounts due to related parties - continued
Unit: RMB
Item name Related party 31/12/2023 31/12/2022
Other payables Universal Global Scientific Industrial Co.,
7,154,263.61 -
Ltd.
Other payables Universal Global Technology (Shanghai)
3,609,020.56 -
Co., Ltd.
Other payables ASE Corporate Services (Shanghai) Limited 3,193,692.63 -
Other payables Universal Global Technology Co., Limited 1,664,434.50 -
Other payables ASE (Shanghai) Inc. 534,976.11 3,363,353.48
Other payables Asteelflash Suzhou Co., Ltd. 342,750.25 -
Other payables SHANGHAI DINGXU PROPERTY
285,740.90 160,708.88
MANAGEMENT CO., LTD.
Other payables USI Science and Technology (Shenzhen)
200,000.00 -
Co., Ltd.
Other payables USI Enterprise Limited - 2,398,445.06
Other payables ASE Inc. - 987.37
Total 16,984,878.56 5,923,494.79
Unit: RMB
Item name Related party 31/12/2023 31/12/2022
ASE Assembly & Test (Shanghai)
Lease liabilities 44,489,167.71 57,933,008.48
Limited
Unit: RMB
Item name Related party 31/12/2023 31/12/2022
Bonds payable USI Enterprise Limited 967,638,439.87 1,364,243,289.23
284 / 285
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(XVII) Supplementary Information
1. Breakdown of non-recurring profit or loss for the current period
Unit: RMB
ITEM Amounts Description
Profit or loss on disposal of non-current assets, including
See Notes (V), 55, 59
those charged off for which provision for impairment of 5,463,221.02
and 61 for details
assets has been made
Government grants recognized in profit or loss (other than
government grants which are closely related to the
Company's business, in line with the national See Notes (V), 54 for
71,813,784.39
regulations, enjoyed under established standards and details
have a continuous impact on the Company's profit or
loss)
Profit or loss on changes in the fair value of financial
assets and financial liabilities held by non-financial
enterprises and profit or loss on disposal of financial See Notes (V), 55 and 56
106,839,747.09
assets and financial liabilities, other than those used in for details
the effective hedging activities relating to normal
operating business
One-time costs incurred by enterprises due to the fact that
the relevant business activities are no longer sustainable, (3,701,028.03)
such as expenses for relocating employees
Other non-operating income or expenses other than the See Notes (V), 60 and 61
12,916,711.91
above for details
Less: Income tax effects 24,950,729.58
Effects attributable to minority interests (386,528.97)
Total 168,768,235.77
2. Return on net assets and earnings per share ("EPS")
The return on net assets and EPS have been prepared by Universal Scientific Industrial (Shanghai) Co., Ltd. in
accordance with Information Disclosure and Presentation Rules for Companies Making Public Offering of
Securities No. 9 - Calculation and Disclosure of Return on Net Assets and Earnings per Share (Revised 2010)
issued by China Securities Regulatory Commission.
Unit: RMB
Weighted average EPS
Profit for the reporting year return on net assets
Basic EPS Diluted EPS
(%)
Net profit attributable to ordinary shareholders of the
12.02% 0.89 0.87
Company
Net profit after deduction of non-recurring profits or losses
10.98% 0.81 0.80
attributable to ordinary shareholders of the Company
285 / 285
