2021 Annual Report
Stock Code: 601231 Abbreviated Name: USI
Convertible Bond Code: 113045 Abbreviated Name: USI Convertible Bond
Universal Scientific Industrial (Shanghai) Co., Ltd.
2021 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.
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2021 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 attend the board meeting.
III. Deloitte Touche Tohmatsu Certified Public Accountants LLP has issued a standard and
unqualified auditor's report for the Company.
IV. Jeffrey Chen, person in charge of the Company, Tan-Yang Liu, person in charge of accounting,
and Chern Yuh-Huah, 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 passed by the
Board
Regarding its profit distribution plan for 2021, USI is going to distribute a cash dividend of RMB 2.60
(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 public reserve into share capital, and all the remaining undistributed
profits shall be carried forward for distribution in the following years. If the total share capital of the
Company and the number of shares in the special buy-back account of the Company change before the
record date for implementing the plan, the cash dividend per share to be distributed shall remain
unchanged and the total amount of distribution shall be adjusted accordingly.
The Company's Profit Distribution Plan for the 2021 was deliberated and approved at the 15th meeting
of the fifth session of the Board of Directors of the Company, and it still needs to be deliberated at the
Company's 2021 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 shareholders and their affiliates for non-
operational purposes?
No
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. Other information
□ Applicable √Not Applicable
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2021 Annual Report
Contents
Section I Definitions ................................................................................................................................... 4
Section II Company Profile and Key Financial Indicators ......................................................................... 6
Section III Management Discussion and Analysis .................................................................................... 11
Section IV Corporate Governance ............................................................................................................ 41
Section V Environmental and Social Responsibility ................................................................................ 64
Section VI Major Events ........................................................................................................................... 74
Section VII Changes in Share Capital and Information of Shareholders ................................................ 102
Section VIII Related Information of Preferred Stocks ............................................................................ 110
Section IX Related Information of Bonds............................................................................................... 111
Section X Financial Statements .............................................................................................................. 113
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 sealed by certified
reference public accountants
Original copies of all documents and announcements of the Company publicly disclosed
in newspapers designated by CSRC during the reporting period
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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, USI, Universal Scientific Industrial (Shanghai) Co., Ltd.
or the listed company
SSE Shanghai Stock Exchange
USI Enterprise Limited USI Enterprise Limited, the controlling shareholder of the Company,
registered in Hong Kong
Universal Scientific Industrial Universal Scientific Industrial Co., Ltd., a company listed on the Taiwan
Co., Ltd. Stock Exchange under the stock code 2350, which terminated its listing on
June 17, 2010
ASE Technology Holding Co., ASE Technology Holding Co., Ltd., a company listed on the Taiwan Stock
Ltd. Exchange under the stock code 3711
ASE Inc. Advanced Semiconductor Engineering, Inc., formerly listed on the Taiwan
Stock Exchange under the stock code 2311 and delisted in 2018.
ASE (Shanghai) Inc. ASE (Shanghai) Inc., a subsidiary of ASE Inc. in which it holds 100% shares
Universal Global Technology Universal Global Technology Co., Limited, a subsidiary of the Company in
Co., Limited which the Company holds 100% shares
Universal Global Technology Universal Global Technology (Shanghai) Co., Ltd., a subsidiary of the
(Shanghai) Co., Ltd., Jinqiao Company in which the Company holds 100% shares
Facility
USI Electronics (Shenzhen) USI Electronics (Shenzhen) Co., Ltd., a subsidiary of the Company in which
Co., Ltd., Shenzhen Facility the Company holds 100% shares
Universal Global Technology Universal Global Technology (Kunshan) Co., Ltd., a wholly-owned
(Kunshan) Co., Ltd., Kunshan subsidiary of the Company
Facility
Universal Global Electronics Universal Global Electronics Co., Ltd., a subsidiary of the Company in
Co., Ltd. which the Company holds 100% shares
Universal Global Technology Universal Global Technology (Huizhou) Co., Ltd., a subsidiary of the
(Huizhou) Co., Ltd., Huizhou Company in which the Company holds 100% shares
Facility
Universal Global Scientific Universal Global Scientific Industrial Co., Ltd., registered in Taiwan, a
Industrial Co., Ltd. subsidiary of the Company in which the Company holds 100% shares
USI Vietnam, Vietnam Facility Universal Scientific Industrial Vietnam Company Limited, a subsidiary of
the Company in which the Company holds 100% shares
FAFG Financiere AFG, a simplified joint stock company established and validly
existing under the laws of France and a subsidiary of the Company in which
the Company holds 100% shares
ASDI ASDI Assistance Direction, a simplified joint stock company established and
validly existing under the laws of France, controlled by Gilles Baruk
Benhamou, a director of the Company
AFG Asteelflash Group, a simplified joint stock company established and validly
existing under the Laws of France. It is a subsidiary of FAFG in which
FAFG holds 100% shares. Since January 1, 2022, it has been merged into its
parent company FAFG.
Asteelflash Suzhou Asteelflash (Suzhou) Co., Ltd., a subsidiary of FAFG in which FAFG holds
100% shares
USI Poland, Poland Factory Formerly known as Chung Hong Electronics Poland SP.Z. O.O; the
Company completed the acquisition of 100% of its equity on June 22, 2020,
and it was renamed Universal Scientific Industrial Poland Sp.z o.o.
Memtech Memtech International Ltd., which was listed on the Singapore Stock
Exchange in 2004, and was delisted on August 22, 2019. The Company
indirectly holds 42.23% of its equity.
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EMS Electronic Manufacturing Services, the services provided by manufacturers
for electronic brand owners, such as manufacturing, procurement, partial
design and logistics
ODM Original Design and Manufacturer
DMS Design and Manufacturing Services
D(MS)2 An acronym for DMS combined with Miniaturization and Solution
SMT 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 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.
PCB Printed Circuit Board, known as the “cornerstone” of electronic products. A
large number of electronic parts used in electronic 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.
SiP System in Package; multiple functional wafers, including processors and
memory wafers, are integrated into a package 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
The reporting period or current January 1, 2021 to December 31, 2021
period
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Section II Company Profile and Key Financial Indicators
I. Company Profile
Name in Chinese 环旭电子股份有限公司
Abbreviation in Chinese 环旭电子
Name in English Universal Scientific Industrial (Shanghai) Co., Ltd.
Abbreviation in English USISH
Legal representative Jeffrey Chen
II. Contact Persons and Contact Information
Secretary of the Board of Directors Securities affairs representative
Name Jinpeng Shi Lili Liu
Address F/5, Building B, 169 Shengxia Road, F/5, Building B, 169 Shengxia Road,
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
Registered address 1558 Zhangdong Road, Integrated Circuit Industrial Zone,
Zhangjiang Hi-tech Park, Shanghai
Change record of registered address None
Office address F/5, Building B, 169 Shengxia Road, Pudong New Area,
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 Shanghai Securities News, China Securities Journal,
which the Company discloses its annual Securities Times, and Securities Daily
report
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. Stock Profile
Stock profile
Stock class Listed on Stock Stock Stock abbreviation
abbreviation code before change
A shares Shanghai Stock USI 601231 None
Exchange
Convertible corporate bonds that can Shanghai Stock 113045 None
be converted into A shares of the Exchange USI Convertible
Company Bond
VI. Other Relevant Information
Accounting firm hired Name Deloitte Touche Tohmatsu Certified Public
by the Company (within Accountants LLP
China) Office address F/30, 222 East Yan’an Road, Shanghai
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Names of accountants Yuan Shouqing, and Hu Ke
who give their signatures
Name Haitong Securities Co., LTd.
Sponsor organization Office address 689 Guangdong Road, Shanghai
that performs the duty of Names of sponsor Zhang Zihui, and Yang Yang
continuous supervision representatives who give
during the reporting their signatures
period Period of continuous April 2, 2021 to December 31, 2022
supervision
Name Zhong De Securities Company Limited
Office address F/22, Deutsche Bank Tower, China Central
Financial consultant Place, 81 Jianguo Avenue, Chaoyang District,
who performs the duty Beijing, China
of continuous Names of financial Wang Wei, and Guan Renhao
supervision during the consultant representatives
reporting period who give their signatures
Period of continuous December 2020 to December 2021
supervision
VII. Key Accounting Data and Financial Indicators in the Past Three Years
(I) Key accounting data
Unit: yuan Currency: RMB
Key 2020
YoY
accounting 2021 2019
(%)
data Before adjustment After adjustment
Operating
55,299,654,770.21 47,696,228,222.53 47,696,228,222.53 15.94 37,204,188,424.22
revenue
Net profits
attributable to
shareholders of 1,857,968,074.82 1,739,435,448.10 1,739,435,448.10 6.81 1,262,103,937.04
the listed
company
Net profits
attributable to
shareholders of
the listed
1,695,083,855.46 1,615,438,890.95 1,615,438,890.95 4.93 1,044,674,761.73
company net of
non-recurring
gains/losses
Net cash flows
-
from operating -1,102,446,978.90 1,436,523,674.10 1,436,523,674.10 2,425,772,253.61
176.74
activities
End of 2020 YoY
End of 2021 End of 2019
(%)
Before adjustment After adjustment
Net assets
attributable to
shareholders of 13,081,960,207.42 12,049,820,179.95 12,049,820,179.95 8.57 10,275,615,667.91
the listed
company
Total assets 35,856,733,503.81 31,070,402,620.02 30,938,495,875.49 15.40 21,911,851,349.31
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(II) Key financial indicators
2020
Key financial indicators 2021 Before After YoY (%) 2019
adjustment adjustment
Basic EPS (yuan/share) 0.85 0.80 0.80 6.25 0.58
Diluted EPS
0.83 0.80 0.80 3.75 0.58
(yuan/share)
Basic EPS net of non-
recurring gains/losses
0.77 0.74 0.74 4.05 0.48
(yuan/share)
Weighted average ROE
14.83 15.88 15.88 Down 1.05 pct. 12.93
(%)
Weighted average ROE
net of non-recurring 13.53 14.75 14.75 Down 1.22 pct. 10.70
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
The net cash flow from operating activities in 2021 decreased by 176.74% mainly due to the increase in
inventories in response to customer orders in the current period.
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 2021
Unit: yuan Currency: RMB
Q4
Q1 Q2 Q3
(October -
(January - March) (April - June) (July - September)
December)
Revenue 10,934,611,963.62 11,338,662,842.90 14,244,559,091.53 18,781,820,872.16
Net profits
attributable to
271,906,070.22 279,133,337.38 571,759,229.79 735,169,437.43
shareholders of the
listed company
Net profits
attributable to 232,201,444.36 230,612,730.76 541,472,044.59 690,797,635.75
shareholders of the
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listed company net
of non-recurring
gains/losses
Net cash flows
from operating -217,236,055.57 -385,456,159.36 -1,241,451,416.67 741,696,652.70
activities
Explanation of differences between quarterly data and those disclosed in regular reports
□Applicable √Not Applicable
X. Items and Amounts of Non-Recurring Gains/Losses
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
Items of non-recurring Amount in Notes (if Amount in Amount in
gains/losses 2021 applicable) 2020 2019
See Note (V),
Gains/losses from disposal of 56 and 58
-9,115,989.64 1,172,336.59 1,318,458.06
non-current assets (V) 56, 58 for
details
Government grants included in
current gains/losses, excluding
See Note (V),
those closely related to operating
52 and 53
activities of the Company, or 50,678,106.85 76,779,477.12 52,011,788.56
(V) 52, 53 for
regular government grants in a
details
certain quota in accordance with
state policies
Gains/losses on changes in fair
value arising from holding
trading financial assets,
derivative financial assets,
trading financial liabilities and
derivative financial liabilities,
and investment income from
See Note (V), 6
disposal of trading financial 134,150,704.71 57,415,602.04 175,214,439.86
(V) 6 for details
assets, derivative financial assets,
trading financial liabilities,
derivative financial liabilities and
other debt investments, except the
effective hedging business related
to the normal operation of the
Company,
Write-back of receivables and See Note (V),
provisions for contract assets 57 and 58
2,836,069.00 - -
impairment subject to separate (V) 56, 58 for
impairment tests details
See Note (V),
Other non-operating income or 57 and 58
18,576,128.64 11,899,780.26 11,116,543.38
expenditures (V) 57, 58 for
details
Less: Enterprise income tax
34,238,090.20 22,910,526.54 22,248,382.17
affected
Non-controlling interest affected
2,710.00 360,112.32 -16,327.62
(after tax)
Total 162,884,219.36 123,996,557.15 217,429,175.31
Explanation on defining a non-recurring gain/loss item listed in Interpretation Pronouncement on
Information Disclosure Criteria for Public Companies No. 1 - Non-Recurring Gains/Losses as a
recurring gain/loss item
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□Applicable √Not Applicable
XI. Items Measured at Fair Value
□Applicable √Not Applicable
Unit: yuan Currency: RMB
Change in the Impact on profit of
Item Opening balance Ending balance
current period the current period
Financial assets held
182,315,272.70 96,480,087.56 -85,835,185.14 31,292,952.87
for trading
Other equity
41,351,831.65 75,957,194.28 34,605,362.63
instruments
Other non-current
152,935,434.70 236,978,820.68 84,043,385.98 15,032,169.92
financial assets
Financial liabilities
-976,413.16 -18,402,480.68 -17,426,067.52 -1,736,900.19
held for trading
Total 375,626,125.89 391,013,621.84 15,387,495.95 44,588,222.60
XII. Other information
□Applicable √Not Applicable
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2021 Annual Report
Section III Management Discussion and Analysis
I. Discussion and Analysis of Operations
In 2021, as the Company consolidated financial statements with FAFG and its EMS/ODM business
accelerated, the Company realized annual operaing revenue of RMB 55.30 billion, an increase of 15.94%
over RMB 47.70 billion in 2020, with revenue of all categories increasing year on year (YoY).
The Company achieved an operating profit of RMB 2.13 billion in 2021, an increase of 8.67% over RMB
1.96 billion in 2020. The total profit was 2.14 billion yuan, an increase of 8.38% compared with RMB 1.97
billion in 2020. The net profit attributable to shareholders of the listed company was RMB 1.858 billion, an
increase of 6.81% over RMB 1.74 billion in 2020. The net profit attributable to shareholders of the listed
company net of non-recurring gains/losses was RMB 1.70 billion, an increase of RMB 80 million or 4.93%
over RMB 1.62 billion in 2020.
II. Industry of the Company during the Reporting Period
(I) Basic situation of the industry
The EMS industry mainly provides overall supply chain solutions such as design, engineering
development, raw material procurement, manufacturing, logistics, testing and after-sales service for
various electronic products and equipment.
The rapid development of downstream industries such as tablet computers, smart TVs, smart wearable
devices, AR/VR and smart home has driven the healthy development of precision electronic components,
smart acoustic machines and smart hardware industries.
The rise of China’s manufacturing industry and the continuous and rapid expansion of the electronic
consumer market have driven the sustainable development of domestic electronic manufacturing
outsourcing industry. After more than 20 years of investment by world-leading EMS providers in China,
China has become the most active and competitive region in the global EMS industry.
(II) Industry characteristics and development trends
1. The industry has a large overall scale, with high industry concentration and fierce
competition
In 2021, the industrial scale of the global EMS industry has exceeded USD 640 billion, with high
industry concentration. The top 10 manufacturers in the world accounted for more than 70% of the total
revenue. Leading enterprises in the industry have accumulated rich customer resources and industry
experience, with large assets and revenues, and maintained a relatively stable leading position. Due to
the accelerated upgrading of electronic products and equipment industry, shortened product life cycle
and high technical transparency, the industry is experiencing increasingly fierce competition in sub-
sectors in the industry. Enterprises in the industry need to actively expand new products and customer
incremental demand, improve process, intelligent manufacturing and new product research and
development, and increase product added value.
2. 5G drives consumer electronics technology innovation and product upgrade
5G has ushered in the era of “Internet of Everything”. New technologies and products such as cloud
computing, AI, Internet of Things, smart wearables and AR/VR have been accelerated and promoted,
and the application depth and breadth of smart interactive products such as smart phones, tablet
computers, smart speakers, wearable devices and automotive electronics have been continuously
expanded. Innovative products of consumer electronics are the demand increment most concerned by the
EMS industry.
3. The demand for electronic products related to automobiles and cloud infrastructure has
grown rapidly
In the global context of “carbon neutrality”, the sales volume of new energy electric vehicles has greatly
increased. The proportion of electric vehicles in the global sales of new vehicles will continue to grow
rapidly. The demand for automotive electronics related to electric vehicles has surged, the upgrading of
technologies such as intelligent cockpit and intelligent navigation has accelerated, and the proportion of
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manufacturing service outsourcing has increased. In addition, 5G applications have driven broadband
infrastructure, and the continuously growing cloud business scale of technology giants has driven the
heavy investment in cloud infrastructure, and the demand for related electronic products such as servers,
switches and storage has grown rapidly.
(III) Periodic, regional and seasonal characteristics of the industry
1. Periodicity of industry development
The development of the EMS industry has a great cyclical relationship with downstream industries, and
the electronic products industry is closely related to the macroeconomic situation. When the economy is
booming, the market demand for electronic products is large and the growth rate is high, which drives
the production and sales of the EMS industry; when the economy is in a downturn, the purchasing power
of consumers and enterprises declines, the demand for products decreases, and the production and sales
volume of industries decreases.
2. Regional characteristics of industry
The global EMS industry rose in Europe and America, and then gradually shifted to South America,
Southeast Asia and Taiwan of China. At present, China, South Asia, Eastern Europe, South America and
other regions have become the fastest growing areas of EMS industry due to their advantages of low
production costs.
At present, the global electronic intelligent manufacturing service enterprises are mainly concentrated in
Asian countries or regions such as China, India and Vietnam. Enterprises in the industry sell their main
products to manufacturing and assembly enterprises or directly to downstream brand owners, and finally
the products will be sold all over the world.
3. Seasonal characteristics of industry operation
The electronic intelligent manufacturing service industry has certain seasonal characteristics in terms of
orders and revenues. The first and second quarters of each year are traditionally off-seasons, the third
quarter is the peak sales season, and the fourth quarter is the peak shipment season. Considering the
frequent release of new consumer electronics by brand owners in the second half of a year and the
influence of Spring Festival in the first half of a year, the sales revenue of enterprises in this industry in
the second half of each year is generally higher than that in the first half of each year.
(IV) Competitive position of the Company in the industry
The Company is a world-renowned manufacturer in the EMS industry. In 2020, USI ranked 12th among
global EMS providers, 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 D(MS)2 manufacturer, by providing brand customers with more value-added design,
manufacturing and related services, USI participates more in developing industry-wide application
solutions, and enhances the manufacturing value added of products and overall services. In the future,
following the core concept of creating value for customers, USI will attach more importance to Solutions
and Services among the D(MS)2, strive to expand the base of high-quality customers and strengthen
partnership with them, gradually transform the Company from a manufacturing service provider to a
total solution provider and comprehensive service provider in the fields mentioned below.
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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 related services for enterprise-class
wireless interconnection products and highly competitive wireless module 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-in-Package (SiP) modules, system-level
Internet of Things (IoT) modules, IoT modules, low-power-consumption telecommunication modules,
enterprise-level wireless routers, etc.
2. Consumer electronics
The Company is the industry's leading manufacturer of smart wearable SiP modules. As 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 highly integrated development of SiP modules related to wearables, including
new advanced packaging technologies such as local spacing shielding, selective plastic packaging, film
plastic packaging, selective sputtering, shape cutting, dry ice cleaning and 3D steel stencil printing. At
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present, smart wearable SiP modules include smart watch SiP module, true wireless earbuds (TWS)
module, and optical heart rate module.
In addition to smart wearable SiP modules, the Company also operates video products, connecting
devices and other product fields, mainly including LED light bars, timing control boards, source-level
drive boards, smart stylus pens, electromagnetic sensing boards, and hair removal machines.
3. Industrial electronics
With sophisticated professionals in product R&D, design, project management, manufacturing and
logistics support, USI is committed to the industrial product market. The Company provides customers
with the most cost-effective, optimized design and a full package of solutions with a strict quality control
process, meeting their needs from mass production, diversified production, to customized production.
Industrial products mainly include point-of-sale (POS) and smart handheld devuce (SHD).
4. Computer and storage
On the market of computer motherboards and peripheral applications, the Company, by adopting
efficient manufacturing process and strict quality management system, shortens the time to market and
mass production for customers' products, improving efficiency while saving costs. USI’s computer
motherboard products include motherboards for servers and workstations, and SipSet modules for
laptops and tablets, etc. USI’s computer peripheral products are mainly devices that connect laptops to
peripherals, such as docking station and dongle.
Storage and interconnection products include solid-state drives (SSDs) and enterprise-class high-speed
switches and network adapters. USI has industry-leading R&D capabilities for new technologies, such
as fibre channel, SAS, SATA, 10 gigabit ethernet, dual port I/O and wireless broadband, etc., and has
developed diversified products. The Company is a leading SSD design and manufacturing partner,
providing customers with services in manufacturing, hardware design, product verification and
customized design of test platform. The Company's OEM products, including high-speed switches and
host channel adaptor (HCA) cards, are must-have devices for enterprises, institutions, computing centers
and data centers.
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5. Automotive electronics
With over three decades of experience in the automotive industry, USI provides turnkey DMS solutions
and global manufacturing services. The Company has been devoted to improving overall quality control
and reducing costs through complete logistics services and flexible IT infrastructure. As a leading
manufacturer on the automotive electronics market, USI has built long-term partnership with well-
known automotive electronics suppliers across the world.
Automotive electronic products include voltage regulators, rectifiers, battery management systems,
power modules for EV charging, hydraulic control modules, motor controllers, external LED lighting,
Integrated Electric Parking Brake (IEPB), in-vehicle infotainment system control unit or control panel,
etc.
6. Medical electronics
Medical electronic products are mainly home care and hospital analytical equipment, including vitamin
K antagonist therapy equipment, cardiovascular equipment and glucose metering device.
(II) Miniaturization design and products
USI has a leading position in SiP miniaturization technology. By integrating several functional ICs and
accessory circuits into a module, miniaturized system modules effectively reduce the area of functional
modules, improve the efficiency of circuit system, and ensure the effectiveness of electromagnetic
interference shielding. With the trend of miniaturization, personalization and functional diversification
of consumer electronics, the modules applied in these products are also developing rapidly towards
miniaturization and integration of multiple functions, which becomes the mainstream of similar module
products.
Through miniaturization technology, most electronic systems, especially for mobile devices, IoT devices,
and wearables, can be reduced in size to meet market demands. As SiP is quite complex with regard to
the capital input, technologies and product design, the Company will continue to increase investment in
multi-functional, more complex and more precise modules to stay on the cutting edge in the industry. In
the era of 5G and IoT, the application of wearable devices will be more extensive and diversified, and
there will be larger demands for lighter, thinner, shorter and smaller electronic products, and the
application of miniaturization technology will be accelerated.
The design and manufacturing ability of “miniaturized” products is one of the core competitiveness of
the Company, and the Company will strive to expand the application and market of miniaturized
modules. At the same time, in the fields of wireless communication, computers, wearables, solid-state
storage, industrial electronics, automotive electronics and other products, the Company will also expand
the application of miniaturization technology and develop modular products such as SOM (System on
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Module) and SipSet.
At present, USI's SiP products cover WiFi modules, UWB modules, mmWave antenna-in-package (AiP)
modules, fingerprint sensor modules, and modules for smart wearables such as watches and earbuds.
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 global ranking of EMS
providers, the Company ranked 12th in revenue scale in 2020, 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
laws and regulations, and the relevant regulatory requirements of Shanghai Stock Exchange as well as
requirements of Taiwan Stock Exchange and New York Stock Exchange because of its parent company
ASE Technology Holding Co., Ltd. The Company has been rated A for information disclosure by
Shanghai Stock Exchange for the last four consecutive years, and won a series of honors for its
operations and governance.
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2021 Annual Report
(II) Global layout and advantages in localized services
In December 2020, the Company completed the acquisition of AFG, the second largest EMS company in
Europe. At present, it has 27 production bases in 10 countries (including regions) including Chinese
mainland, Taiwan, the United States, France, Germany, Britain, Czech Republic, Mexico, Poland,
Tunisia and Vietnam, serving world-renowned brand owners. Through its global layout, the Company
not only globalizes its business cooperation and production bases, but also focuses on the global market
and integrates global resources to become a more international company.
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2021 Annual Report
(III) Diversified business areas and rich product portfolio
The Company not only has the comprehensive strength of professional design and manufacture of
electronic products (covering electronic components, spare parts and complete machines) and system
assembly, but also has the advantages of strategic selection of sub-sectors and integration of products.
The Company's product portfolio is “rich and balanced”, covering five major fields, such as 3C
(communication, consumption and computer) products, industrial electronics, medical care, automotive
electronics, etc. On the basis of “selecting the best among the best”, the Company implements horizontal
integration across sub-sectors and industries, conforms to the development trend of continuous
integration of electronic industry, dynamically realizes the optimal combination of its products, and
promotes its sustainable and stable development. At the same time, the Company will strengthen the
vertical integration of core components and complete machines, highlight service value, enhance
customer engagement and expand quality customers, and then consolidate and enhance its strategic
position as an integrated service provider in the supply chain.
The Company always attaches importance to judging the industry development and grasping market
opportunities. The Company has established long-term and stable supply chain partnership with many
international first-class large-scale electronic product brands, and occupies an important position in the
supply chain of its core products. Based on the close cooperation with the world-class electronic brands
and the close follow-up of the industry technology development trend, the Company can quickly
respond to the changes in market demand, and make forward-looking deployment and advanced research
and development of new products in time. At the end of 2020, the Company set up a Miniaturization
Competence Center (MCC), committed to becoming a benchmark technology innovation engine in the
industry, serving the needs of domestic and foreign customers for miniaturized and modular products
around smart phones, smart wearables, automotive electronics and other fields, and providing “one-stop
service” from design to manufacturing. In April 2021, the Company started Corporate Venture Capital
(CVC). Taking business collaboration as the starting point, it makes strategic investment in upstream and
downstream of the industrial chain, organically combines industrial empowerment with capital operation,
and incubates business sectors and potential partners with growth potential through the investment of
supporting funds and resources, so as to serve the medium and long-term corporate development
strategy of enterprises, establish an closed loop of industrial ecology and continuously enhance
enterprise value.
(IV) Focus on automation and intelligent manufacturing
As a global leader in electronic design and manufacturing, the Company has been taking “intelligent
manufacturing” as one of its important business strategies. After more than 40 years of development, the
Company has the ability of large-scale production management in the electronic manufacturing industry,
and has formed a distinctive, industry-leading and effective production and operation management and
internal control system in its long-term management practice. The Company can timely and efficiently
purchase all kinds of raw materials according to customer needs, complete the assembly of all finished
products and related after-sales service, respond quickly to market changes, shorten the delivery cycle
and improve production efficiency through the optimization of various supply processes.
The Company uses the mainstream I4.0 automation technology to realize the intelligent manufacturing
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2021 Annual Report
roadmap. At present, technologies that have been introduced include internal automation equipment
communication network supporting 5G and 4G, Automatic Material Handling Systems (AMHS), fully
automated manipulator testing unmanned workshop, and real-time production equipment status
monitoring with remote access dashboard; artificial intelligence (AI) technology has been applied to the
management of key production equipment, production systems and product inspection systems.
(V) Product innovation driven by R&D
The Company always attaches importance to technology R&D, and constantly increases investment in
R&D. From 2019 to 2021, the Company invested RMB 1.37 billion, RMB 1.576 billion and RMB 1.64
billion respectively in R&D. By the end of 2021, the Company had a R&D team of 2,332 people, and
the Company had obtained 696 patents with 173 patents under application.
The Company is a global leader in SiP technology. In 2021, it integrated a number of advanced
technologies on the miniaturized and multifunctional SiP, such as double-sided plastic packaging which
can ensure the high integration and design flexibility of products and realize double-sided
electromagnetic shielding. The Company has successfully developed a new spacing shielding
technology that uses metal frames and laser slotting technology on packaging products, so that the
products have greater flexibility in design and application.
In addition to miniaturization technology for wearable and communication products, the Company
provides multi-process services of electronic packaging process, high-density SMT process and “EMS+”
(Electronics Manufacturing Service Plus) for storage, industrial and automotive electronic products.
Based on the advantages of advanced technology and core processes, the Company achieved new
breakthroughs in product innovation in 2021. The automotive electronics business has obtained the
manufacturing certification of ISO26262; the application products of electric vehicle power system,
battery management system and heat dissipation system have been formally mass-produced; the
assembly, production and testing of power modules at power semiconductor international manufacturers
have been laid out. IGBT and SiC power modules for electric vehicle inverters are expected to be
officially mass-produced in 2022. The Company has introduced all-flash array products using PCIe
Gen.4 technology, WM-BZ-ST-55 dual-core Bluetooth 5.0 antenna package module, and SOM7225 5G
system module integrating memory, power management IC, audio codec and multi-mode wireless
connection interface.
(VI) Long-term adherence to sustainable management
The Company has been adhering to the vision of “Be a most reliable provider for electronic
design,manufacturing service, and modularization with diversified global footprints and miniaturization
solution”. Guided by the United Nations Sustainable Development Goals (SDGs), it strengthens the
SDGs awareness of every employee, and works hand in hand with partners and communities to promote
economic growth and productivity improvement in a sustainable way. With the mission of “Turn
innovative technologies into value for our customers”, the Company promises to contribute to high-
quality and sustainable living space, provide employees with a challenging and fulfilling working
environment, create substantial rewards for stakeholders, and fulfill its responsibilities as a world
corporate citizen.
People are the valuable assets of the Company. The Company has been constantly improving the career
planning, performance appraisal and incentive mechanism of employees, providing a platform for the
development of talents, a channel for more outstanding talents to join and a powerful talent guarantee for
the Company to achieve its development goals. The Company attaches great importance to personnel
training and technological innovation, and provides employees with a suitable career development path
through platforms and incentive measures in parallel, and at the same time realizes the accumulation of
its own talents. In addition, the Company has established a long-term and effective employee incentive
mechanism to improve the cohesion of employees and enterprise competitiveness, and ensure its long-
term and stable development. In the last three years, the Company has continuously launched employee
stock ownership plans and equity incentive plans according to business needs.
While operating steadily, the Company takes the mission of “creating value for shareholders and sharing
growth with shareholders”. By the end of 2021, the Company had achieved a cumulative net profit of
RMB 10.03 billion and a cumulative cash dividend of RMB 3.29 billion since its listing, with an average
cash payout ratio of 32.79%, effectively safeguarding and enhancing the interests of investors.
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2021 Annual Report
V. Main Operations during the Reporting Period
The Company achieved operating revenue of RMB 55.30 billion in 2021, an increase of 15.94% over RMB
47.70 billion in 2020, and the revenue from various products increased YoY; among them, the revenue from
industrial products increased by 67.26% YoY; the revenue from automotive electronics increased by 54.05%
YoY; the revenue from computer and storage products increased by 25.28% YoY. The main reasons for the
change in operating revenue are: (1) increased revenue in the consolidated FAFG statements in 2021; (2) in
2021, the global economy resumed growth, and the electric vehicle, intelligent manufacturing and new energy
industries drove the demand growth of related business segments; the growth rate of the Company's
EMS/ODM business accelerated, especially industrial and automotive electronics; (3) new production lines in
Mexico and Taiwan sites have been put into production one after another, and orders have increased rapidly.
In 2021, the proportion of communication and consumer electronics products in the revenue decreased YoY,
while the proportion of industrial, computer and storage products and automotive electronics in the operating
revenue all increased.
The total sales, administrative, R&D and financial expenses of the Company in 2021 were RMB 3.33 billion,
an increase of RMB 310 million or 10.29% over RMB 3.02 billion in 2020.
The Company achieved operating profit of RMB 2.13 billion in 2021, an increase of 8.67% over RMB 1.96
billion in 2020; the total profit was RMB 2.14 billion, an increase of 8.38% over RMB 1.97 billion in 2020;
the net profit attributable to shareholders of the listed company was RMB 1.86 billion, an increase of 6.81%
over RMB 1.74 billion in 2020. In 2021, the net profit attributable to shareholders of the listed company net
of non-recurring gains/losses was RMB 1.70 billion, an increase of RMB 80 million and 4.93% over RMB
1.62 billion in the same period of 2020.
（I）Main business analysis
1. Analysis of changes in related items in income statement and cash flow statement
Unit: yuan Currency: RMB
Items Amount in the current Amount of the same Change in
period period last year percentage (%)
Operating revenues 55,299,654,770.21 47,696,228,222.53 15.94
Operating costs 49,981,479,197.84 42,809,550,114.14 16.75
Sales expenses 311,480,902.10 219,892,291.75 41.65
Administrative expenses 1,169,173,384.77 1,123,158,982.65 4.10
Financial expenses 203,398,590.62 95,750,510.66 112.43
R&D expenses 1,641,398,512.61 1,576,363,064.48 4.13
Net cash flow from operating
-1,102,446,978.90 1,436,523,674.10 -176.74
activities
Net cash flow from investment
-1,486,554,540.33 -3,010,920,320.94 -50.63
activities
Net cash flow from financing
2,391,384,303.44 1,824,477,834.32 31.07
activities
Reasons for changes in sales expenses: Mainly due the increase in consolidated revenue and royalties in
the current period
Reasons for changes in financial expenses: Mainly due to the increase in costs related to the issuance of
convertible corporate bonds in the current period
Reasons for changes in net cash flow from operating activities: Mainly due to the increase in inventory
in the current period in response to customer orders.
Reasons for changes in net cash flow from investment activities: Mainly due to the decrease in equity
investment in the current period compared with payment for M&A of the overseas company the previous
year
Reasons for changes in net cash flow from financing activities: Mainly due to the cash received from the
issuance of convertible bonds in the current 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
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2021 Annual Report
In the current period, the Company's main business income increased by 15.94% over the same period
last year, and its main business cost increased by 16.75% 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 Year-on-year
Revenue Operatin
profit change in
Product Revenue Operating cost YoY g cost
margin gross profit
(%) YoY (%)
(%) margin (%)
Industrial Down 4.17
7,276,135,793.13 6,074,544,645.90 16.51 67.26 76.05
products pct.
Computer Down 1.27
4,793,053,315.18 4,079,381,724.91 14.89 25.28 27.17
and storage pct.
Consumer Down 0.77
18,566,021,687.70 16,886,497,387.85 9.05 7.85 8.78
electronics pct.
Automotive
2,605,088,256.75 2,402,266,475.49 7.79 54.05 52.93 Up 0.68 pct.
electronics
Communicat
Down 0.56
ion 21,211,368,145.31 19,799,912,823.21 6.65 4.57 5.20
pct.
electronics
Medical Down 3.63
280,679,550.41 264,285,249.65 5.84 289.85 305.46
electronics pct.
Down 19.50
Others 521,255,215.26 471,281,079.75 9.59 122.30 183.42
pct.
Down 0.66
Total 55,253,601,963.75 49,978,169,386.76 9.55 15.90 16.76
pct.
Main business by region
Year-on- Year-on-
Gross year year Year-on-year
profit change in change change in
Region Operating revenue Operating cost
margin operating in gross profit
(%) revenue operating margin (%)
(%) cost (%)
Chinese Down 0.25
38,299,554,979.91 34,498,348,382.50 9.92 8.90 9.21
Mainland pct.
Taiwan, Down 0.59
17,051,370,814.17 15,654,246,788.13 8.19 10.04 10.76
China pct.
Down 3.74
Europe 2,803,209,531.97 2,542,462,768.34 9.30 649.54 681.80
pct.
Down 0.52
Others 10,966,675,435.84 10,902,099,445.89 0.59 35.25 35.97
pct.
Down 0.08
Tradeoff -13,867,208,798.14 -13,618,987,998.10 1.79 20.86 20.95
pct.
Down 0.66
Total 55,253,601,963.75 49,978,169,386.76 9.55 15.90 16.76
pct.
Explanation of the main business by sector, product, region and sales mode
None
(2) Analysis of production and sales volume
√Applicable □ Not Applicable
Year-on- Year- Year-on-
Main products Output Sales volume year on- year
Inventory
change in year change
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2021 Annual Report
production change in
(%) in sales inventory
volume (%)
(%)
Computer and
19,809,213 19,683,453.00 762,612.00 33 27 20
storage
Industrial
37,916,394 42,350,692.00 618,850.00 402 450 -88
products
Communication
591,015,901 601,868,775.00 29,128,767.00 0 5 -27
electronics
Consumer
264,155,896 257,881,242.00 11,968,140.00 54 51 110
electronics
Automotive
51,465,137 55,498,365.00 3,461,042.00 7 15 -54
electronics
Medical
0 16,506,212.00 44,915.00 -100 3 -100
electronics
Others 6,786,265 6,839,332.00 52,311.00 3 5 -50
Total 971,148,806 1,000,628,071.00 46,036,637.00 14 19 -39
Explanation of production and sales volume
(3) Performance of major procurement contracts and major sales contracts
□Applicable √Not Applicable
(4) Cost analysis
Unit: yuan
Situation by product
Perce
Percent
ntage
Amount in the age in
Cost in YoY
Product Current amount same period last total Remark
item total (%)
year cost
cost
(%)
(%)
Communic
Raw 17,563,315,933.4
ation 88.73 16,220,124,974.12 86.21 8.28
materials 7
electronics
Consumer Raw 15,480,396,654.4
91.82 14,435,748,436.59 93.08 7.24
electronics materials 7
Computer Raw
and materials 3,463,510,159.58 86.15 2,791,807,541.16 88.04 24.06
storage
Industrial Raw Due to the
products materials increase of
5,081,919,122.30 83.86 2,981,371,121.70 86.60 70.46
consolidated
revenue
Automotiv Raw Due to the
e materials increase of
1,793,876,098.35 75.76 1,141,329,332.81 73.50 57.17
electronics consolidated
revenue
Medical Raw Due to the
electronics materials 281.9 increase of
195,058,601.05 74.31 51,073,963.83 78.88
1 consolidated
revenue
Others Raw Due to the
materials 155.6 increase of
355,017,372.12 77.23 138,850,899.05 91.46
8 consolidated
revenue
Total 43,933,093,941.3 88.18 37,760,306,269.26 88.42 16.35
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2021 Annual Report
5
Explanation of other aspects of cost analysis
The Company completed the acquisition of FAFG and consolidated its statements in December 2020.
With FAFG’s financial statements consolidated for the full year of 2021, and the Company’s
consolidated revenue has grown significantly.
(5) Changes in the consolidation scope due to equity changes of major subsidiaries during the
reporting period
□Applicable √Not Applicable
(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
The sales to the top five customers amounted to RMB 329.75 million, accounting for 59.63% of the
total annual sales; among the top five customers, the sales to related parties amounted to 0RMB ,
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
The purchase amount from the top five suppliers was RMB 206.15 billion, accounting for 44.83 % of the total
annual purchase amount; among the top five suppliers, the purchase amount from related parties was 0 yuan,
accounting for 0 % of the total annual 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 of the Company's top five customers are as follows:
Unit: 10,000 yuan Currency: RMB
No. Proportion to total annual sales
Customer name Sales
(%)
1 Company A 1,803,650.04 32.62
2 Company B 838,884.48 15.17
3 Company C 242,666.08 4.39
4 Company D 207,534.48 3.75
5 Company E 204,718.83 3.7
Total 3,297,453.92 59.63
The purchase amount of the Company's top five suppliers is as follows:
Unit: 10,000 yuan Currency: RMB
No. Proportion in total annual
Supplier name Purchase amount
purchase (%)
1 Supplier A 1,035,366.40 22.52
2 Supplier B 798,231.42 17.36
3 Supplier C 96,448.51 2.10
4 Supplier D 66,400.86 1.44
5 Supplier E 65,002.91 1.41
Total 2,061,450.10 44.83
3. Expenses
√Applicable □Not Applicable
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2021 Annual Report
Items 2021 2020 Change YoY Explanation
Mainly due the
increase in
Sales expense 311,480,902.10 219,892,291.75 91,588,610.35 41.65 consolidated revenue
and royalties in the
current period
Mainly due to the
increase in costs
related to the
Financial
203,398,590.62 95,750,510.66 107,648,079.96 112.43 issuance of
expenses
convertible corporate
bonds in the current
period
Mainly due to the
provisions for losses
on inventory
Loss on assets
-18,746,153.38 -11,792,788.58 -6,953,364.80 58.96 impairment in
impairment
accordance with
accounting policies in
the current period
Mainly due to the
provisions for losses
Loss on credit on credit impairment
-1,706,888.48 7,894,930.75 -9,601,819.23 -121.62
impairment in accordance with
accounting policies in
the current period
Income from Mainly resulted from
change in fair the changes in fair
value (losses 44,588,222.60 -6,272,200.14 50,860,422.74 -810.89 value caused by
are represented derivative financial
by '-') products
Mainly due to the
settlement income of
derivative financial
Investment
products of hedging
income (losses
111,678,979.96 83,440,494.33 28,238,485.63 33.84 operation in the
are represented
current period and the
by '-')
cash dividend
received from equity
investment.
Gain from Mainly due to the
disposal of increase in income
assets (losses 2,414,697.02 1,796,090.81 618,606.21 34.44 from fixed asset
are represented disposal in the
by '-') reporting period.
Mainly due to the
decrease in
Other income 50,678,106.85 76,779,477.12 -26,101,370.27 -34.00 government subsidies
recognized in the
current period
Mainly due to the
income received from
Non-operating
19,628,576.06 14,978,610.83 4,649,965.23 31.04 insurance claim and
income
changes in lease in
the reporting period
Non-operating Mainly due to losses
12,583,134.08 3,066,306.86 9,516,827.22 310.37
expenses on asset scrapping in
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2021 Annual Report
the current period
4. R&D investment
(1) Particulars of R&D investment
√Applicable □Not Applicable
Unit: yuan
Expensed R&D investment in the current period 1,641,398,512.61
Capitalized R&D investment in the current period 0
Total R&D investment 1,641,398,512.61
Proportion of total R&D investment in operating revenue (%) 2.97
Proportion of capitalized R&D investment (%) 0
(2) Table of R&D personnel
√Applicable □Not Applicable
Number of R&D personnel in the Company 2,332
Proportion of R&D personnel in the total number of employees of the
9.7
Company (%)
Breakdown by educational background
Educational background Number of personnel
Doctor’s degree 8
Master’s degree 779
Bachelor’s degree 1,233
Junior college 248
Senior high school and under 64
Breakdown by age
Age Number of personnel
Under 30 years old (excluding 30 years old) 544
30-40 years old (including 30 years old and excluding 40 years old) 1,069
40-50 years old (including 40 years old and excluding 50 years old) 565
50-60 years old (including 50 years old and excluding 60 years old) 149
60 years old and above 5
(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
5. Cash flow
√Applicable □ Not Applicable
Items 2021 2020 Reasons for change
Mainly due to the increase in
Net cash flow from inventory in the current period in
-1,102,446,978.90 1,436,523,674.10
operating activities response to customer orders
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2021 Annual Report
Mainly due to less equity
investment in the current period
Net cash flow from
-1,486,554,540.33 -3,010,920,320.94 compared with expenses for M&A
investing activities
of overseas subsidiary last year
Mainly due to the cash received
Net cash flow from
2,391,384,303.44 1,824,477,834.32 from the convertible corporate
financing activities
bonds in the reporting period
(II) Explanation of significant changes in profit caused by non-main business
□Applicable √ Not Applicable
(III) Analysis of assets and liabilities
√Applicable □Not Applicable
1. Assets and liabilities
Unit: Yuan
Proportion Proportion
to total to total
December 31, December 31,
Item assets (%) assets (%) YoY Remark
2021 2020
December December
31, 2021 31, 2020
Mainly due to the
decrease of
Financial
- accounts receivable
assets held 96,480,087.56 0.27 182,315,272.70 0.59
47.08 factoring business
for trading
in the current
period
Mainly due to stock
and inventory
preparation in
response to
9,037,562,662.
Inventory 25.20 6,765,336,245.29 21.77 33.59 customers' expected
64
orders as a result of
global component
shortage and the
pandemic
Mainly due to the
Investments
changes in the fair
in other
75,957,194.28 0.21 41,351,831.65 0.13 83.69 value of industrial
equity
fund investment in
instruments
the current period
Mainly due to the
construction of new
plants and the
Construction purchase of
798,015,703.22 2.23 431,942,421.24 1.39 84.75
in progress machinery and
equipment to meet
growing operational
needs
Mainly due to the
increase of prepaid
expenses for
Other non-
136,815,311.18 0.38 89,743,706.46 0.29 52.45 equipment and
current assets
construction costs
in the reporting
period
Other non- Mainly due to new
236,978,820.68 0.66 152,935,434.70 0.49 54.95
current strategic equity
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2021 Annual Report
financial investments in the
assets current period
Mainly due to the
adjustment of the
fund structure and
Short-term 2,480,500,031. 560.8 the increase of
6.92 375,341,430.81 1.21
borrowings 68 6 short-term loans
from overseas
banks in the
reporting period
Mainly due to the
increase in returns
Taxes
238,676,479.75 0.67 179,000,709.13 0.58 33.34 and the accrual of
payable
income tax in the
current period
Mainly resulted
Derivative from the changes in
-
financial 976,413.16 0.00 18,402,480.68 0.06 fair value caused by
94.69
liabilities derivative financial
products
Mainly due to the
adjustment of the
fund structure and
Long-term 1,101,220,467. - the repayment of
3.07 3,011,668,944.64 9.69
borrowings 55 63.43 short-term loans
from overseas
banks in the
reporting period
Mainly due to
government
Deferred
59,791,942.70 0.17 32,724,563.92 0.11 82.71 subsidies related to
income
assets received in
the current period
Mainly resulted
Not from the issuance
Bond 3,115,505,143.
8.69 0.00 0.00 applic of convertible
payable 28
able corporate bonds in
the current period
Mainly due to share
Treasury - 153.3
-0.95 -134,707,206.58 -0.43 buy-back in the
stock 341,236,339.88 2
current period
Mainly due to the
Surplus accrual of surplus
738,004,669.96 2.06 542,610,242.85 1.75 36.01
reserve reserve in the
current period
Mainly due to
conversion rights
Not
Other equity from the
409,902,116.17 1.14 0.00 0.00 applic
instruments convertible
able
corporate bonds in
the current period
Other explanations
None
2. Overseas assets
√Applicable □ Not Applicable
(1) Asset size
Including: overseas assets 23,500,315,447.75 (unit: yuan; currency: RMB), accounting for 45.37% of
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2021 Annual Report
the total assets.
(2) Relevant explanations on the relatively high proportion of overseas assets
□Applicable √Not Applicable
3. Major asset restrictions as of 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, according to the data compiled by the Company, Apple smart
phones accounted for 17% of the global smart phone market in 2021, with sales reaching 228 million
units, an increase of 19% over that of 2020.
WW Smart Phone Estimated Market Share
2020 2021 20'21
Shipments Market Shipments Market YoY
(M units) Share% (M units) Share% Growth%
Worldwide Total 1243 - 1319 - 6.1
Samsung 240 19 265 20 11
Apple 192 15 228 17 19
Xiaomi 139 11 180 14 30
Vivo 97 8 124 9 28
OPPO 106 9 132 10 24
Others 470 38 391 30 -17
Source: USI, Jan. 2022
2. In terms of consumer electronics, according to the market survey report compiled by the Company,
the overall wearable product market shipments grew at a CAGR of 11%.
WW Wearable Market Forecast
20/21 20-25
Product 2020 2021F 2022F 2023F 2024F 2025F
YoY CAGR
Total Shipment (M
446 537 622 681 727 763 20% 11%
Units)
Earwear 268 330 393 434 466 492 23% 13%
Watch 106 133 152 167 181 192 25% 12%
Wrist Band 70 72 75 76 76 76 3% 2%
Others 2.0 2.1 2.5 3.0 3.4 3.8 3% 14%
Market Share (%)
Earwear 60% 61% 63% 64% 64% 64%
Watch 24% 25% 24% 25% 25% 25%
Wrist Band 16% 13% 12% 11% 10% 10%
Others 0.4% 0.4% 0.4% 0.4% 0.5% 0.5%
Source: USI, Feb. 2022
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3. In terms of computers and storage products, according to the data compiled by the Company, the
market demand for server mainboards and switches will still maintain stable growth. By strengthening
cooperation with major customers, the Company strives for more market shares and orders.
3.1 Server Revenue by Region
Sum of Vendor Revenue ($M) Region 2020 2021 2022 2023 2024 2025 CAGR
North America 35,108 39,105 41,542 42,870 44,748 45,987 5.5%
Greater China 22,484 25,882 28,358 29,694 31,456 32,738 7.8%
Western Europe 9,824 11,004 11,530 12,079 12,463 12,915 5.6%
Japan (Region) 3,504 3,543 3,615 3,744 3,782 3,906 2.2%
Mature Asia/Pacific 2,366 2,659 2,679 2,746 2,814 2,820 3.6%
Emerging Asia/Pacific 1,601 1,734 1,763 1,811 1,845 1,871 3.2%
Latin America 1,725 1,710 1,675 1,759 1,746 1,715 -0.1%
Eastern Europe 1,076 1,114 1,175 1,243 1,314 1,365 4.9%
Middle East and North Africa 1,227 1,297 1,340 1,323 1,321 1,338 1.7%
Eurasia 1,162 1,011 1,101 1,164 1,207 1,221 1.0%
Sub-Saharan Africa 368 429 437 442 444 417 2.5%
Grand Total 80,446 89,488 95,214 98,875 103,138 106,293 5.7%
Source: USI, Feb. 2022
3.2 Global Ethernet Switch and Router Market Unit: USD billion
20’-25’
2020 2021 2022 2023 2024 2025
CAGR
Switch and router 42.7 43.1 43.6 44.0 44.4 44.9 1.0%
Source: USI, Feb. 2022
3.3. In terms of storage products, SSD is the important product of the Company. According to the data
compiled by the Company, SSD applications are growing in laptops and data centers, and the demand
has obviously increased. The annual market growth rate in 2021 was 15%. The compound growth rate of
SSD market from 2020 to 2025 is about 9.3%. While actively maintaining existing customers, the
Company is striving to develop new customers and focus on developing enterprise-level products.
Unit: USD million
20/21 20-25
2020 2021 2022 2023 2024 2025
YoY CAGR
Total SSD
32,083 36,959 37,744 41,341 46,193 49,992 15% 9.3%
Revenue
Source: USI, Feb. 2022
4. In terms of industrial products, according to the data compiled by the Company, the market of the
main products, smart handheld devices and POS, grew by 8.8% in 2021 due to the growth of logistics
and warehousing demand and the recovery of retail industry.
Unit: USD billion
20/21 20-25
2020 2021 2022 2023 2024 2025
YoY CAGR
Total
POS 65 71 76 83 90 98 8.8% 8.5%
Revenue
Source: USI, Feb. 2022
5. In terms of automotive products, according to the data compiled by the Company, the automotive
electronics industry resumed its growth as the epidemic and material shortage abated; in particular, the
compound growth rate of demand for ADAS and HEV-EV is relatively high.
5.1 Automotive Electronics Forecast by Domain
Unit: USD million
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2021 Annual Report
20-25
Domain 2020 2021 2022 2023 2024 2025
CAGR
ADAS 24,758 28,874 33,379 37,524 41,362 47,573 14%
Body & Convenience 16,861 17,661 18,010 18,450 18,581 18,736 2.1%
Chassis & Safety 19,597 19,958 20,105 20,314 20,407 20,797 1.2%
HEV-EV 6,567 9,634 12,699 16,229 20,007 22,662 28%
Information 28,348 29,510 29,879 31,340 32,809 33,318 3.3%
Powertrain 27,364 28,781 30,328 31,148 30,856 30,748 2.4%
Grand Total 123,495 134,418 144,400 155,005 164,022 173,834 7.1%
Source: USI, Feb. 2022
5.2 New Energy Cars Sales
CAGR
M units 2019 2020 2021 2022 2023 2024 2025 2026
(20-26)
Total 2.6 5.3 7.7 13.9 19.0 25.0 32.3 41.3 41.0%
PHEV 0.7 1.0 2.0 2.7 3.8 5.0 6.4 8.1 40.6%
EV 1.9 4.2 5.7 11.3 15.2 19.9 25.8 33.3 41.1%
Source: USI, Feb. 2022
5.3 Total Auto Power Module
Unit: USD million
CAGR
2019 2020 2021 2022 2023 2024 2025
(20-25)
Total Auto Power
1,113 1,173 1,636 2,030 2,643 3,440 4,387
Module 30.2%
IGBT Power
849 951 1,376 1,744 2,260 2,930 3,477
Module 29.6%
MOSFET Power
243 197 223 241 274 312 375
Module 13.7%
Wide Bandgap
21 24 36 46 109 198 535
Power Module 86.0%
Source: USI, Feb. 2022
6. In terms of medical products, according to the data compiled by the Company, the market demand for
electronic manufacturing services has grown steadily.
Medical Product Assembly Value, 2020-2025
Unit: USD million
20-25
2020 2021 2022 2023 2024 2025
CAGR
Medical Diagnostics 18,590 19,950 21,430 22,890 24,330 25,850 6.8%
Therapeutic 11,010 11,475 11,980 12,515 13,050 13,640 4.4%
Monitoring & Surgical 17,650 18,650 19,660 20,870 22,120 23,450 5.8%
Total 47,250 50,075 53,070 56,275 59,500 62,940 5.9%
Source: USI, Feb. 2022
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(V) Analysis of investment
Overall analysis of foreign equity investment
√Applicable □ Not Applicable
In order to implement its development strategy, in 2021, the Company injected capital into Huizhou
Facility and Vietnam Facility as planned, which have been completed and put into operation. In 2021,
the Company increased investment in industrial funds and started Corporate Venture Capital (CVC)
investment.
1. Significant equity investment
√Applicable □ Not Applicable
1) On July 3, 2020, the second meeting of the fifth Board of Directors of the Company reviewed and
approved the Proposal on Foreign Investment by Wholly-owned Subsidiaries, which proposed to increase the
total project investment of Vietnam Facility by USD 158 million, and adjusted the total project investment of
Vietnam Facility from USD 42 million to USD 200 million. Among them, the Company invested USD 80
million through Universal Global Technology Co., Limited, and the rest of the funds were financed from
banks or raised by Vietnamese Facility. For details, please refer to the Announcement on Foreign Investment
of Wholly-owned Subsidiaries (L.2020-053).
The Company injected capital to Vietnam Facility in batches. As of December 31, 2021, it has has
invested a total capital of USD 80 million through Universal Global Technology Co., Limited.
2) On March 26, 2021, the ninth meeting of the fifth Board of Directors and the eighth meeting of the
fifth Board of Supervisors of the Company reviewed and approved the Proposal on Using Raised Funds
to Increase Capital of Subsidiaries, and agreed that the Company would use RMB 600 million raised
funds from convertible corporate bonds to increase the capital of Huizhou Facility, the implementer of
the fundraising project “Huizhou Facility Electronic Products Production Project”. The Company will
inject capital into Huizhou Facility in batches according to the progress of the fundraising project. For
details, please refer to the Announcement on Using Raised Funds to Increase Capital of Subsidiaries (No.
2021-030).
As of December 31, 2021, the Company has used the raised funds to inject RMB 325 million into
Huizhou Facility.
2. Significant non-equity investment
□ Applicable √ Not Applicable
3. Financial assets measured at fair value
√Applicable □ Not Applicable
Number of Number of Gain/loss
shares held at Beginning book shares held at Ending book during the
Company
the beginning value the end of the value reporting
of the period period period
TriKnight
Capital 29,285,000.00 41,351,831.65 29,285,000.00 75,957,194.28 14,910,026.14
Corporation
PHI FUND,
10,798,010.00 64,091,002.18 15,000,000.00 93,130,696.47 3,782,154.36
L.P.
GaN System
N/A N/A 589,622.00 31,878,465.32 -
Inc.
Senscomm
Semiconductor N/A N/A 257,937.00 20,000,000.00 -
Co., Ltd.
Glory Ventures N/A N/A 1,000,000.00 1,000,000.00 -
Others N/A 252,757,224.54 N/A 186,473,333.29 72,526,893.91
Total 40,083,010.00 358,200,058.37 46,132,559.00 408,439,689.36 91,219,074.41
Note: Gain/loss during the reporting period includes fair value evaluation, gains and losses from disposal,
cash dividends and handling fees
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2021 Annual Report
4. Specific progress of material asset restructuring and integration during the reporting period
√Applicable □ Not Applicable
After the Company completed the equity transfer of FAFG in December 2020, it started the collaborative
integration with AFG. In 2021, the regional management collaboration between the Company and AFG
production bases has been completed, and cooperation has been strengthened in global sales, customer service,
finance, IT, supply chain, R&D, etc.
Opinions of independent directors
The independent directors have agreed on this matter.
(VI) Sale of material assets and equity
□Applicable √Not Applicable
(VII) Analysis of major holding and joint stock companies
√Applicable □ Not Applicable
Currency
of Registered capital Total
Company Name Net assets Net profit
registered (RMB) assets
capital
UNIVERSAL
GLOBAL
RMB 550,000,000.00 326,055.37 142,773.92 30,680.16
TECHNOLOGY(KUN
SHAN)CO., LTD.
Universal Global
Electronics (Shanghai) RMB 50,000,000.00 (note) 6,121.25 6,105.14 124.73
Co., Ltd.
Universal Global
327,500,000.00
Technology Co., USD 436,721.43 69,911.49 -8,356.50
(note)
Limited
Universal Global
Technology (Shanghai) RMB 1,330,000,000.00 378,769.37 179,893.92 32,720.79
Co., Ltd.
Universal Global
Technology (Huizhou) RMB 460,000,000.00 58,666.29 44,657.13 -969.19
Co., Ltd
USI Science and
Technology (Shenzhen) RMB 10,000,000.00 1,571.39 1,325.47 115.81
Co.,Ltd
USI Electronics
USD 75,000,000.00 267,351.84 138,632.46 24,222.00
(Shenzhen) Co., Ltd.
USI Japan Co., Ltd. JPY 95,000,000.00 820.25 731.54 59.41
Universal Global
1,980,000,000.00
Technology Co., NTD 617,519.27 151,106.96 23,839.12
(note)
Limited
Universal Global
USD 11,000,000.00 196,417.48 9,099.42 407.49
Industrial Co., Limited
Universal Scientific
Industrial De México MXN 1,258,077,326.00 196,586.22 44,883.56 -4,976.66
S.A. De C.V.
USI America, Inc. USD 9,500,000.00 5,206.97 4,432.62 100.57
Universal Global
Technology Co., USD 51,000,000.00 (note) 23,075.15 23,068.20 488.81
Limited
UNIVERSAL
SCIENTIFIC
INDUSTRIAL USD 80,000,000.00 117,011.48 46,382.06 -4,338.53
VIETNAM
COMPANY LIMITED
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2021 Annual Report
Universal Scientific 321,374,822.00
EUR 213,806.26 174,921.38 -1,302.29
Industrial (France) (note)
USI Inc. NTD 1,399,727,400.00 176,351.92 75,549.99 4,281.23
PLN 80,852,300.00 25,546.45 22,392.55 4,230.03
FINANCIERE AFG EUR 183,649,562.80 513,144.38 313,625.62 13,620.28
Note: 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
2. Joint-stock company
Unit: RMB 10,000 yuan
Currency
of Registered
Company Name % Total assets Net assets Net profit
registered capital (RMB)
capital
Universal Global Technology
49 RMB 220,000,000 65,418.35 23,312.33 1,269.96
Co., Limited
M-Universe Investments
42.23 USD 138,969,126 139,563.56 94,076.13 3,782.03
PTE.LTD.
3. Subsidiaries or joint-stock companies that contributed over 10% to the net profit of the Company
Unit: RMB 10,000 yuan
Contribution to
Company Name Revenue Operating profit Net profit consolidated net
profit
Universal Global
Technology (Shanghai) Co., 829,683.29 37,226.90 32,720.79 17.62%
Ltd.
UNIVERSAL GLOBAL
TECHNOLOGY(KUNSHA 582,101.67 35,423.56 30,680.16 16.52%
N)CO., LTD.
USI Electronics (Shenzhen)
414,141.46 26,659.61 24,222.00 13.05%
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 the reports by professional market research institutions compiled by the Company, the
global electronic manufacturing service (EMS) revenue exceeded USD 640 billion in 2021, and is
expected to reach USD 830 billion in 2025, growing at an average CAGR of 7.1% from 2020 to 2025.
The overall market shows a steady growth trend, and the Asia-Pacific region will maintain a leading
growth rate.
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2021 Annual Report
Global EMS/ODM Market Forecast
Source：USI, Feb. 2022
The Worldwide CM, EMS and ODM Market by Region, 2020-2025
The Worldwide CM, EMS and ODM Market by Region, 2020-2025
Region 2020 2021 2022 2023 2024 2025 CAGR
CM Revenue ($M)
Americas 99,043 97,524 101,398 105,838 110,591 116,661 3.3%
EMEA 72,669 71,139 73,376 75,899 78,590 81,675 2.4%
APAC 422,944 475,809 510,965 551,779 595,962 639,951 8.6%
Total 594,656 644,472 685,739 733,517 785,143 838,288 7.1%
EMS Revenue ($M)
Americas 96,702 95,251 99,061 103,420 108,074 114,018 3.3%
EMEA 68,949 67,501 69,661 72,099 74,695 77,682 2.4%
APAC 312,070 356,094 382,437 413,945 448,463 482,556 9.1%
Total 477,721 518,846 551,159 589,463 631,231 674,256 7.1%
ODM Revenue ($M)
Americas 2,341 2,273 2,337 2,419 2,518 2,644 2.5%
EMEA 3,720 3,638 3,715 3,800 3,895 3,993 1.4%
APAC 110,874 119,715 128,529 137,835 147,499 157,396 7.3%
Total 116,935 125,627 134,580 144,054 153,912 164,032 7.0%
Source：USI, Feb. 2022
2. Global competitive landscape and industry ranking
Among global EMS providers, USI ranked 12th in 2020.
Operating income
Name of manufacturer Annual growth rate Net operating margin
Rank (USD 100 million)
Year 2020 19'20 2020
1 Honghai 1,823 5.4% 2.1%
2 PEGATRON 475 7.3% 1.6%
3 Quanta 371 11% 2.3%
4 COMPAL 353 11% 1.0%
5 Wistron 286 0.9% 1.5%
6 Jabil Circuit, Inc. 276 5.0% 0.8%
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2021 Annual Report
7 Flextronics 233 -6.4% 1.8%
8 BYD 228 23% 3.8%
9 INVENTEC 173 5.2% 1.3%
10 delta 99 14% 9.7%
11 TPV 92 4.3% 2.5%
12 USI 70 30% 3.6%
Whole Industry 5940 7.1% 2.2%
Source：USI, Feb. 2022
3. Industry trend of profit level and analysis of net profit margin
The Company's net profit margin was 3.63% in 2020 and 3.36% in 2021, better than the average of the
world's top 10 contract manufacturers (CMs).
The reasons why the Company's net income ratio is higher than the industry average are as follows:
(1) USI has a diversified and balanced product mix, and its products are high technology-based.
USI has competitive advantages in the segments of the Company’s product categories. Meanwhile, USI
provides design and manufacturing services in key parts and components, rather than end product
assembly.
(2) USI has an industry-leading technology level. The Company has a high product yield and
process capacity above industry average. For instance, USI's average first pass yield of SMT process
exceeds 99.7%.
(3) USI has an advantage in cost control. In the process of new product introduction (NPI), USI
gain an advantage in cost management by selecting best-match materials; USI effectively controls the
unit production cost by adopting an efficient production line layout and an institutionalized,
systematized and standardized production process.In addition, the Company optimizes the existing
manufacturing process and builds an intelligent factory by introducing intelligent automation,
transforming labor-intensive manufacturing into high-productivity intelligent manufacturing, improving
product quality, enhancing process stability and on-schedule delivery ability, and maximizing cost-
effectiveness.
4. Industry landscape
In the short-to-medium term, the demand for traditional 3C products will continue to grow more slowly.
What used to drive high-speed growth of the industry, such as PCs and mobile phones, has entered into
the maturity stage. In this case, modular and system integration products, providing fast and easy-to-use
market solutions, have been widely applied in mobile phones and wearable devices. With more features
of health monitoring and big data analysis rolling out, it is expected that more wearable devices will
adopt modular solutions in the future.In addition, with the rapid development of new technologies such as
5G and AI, the improvement of data resource storage, calculation and application demand in China has driven
the growth of data center scale. In early 2022, the “14th Five-year Plan” proposed that “data center is the
digital base of digital economy”, and “counting from east to west” provides bottom support for data center
and facilitates the development of digital economy. The construction period of “counting from east to west”
project is from 2022 to 2025. The data center has a long industrial chain, wide coverage and great driving
effect, which will drive the transformation, upgrading and innovative development of many core industries of
digital economy, including electronic information manufacturing, software and information technology
services.
In the medium-to-long term, 5G will be the largest opportunity for the electronic industry. 5G will
actually usher in an era of Internet of Things (IoT), where everything is connected, by meeting the needs
of growing mobile data traffic and the emerging devices and application scenarios in the future. With the
accelerated integration of 5G with Industrial Internet, cloud computing, big data, artificial intelligence
(AI), and IoT, the amount and complexity of data should be supported by high-performance computing,
which brings new opportunities for the development of AI and edge computing, and subsequently boosts
the demand for hardware, electronic equipment, communication and storage.In addition, the automobile
industry is undergoing the transformation of “electrification, intelligence, unmanned and networking”.
The accelerated development of automobile intelligence makes the intelligent boundary expand
continuously, and many fields such as intelligent cockpit, intelligent driving, power electronics, electric
motor control and battery energy storage will usher in accelerated growth.
(II) Corporate Development Strategy
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2021 Annual Report
□Applicable √ Not Applicable
1. Industry development trend
As the EMS business model has grown matured and EMS service capabilities have continuously
improved, the global EMS industry has expanded its serviceable fields, and the revenue/shipments has
increased year by year. In order to meet the growing needs of brand customers, the EMS industry
continuously expands to the high-end field of the product value chain. This trend brings broader space
for USI, a manufacturer that has product planning, design and R&D capabilities. According to the
market analysis report and the market data collected by the Company, the global EMS/ODM market has
been growing steadily with a CAGR of 7.1%.
2. Industrial barriers
(1) Barriers of R&D and manufacturing capacity
Due to the rapid development of electronic products, short product iteration cycle, and the deepening of
specialization in the division of labor, brand customers put forward much higher and more stringent
requirements for manufacturing service providers in product design and process research and
development. Market demand promotes the transformation and upgrading of manufacturing services
from traditional manufacturing to intelligent manufacturing. Through intelligent automation, the
Company can optimize the manufacturing process, improve product quality, enhance process stability
and on-schedule delivery ability, etc., and provide supporting facilities in the overall R&D technical
capability, process technical support, quality technical control and production technical management.
This has become a very high threshold to enter the electronic manufacturing services.
(2) Barriers to entering brand owners' supply chain
Against a background of rapid product evolution and intensified global competition in electronic
industry, CMs can only achieve sustainable profitability by cooperating with large brand customers and
joining their global eco-system of division of labour. Before that, however, they need long-term
marketing and promotion, strict certification of quality system and product performance verification.
Therefore, strict vendor qualification is the barrier for new entrants.
(3) Barriers of mass production management
One of EMS providers' key services for global brand customers is mass production service. To achieve
high efficiency and quality of product manufacturing under the circumstances of numerous production
lines, various types of raw materials in large quantities, and high-volume purchase orders, the EMS
providers should adopt standardized management of production process and operation procedures, real-
time online monitoring, product testing and inspection, etc. This requires strong competences in
production management of EMS companies.
(4) Barriers of supply chain management (SCM)
EMS providers serve clients in a wide range of fields, including communication and consumer
electronics; the EMS services vary from product R&D, design, material procurement, manufacturing,
quality control, logistics, distribution to after-sales service; the services are provided globally, making it
necessary for EMS providers to have global procurement, distribution and maintenance capabilities to
reduce costs and better serve their brand customers. Therefore, it is a complex and systematic for EMS
providers to meet each customer's needs of services in the whole the supply chain, and establish an
efficient and competitive supporting system for upstream and downstream services. It is an obstacle for
EMS providers to develop excellent supply chain management competence that meets customers’ needs.
(5) Barriers of sufficient capital investment
The EMS providers must have the manufacturing capacity matched with the business scale of their
large-scale brand customers, which requires sufficient investment in fixed assets such as equipment,
plants, supporting facilities, etc. Specifically, to realize precision manufacturing, the EMS providers
need to purchase a large number of expensive SMT line, assembly and test equipment, which requires
high initial investment, and subsequent investments in technologies and equipment renewal along with
constant product upgrades; on the other hand, mass production needs large-scale, complete procurement
system, for which a large amount of working capital is required. Therefore, continuous and sufficient
capital investments can be another obstacle to entering the EMS industry.
3. Changes in competitive landscape
The top manufacturers in the global contract manufacturing industry are relatively stable, and top three
product categories (communication, computer and consumer electronics) by revenue share maintain
relatively stable growth.
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2021 Annual Report
According to the statistics from professional institutions collected by the Company, in 2021, the revenue
of the top three categories in the contract manufacturing industry was communication, accounting for
36%, computer, accounting for 34%, and consumer electronics, accounting for 14%.
It is estimated that by 2025, communications, computer and consumer electronics will account for 85%
of the entire contract manufacturing industry. From 2019 to 2025, the three categories will grow at a
CAGR of 6.7%, 5.8%, 1.8% respectively.
4. Challenges ahead
(1) Industry players strive for market share more actively, intensifying the competitive pressure of
market expansion.
(2) To respond to clients' the requirements of high-quality service and cost control, USI needs to
continuously increase investment, improve efficiency and reduce costs, facing increasing difficulties in
large-scale operation and refined management.
(3) USI, which has accelerated vertical integration and global business expansion through M&A
and strategic investment, needs to arrange financing projects and the funds appropriately, control
financial risks, promote effective integration and synergy after the M&A and, eventually, achieve the
goal of creating value for the Company. The whole process has some uncertainties and risks.
5. Corresponding strategies
(1) Based on the Company's technical, capital, and resource integration advantages, USI has
deepened partnership with the existing customers and try to win more customers to extend its business.
(2) Complying with the development trend of “global demand and localized service”, USI has
rationally distributed global production capacity, introduced new technologies and developed new
products for customers with advanced manufacturing process, flexible production capacity and localized
service, and shortened the time from design concept to mass production to provide more added value.
(3) USI has increased R&D investment in key technologies and application fields, strengthened
vertical integration and industrial cooperation between upstream and downstream of the industrial chain
by integrating Group resources, sharing technologies and independent innovation, and actively deployed
new products and new customers in the industrial and automotive electronics fields to seize the business
opportunities of future market growth.
(4) USI has deepened business collaboration with FAFG, continuously integrated the global
production bases and technical capabilities of both parties, focused on new terminal markets and
customers together, and realized the expansion of global revenue scale in the future.
(5) Starting from the Company's development strategy, USI has introduced professionals with
world-renowned enterprise experience to achieve the development goals in important business areas.
(6) USI has maintained a stable financial structure and a sufficient source of funds required for the
development of new technologies and products.
(III) Business plan
□Applicable √ Not Applicable
1. Overall plan
As a global electronic design, manufacturing and service D(MS)2 provider, the Company will not only
pursue internal growth, but actively seek external growth momentum in the future.Adhering to the
strategy of “modularization, diversification and globalization”, the Company revolves around five major
fields: 4C + 1I (Communication, Computer, Consumer and Car Electronics + Industrial Products), based
on rich and balanced product lines, with miniaturized solutions as the technical core, lays out the future
of the industry with a global perspective, continuously innovates in miniaturized solutions, and strives to
create value for customers.
Through long-term and stable cooperation with global leading brand manufacturers for many years, the
Company has maintained its leading role in miniaturized modules, SiP, wearable electronics
manufacturing and other sub-sectors. Meanwhile, the Company adheres tothe strategy of “selecting the
best among the best”, and locks in a niche market with high growth and certain market scale according
to market dynamics, customer needs and mainstream technology of electronic technology, combined
with the core advantages accumulated over the years. The Company will continue to seek external
growth opportunities, and strengthen products, supply chains, customers, technologies and
manufacturing bases to drive continued revenue and profitability growth.
Focusing on the development trend of smart cars, automotive power modules and power electronics are
another focus of the Company’s development strategy. The Company has been deeply engaged in
automotive and electricity business for over 30 years, with years of accumulated technology and
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2021 Annual Report
experience. At present, the Company has entered into the assembly, production and testing of power
modules of international power semiconductor manufacturers, and is expected to formally mass produce
IGBT and SiC power modules used in Inverter for electric vehicles in 2022. Through flexible
organization, the Company will introduce production automation and continuously strengthen the power
production and testing technology related to electric vehicles, which is expected to continue to grow
rapidly in the next five years.
2. R&D plan
Cutting-edge process capability, strict quality control system and real-time feedback for manufacturing
and sales have always been the key factors for customers to build long-term trust and partnership with a
company. To maintain its competitive edge in the industry, USI must continue to strengthen its R&D
capacity, and increase the proportion of investment into product R&D. By recruiting outstanding R&D
talents from both Chinese mainland and Taiwan, the Company will inject vitality into the development
of various new technologies and products, integrate the capabilities of software, hardware and
miniaturization, and improve the added value and profit of products.
Currently USI has been devoted to producing lighter, thinner, shorter, smaller products with low-power
consumption, strong interconnectivity, and intelligent learning capability. Looking into the future, USI
will use 5G lab test and verification methods to provide the best miniaturized antenna design for
intelligent mobile devices, and expand the technology to computer, communication, wearable, industrial
and car electronics, connecting the cloud storage and cloud computing, and integrating all product
technologies to form an IoT network to meet the needs of customers.
In 2022, the Company will continue to study SESUB technology and its application in SiP, embedding
the main chip inside the substrate, making full use of the substrate surface to provide more space for SiP
design and parts arrangement, and thereby realizing high density and miniaturization of products. In
addition, due to COVID-19 outbreak, anti-epidemic or epidemic prevention materials have been added
to structural parts (especially plastics). In order to avoid infection by contact, antibacterial agents have
been added to the material process formula, and antibacterial agents or disinfectants have been sprayed
on the surface of portable products. At the same time, how to strengthen the durability of materials must
also be considered. The Company's R&D team continues to expand business opportunities in the field of
material application.
Therefore, the Company will focus on the following R&D directions:
(1) Developing the design capability of wireless communication modules and 5G new RF products;
continue to focus on the development of QUALCOMM’s latest 5G IoT platform, upgrade product
specifications in line with the mainstream trend of the market, and take into account the product life
cycle;
(2) Automotive electronic products;
(3) Continuously expanding the application of miniaturized products into the IoT field, and
constantly improving manufacturing process;
(4) Cooperating with other industry-leading technology companies to produce module products
with higher integration and more functions, and expand to IoT and other fields;
(5) Developing network-attached storage (NAS) devices for cloud computing, and cooperating with
major chip companies for the development of high-performance SSD and R&D on miniaturization of
SSD;
(6) Developing miniaturization and automation technologies, and automation tools;
(7) Persistently developing products with green design to reduce material and energy consumption.
3. Production plan
Through M&A of FAFG, USI has 27 production sites in 10 countries or regions, including Chinese
mainland, Taiwan, the United States, France, Germany, the United Kingdom, the Czech Republic,
Mexico, Poland, Tunisia and Vietnam. By acquiring part of Memtech's equity and strengthening the
vertical integration of industries, the Company will appropriately expand the production capacity of
production bases in other regions according to customer demand and future growth demand. In 2021, the
Company's factories in Vietnam and Huizhou were completed and officially put into production.
Since 2016, referring to the spirit of Industry 4.0 and taking Shanghai Zhangjiang factory as the first
demonstration site, the Company has worked out the “5-star factory standard” for intelligent
manufacturing, that is, the machines are 100% automated, light-off production is enabled in more than
80% of the production lines, and the direct manpower is less than 30%. The Company plans to upgrade
its main factories to 3-star and 4-star in 2023, and upgrade its four factories to 5-star light-off factories in
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2021 Annual Report
2025 to realize fully automated production.
In addition, the Company has set up a digital transformation committee, continuously strengthened
digital management, comprehensively improved its entire process, and made good use of IT technology
platform to upgrade, so as to create future competitive advantages.
4. Human resources (HR) plan
According to its future development strategy, USI has formulated an HR plan on the basis of HR
demand forecast, including talent recruitment and training. To satisfy the needs of business development
and enhance work efficiency, USI intends to optimize HR structure, and improve the level of automated
manufacturing. The Company will continue to improve the people-oriented corporate culture, create
growth opportunities for employees, establish a career development, performance evaluation and
incentive mechanism for employees, and reduce employee turnover so as to provide a strong talent
foundation for the Company to achieve its development goals.
5. Sustainable business plan
USI integrates the core values of “unity of knowledge and action, concerted efforts” into 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 cope with climate change. In terms of society (S), it continues employee care
and promotes social participation activities to exert enterprise influence, and thus realizes global
partnership. In terms of governance (G), it upholds the principle of safeguarding investors' rights and
interests, strengthening operational risk management and implementing information security control to
achieve a sound corporate governance structure.
In 2010, USI started to issue annual sustainability reports, and established Sustainability Committee of
the Group in 2020, ranking top in the industry rankings published by S&P Global, MSCI, Sustainalytics,
SynTao Green Finance, Sino-Securities Index, Wind and other domestic and foreign ESG rating agencies.
At the beginning of 2022, USI released the report “Task Force on Climate-Related Financial Disclosure,
TCFD)”, managed and disclosed climate risks and opportunities, and launched a phased strategy to
achieve the goal of net zero carbon emissions in 2050.
(IV) Possible risks
√Applicable □ Not Applicable
1. Macroeconomic fluctuation risk
Electronic manufacturing industry is closely related to technological development and consumer demand.
The Company has been keeping an eye on market changes, maintaining close interaction with customers
to grasp their demand changes, strengthening the collection and analysis of market information to reduce
the impact of product demand changes on the Company, participating in product design or product
development with leading customers in the industry, so as to realize resource sharing and ensure that
R&D technology can meet customer's needs. However, if the global macroeconomic growth declines
further, resulting in weak demands for downstream communications, consumer electronics and industrial
electronics products, the Company's operating performance may face adverse effects.
2. Industry competition risks
EMS industry is a fully competitive industry with numerous global manufacturers, but its overall
concentration is on the rise. According to market research and information collected by USI, the revenue
of the world’s top 25 EMS manufacturers accounted for more than 80% of the entire market in 2020 and
2021, and the industry kept high level of rivalry and concentration. With an increasing number of
industry participants and shortened product life cycle, the Company is faced with intense competition in
sub-sectors of the industry. If the Company cannot ensure the leading advantages of technology and
products or extend the industrial chain to the design with high added value in time, its market share and
profit margin may face the risk of being squeezed.
3. Risk of high customer concentration
During the reporting period, the the Company’s revenue from its top five customers accounted for 59.63%
of the total revenue, showing high customer concentration. Such customers are internationally-renowned
electronic brands, and have established a long-term and stable cooperative relationship with USI to
ensure sufficient business order. In spite of this, if the customer demand declines, or the Company fails
to timely meet the customer requirements in product R&D and design, product quality control, qualified
supplier certification, delivery date, etc., it may cause certain fluctuations in customer orders, thus
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adversely affecting the Company's business scale and operating performance. Therefore, the Company
faces the risk of high customer concentration to a certain extent.
4. Risk of technology R&D and upgrading
Communication electronics, consumer electronics, computers and storage products account for more
than 80% of its revenue. The 3C products, characterized by rapid technological update, frequent product
technology upgrade and gradually shortened product life cycle, is becoming increasingly miniaturized,
shorter and thinner. As new technologies and products are constantly emerging in the industry where the
Company is operating, the rapid upgrading of technologies and products may impact the Company's
products using existing technologies. If the Company fails to reasonably and continuously increase
investment in technology R&D, or timely develop new products with higher quality and meeting
customer needs, it will be unable to maintain its core competitiveness, which will have a potential
adverse impact on its profitability. In recent years, the Company has gradually realized the “global”
production and operation layout through M&A or establishing new subsidiaries in different countries and
regions around the world. However, there are differences in laws and regulations, accounting and tax
systems, business practices, corporate management systems, corporate cultures and other aspects
between the operating bases located in various countries or regions and listed company. The Company
and merged or newly established companies still need to integrate at least in financial management,
customer management, resource management, business development, corporate culture, etc. If the
relevant integration plan is not effectively implemented, it may face risks such as unsatisfactory synergy
M&A or newly established enterprises, loss of core personnel, and decline in performance.
5. Transnational operation risk
To better serve major customers, USI has arranged production, sales and logistics worldwide to quickly
respond to the product delivery needs of major customers. As a result, the Company has 27 large-scale
production bases (including those under construction) in 10 countries and regions. Overseas companies
need to abide by the laws and regulations of their countries and regions when conducting business and
setting up institutions abroad, and to a certain extent, they need to rely on overseas raw material
suppliers, technical service providers or overseas third-party service institutions to ensure the orderly
operation of daily businesses. If the laws, regulations, industrial policies or political and economic
environment of the countries and regions where overseas business is located have undergone major
changes, or there are unpredictable factors such as international tensions, wars, trade sanctions or other
force majeure, it may have potential adverse effects on the normal business operation and sustainable
development of overseas companies. In addition, if the countries and regions where the relevant overseas
businesses are located have restrictions on foreign exchange control and dividend distribution, overseas
companies may have the risk of restrictions on dividend remittance.
6. Emerging risk: Upstream supply chain risk
Due to COVID-19 outbreak and the shortage of global chip capacity, since 2020, there has been a
continuous shortage of supply in the electronics supply chain, a shortage of chips and key components,
and an increase in procurement and international logistics costs. In order to ensure on-time delivery, the
Company also needs more materials to establish safety stock. Due to the overstock or understock of
certain components, the Company's materials in stock have increased greatly. In response to the existing
supply chain risks, the Company needs to have more flexibility in the procurement of key components,
material inventory management, production scheduling, etc. It also needs to confirm demand more
closely with customers and make dynamic adjustment, and arrange shipments and international
transportation reasonably to avoid negative impact on the operation.
(V) Miscellaneous
□Applicable √Not Applicable
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
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Section IVCorporate 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. 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 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.
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(VI) Information disclosure and transparency: The Company truthfully, accurately, completely and
timely disclosed relevant information through Shanghai Securities News, China Securities Journal,
Securities Times, Securities Daily, 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 Listed Companies" in "Section VI
Important Matters".
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
III. Brief Introduction to general meetings of shareholders
Query index of the Disclosure date
Session
Holding date designated website when the Resolution
number
on which the resolution is
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2021 Annual Report
resolution is published
published
2020 annual April 23, www.sse.com.cn April 24, 2021 Deliberated and approved 16
general 2021 (Announcement proposals, including the Work Report
meeting of No.: 2021-041) of the Board of Directors for the
shareholders Year 2020, the Work Report of the
Board of Supervisors for the Year
2020, the Financial Final Report for
the Year 2020, 2020 Annual Report
and Its Summary, the Profit
Distribution Preplan for the Year
2020, the Proposal on Regular
Related Transactions for the Year
2020, the Proposal on Estimated
Regular Related Transactions for the
Year 2020, the Proposal on
Investment Quota of Wealth
Management Products with Self-
owned Idle Funds for the Year 2021,
the Proposal on Bank Credit Line for
the Year 2021, the Proposal on
Financial Derivatives Transactions
for the Year 2021, the Proposal on
Renewal of Financial Audit
Institution, the Proposal on Renewal
of Internal Control Audit Institution,
the Proposal on Amendment to the
Articles of Association, the Proposal
on Agreeing to Provision of Mutual
Guarantees by Controlled
Subsidiaries, the Proposal on
Amendment to the External
Guarantee Management Regulations,
and the Proposal on Supplement of
Candidates for Non-Independent
Directors of the Fifth Session of the
Board of Directors
The first September www.sse.com.cn September 14, Deliberated and approved 3
interim 13, 2021 (Announcement 2021 proposals, including the Proposal on
general No.: Lin 2021- 2021 Employee Stock Ownership
meeting of 075) Plan (Draft) and Its Summary, the
shareholders Proposal on the Administrative
for the year Measures for 2021 Employee Stock
of 2021 Ownership Plan, and the Proposal on
Requesting the General Meeting of
Shareholders to Authorize the Board
of Directors to Handle Matters
Related to the 2021 Employee Stock
Ownership Plan
Convening of an interim general meeting of shareholders requested by the preferred shareholders whose
voting rights have been restored
□ Applicable √Not Applicable
Particulars on general meetings of shareholders
□ Applicable √Not Applicable
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2021 Annual Report
IV. Directors, supervisors and members of the senior management
(I) Shareholding change and remuneration of directors, supervisors and members of the senior
management currently employed and retired during the reporting period
√Applicable □Not Applicable
Unit: Share
Total pre-tax
remuneration Wh
Number of
Number from the remu
Commencement Termination shares Change in
Position of shares Reasons Company was o
Sex Age date of term of date of term held at the share of the
(note) held at the for change during the from
office of office beginning year
end of the reporting partie
of the year
year period (RMB Com
10,000)
Chairman
of the
Male 58 2018-06-28 2023-04-27 0 0 0 N/A 250 or more Y
Board of
Directors
Director Male 58 2016-04-19 2023-04-27 0 0 0 N/A Y
Director
and General Male 68 2008-06-20 2023-04-27 0 0 0 N/A 250 or more
Manager
Director Male 63 2018-07-16 2023-04-27 0 0 0 N/A Below 40 Y
Director
Male 61 2018-07-16 2021-04-23 0 0 0 N/A Below 40 Y
(Resigned)
2010-03-10
Director Male 43 2023-04-27 0 0 0 N/A Below 40 Y
Director Male 44 2017-04-17 2023-04-27 0 0 0 N/A Below 40 Y
Director Male 68 2021-04-23 2023-04-27 0 0 0 N/A Below 40 Y
Independent
Male 58 2017-04-17 2023-04-27 0 0 0 N/A Below 40
Director
Independent
Male 78 2017-04-17 2023-04-27 0 0 0 N/A Below 40
Director
Independent
Male 60 2020-04-28 2023-04-27 0 0 0 N/A Below 40
Director
Chairman
of the
Male 59 2008-06-19 2023-04-27 0 0 0 N/A Below 40 Y
Board of
Supervisors
Supervisor Male 47 2016-04-19 2023-04-27 0 0 0 N/A Below 40 Y
Employee
Male 50 2020-04-28 2023-04-27 0 0 0 N/A 40~100 Y
supervisor
Senior Vice
Male 59 2011-02-09 2023-04-27 20,700 20,700 0 N/A 150~250
President
Senior Vice
President Male 66 2009-12-09 2021-12-24 0 0 0 N/A 150~250
(Resigned)
Senior Vice
Male 60 2008-06-20 2023-04-27 0 0 0 N/A 150~250
President
Stock
Senior Vice
option
President Male 66 2008-06-20 2021-12-24 0 56,000 56,000 150~250
incentive
(Resigned)
exercise
Vice
Male 64 2009-12-09 2023-04-27 0 0 0 N/A 40~100
President
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2021 Annual Report
Senior Vice
Male 63 2017-04-27 2023-04-27 0 0 0 N/A 250 or more
President
Senior Vice
Male 59 2017-04-27 2023-04-27 0 0 0 N/A 150~250
President
Senior Vice
Male 59 2020-04-28 2023-04-27 0 0 0 N/A 100~150
President
Senior Vice
Male 57 2020-04-28 2023-04-27 0 0 0 N/A 100~150
President
Senior Vice
Male 54 2020-04-28 2023-04-27 0 0 0 N/A 150~250
President
Vice
Male 63 2020-04-28 2023-04-27 0 0 0 N/A 100~150
President
Vice
President Male 55 2020-04-28 2021-12-24 0 0 0 N/A 150~250
(Resigned)
Vice
Male 56 2020-04-28 2023-04-27 0 0 0 N/A 150~250
President
Vice
Stock
President
option
and Chief Male 57 2008-06-20 2023-04-27 0 20,000 20,000 100~150
incentive
Financial
exercise
Officer
Senior Vice
President Stock
and option
Male 46 2018-06-28 2023-04-27 0 52,000 52,000 250 or more
Secretary to incentive
the Board exercise
of Directors
/ / / / / 20,700 148,700 128,000 /
Note: During the reporting period, the Company assumed expenses of options and employee stock
ownership plan granted tothe directors, supervisors and members of the senior management, totaling
RMB 6.60 million, which were not included in the pre-tax remuneration they received from the
Company.
Name Work Experience
Jeffrey Chen Jeffrey Chen, from Taiwan, China, graduated from the University of British Columbia with a
master’s degree in business administration. Mr. Chen has served as chairman of Universal
Scientific Industrial (Shanghai) Co., Ltd. since June 2018. He joined the predecessor of ASE
Technology Holding Co., Ltd. in 1994, serving successively as the assistant to the central staff
office, special 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.
He previously worked for Citibank Taiwan as the general manager assistant and Bankers
Trust Taipei Branch as the assistant general manager. Currently he also serves as a director of
ASE Technology Holding Co., Ltd. and an independent director of Mercuries & Associates
Holding, LTD.
Chen-Yen Chen-Yen Wei from Taiwan, China, holds a bachelor’s degree from National Chiao Tung
Wei University. Mr. Wei joined Universal Scientific Industrial Co., Ltd in 1979, where he served
successively as engineering manager, vice president of finished product business group, senior
vice president of communication product business group, senior vice president of corporate
service unit, and general manager of the company. Currently he serves as the director and
president of the Company.
Dtuang Dtuang Wang, from Taiwan, China, holds a bachelor’s degree in laws from National Taiwan
Wang 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 Foundation, a director of
Dinggu Holdings Co., Ltd., a director of Hongjing Construction Co., Ltd., an independent
executive director of First Commercial Bank Co., Ltd., 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
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2021 Annual Report
Committee, a director of ASE Semiconductor Manufacturing Co., Ltd., and the professor of
Ming Chuan University Law School.
Rutherford Rutherford Chang, American, holds a bachelor’s degree in Psychology from Wesleyan
Chang University. Mr. Chang served as the special assistant to the chairman of J&R Holding and the
special assistant to the chairman of Advanced Semiconductor Engineering, Inc. In addition to
serving as a director of the company, he also serves as a director of ASE Semiconductor
Manufacturing Co., Ltd.
Neng Chao Neng Chao Chang, British, with a bachelor’s degree in economics from Williams University,
Chang is a former analyst at Morgan Stanley. He currently serves as the general manager of USI
America Inc., a director of ASE Test Inc., a director of USI Inc., and a director of Advanced
Semiconductor Engineering, Inc.
Gilles Baruk Gilles Baruk Benhamou, French, born in June, 1953, graduated from cole Polytechnique in
Benhamou Paris with a master’s degree in science. Mr. Gilles Benhamou has more than three decades’
experience in the electronic components & assembly industry. Currently he serves as the CEO
of 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.
Yunwei Chinese, with a doctorate in accounting from SUFE, is the founder of the Chinese Accounting
Tang 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 Standards Board, president of Shanghai
Accounting Association, and a member of the Listing Committee for Shanghai Stock
Exchange. Mr. Tang served as a senior researcher of the International Accounting Standards
Board from March 1999 to January 2000. He was awarded honorary membership to the
Association of Chartered Certified Accountants, an honorary fellowship of Lingnan
University in Hong Kong, and the title of 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 China
Jushi Co., Ltd., , Ping An Healthcare and Technology Company Limited and Shanghai
Lujiazui International Financial Asset Exchange Co.,Ltd..
Yiyun Chu 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 selected
candidate of accounting master training project of the Ministry of Finance, who concurrently
takes the position of a member of the Committee for Accounting Standards for Business
Enterprises appointed by the Ministry of Finance, the director of Accounting Society of
China, and executive secretary of Accounting Education Branch, Accounting Society of
China. He also serves as an independent director of Ping An, Bank of Hebei (Not listed) and
Bank of Jiaxing, and an external supervisor of Ping An Bank.
Michael Michael Chung, from Taiwan, China, has a bachelor’s degree in Electrical Engineering from
Chung National Tsing Hua University, Taiwan. Mr. Chung served as the general manager of the
business group of Hon Hai Precision Industry Co., Ltd. and the chief executive officer of TPK
Holding Co., Ltd. He joined AcSiP in June 2019 as the Chairman of the Board since. He also
serves as an independent director of LuxNet Corp., a director of SAVITECH, Dasheng
Venture Capital Co., Ltd, Feng Tay Enterprises Co., Ltd. and LOROM INDUSTRIAL CO.,
LTD.
Meng-Kuo Meng-Kuo Shih, from Taiwan, China, has a master’s degree in management science from
Shih Taiwan Jiaotong University. Mr. Shih used to serve as deputy director of finance of TECO
Electric & Machinery Co., Ltd., director of finance of TECO OPTRONICS CORPORATION,
chief financial officer and spokesperson of InterServ International Inc., and chief financial
officer of Advanced Semiconductor Engineering, Inc. In addition to the director of USI, he
holds the position of a director of USI Inc.
Andrew Andrew Robert Tang, American, graduated from Yale University. Mr. Tang previously
Robert Tang worked for private investment companies and Morgan Stanley, and joined Advanced
Semiconductor Engineering, Inc. in 2014 where he currently assumes the Vice President. He
also serves as a director of Guam Capital Investment Company.
David David Huang, from Taiwan, China, holds an EMBA from Shanghai Jiaotong University. Mr.
Huang Huang previously worked for Universal Scientific Industrial Co., Ltd. Currently he serves as
the director of USI's manufacturing services.
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2021 Annual Report
Ta-I Lin 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 the general manager of Universal Scientific Information Products Business
Division, president of USI Electronics (Shenzhen) Co., Ltd., and the manager of Universal
Scientific Industrial Co., Ltd. Taiwan Factory. Currently, serves as the senior Vice President
of the Company.
Feng-Ta Mr. Feng-Ta Chen, from Taiwan, China, once served as deputy manager of SAMPO CORP.,
Chen manager of wireless network card operation management of Universal Scientific Industrial
Co., Ltd., associate manager of ERP project management, associate manager of global human
resources administration, and general manager of Shanghai Zhangjiang Factory, Jinqiao
Factory, and Shengxia Factory of USI. Currently, he serves as the senior vice president of the
Company's global sales and after-sales service department.
Jing Cao Jing Cao, American, holds a double master's degree in engineering from Arizona State
University. Once served as the senior Vice President of Mindspeed, the vice president of Tyco
Electronics Co., Ltd., and the senior Vice President of UTAC Semiconductor Co., Ltd.
Currently, serves as the senior vice president of the Company.
Yuan-Hsin Yuan-Hsin Sheng, from Taiwan, China, once served as the general manager of Eagle Test
Sheng Systems Taiwan, the vice president of ASE Inc., and the vice president of Universal Scientific
Industrial Co., Ltd. Currently, serves as the senior vice president of the Company.
Tan-Yang Tan-Yang Liu, from Taiwan, China, holds a master's degree from the University of
Liu 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 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, serves as the
vice president and chief financial officer of the Company.
Jinpeng Shi Chinese, holds a bachelor's degree from the School of Economics and Management of Tongji
University, and a EMBA's degree from China Europe International Business School. Once
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 Department, the president of No.3
Business Department and the managing director of Great Wall Securities. Currently, serves as
the senior vice president and the secretary to the Board of Directors of the Company.
Yung-Che Yung-Che Fang, from Taiwan, China, holds a doctor's degree in Mechanical and Aeronautical
Fang Engineering from Case Western Reserve University. Once worked as the executive vice
president at SOCLE Technology Corporation, and the vice president at GIGABYTE
Technology Co., Ltd. and First International Computer, Inc. Currently, serves as the senior
vice president of the Company.
Jeh-Chang Jeh-Chang Lee from Taiwan, China, holds a MBA's degree from University of Maryland. Mr.
Lee Lee Once worked as the deputy director of Taiwan Semiconductor Manufacturing Co., Ltd.
and currently serves as the senior vice president of the Company.
Johnson Johnson Lien, from Taiwan, China, holds a MBA's degree from Chung Hsing University.
Lien Once worked as the special assistant to the general manager and the marketing director of
Siliconware Precision Industries Co., Ltd., and the vice president at Avct and Avct Optical
Electronic and at Jmex Solutions. Currently, serves as the senior vice president of the
Company.
Chia-Hsiung Chia-Hsiung Yu, from Taiwan, China, holds a MBA's degree from National Chiao Tung
Yu University. Currently, serves as the vice president of the Company.
Yueh-Ming Yueh-Ming Lin, from Taiwan, China, holds a bachelor's degree of Electrical Engineering
Lin from Feng Chia University. Mr. Lin Joined in Universal Scientific Industrial Co.，Ltd. In
1995. Currently, serves as the vice president of the Company.
TS Chen TS Chen, from Taiwan, China, holds a bachelor's degree in industrial engineering from Chung
Yuan Christian University. Mr. Chen joined in Advanced Semiconductor Engineering, Inc. in
June 1988. Before joining ASE Group, he worked for Taiwan Integrated Circuit
Manufacturing Co., Ltd. and Philips Electronic Building Elements Industries (Taiwan) Ltd.
From June 1988 to June 2006, Mr. Chen served successively as the senior vice president at
Advanced Semiconductor Engineering, Inc. and the general manager at Zhongli Branch of
Advanced Semiconductor Engineering, Inc. From June 2006 to May 2012, he worked as the
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2021 Annual Report
general manager of Powerase Technologies Inc. From June 2006 to June 2015, he served as
the supervisor of Advanced Semiconductor Engineering, Inc.; in June 2015, he was appointed
as director of the Company; In August 2015, served as the general manager at Zhongli Branch
of Advanced Semiconductor Engineering, Inc. No longer served as director of the Company
after April 23, 2021.
Chueh Hou Chueh Hou, from Taiwan, China, holds an MBA's degree from Tunghai University. In July
1987, Mr. Hou joined in Universal Scientific Industrial Co., Ltd. where he served as the
manager of the engineering department, the director of the development office, the vice
president of the business office, the senior vice general manager of the business division, and
the general manager of the Company. He was appointed as the senior vice president of the
Company in December 2009, and no longer held this position due to retirement on December
24, 2021.
Hung-Chi Hung-Chi Liu, from Taiwan, China, graduated from the Electronics Department of Chung
Liu Yuan Christian University. Mr. Liu once worked as the purchasing engineer of NCR Systems
Taiwan Ltd., the manager of HP Development Company, L.P., the person in charge of the
Wireless Communication Products Division of Universal Scientific Industrial Co., Ltd. He
was appointed as the senior vice president of the Company in June 2008, and no longer held
this position due to retirement from December 24, 2021.
Tsung-Yi Tsung-Yi Chiu from Taiwan, China, holds a master's degree in Industrial Management from
Chiu National Taiwan University of Science and Technology. Mr. Chiu was appointed as the vice
president of the Company in April 2020, and no longer held this position due to early
retirement from December 24, 2021.
Particulars on other information
□Applicable √Not applicable
(II) Employment of directors, supervisors and senior management currently employed and retired
during the Reporting Period
1. Employment in shareholders’ companies
√Applicable □Not Applicable
Comme
Termin
ncemen
Name of Name of ation
t date
person shareholder’s Position held in shareholder’s company date of
of term
employed company term of
of
office
office
Jeffrey Chen ASE Technology Director (representative) of ASE Technology / /
Holding Co., Holding Co., Ltd., Advanced Semiconductor
Ltd., etc. Engineering, Inc. and ASE TEST, Inc.; supervisor
of ASE (Shanghai) Inc., ASE (Kunshan) Japan
Inc. and ASE (Korea) Inc. Supervisor, ASE
(Weihai) Inc.; director of Wuxi Tongzhi
Microelectronics Co., Ltd., ASE Test Limited
(Singapore), ASE Test Holdings Ltd. And
Omniquest Industrial Ltd.; supervisor ofASE
Assembly & Test (Shanghai) Limited; director of
Shanghai Ding Hui Real Estate Development Co.,
Ltd.; director (representative) of ASE Electronics
Inc.; director of Advanced Semiconductor
Engineering (HK) Limited, Suzhou ASE
Semiconductors Co., Ltd., Shanghai Ding Wei
Real Estate Development Co., Ltd., Shanghai Ding
Yu Real Estate Development Co., Ltd., KunShan
Ding Hong Real Estate Development Co., Ltd.,
Shanghai Ding Qi Property Management Co., Ltd.,
Shanghai Ding Fan Commercial Management Co.,
Ltd., Shanghai DingXu Property Management Co.,
Ltd., and Super Zone Holdings Ltd.; chairman of
48 / 258
2021 Annual Report
the Board of Directors and director
(representative) of USI Inc.; director of Huntington
Holdings International Co., Ltd., Shanghai Ding
Yao Real Estate Development Co., Ltd. and Real
Tech Holdings Limited
Chen-Yen USI Inc., etc. Director of USI Inc., HUNTINGTON HOLDINGS / /
Wei INTERNATIONAL CO. LTD., UNITECH
HOLDINGS INTERNATIONAL CO. LTD.,
REAL TECH HOLDINGS LIMITED, and
Universal ABIT Holding Co., Ltd.
Dtuang Wang ASE Technology Chief executive and corporate governance director, / /
Holding Co., member of the Risk Management Committee and
Ltd. chief risk officer, chief information security officer
of ASE Technology Holding Co., Ltd.; director
(representative), and chief executive of Advanced
Semiconductor Engineering, Inc.; chairman of the
Board of Directors and general manager at
Advanced Semiconductor Engineering (China)
Ltd.; director and general manager at ASE
Assembly & Test (Shanghai) Limited; director of
SINO HORIZON; director of Hung Ching
Development & Construction Co.; director of
Hong Jing New Stocks Co., Ltd.; Director and
CEO of ASE Cultural and Education Foundation
and ASE Environmental Sustainability Foundation
Rutherford ASE Technology Director of ASE Technology Holding Co., Ltd., / /
Chang Holding Co., director (representative) of Advanced
Ltd. Semiconductor Engineering, Inc., director
(representative) of ASE TEST, Inc., director and
general Manager of ASE Investment (Kunshan)
Limited, and director (representative) of USI Inc.
Neng Chao Director (representative) of Advanced / /
Chang Advanced Semiconductor Engineering, Inc., director
Semiconductor (representative) of ASE TEST, Inc., and director
Engineering, Inc. (representative) of USI Inc.
Meng-Kuo USI Inc., etc. Director of USI Inc., HUNTINGTON HOLDINGS / /
Shih INTERNATIONAL CO. LTD., UNITECH
HOLDINGS INTERNATIONAL CO. LTD.,
REAL TECH HOLDINGS LIMITED, Universal
ABIT Holding Co., Ltd. and USI Enterprise
Limited
Andrew Advanced Supervisor (representative) of Advanced / /
Robert Tang Semiconductor Semiconductor Engineering, Inc.; ASE TEST,
Engineering, Inc.; director of Shanghai Ding Hui Real Estate
Inc., etc. Development Co., Ltd., Shanghai Ding Wei Real
Estate Development Co., Ltd., and Shanghai Ding
Yu Real Estate Development Co., Ltd.; supervisor
(representative) of USI Inc.; director of ASE
Cultural and Education Foundation and ASE
Environmental Sustainability Foundation
Chen-Lung USI Inc., etc. Director of USI Inc., director of HUNTINGTON / /
Wei HOLDINGS INTERNATIONAL CO. LTD., and
director of Universal ABIT Holding Co., Ltd.
Ta-I Lin Universal Director / /
ABIT Holding
Co., Ltd.
Tan-Yang Liu USI Inc., etc. Director of USI Enterprise Limited and director of / /
USI Inc.
TS Chen ASE Technology Director (representative) of ASE Technology / /
49 / 258
2021 Annual Report
Holding Co., Holding Co., Ltd.; director (representative) of
Ltd., etc. Advanced Semiconductor Engineering, Inc. and
general manager at its Zhongli Branch; supervisor
of Suzhou ASE Semiconductors Co., Ltd.; director
of ASE (Weihai) Inc. and ASE (Kunshan) Inc.;
director (representative) of Lu-Chu Development
Corporation
Particulars on TS Chen no longer served as director of the Company from April 23, 2021.
employment
in
shareholders’
companies
50 / 258
2021 Annual Report
2. Employment in other companies
√Applicable □Not Applicable
Name of Commencement Termination
Name of other
person Position held in other companies date of term of date of term
companies
employed office of office
Dtuang School of Director and CEO of Zhang Yao Hongying / /
Wang Law of Ming Social Welfare and Charity Foundation
Chuan and Honorary Professor at School of Law
University, of Ming Chuan University
etc.
Gilles Baruk Saphir, etc. CEO of Saphir, director of Decelect, CEO
Benhamou of Retail Evolution, and CEO of ASDI
Assistance Direction
Meng-Kuo Global Director / /
Shih Venture
Capital Co.,
Ltd.
Andrew Guam Capital Director / /
Robert Tang Investment
Yunwei China Jushi Independent director of China Jushi Co., / /
Tang Co., Ltd., etc. Ltd., Ping An Healthcare and Technology
Co., Ltd., and Shanghai Lujiazui
International Financial Asset Exchange
Co.,Ltd.
Yiyun Chu Shanghai Professor and PhD advisor with School of / /
University of Accounting, SUFE, member of the 1st
Finance and Advisory Committee for Accounting
Economics, Standards for Business Enterprises of the
etc. Ministry of Finance, director of the
Accounting Society of China, executive
secretary-general at the Accounting
Education Branch of the Accounting
Society of China, full-time researcher at
Institute of Accounting and Finance,
Shanghai University of Finance and
Economics as the Key Research Base of
Humanities and Social Sciences of the
Ministry of Education, and independent
director of Ping An Insurance (Group)
Company of China, Bank of Hebei Co.,
Ltd. (Unlisted), and Bank of Jiaxing
(Unlisted)
Michael AcSiP, etc. Chairman of the Board of Directors of / /
Chung AcSiP, independent director of LuxNet
Corp., and director of Savitech Corp.,
Dasheng Venture Capital Co., Ltd., FENG
TAY ENTERPRISES CO., LTD., and
LOROM INDUSTRIAL CO., LTD.
Ta-I Lin SUMA-USI Director / /
Electronics
Co., Ltd.
Jinpeng Shi GJS Capital Director of GJS Capital Co., Ltd. and / /
Co., Ltd., etc. supervisor of SUMA-USI Electronics
Co., Ltd.
Particulars None
on
employment
in other
51 / 258
2021 Annual Report
companies
(III) Remuneration of directors, supervisors and members of the senior management
√Applicable □Not Applicable
Decision-making procedures for The relevant proposals on the annual remuneration of members of the
the remuneration of directors, senior management personnel shall be reviewed by the Remuneration
supervisors and members of the Committee under the Board of Directors and then submitted to the
senior management Board of Directors for deliberation and approval before implementation.
Determination basis for the
Remuneration shall be determined according to their performance
remuneration of directors,
appraisal, combined with the Company's asset status, profitability and
supervisors and members of the
progress of annual business objectives.
senior management
Actual payment of the
For details, see Section IV-I (I) Shareholding change and remuneration
remuneration of directors,
of directors, supervisors and members of the senior management
supervisors and members of the
currently employed and retired during the reporting period.
senior management
Total remuneration actually
received by all directors,
supervisors and members of the RMB 30.52 million
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
TS Chen Director Resigned Resignation due to work
arrangement adjustment
Gilles Baruk Benhamou Director Appointed New appointment
Chueh Hou Senior vice president Resigned Resignation due to
retirement
Hung-Chi Liu Senior vice president Resigned Resignation due to
retirement
Tsung-Yi Chiu Vice president Resigned Resignation due to
retirement
(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
Session of meeting Holding date Resolution
The following proposals were deliberated and adopted:
The 8th meeting of 1. Proposal on the Company's Qualification for the Public Issuance of
the fifth session of March 1, Convertible Corporate Bonds
the Board of 2021 2. Proposal on the Listing of Convertible Corporate Bonds
Directors 3. Proposal on Opening a Special Account for Funds Raised by
Public Issuance of Convertible Corporate Bonds and Signing a
Regulatory Agreement
The 9th meeting of The following proposals were deliberated and adopted:
the fifth session of March 26, 1. Proposal on the 2020 Work Report of the Board of Directors
the Board of 2021 2. Proposal on the 2020 Work Report of the General Manager
Directors 3. Proposal on 2020 Final Financial Report
52 / 258
2021 Annual Report
4. Proposal on 2021 Annual Report and its Summary
5. Proposal on 2020 Annual Internal Control Self-Assessment
Report
6. Proposal on 2020 Annual Corporate Social Responsibility
Report
7. Proposal on 2020 Profit Distribution Plan
8. Proposal on Recognition of Loss of Assets Deductible Against
Taxable Income in 2020
9. Proposal on the Remuneration of the Company's Senior
Management in 2020
10. Proposal on Regular Related Party Transactions in 2020
11. Proposal on Predicted Regular Related Party Transactions in
2021
12. Proposal on the Amount of Wealth Management Products
Using Self-owned Idle Funds Allowed for 2021
13. Proposal on Bank Credit Lines in 2021
14. Proposal on the Amount of Financial Derivative Transactions
Allowed for 2021
15. Proposal on the Company's Provision of Financial Assistance
to Subsidiaries
16. Proposal on New Candidates for Non-independent Directors
of the Fifth Session of the Board of Directors
17. Proposal on Appointing Securities Affairs Representative
18. Proposal on Formulating 2021 Internal Audit Plan
19. Proposal on Renewing the Contract with Financial Audit
Institutions
20. Proposal on Renewing the Contract with Internal Control
Audit Institutions
21. Proposal on Amending the Articles of Association
22. Proposal on Amending the Rules of Registration for Insiders
23. Proposal on Replacing Pre-issuance Investments Using Self-
Owned Funds and Flotation Costs with Raised Funds
24. Proposal on Using Raised Funds for the Supplementary
Working Capital Project
25. Proposal on Using Raised Funds to Inject Capital into
Subsidiaries
26. Proposal on Using Idle Raised Funds for Cash Management
27. Proposal on Guarantees Between Holding Subsidiaries
28. Proposal on Amending the Administrative Rules of External
Guarantee
29. Proposal on Holding 2020 Annual General Meeting of
Shareholders
The following proposals were deliberated and adopted:
1. Proposal on Quarterly Report for Q1 2021
The 10th meeting of
2. Proposal on Amending the Rules of Information Disclosure
the fifth session of April 26,
3. Proposal on Amending the Internal Reporting Rules for Major
the Board of 2021
Issues
Directors
4. Proposal on Confirmation of the Participants and Vesting price
of Core Employee Stock Ownership Plan Phase II
The following proposals were deliberated and adopted:
The 11th meeting of
1. Proposal on Retroactive Adjustment of Financial Statements for
the fifth session of cJuly 12,
Business Combination not Under Common Control
the Board of 2021
2. Proposal on the Use of Self-owned Funds for Corporate Venture
Directors
Capital and Authorization of Investment Quota
The 12th meeting of The following proposals were deliberated and adopted:
August 24,
the fifth session of 1. Proposal on the 2021 Semi-Annual Report and its Summary
2021
the Board of 2. Proposal on the Special Report on the Deposit and Actual
53 / 258
2021 Annual Report
Directors Usage of the Raised Funds in the First Half of 2021
3. Proposal on the Plan for Share Buy-back by Centralized
Bidding Transactions
4. Proposal on 2021 Employee Stock Ownership Plan (Draft) and
its Summary"
5. Proposal on the Administrative Rules for 2021 Employee Stock
Ownership Plan
6. Proposal on Requesting the General Meeting of Shareholders to
Authorize the Board of Directors to Handle Formalities Related to
2021 Employee Stock Ownership Plan
7. Proposal on Holding the First Extraordinary General Meeting
of Shareholders in 2021
The following proposals were deliberated and adopted:
1. Proposal on Quarterly Report for Q1 2021
2. Proposal on the Adjustment of Participants and Cancellation of
Part of the Options in the Incentive Stock Option Plan 2015
3. Proposal on the First Exercise Period of Incentive Stock Option
The 13th meeting of Plan 2019 Part I and the Method of Independent Exercise
the fifth session of October 26, 4. Proposal on Adjustment of Some Issues and Cancellation of
the Board of 2021 Part of the Stock Options in the Incentive Stock Option Plan 2019
Directors 5. Proposal on First Exercise Period of Incentive Stock Option
Plan 2019 Part II and the Method of Independent Exercise
4. Proposal on Adjustment and Cancellation of Part of the Stock
Options in the Incentive Stock Option Plan 2019
7. Proposal on Adjustment of the Use of the Company's Shares
bought back in 2019
The 14th meeting of The following proposals were deliberated and adopted:
the fifth session of December 14, 1.Proposal on USI's Wholly-owned Subsidiary FAFG's
the Board of 2021 Combination with its Wholly-owned Subsidiary AFG
Directors 2.Proposal on Amending the 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
Attendanc
e at
general
Attendance at meetings of the Board of Directors meetings
of
Independe shareholde
Name of
nt director rs
director
or not Two
Number Number of
Number Times of Numb consecuti
of attendance Number
of attendan er of ve
attendan by of
attendan ce by absenc absences
ce communicati attendance
ce in proxy e in person
required on
person or not
Jeffrey
No 7 7 6 0 0 No 2
Chen
Rutherfo
No 7 7 7 0 0 No 0
rd Chang
Neng
Chao No 7 7 7 0 0 No 0
Chang
Dtuang
No 7 7 7 0 0 No 0
Wang
Chen- No 7 7 7 0 0 No 0
54 / 258
2021 Annual Report
Yen Wei
TS Chen No 2 2 2 0 0 No 0
Gilles
Baruk
No 5 5 5 0 0 No 0
Benham
ou
Yiyun
Yes 7 7 7 0 0 No 2
Chu
Yunwei
Yes 7 7 7 0 0 No 0
Tang
Michael
Yes 7 7 7 0 0 No 0
Chung
Particulars on two consecutive absences in person from meetings of the Board of Directors
□Applicable √Not Applicable
Number of meetings of the Board of Directors held in 7
2021
Including: on site 0
by communication 5
on site x by communication 2
(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
(1). Members of special committees under the Board of Directors
Type of special committees Name of members of special committees
Audit Committee Yunwei Tang, Jeffrey Chen, Chen-Yen Wei, Yiyun Chu, and Michael Chung
Nomination Committee Michael Chung, Jeffrey Chen, Chen-Yen Wei, Yunwei Tang, and Yiyun Chu
Remuneration and Appraisal
Yiyun Chu, Jeffrey Chen, Chen-Yen Wei, Michael Chung, and Yunwei Tang
Committee
Jeffrey Chen, Chen-Yen Wei, Gilles Baruk Benhamou, Neng Chao Chang,
Strategic Committee
and Michael Chung
(2). 5 meetings held by the Audit Committee during the reporting period
Other information
Holding Important comments and on performance of
Meeting content
date suggestions functions and
duties
The following proposals were The Company's financial report Conducted on-site
deliberated and submitted to the was true, complete and accurate, research on the
Board of Directors: with no related cheating, fraud and Company's
1. Proposal on Financial Final material misstatement, and the operation and
Accounts Report of 2020 Company had no significant communicated
2. Proposal on 2020 Final Financial accounting error adjustments, no with the
March 26,
Report changes in significant accounting management on
2021
3. Proposal on 2020 Annual policies and estimates, no matters the Company's
Internal Control Self-Assessment involving important accounting development.
Report judgments, and no matters
4. Proposal on 2020 Profit resulting in a non-standard audit
Distribution Plan report with unqualified opinions.
5. Proposal on Regular Related The actual operation of the
55 / 258
2021 Annual Report
Party Transactions in 2020 Company's internal control
6. Proposal on Predicted Regular complied with the requirements of
Related Party Transactions in 2021 the corporate governance norms
7. Proposal on the Amount of for listed companies issued by the
Wealth Management Products China Securities Regulatory
Using Self-owned Idle Funds Commission.
Allowed for 2021
8. Proposal on Bank Credit Lines in
2021
9. Proposal on the Amount of
Financial Derivative Transactions
Allowed for 2021
10. Proposal on the 2020 Work
Report of the General Manager
11. Proposal on Formulating 2021
Internal Audit Plan
12. Proposal on Renewing the
Contract with Internal Control
Audit Institutions
13. Proposal on Renewing the
Contract with Financial Audit
Institutions
14. Proposal on Replacing Pre-
issuance Investments Using Self-
Owned Funds and Flotation Costs
with Raised Funds
15. Proposal on Using Raised
Funds for the Supplementary
Working Capital Project
16. Proposal on Using Raised
Funds to Inject Capital into
Subsidiaries
17. Proposal on Using Idle Raised
Funds for Cash Management
18. Proposal on 2020 Performance
Report of the Audit Committee
The following proposals were The Company's financial report Communicated
deliberated and submitted to the was true, complete and accurate, with the
Board of Directors: with no related cheating, fraud and management on
1. Proposal on Financial Statements material misstatement, and the the Company's
for Q1 2021 Company had no significant development.
2. Proposal on Work Report on accounting error adjustments, no
Internal Control for Q1 2021 changes in significant accounting
April 26, policies and estimates, no matters
2021 involving important accounting
judgments, and no matters
resulting in a non-standard audit
report with unqualified opinions.
After the internal audit work report
was reviewed, no major problems
were found in the internal audit
work.
Proposal on Retroactive The external appraiser appointed Communicated
Adjustment of Financial data for by the Company confirmed the fair with the chief
Business Combination not Under value of various identifiable assets, financial officer
July 12, Common Control was deliberated liabilities and contingent liabilities and the secretary
2021 and submitted to the Board of of FAFG obtained in the business of the board of
Directors. combinate ion. According to the directors on the
relevant accounting standards, it allocation of the
was necessary to retrospectively ppa company's
56 / 258
2021 Annual Report
adjust some of the financial data of acquisition
the Company's 2021 First Quarter premium.
Report. The financial statements
retrospectively adjusted in line
with the relevant provisions of the
accounting standards, objectively
and truly reflected the Company's
financial situation and actual
operating results.
The following proposals were The Company's financial report Conducted
deliberated and submitted to the was true, complete and accurate, research on the
Board of Directors: with no related cheating, fraud and Company's
1. Proposal on Financial Statements material misstatement, and the operation and
for H1 2021 Company had no significant communicate with
2. Proposal on Work Report on accounting error adjustments, no the management
Internal Control for H1 2021 changes in significant accounting on the Company's
3. Proposal on the Special Report policies and estimates, no matters development.
on the Deposit and Actual Usage of involving important accounting
the Raised Funds in the First Half judgments, and no matters
of 2020 resulting in a non-standard audit
report with unqualified opinions.
After the internal audit work report
August 24,
was reviewed, no major problems
2021
were found in the internal audit
work.
The Company used the raised
funds in accordance with the
provisions and requirements of
relevant laws, regulations, and
regulatory documents, and
disclosed the relevant information
of the raised funds in a timely,
true, accurate and complete
manner, with no violation of the
use and management of the raised
funds.
The following proposals were The Company's financial report Conducted
deliberated and submitted to the was true, complete and accurate, research on the
Board of Directors: with no related cheating, fraud and Company's
1. Proposal on Quarterly Report for material misstatement, and the operation and
Q3 2021 Company had no significant communicate with
2. Proposal on Work Report on accounting error adjustments, no the management
Internal Control for Q3 2021 changes in significant accounting on the Company's
October policies and estimates, no matters development.
26, 2021 involving important accounting
judgments, and no matters
resulting in a non-standard audit
report with unqualified opinions.
After the internal audit work report
was reviewed, no major problems
were found in the internal audit
work.
(3). 1 meeting held by the Nomination Committee during the reporting period
Other information
Holding Important comments and on performance of
Meeting content
date suggestions functions and
duties
57 / 258
2021 Annual Report
Deliberated and approved the The Nomination Committee None
Proposal on Nominating and performed its duties diligently in
Supplementing Candidates accordance with relevant
(company) for Non-Independent regulations and the provisions of
Directors of the Fifth Session of the Articles of Association and
the Board of Directors the Rules of Work of the
Nomination Committee of the
March 26, Company, reviewed the
2021 Company's nomination and
addition of non-independent
director candidates for the fifth
session of the Board of Directors,
and formulated a proposal to be
submitted to the Board of
Directors of the Company for
deliberation.
(4). 4 meetings held by the Remuneration and Appraisal Committee during the reporting period
Other information
Holding Important comments and on performance of
Meeting content
date suggestions functions and
duties
Deliberated and approved the The remunerations paid by the None
Proposal on Confirming the Company to directors, supervisors
Company's Members of the and members of the senior
March 26, Senior Management for the Year management were in line with the
2021 2020, and agreed to submit the Company's remuneration system
proposal to the Board of standards, and the remuneration
Directors for deliberation. data disclosed were true,
reasonable and accurate.
Deliberated and approved the The holders identified in the None
Proposal on Confirming the current employee stock ownership
Holders of Phase-2 Core plan all met the relevant laws and
Employee Stock Ownership regulations, the holding conditions
Plan and the Transfer Price, and stipulated in the normative
agreed to submit it to the Board documents, and the determination
of Directors for deliberation. standards for the participants
stipulated in the employee stock
April 26, ownership plan. Their subject
2021 qualification as the holders was
legal and valid.
The current employee stock
ownership plan was conducive to
the sustainable development of the
listed company, and there was no
situation that damages the interests
of the listed company and its all
shareholders.
Deliberated and approved the The Company's 2021 employee None
following proposals and agreed stock ownership plan could further
to submit them to the Board of improve the Company's
Directors for deliberation: remuneration incentive
August
1. Proposal on “2021 Employee mechanism, fully mobilize the
24, 2021
Stock Ownership Plan (Draft) enthusiasm of the Company's core
and Its Summary” employees, realize the long-term
2.Proposal on the development of the Company and
“Administrative Measures for the full integration of employees'
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2021 Annual Report
2021 Employee Stock interests, and facilitate the
Ownership Plan” Company sustainable operations,
3. Proposal on Requesting the thus the meeting agreed with the
General Meeting of Company to implement the 2021
Shareholders to Authorize the employee stock ownership plan.
Board of Directors to Handle
Matters Related to the 2021
Employee Stock Ownership
Plan
Deliberated and approved the The exercise conditions for the None
following proposals and agreed first exercise period of the initial
to submit them to the Board of grant equity and reserved grant
Directors for deliberation: equity under the incentive plan
1. Proposal on Adjustment of were met, and the Company's
Incentive Objects and implementation of the exercise was
Cancellation of Partial Equity in line with the relevant provisions
under the 2015 Stock Option of the Option Incentive Plan and
Incentive Plan the Option Incentive
2. Proposal on the Satisfaction Administration Measures.
with Exercise Conditions by the The adjustment and cancellation
First Exercise Period of the were performed in line with the
Initial Grant of the 2019 Stock relevant provisions of the
Option Incentive Plan and Company's Stock Option Incentive
Exercise of the Right by Self- Plan (Draft) and Appraisal
Exercise Administrative Measures for
October
3. Proposal on Adjustment of Implementation of the Stock
26, 2021
Matters Related to the Initial Option Incentive Plan.
Grant of the 2019 Stock Option
Incentive Plan and Cancellation
of Partial Equity
4. Proposal on the Satisfaction
with Exercise Conditions by the
First Exercise Period of the
Reserved Grant of the 2019
Stock Option Incentive Plan and
Exercise of the Right by Self-
Exercise
5. Proposal on Adjustment of
Matters Related to the Reserved
Grant of the 2019 Stock Option
Incentive Plan and Cancellation
of Partial Equity
(5). 3 meetings held by the Strategic Committee during the reporting period
Other information
Holding Important comments and on performance of
Meeting content
date suggestions functions and
duties
The members of the Strategic The members of the Strategic
Committee listened carefully to Committee listened carefully to
Understood the
the 2021 Strategic Plan of the 2021 Strategic Plan of
impact of
Universal Scientific Industrial Universal Scientific Industrial
March 26, international trade
(Shanghai) Co., Ltd. made by the (Shanghai) Co., Ltd. made by the
2021 frictions on the
Company's President Mr. Chen- Company's President Mr. Chen-
Company's
Yen Wei, and discussed it. None Yen Wei, and discussed it. None
business
of the participating members had of the participating members had
any objection to the report. any objection to the report.
59 / 258
2021 Annual Report
The Strategic Committee The Strategic Committee
deliberated the Proposal on Using deliberated the Proposal on
Self-owned Funds for Enterprise Using Self-owned Funds for
July 12, Venture Capital Investment and Enterprise Venture Capital
None
2021 Investment Quota Authorization, Investment and Investment
and agreed to submit it to the Quota Authorization, and agreed
Board of Directors for to submit it to the Board of
deliberation. Directors for deliberation.
The Strategic Committee The Strategic Committee
deliberated the Proposal on the deliberated the Proposal on the
Plan for Repurchasing Shares Plan for Repurchasing Shares
August
through Centralized Bidding through Centralized Bidding None
24, 2021
Transactions and agreed to submit Transactions and agreed to
it to the Board of Directors for submit it to the Board of
deliberation. Directors for deliberation.
(6). Specific particulars on matters of objection
□Applicable √Not Applicable
III. 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 company 2,636
Number of on-the-job employees of the main subsidiaries 22,131
Total number of on-the-job employees 24,768
Number of retirees of whom the parent company and major 13
subsidiaries are responsible for the expenses
Breakdown by function
Function Number
Production 16,163
Sales 734
Technical 4,902
Financial 231
Administrative 2,738
Total 24,768
Breakdown by education background
Education background Number
Doctor's degree 13
Master's degree 1,385
Bachelor's degree 3,919
Junior college 3,421
Senior school's degree and below 16,030
Total 24,768
(II) Remuneration policy
√Applicable □Not Applicable
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.
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2021 Annual Report
(III) Training program
√Applicable □Not Applicable
The Company has established a dual-track learning pathway. One the one hand, internal training courses
in different categories are designed systematically and arranged by five colleges, so that trainees can
take required courses, join training sessions held by internal lecturers as well as workshops organized by
external professional lecturers. On the other hand, the Company promotes the Individual Development
Program (IDP), so as to ensure the depth and breadth of employees' career development and contribute
to sustainable development.
(IV) Labor outsourcing
√Applicable □Not Applicable
Total working hours of labor outsourcing 7,909,001.53
Total remuneration paid for labor outsourcing 172,374,675.64
X. Plan for profit distribution or capitalization from public reserve funds
(I) Formulation, implementation or adjustment of the cash dividend policy
√Applicable □Not Applicable
Regarding its profit distribution plan for 2020, USI intended to distribute a cash dividend of RMB 5 (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 public reserve into share capital, and all the remaining undistributed profits were
carried forward for distribution in the following years. The Company's total share capital on the record
date for implementing the plan for 2020 profit distribution was 2,209,609,072 shares, and after the
deduction of 11,332,177 shares in the Company's special buy-back securities account, the actual number
of shares participating in the distribution was 2,198,276,895 shares. 2020 profit distribution was
completed on June 3, 2021.
Regarding its profit distribution plan for 2021, USI is going to distribute a cash dividend of RMB 2.60
(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 public reserve into share capital, and all the remaining undistributed
profits were carried forward for distribution in the following years.
Prior to the record date for implementing the plan, in case of any changes in the Company's total share
capital and the number of shares in the Company's special buy-back securities account, the amount of
cash dividends distributed per share will remain unchanged, and the total distribution will be adjusted
accordingly.
The Company's Profit Distribution Plan for the Year 2021 was deliberated and approved at the 15th
meeting of the fifth session of the Board of Directors of the Company, and it still needs to be deliberated
at the Company's 2021 annual general meeting of shareholders.
(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
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 √Yes □No
opinions and demands, and whether their legitimate rights and interests 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
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2021 Annual Report
□Applicable √Not Applicable
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
Option exercise of the Incentive Stock Option Plan 2015: In the fourth quarter
of 2021, a total of 19,900 shares were exercised and registered for transfer. As
of December 31, 2021, a total of 7,798,620 shares were exercised and For details, see the
registered for transfer, accounting for 37.56% of the total number of exercisable announcement (No.:
stock options. 2022-001) disclosed by
Option exercise of the Incentive Stock Option Plan 2019 Part I: In the fourth the Company on the
quarter of 2021, a total of 509,300 shares were exercised and registered for website of Shanghai
transfer. As of December 31, 2021, a total of 509,300 shares were exercised Stock Exchange
and registered for transfer, accounting for 3.15% of the total number of (www.sse.com.cn) on
exercisable stock options. January 5, 2022
Option exercise of Incentive Stock Option Plan 2019 Part II: In the fourth
quarter of 2021, no option was exercised yet.
The Core Employee Stock Ownership Plan Phase II completed the non-trading For details, see the
transfer of shares: On December 22, 2021, the Company received the Transfer announcement (No.:
Registration Confirmation issued by China Securities Depository and Clearing 2021-102) disclosed by
Co., Ltd.; 1,780,050 shares held in the Company's special buy-back securities the Company on the
account (B882423910) were transferred to the Company's second-phase core website of Shanghai
employee stock ownership plan securities account in the form of non-trading Stock Exchange
transfer on December 21, 2021, at a price of RMB 12.665 per share (the total (www.sse.com.cn) on
transaction consideration was RMB 22,544,333.25) December 23, 2021
The Employee Stock Ownership Plan 2021 completed the non-trading transfer For details, see the
of shares: On September 23, 2021, the Company received the Transfer announcement (No.:
Registration Confirmation issued by China Securities Depository and Clearing 2021-077) disclosed by
Co., Ltd.; 281,200 shares held in the Company's special buy-back securities the Company on the
account (B882423910) were transferred to the Company's securities account for website of Shanghai
Employee Stock Ownership Plan 2021 in the form of non-trading transfer on Stock Exchange
September 22, 2021, at a price of RMB 0 per share. (www.sse.com.cn) on
September 24, 2021
(II) Incentive matters not disclosed in temporary announcements or with further progress
Equity incentive
□Applicable √Not Applicable
Other particulars
√Applicable □Not Applicable
Employee stock ownership plan
√Applicable □Not Applicable
The Core Employee Stock Ownership Plan Phase I held 1,280,600 shares in the lock-up peirod, and as
of December 31, 2021, a total of 479,900 shares have been sold.
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
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2021 Annual Report
□Applicable √Not Applicable
The Company had an appraisal and incentive mechanism. The Remuneration and Appraisal 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 very
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 asset status, 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
During the reporting period, the Company revised the Internal Reporting System for Major Matters, the
Rules of Information Disclosure, the Rules of External Guarantee Management, the Administrative
Regulations for Registration of Information Insiders and the Procedures for Loaning of Funds and
continued carrying out internal control construction, optimization and improvement. The Company
maintained effective internal control in all material aspects of financial and non-financial reporting.
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. 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
Whether to disclose the internal control audit report: Yes
Type of internal control audit report opinions: An unqualified opinion
XV. Rectification of problems identified in self-examination of governance special actions by the
listed company
Not Applicable
XVI. Others
□Applicable √Not Applicable
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2021 Annual Report
Section V Environmental and Social Responsibility
I. Environmental information
(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
1. Pollutant Discharge information
√Applicable □Not Applicable
1) The information of wastewater detection and waste treatment in USI in 2021 is as follows:
Information on Wastewater Discharge in 2021
Number & Monitoring units and Shanghai Weizheng Test
position of methods Technology Co., Ltd.
ws-3101154143063-1
wastewater
discharge port
Discharge Discharge mode and It is discharged from the pipe
“Integrated Wastewater Discharge
standard destination and enters the urban sewage
Standard” DB31/199
treatment plant
Testing items Standard Test date
value 2021/1/12 2021/3/10 2021/05/21 2021/8/23 2021/10/14 2021/11/23
PH 6--9 7.72 7.56 6.99 6.7 7.2 6.2
Suspended Solids ≤400 246 34 80 33 34 34
(SS) (mg/L)
Chemical Oxygen ≤500 286 188 160 90 182 105
Demand (COD)
(mg/L)
Biochemical ≤300 46.4 46.0 34.6 21.7 48.7 22.4
Oxygen Demand
(BOD5) (mg/L)
Ammonia Nitrogen ≤45 15.2 20.8 2.22 2.74 8.22 0.24
(NH3-N) (mg/L)
Total Nitrogen ≤70 25.7 23.6 18.1 23.9 13.2 3.02
(mg/L)
Total Phosphorus ≤8 1.76 1.79 2.79 0.2 0.61 0.41
(mg/L)
Petroleum (mg/L) ≤15 0.29 ＜0.06 0.16 ＜0.06 0.14 0.13
Animal and ≤100 ＜0.06 0.94 0.43 ＜0.06 0.08 ＜0.06
Vegetable Oils
(mg/L)
Anionic Surfactant ≤20 0.10 0.32 ＜0.17 0.12 0.44 0.36
(mg/L)
Total Dissolved ≤2000 466 410 1.02×103 214 596 467
Solids (mg/L)
Remarks / Qualified Qualified Qualified Qualified Qualified Qualified
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2021 Annual Report
Information on Solid (Hazardous) Waste Discharge in 2021
Transfe
Storage
Output r Disposal or
Name Category Code capacit
(tons) amount recovery
y (tons)
(tons)
PCB dust, board edge, Hazardou 900-045-49 25.932 25.932 0 Hand it over to a
PCB with parts s waste qualified unit for
processing
Empty barrels, rags, filter Hazardou 900-041-49 39.216 39.216 0 Hand it over to a
elements and sludge s waste qualified unit for
contaminated with processing
chemicals
Organic resin Hazardou 900-014-13 30.17 30.17 0 Hand it over to a
s waste qualified unit for
processing
Bromopropane Hazardou 900-404-06 18.366 18.366 0 Hand it over to a
s waste qualified unit for
processing
Waste isopropanol and Hazardou 900-402-06 165.132 165.132 0 Hand it over to a
other solvents s waste qualified unit for
processing
Waste oil Hazardou 900-249-08 0.51 0.51 0 Hand it over to a
s waste qualified unit for
processing
Waste cutting fluid Hazardou 900-006-09 1.014 1.014 0 Hand it over to a
s waste qualified unit for
processing
Waste activated carbon Hazardou 900-039-49 7.582 7.582 0 Hand it over to a
s waste qualified unit for
processing
200L iron drum Hazardou 900-041-49 120 120 0 Hand it over to a
s waste qualified unit for
processing
Waste fluorescent tubes Hazardou 900-023-29 0.19 0.19 0 Hand it over to a
s waste qualified unit for
processing
Lead-acid waste battery Hazardou 900-044-49 0 0 0 Hand it over to a
s waste qualified unit for
processing
Lead–tin paste and tin slag Hazardou 900-025-31 0 0 0 Hand it over to a
s waste qualified unit for
processing
Laboratory waste Hazardou 900-047-49 0.1 0.1 0 Hand it over to a
s waste qualified unit for
processing
2) The treatment information of industrial waste gas and hazardous waste in USI Electronics (Shenzhen)
Co., Ltd. in 2021 is as follows:
Is there
Discharge Is the total
Types of Discharge Implementation any
port emission
pollutants mode standards excessive
information approved?
emission?
Tin, lead and Emission Limits of Air
their compounds Organized Pollutants in
A1 None None
Non-methane emission Guangdong Province
total DB4427-2001
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2021 Annual Report
hydrocarbons
Tin, lead and
Emission Limits of Air
their compounds
Organized Pollutants in
A2 Non-methane None None
emission Guangdong Province
total
DB4427-2001
hydrocarbons
Tin, lead and
Emission Limits of Air
their compounds
Organized Pollutants in
A3 Non-methane None None
emission Guangdong Province
total
DB4427-2001
hydrocarbons
Tin, lead and
Emission Limits of Air
their compounds
Organized Pollutants in
B4 Non-methane None None
emission Guangdong Province
total
DB4427-2001
hydrocarbons
Tin, lead and
Emission Limits of Air
their compounds
Organized Pollutants in
B5 Non-methane None None
emission Guangdong Province
total
DB4427-2001
hydrocarbons
Tin, lead and
Emission Limits of Air
their compounds
Organized Pollutants in
C6 Non-methane None None
emission Guangdong Province
total
DB4427-2001
hydrocarbons
Hazardous waste generation information is as follows:
Delivery situation
Species Output T/a Delivery volume Collection and
Delivery date
T/a transportation unit
January to
Waste organic solvent 21.26 21.26
December 2021
Waste circuit board January to
(without electronic 45.809 45.809 December 2021
components)
Waste circuit board January to 1.DONGGUAN WEIJI
(with electronic 5.596 5.596 December 2021 RENEWABLE
components) RESOURCES
CENTRALIZED
Abandoned packing January to
PROCESSING
drums/empty 4.57 4.57 December 2021
CENTER CO., LTD.
containers
2. Huizhou TCL
January to
Waste emulsion 0.65 0.65 Environment
December 2021
Technology Co., Ltd.
January to
Waste dry battery 0.06 0.06 3. 100% legally
December 2021
handled by Hanlan
Waste January to (Foshan) Industrial
cloth/paper/sand/cotton December 2021 Environment Service
swabs/wood Co., Ltd. and other
34.02 34.02
chaff/gloves/other companies
wastes containing
solvents
January to
Waste mineral oil 0.245 0.245
December 2021
January to
Waste activated carbon 14.02 14.02
December 2021
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2021 Annual Report
Waste fluorescent January to
0.125 0.125
tubes December 2021
January to
Total 126.455 126.455
December 2021
3) Information on wastewater detection, waste treatment and industrial waste gas emission of Asteelflash
Suzhou. in 2021 is as follows:
Information on Wastewater Discharge in 2021
Number & position Monitoring units Suzhou Youlian
of wastewater Coordinates: x=53452. 745 and methods Checking & Measuring
discharge port Y=31496.402 Technology Service
Co.,Ltd.
Discharge standard Discharge mode It is discharged from
Water Quality Standard for
and destination the pipe and enters the
Sewage Discharged into Urban
urban sewage treatment
Sewers > GB/T31962-2015
plant
Testing items Standard Test date
value 2021/4/30 2021/07/21 2021/10/18
April 30, 2021 July 21, 2021 October 18, 2021
PH 6.5-9.5 7.35 7.82 7.1
Suspended Solids ≤400 26 20 19
(SS)(mg/L)
Chemical Oxygen ≤500 214 24 95
Demand
(COD)(mg/L)
Biochemical Oxygen ≤350 71.9 8.4 43.8
Demand
(BOD5)(mg/L)
Ammonia Nitrogen ≤45 24.1 6.4 11.8
(NH3-N)(mg/L)
Total Nitrogen(mg/L) ≤70 70.0 7.41 1.27
Total ≤8 3.76 0.73 13.0
Phosphorus(mg/L)
Animal and Vegetable ≤100 0.45 ND ND
Oils (mg/L)
Remarks / Qualified Qualified Qualified
Information on Solid (Hazardous) Waste Discharge in 2021
Transfe
Storage
Output r Disposal or
Name Category Code capacity
(tons) amount recovery
(tons)
(tons)
PCB plate edges, Hazardous 900-045-49 16.7535 14.2335 2.52 Hand it over to a
PCB with parts waste qualified unit for
processing
Empty buckets Hazardous 900-041-49 5.151 5.151 0 Hand it over to a
and rags waste qualified unit for
contaminated processing
with chemicals
Waste Hazardous 900-402-06 7.06 6 1.06 Hand it over to a
isopropanol and waste qualified unit for
other solvents processing
Waste oil Hazardous 900-999-49 17.741 17.741 0 Hand it over to a
waste qualified unit for
processing
Waste fluorescent Hazardous 900-023-29 0 0 0 NA
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2021 Annual Report
tubes waste
Lead-tin slag Hazardous 900-000-31 0.2 0 2.2 Self-storage
waste
Waste activated Hazardous 900-039-49 0.224 0.224 0 Hand it over to a
carbon waste qualified unit for
processing
Information on Industrial Exhaust Emission in 2021
Test result Remarks:
Particulate matter Voc Reporting
Sampling point Standard Emission Emission Emission Emission date:
position dry flue concentration rate concentration rate January 13,
gas flow Mg/m3 Kg/h Mg/m3 Kg/h 2021
rate
PTH 1# 1172 ND ND ND ND Entrusted
PTH 2# 3510 ND ND ND ND third party:
PTH 3# 5774 ND ND ND ND Suzhou
PTH 4# 1854 ND ND ND ND Youlian
SMT 5# 636 ND ND ND ND Checking &
SMT 6# 2772 ND ND ND ND Measuring
SMT 7# 1800 ND ND ND ND Technology
SMT 8# 1956 ND ND ND ND Service
SMT 9# 1836 ND ND ND ND Co.,Ltd.
SMT 10# 1174 ND ND ND ND
Washing Room 1# 1204 1.4 0.00169 ND ND
Washing Room 2# 1272 ND ND ND ND
2. Construction and operation of pollution prevention and control facilities
√Applicable □ Not Applicable
1) USI
Construction status: A new sewage treatment station is built in 2021 to treat the wastewater after cleaning
with water-based cleaning agent.
There is no change in waste gas and noise treatment facilities in 2021 compared with that in 2020.
In 2021, the waste gas treatment facilities and waste water treatment facilities are in good operation, and
consumables such as activated carbon and filter cotton are replaced regularly. The outsourced monitoring
results of each waste gas and waste water discharge outlet show that the waste gas reaches the standard.
Total emissions: hazardous waste 273 tons / VOCs 3.785 tons
Excessive emissions: N/A
Approved total discharge: wastewater CODcr: 11.1341t/a; ammonia nitrogen: 0.5592t/a; exhaust gas
particulate matter: 1.795 t/a; SO2: 0.013t/a; NOx: 1.1098t/a; VOCs: 12.1229t/a
2）Shenzhen Facility
Construction status: There is no change in pollution source treatment facilities in 2021 compared with
that in 2020.
3 discharge ports in Building A: UV photolysis + activated carbon adsorption
2 discharge ports in Building B: UV photolysis + activated carbon adsorption
1 discharge port in Building C: Activated carbon adsorption (laboratory, unused in recent two years)
Operation status: In 2021, 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: 126 tons of hazardous waste / 1.227 tons of VOCs
Excessive emissions: N/A
Approved total emissions: currently no relevant requirements by Shenzhen government
3) Asteelflash Suzhou
Construction status: There is no change in pollution source treatment facilities in 2021 compared with
that in 2020.
12 discharge ports in Building 1: Activated carbon adsorption
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2021 Annual Report
Operation status: In 2021, 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: hazardous waste 47.13 tons / VOCs 0 tons
Excessive emissions: no excessive emissions
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
Name of
Production or Content
administrative Project file name Document No.
approval unit description
license
Pollutant Pollutant discharge permit Pudong New 91310000745611834X001U None
discharge Area Ecological
permit Environment
Bureau
EIA report Environmental Impact
form Assessment Report Form of Pudong New
Technical Transformation Area Ecological H.P.H.B.X.P.[2009] No.
None
Project of Deep Intelligent Environment 360
Production Line of Ultra-thin Bureau
Communication Module
EIA Staff Canteen Project of USI
registration NA 20193100000300000434 None
form
2) Shenzhen Facility
The latest EIA and main administrative licensing information are as follows:
Name of
EIA/Administrative Licensing Authority Licensing Date License File No.
License
EIA Reply (Expansion Approved by Shenzhen June 17, 2015 S.N.H.S.P.X [2015] No.113
Project) Nanshan District
Environmental
Protection and Water
Affairs Bureau
Pollutant discharge Nanshan Administration December 9, 2019 Permit No.:
permit Sub-bureau of Shenzhen 91440300723001066L001Q
Ecological Environment
Bureau
3) Asteelflash Suzhou
The latest EIA and main administrative licensing information are as follows:
Name of EIA/Administrative Licensing
Licensing Date License File No.
License Authority
Production technical Suzhou Wujiang July 8, 2019 W.H.J [2019] No.180
transformation project with an Ecological
annual output of 150 million Environment
automatic canned cigarette oil Bureau
boxes
Pollutant discharge permit Suzhou Wujiang May 22, 2020 Permit No.:
Ecological 91320509734422894M001Y
Environment
Bureau
4. Emergency plan for environmental emergencies
√Applicable □ Not Applicable
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2021 Annual Report
Project file name Filing Date Filing Department Record No.
Emergency Plan for Sudden Environmental July 29, 2021 Pudong New Area 02-310115-
Time of Universal Scientific Industrial Ecological Environment 2021-276-L
(Shanghai) Co., Ltd. Bureau
Emergency Plan for Environmental November Shenzhen Ecological 440305-
Emergencies of USI Electronics (Shenzhen) 30, 2020 Environment Bureau 2020-0067-L
Co., Ltd.
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 regularly and routinely monitor emission sources of various pollutants.
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
Participation in None
environmental pollution
liability insurance
Payment of environmental Pay environmental tax on time every quarter
tax
Environmental policy and Complying with laws and regulations, responding to environmental
annual environmental protection, hazard prevention, communication training, pollution prevention,
objectives and results continuous improvement, energy saving and waste reduction, effective
utilization, setting goals and sustainable operation.
Environmental protection Every year, special funds are invested in environmental protection projects
investment and to ensure that environmental protection funds are earmarked. The funds are
environmental technology used for annual environmental testing, pollution prevention and control,
development waste reduction and recycling to ensure that all environmental emissions
meet the requirements of environmental protection laws and regulations.
Recycling of waste products A waste management plan has been formulated, in which hazardous wastes
are handed over to qualified units for treatment and non-hazardous wastes
are recycled by licensed recycling units or cleared and transported to
licensed incineration plants for treatment.
Total resource consumption USI: 207,553 tons of water and 73,522,365 Kwh of electricity
in 2021 USI Electronics (Shenzhen) Co., Ltd.: 98,965 tons of water and 28,038,300
Kwh of electricity
Asteelflash Suzhou: 164,054 tons of water and 13,411,700 Kwh of
electricity
Environmental violations in None
2021
Environmental awards in None
2021
(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
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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 2021, the recovery rate of waste reached 85.46%. 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
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. The revenue of clean technology products
accounts for 32.8% of the Company's overall revenue and the Company will continue to invest in
research and development to increase the proportion of clean technology products in the future.
(IV) Measures taken to reduce their carbon emissions during the reporting period and their effects
√Applicable □ Not Applicable
USI continues to implement the greenhouse gas reduction policy. Since 2007, it has carried out internal
inventory of greenhouse gases according to ISO 14064-1 standard. In 2010, it integrated various
production bases for inventory, which was verified by a third-party verification agency, and established
the basic data of USI. Since 2018, Taiwan’s factory categories have been introduced, and mainland
factories have also been introduced one after another. In 2020, a more comprehensive and in-depth
category inventory has been conducted. In addition, the carbon footprint accounting of products has been
carried out since 2017, and information disclosure has been carried out in accordance with relevant
international norms, initiative regulations and customer requirements.
In response to the challenges brought by climate change to USI, the mainland plant has used 100%
renewable energy, while the Mexican plant consumes 30% of its annual power from renewable energy.
In addition, Zhangjiang plant and Shenzhen plant conduct carbon quota management according to local
regulations. Moreover, the total amount management of greenhouse gases, the trading system and the
possible energy tax or carbon tax are all issues that we continue to pay attention to. In addition to
continuous energy saving improvement, USI continues to promote green commitment and
environmental protection related measures in various plants to reduce risks and opportunities brought by
climate change.
1. USI
In 2021, the Company implements energy-saving benefits in plants and replaces the two-fluid humidifier with
high-pressure micro-mist humidifier, saving about 44,230 Kwh of electricity annually.
2. Shenzhen Facility
The Company actively implements the emission reduction initiatives, trains its employees to save energy and
reduce consumption, and effectively controls the air conditioning in office space, saving about 36,000 KWh
of electricity annually.
3. Asteelflash Suzhou
1) Clean energy and new energy were used from January 2021, mainly including hydropower, nuclear
power and new energy. Among them, the total electricity consumption in 2021 is 13,407,010 KWh, of which
green electricity consumption accounts for 15% of the total electricity consumption.
2) In March 2021, some water pumps of the air conditioning system were reconstructed, saving about
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225,360 Kwh of electricity annually.
3) One cooling tower was replaced in February and in August 2021 respectively, saving about 935,611
Kwh of electricity
II. Social Responsibility Work
√Applicable □ Not Applicable
USI actively participates in social welfare, honors the promise of “actively promoting social well-being
and participating in social welfare activities” in the Sustainable Development Policy, and hopes to
become one of the models of corporate social citizenship. In 2021, it invested RMB 3,048,341 to support
social welfare projects. In addition to donating money, it widely practiced the four main axes of
“investing in education”, “giving back to the society”, “conserving the environment” and “promoting
literature and art” through various activities, so as to realize local care, contribute to the community and
build a sustainable future.
In addition to expanding education to get rid of poverty, and actively carrying out rural education, rural
revitalization and other public welfare actions, USI also continues to sponsor projects such as “China Go
League”, “Love Library”, “The Million Tree Project”, “Coastal Cleanup”, “Road Public Welfare Service”
and art and cultural performances in various factories. With the promotion and practice of enterprises, it
can give more positive energy to society and environment and create better value for human society by
combining the efforts of all people.
III. Consolidate and expand the achievements of poverty alleviation and rural revitalization
√Applicable □ Not Applicable
USI expands the achievements of poverty alleviation in education as the main axis, actively carries out
public welfare actions such as rural education and rural revitalization, and makes every effort to
consolidate the achievements of poverty alleviation, help more students realize their dreams and achieve
harmonious social development. In 2021, USI promoted revitalization activities such as “Science and
Technology Helps Rural Education”, “Hope for Pearl”, “Western Student Aid Plan”, “Spring Festival
Gift Package” for Rural Revitalization by Charity Federation, “Hearty Wish” and “Huanghe Jiaotong
University Student Aid Activity”, with a total investment of RMB 216,000 to help 1,043 poor students.
(I) Science and technology helps rural education
USI uses science and technology to help rural education, donating computer in classrooms for rural
schools, improving teaching environment, enriching teaching resources and helping rural students get
better educational resources. A total of 150 computers were donated to build computer classrooms in five
schools in Gansu and Qinghai Province, benefiting 961 students. USI continued to follow up the
computer teaching and use in class of caring teachers and students, and specially organized a team of
professional social workers, technicians, project executors and local poverty alleviation workers to visit
and investigate. According to the research report, in 2022, it plans to further empower rural teachers and
rural education with the help of science and technology, so that school teachers can teach computer
courses more smoothly and improve the project efficiency.
(II) Hope for Pearl
Shenzhen Facility and Kunshan Facility has actively participated in the "Hope for Pearl", and supported
students from extremely poor families with excellent grades to complete their education for five
consecutive years. In 2021, through the charity walking development activities with the theme of
“Gathering Love and Escorting Pearl”, it combined sports with public welfare, got close to nature on
foot, shared their initial intentionof “Hope for Pearl” on the way of “Pearl Retrieval”, enabled employees
to directly support and participate in the “Hope for Pearl”, donated RMB 100,000 to Yezhai Middle
School in Qianshan, Anhui Province, and set up the fifth pearl class of USI-“2021 USI Shuijing Pearl
Class” to help 40 poor students complete their education. In addition to material support, it continued to
provide spiritual care. Under the escort of love, the 2018 USI Shuijing Pearl Class has taken the first step
in pursuing their dreams. 100% of the 30 pearl students in Jianshan Middle School were admitted into
universities, and 97%of students in USI Shuijing Pearl Class in Luoyang No.3 Middle School were
admitted into universities, 45% of them to key universities.
(III) Western Student Aid Plan
USI has carried out the Western Student Aid Plan through Cihui Foundation in western rural areas such
as Yunnan and Sichuan Province, invested RMB 48,000 to support 12 college students, guaranteed
students' educational opportunities in the form of subsidies, helped outstanding students in remote
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villages to further their education, and escorted their growth to successfully complete their education and
help more people with the knowledge learned.
(IV) Rural Revitalization through “Spring Festival Gift Package” and “Hearty Wish”
Activities by Kunshan Charity Federation
Adhering to “doing small things with great love”, USI took the form of a “gift package” before the
Spring Festival, donated RMB 9,000 of “Spring Festival Gift Package” to convey greetings to scattered
orphans, scattered elderly people with five guarantees, families with low income and marginal income,
and families with disabled persons in difficulty in Kunshan, and sends rice, grain and oil, dry goods and
other materials to each family. This year’s gift package is different from that of the previous years. The
rice and dry goods’ gift boxes come from Bijiang, Guizhou Province and Atushi, Xinjiang, Kunshan’s
counterparts in pairing assistance. This time, it chose to buy poverty alleviation products from one poor
area to support another, which not only helped counterparts in the sales of agricultural products, but also
conveyed delicious food and love to the “tip of the tongue” of impoverished families in Kunshan. With
the initial intention of “true feelings, true intentions and true goodness”, it is intended to do the best and
offer the love.
On the occasion of Children's Day on June 1, USI continued to support the Charity Federation’s “Hearty
Wishes” activities, collected and sorted out the wishes of 30 children in remote areas of Kunshan
through in-depth visits to mountain villages and communities by the Charity Federation, and donated the
“Children’s Day Wishes” with a total value of RMB 9,000 to accurately satisfy each child's tiny wishes
and convey social care.
(V) Student aid activities of Huanghe Jiaotong University
In order to offer children in remote areas better educational resources, USI donated computers worth
RMB 50,000 for students of Huanghe Jiaotong University, hoping that the technological teaching tools
would allow students to have more possibilities in the future.
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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 performed
Whether performed in
Party making Whether there in a timely
Commitment Commitment Commitment strictly a timely
Commitment background the is a deadline for manner, describe
type content time and term performed in a manner,
commitment performance the specific
timely manner describe the
reasons
next step
Others USI Note 1 2December 12, No Yes
Enterprise 2019
Limited,
directors,
supervisors,
members of
the senior
management,
and actual
controllers of
USI
Others USI, ASDI Note 2 December 12, No Yes
Commitments related to
and FAFG 2019
major asset restructuring
Others USI Note 3 December 12, No Yes
Enterprise 2019
Limited and
actual
controllers of
USI
Settlement of USI Note 4 December 12, No Yes
horizontal Enterprise 2019
competition Limited and
actual
controllers of
USI
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Settlement of USI Note 5 December 12, No Yes
related Enterprise 2019
transactions Limited and
actual
controllers of
USI
Others ASDI Note 6 December 12, No Yes
2019
Restriction on ASDI Note 7 December 8, Yes Yes
sale of shares 2020 to
December 7,
2023
Settlement of USI Note 8 Long term No Yes
horizontal Enterprise
competition Limited and
ASE Inc.
Settlement of Actual Note 9 Long term No Yes
horizontal controller of
competition USI
Others USI Note 10 Long term No Yes
Enterprise
Commitments related to Limited
IPO Others ASE Note 11 Long term No Yes
(Shanghai)
Inc.
Others Actual Note 12 Long term No Yes
controller of
Universal
Scientific
Industrial
(Shanghai)
Co., Ltd.
Note 1:
1. Commitment regarding provision of true, accurate and complete information:
(1) The relevant information, materials, and certificates provided by and the statements, explanations, commitments, and guarantees made by the party making
the commitment to the listed company and the intermediaries involved in this transaction for this transaction are true, accurate and complete, and contain no false
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records, misleading representations or material omissions, their copies are consistent with the originals, and the signatures and seals on all documents are true.
(2) During the period of participating in this transaction of the listed company, the party making the commitment will, in accordance with relevant laws,
administrative regulations and rules, and relevant provisions of China Securities Regulatory Commission and Shanghai Stock Exchange, timely provide information
on this transaction and ensure that such information is true, accurate and complete, and contains no false records, misleading representations or material omissions.
(3) If the party making the commitment is placed on file for investigation by the judicial authority or by the China Securities Regulatory Commission since the
information provided or disclosed in this transaction is suspected of false records, misleading statements or material omissions, before the conclusion of the
investigation is made, the party making the commitment shall not transfer the shares (if any) that it has equity in the listed company, and shall, within two trading
days of receipt of the case filing and inspection notice, submit the written application for suspension of transfer and the stock account to the Board of Directors of
the listed company, so that the Board of Directors applies to the stock exchange and the registration and clearing company for the lock on behalf of the party making
the commitment; if the application for lock-up is not submitted within two trading days, the Board of Directors shall be authorized to directly submit the identity
information and account information of the party making the commitment to the Shanghai Stock Exchange and the registration and clearing company and apply for
lock-up after verification; if the Board of Directors fails to do so, the Shanghai Stock Exchange and the registration and clearing company shall be authorized to
directly lock the relevant shares. If the investigation concludes that there are any violations of laws and regulations, the party making the commitment undertakes to
lock up the shares voluntarily for relevant investor compensation arrangements.
2. Commitment regarding no major violations of laws and regulations:
(1) As of the date of issuance of this letter of commitment, the party making the commitment has no violation of Articles 147 and 148 of the Company Law.
(2) Before the listed company publicly discloses the relevant information of this transaction in accordance with the law, the party making the commitment shall
fulfill the obligation to keep the corresponding information confidential according to the law, shall not make such information public or disclose such information,
and shall not be engaged in illegal activities such as insider trading and manipulation of the securities market through the use of the information related to this
transaction which is not made public or disclosed with the Company's consent or in line with the law.
(3) In the last three years, the party making the commitment was not filed for investigation by judicial organs for suspected crimes or by administrative
authorities such as China Securities Regulatory Commission for suspected violations of laws and regulations; In the last twelve months, the party making the
commitment was not publicly reprimanded by the Shanghai Stock Exchange and had no other material dishonesty; In the last three years, the party making the
commitment did not receive any serious administrative punishments (including administrative punishments within the securities market, public reprimands from the
exchange, and other penalties related to the securities market, except those obviously unrelated to the securities market) or criminal punishments, and was not
involved in material civil lawsuits or arbitrations related to economic disputes; The party making the commitment had no dishonesty such as failure to repay large
debts on time, failure to perform commitments, being subject to administrative supervision measures taken by the China Securities Regulatory Commission or
disciplinary actions by the Shanghai Stock Exchange.
3. Commitment regarding no circumstances stipulated in Article 13 of the Interim Provisions on Strengthening the Supervision over Abnormal Stock
Trading Related to the Material Asset Reorganizations of Listed Companies:
(1) The party making the commitment has not been placed on file for investigation or filed for inspection due to suspected insider trading related to this major
asset reorganization.
(2) In the last 36 months, the party making the commitment was not subject to administrative punishments by the China Securities Regulatory Commission or
investigated for criminal liability by judicial authorities for insider trading related to this major asset restructuring.
(3) The party making the commitment does not have the circumstance stipulated in Article 13 of the Interim Provisions on Strengthening the Supervision over
Abnormal Stock Trading Related to the Material Asset Reorganizations of Listed Companies that it shall not participate in the major asset restructuring of listed
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companies.
4. Commitment regarding no reduction in holdings before the completion of the transaction:
(1) During this transaction, the party making the commitment guarantees that it shall not reduce its holdings of the listed company's shares (if any) from the
date of resumption of trading of the listed company's shares to the completion of this transaction.
(2) Upon the expiration of the aforementioned period for non-reduction of the listed company's shares, the party making the commitment shall strictly abide by
the relevant laws and regulations such as the Company Law and the Securities Law, and the relevant provisions and requirements of the China Securities Regulatory
Commission and the Shanghai Stock Exchange on the reduction of holdings. If the China Securities Regulatory Commission and the Shanghai Stock Exchange have
new provisions on the reduction of holdings, the party making the commitment shall also strictly abide by the relevant provisions.
(3) From the date of resumption of trading of the Company's shares to the completion of this transaction, if the Company implements ex-rights such as
capitalization of shares, gifting of bonus shares, or rationing of shares, the party making the commitment guarantees that the newly shares acquired therefrom shall
also abide by the above compliance to no reduction of holdings.
(4) In case of violation of any of the above commitments, the proceeds obtained by the party making the commitment from the reduction of holdings shall be
owned by the Company, and the party making the commitment shall be liable for all direct and indirect losses caused thereby to the listed company, and undertake
corresponding legal liabilities.
Note 2:
1. Commitment regarding provision of true, accurate and complete information:
(1) The relevant information, materials, and certificates provided by and the statements, explanations, commitments, and guarantees made by the listed
company to the intermediaries involved in this transaction for this transaction are true, accurate and complete, there are no false records, misleading representations
or material omissions, the copies are consistent with the originals, and the signatures and seals on all documents are true. (2) During the period of participating in
this transaction, the Company will, in accordance with relevant laws, administrative regulations and rules, and relevant provisions of China Securities Regulatory
Commission and Shanghai Stock Exchange, timely provide information on this transaction and ensure that such information is true, accurate and complete, and
contains no false records, misleading representations or material omissions. In case of violation of any of the above commitments, the Company will bear
independent and/or joint legal liabilities; if any loss is caused thereby to any other party, the Company will undertake the corresponding compensation liability to the
party suffering from the loss according to law.
(2) ASDI and FAFG has provided the listed company with the information and materials in relation to this transaction that the listed company had requested in
writing ASDI to do so, and commit that the above content, and the statements, explanations, commitments, and guarantees in relation to this transaction made by
ASDI and FAFG are true, accurate and complete, and contain no false records, misleading representations or material omissions, their copies are consistent with the
originals, and the signatures and seals on all documents are true. From the date of this commitment to the closing date of this transaction, ASDI and FAFG will, in
accordance with relevant laws, administrative regulations and rules, and relevant provisions of China Securities Regulatory Commission and Shanghai Stock
Exchange, make reasonable commercial efforts to provide the Company and the intermediaries involved in this transaction with information about this transaction in
a timely manner, and ensure that such information is true, accurate and complete, and contains no false records, misleading representations or material omissions. If
ASDI is placed on file for investigation by the Chinese judicial authority or by the China Securities Regulatory Commission since the information provided by ASDI
in this transaction is suspected of false records, misleading statements or material omissions, before the conclusion of the investigation is made, ASDI shall not
transfer the shares (if any) that it has equity in the listed company, and shall, within two trading days of receipt of the case filing and inspection notice, submit the
written application for suspension of transfer and the stock account to the Board of Directors of the listed company, so that the Board of Directors applies to the
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2021 Annual Report
stock exchange and the registration and clearing company for the lock on behalf of ASDI; if the application for lock-up is not submitted within two trading days, the
Board of Directors shall be authorized to directly submit the identity information and account information of ASDI to the Shanghai Stock Exchange and the
registration and clearing company and apply for lock-up after verification; if the Board of Directors fails to do so, ASDI shall authorize the Shanghai Stock
Exchange and the registration and clearing company to directly lock the relevant shares. If the official investigation of the judicial authority or the China Securities
Regulatory Commission concludes that there are any violations of laws and regulations, ASDI undertakes to lock up the shares voluntarily for relevant investor
compensation arrangements. If the information provided in this letter of commitment is inaccurate or incomplete, which negatively affects the transaction or causes
losses to the listed company, (i) all claims or requests made by the listed company or its affiliates with respect to the signatory of this letter of commitment, may
only be made in accordance with the terms and conditions of the Share Purchase Agreement ("SPA") in relation with this transaction, and (ii) the signatory shall be
liable to third parties in accordance with applicable laws and regulations; and in cases of (i) and (ii), the listed company and its affiliates are not entitled to any
compensation other than under the SPA, namely, the SPA is the independent and sole source of recourse for the listed company and its affiliates against the signatory.
If the Company or any of its affiliates fails to obtain control over FAFG (directly or indirectly) pursuant to the SPA, this letter of commitment and the statements and
commitments contained therein shall automatically terminate and be deemed invalid. If the transaction is not realized through the issuance of new shares by the
listed company, this letter of commitment shall automatically be deemed invalid. If the above information changes before the closing of the transaction, the
Company shall be notified in writing.
2. Commitment of the listed company and ASDI regarding no related relationship:
(1) The listed company has no related relationship with ASDI, enterprises controlled by ASDI and other related parties. If the Company's violation of the above
commitment causes any impact or loss to this transaction, it shall be liable for compensation according to law. (2) ASDI, enterprises controlled by ASDI (except for
FAFG and enterprises controlled by FAFG), and directors of ASDI have no related relationship with the listed company. If the information provided in this letter of
commitment is inaccurate or incomplete, which negatively affects the transaction or causes losses to the Company, (i) all claims or requests made by the listed
company or its affiliates with respect to the signatory of this letter of commitment, may only be made in accordance with the terms and conditions of the Share
Purchase Agreement ("SPA") in relation with this transaction, and (ii) the signatory shall be liable to third parties in accordance with applicable laws and regulations;
and in cases of (i) and (ii), the listed company and its affiliates are not entitled to any compensation other than under the SPA, namely, the SPA is the independent
and sole source of recourse for the listed company and its affiliates against the signatory. If the listed company or any of its affiliates fails to obtain control over
FAFG (directly or indirectly) pursuant to the SPA, this letter of commitment and the statements and commitments contained therein shall automatically terminate
and be deemed invalid. If the transaction is not realized through the issuance of new shares by the listed company, this letter of commitment shall automatically be
deemed invalid. If the above information changes before the closing of the transaction, the listed Company shall be notified in writing.
3. Commitment of the listed company regarding no major violations of laws and regulations:
(1) The listed company is a company limited by shares legally established and validly existing within the territory of the People's Republic of China, and listed
on the main board of the Shanghai Stock Exchange, and has the subject qualification for this transaction.
(2) As of the date of issuance of this letter of commitment: In the last three years, the listed company was not filed for investigation by judicial organs for
suspected crimes or by administrative authorities such as China Securities Regulatory Commission for suspected violations of laws and regulations. In the last
twelve months, the listed company was not publicly reprimanded by the Shanghai Stock Exchange and had no other material dishonesty. In the last three years, the
listed company did not receive any serious administrative punishments (including administrative punishments within the securities market, public reprimands from
the exchange, and other penalties related to the securities market, except those obviously unrelated to the securities market) or criminal punishments, and was not
involved in material civil lawsuits or arbitrations related to economic disputes. The listed company had no dishonesty such as failure to repay large debts on time,
failure to perform commitments, being subject to administrative supervision measures taken by the China Securities Regulatory Commission or disciplinary actions
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by the Shanghai Stock Exchange.
Note 3: 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.
(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;
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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 4: 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.
(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 5: 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
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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 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 6:
1. Commitment regarding clear ownership of the target assets:
(1) Matters concerning the ownership of the target equity (referring to the 8,317,462 shares of FAFG held by ASDI, accounting for about 10.4% of the total
share capital of FAFG): Subject to the stipulations in the Company's articles of association and the shareholders' agreement, a. The Company has legal and complete
ownership and disposal rights over the equity of the target company, with no defect or objection in the qualification of shareholders, the Company's holding of the
target shares does not involve any form of entrusted shareholding, trust holding or similar arrangements, and the target equity is not involved in any property rights
disputes or potential disputes; b. The Company has fully paid the registered capital corresponding to the equity held in the target company; c. The equity of the target
company is not subject to pledge, seizure, freezing, ownership dispute and other right restrictions. As far as the Company is aware, there is no situation related to the
target equity held by the Company that may affect the legal existence of the target company. The Company commits to maintain the aforesaid situation until the
completion of this transaction.
(2) If the information provided in this letter of commitment is inaccurate or incomplete, which negatively affects the transaction or causes losses to the listed
company, (i) all claims or requests made by the listed company or its affiliates with respect to the signatory of this letter of commitment, may only be made in
accordance with the terms and conditions of the Share Purchase Agreement ("SPA") in relation with this transaction, and (ii) the signatory shall be liable to third
parties in accordance with applicable laws and regulations; and in cases of (i) and (ii), the listed company and its affiliates are not entitled to any compensation other
than under the SPA, namely, the SPA is the independent and sole source of recourse for the listed company and its affiliates against the signatory.
(3) If the listed company or any of its affiliates fails to obtain control over FAFG (directly or indirectly) pursuant to the SPA, this letter of commitment and the
statements and commitments contained therein shall automatically terminate and be deemed invalid. If the transaction is not realized through the issuance of new
shares by the listed company, this letter of commitment shall automatically be deemed invalid.
(4) If the above information changes before the closing of the transaction, the listed company shall be notified in writing.
2. Commitment regarding no circumstances stipulated in Article 13 of the Interim Provisions on Strengthening the Supervision over Abnormal Stock
Trading Related to the Material Asset Reorganizations of Listed Companies:
(1) Regarding the non-existence of matters that the person making the commitment is not allowed to participate in the major asset restructuring of listed
companies: As of the date of this letter of commitment, to the best of the person making the commitment's knowledge, the person making the commitment and its
directors, supervisors, members of the senior management, controlling shareholders, and actual controllers, and institutions controlled by the person making the
commitment (excluding FAFG and enterprises controlled by FAFG) have not been placed on file for investigation or filed for inspection due to suspected insider
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trading related to this transaction; In the last 36 months, they were not subject to administrative punishments by the China Securities Regulatory Commission or
investigated for criminal liability by judicial authorities for insider trading related to this major asset restructuring. None of the aforementioned relevant entities is
prohibited from participating in the major asset restructuring of listed companies in accordance with Article 13 of the Article 13 of the Interim Provisions on
Strengthening the Supervision over Abnormal Stock Trading Related to the Material Asset Reorganizations of Listed Companies.
(2) If the information provided in this letter of commitment is inaccurate or incomplete, which negatively affects the transaction or causes losses to the listed
company, (i) all claims or requests made by the listed company or its affiliates with respect to the signatory of this letter of commitment, may only be made in
accordance with the terms and conditions of the Share Purchase Agreement ("SPA") in relation with this transaction, and (ii) the signatory shall be liable to third
parties in accordance with applicable laws and regulations; and in cases of (i) and (ii), the listed company and its affiliates are not entitled to any compensation other
than under the SPA, namely, the SPA is the independent and sole source of recourse for the listed company and its affiliates against the signatory.
(3) If the listed company or any of its affiliates fails to obtain control over FAFG (directly or indirectly) pursuant to the SPA, this letter of commitment and the
statements and commitments contained therein shall automatically terminate and be deemed invalid. If the transaction is not realized through the issuance of new
shares by the listed company, this letter of commitment shall automatically be deemed invalid.
(4) If the above information changes before the closing of the transaction, the listed company shall be notified in writing.
Note 7:
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 8:
(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 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 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, but also 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.
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Note 9:
(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 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 person making the commitment has 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 carried out production or operation of such expanded business, the person making the commitment shall guarantee
that such other enterprises shall not engage in new businesses that compete 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. 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 10:
(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
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2021 Annual Report
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.
Note 11:
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 12:
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.
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2021 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 the "audit report with non-standard
opinions" 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 for and impacts of corrections of significant accounting
errors
□Applicable √Not Applicable
(III) Communication with the previous accounting firm
□Applicable √Not Applicable
(IV) Other particulars
□Applicable √Not Applicable
VI. Appointment and dismissal of the accounting firm
Unit: 10,000 Currency: RMB
Current accounting firm
Name of domestic accounting firm Deloitte Touche Tohmatsu Certified Public
Accountants LLP
Remuneration of domestic accounting firm 388
Term of office of domestic accounting firm 11
Name Remuneration
Internal control audit accounting Deloitte Touche Tohmatsu
firm Certified Public Accountants 56
LLP
Financial consultant Zhong De Securities Company
0
Limited
Sponsor Haitong Securities Co., Ltd. 1,520.52
Particulars on appointment and dismissal of the accounting firm
√Applicable □Not Applicable
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2021 Annual Report
The Company's 2020 annual general meeting of shareholders was held on April 23, 2021, and this
meeting deliberated and approved the appointment of Deloitte Touche Tohmatsu Certified Public
Accountants LLP as the Company's 2021 financial audit agency and internal control audit agency.
Particulars on the change of accounting firm during the auditing period
□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) Situation and reasons for termination of listing
□Applicable √Not Applicable
VIII. Matters related to bankruptcy and reorganisation
□Applicable √Not Applicable
IX. Material litigation and arbitration
□The Company had material litigation and arbitration during the year √The Company did not have
material litigation and arbitration during the year
X. Suspected violations of laws and regulations of, and punishments and rectifications to the listed
Company, its directors, supervisors, members of the senior management, controlling shareholders,
and actual controllers
□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 failed
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.
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 Regular related For details, see the announcement (No.: 2021-023) on the website of
transactions the Shanghai Stock Exchange (www.sse.com.cn)
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
(II) Related transactions as a result of acquisition and disposal of assets or equity
1. Events disclosed in temporary announcements and without further progress or change in
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2021 Annual Report
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
4. 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
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
(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
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2021 Annual Report
(II) Guarantees
√Applicable □Not Applicable
Unit: Yuan Currency: RMB
The Company's external guarantees (excluding guarantees to subsidiaries)
Relationship Whether
Guarantee Whether Whether
between the it is a
date (date Guarantee the the Guarantee Counter-
guarantying Guaranteed Guarantee Guarantee Guarantee Collateral guarantee Related
Guarantying of signing expiry guarantee guarantee overdue guarantee
party and party amount start date type (if any) for relationship
party the date has been is amount situation
the listed related
agreement) fulfilled overdue
company parties
/ / / / / / / /
Total amount of guarantees during the reporting period (excluding guarantees 0
to subsidiaries)
Total balance of guarantees at the end of the reporting period (A) (excluding 0
guarantees to subsidiaries)
Guarantee of the Company and its subsidiaries to subsidiaries
Total amount of guarantees to subsidiaries during the reporting period 10,768.54
Total balance of guarantees to subsidiaries at the end of the reporting period 7,555.77
(B)
Total amount of the Company's guarantees (including guarantees to subsidiaries)
Total amount of guarantees (A+B) 7,555.77
Proportion of the total amount of guarantees in the Company's net assets (%) 0.82
Including:
Amount of guarantee provided to shareholders, actual controllers and related 0
parties (C)
Amount of debt guarantee provided directly or indirectly for the guaranteed 4,367.92
object 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) 4,367.92
Particulars on the situation that unexpired guarantees may bear joint liability None
for repayment
Particulars on guarantees 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
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2021 Annual Report
subsidiaries within the scope of its consolidated statement. The 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.
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2021 Annual Report
(III) Entrusting others to manage cash assets
1. Entrusted wealth management
(1) Overall condition of entrusted wealth management
√Applicable □Not Applicable
Unit: Yuan Currency: RMB
Overdue uncollected
Type Source of fund Amount incurred Undue balance
amount
Bank wealth Self-owned 0 0
management funds 3,616,000,000.00
products
Bank wealth Raised funds 0 0
management 3,027,000,000.00
products
Fund wealth Self-owned 0 0
management funds 4,452,170.32
products
Others
□Applicable √Not Applicable
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2021 Annual Report
(2) Individual entrusted wealth management
√Applicable □Not Applicable
Unit: 10,000 Currency: RMB
Expected Future Impairment
Type of Actual Legal
Type of Annual return Principal entrusted provision
Trustee Entrusted Amount Start Date End date Source gain or procedures
Direction Returns Return (If any) repayment investment (if any)
Investment loss conducted
plan
Hwabao WP Fund wealth 40.00 2020/5/14 2021/9/13 Self- Standardised Fixed 2.09 All repaid Yes No
Fund management owned debt-based income
Management products funds assets and collective
Co., Ltd. money asset
market funds management
Hwabao WP Fund wealth 405.22 2020/5/14 2021/9/13 Self- Standardised Fixed 18.89 All repaid Yes No
Fund management owned debt-based income
Management products funds assets and collective
Co., Ltd. money asset
market funds management
Xiamen Bank wealth 20,000.00 2021/4/2 2021/6/30 Raised Money Principal 0.61% 163.17 163.17 All repaid Yes No
International management funds market: protected, from 7
Bank Shanghai products cash&deposit floating rate days to
Branch less than
14 days,
1.16%
from 14
to less
than 21
days,
1.76%
from 21
days to
less than
30 days,
2.41%
from 30
days to
less than
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2021 Annual Report
60 days,
2.61%
from 60
days to
less than
89 days,
3.3 % at
89 days
Fubon Bank Bank wealth 30,000.00 2021/4/2 2021/6/30 Self- Money Principal 3.300% 241.40 241.40 All repaid Yes No
Shanghai Xuhui management owned market: protected,
Branch products funds cash&deposit floating rate
Bank of Beijing Bank wealth 20,000.00 2021/4/6 2021/6/29 Self- Money Principal 3.300% 151.89 151.89 All repaid Yes No
Shanghai management owned market: protected,
Branch products funds cash&deposit floating rate
China Bank wealth 12,000.00 2021/4/2 2021/5/7 Raised Money Principal 2.950% 33.95 29.18 All repaid Yes No
Construction management funds market: protected,
Bank Shanghai products cash&deposit floating rate
Baosteel Branch
China Bank wealth 60,000.00 2021/4/2 2021/6/29 Raised Money Principal 3.200% 462.90 506.30 All repaid Yes No
Construction management funds market: protected,
Bank Shanghai products cash&deposit floating rate
Baosteel Branch
Bank of Bank wealth 30,000.00 2021/4/6 2021/6/30 Raised Money Principal 3.170% 221.47 221.47 All repaid Yes No
Communications management funds market: protected,
Shanghai products cash&deposit floating rate
Branch
Agricultural Bank wealth 6,000.00 2021/4/6 2021/5/6 Raised Money Principal 2.950% 14.55 14.55 All repaid Yes No
Bank of China management funds market: protected,
Shanghai products cash&deposit floating rate
Branch
Agricultural Bank wealth 6,000.00 2021/4/6 2021/6/1 Raised Money Principal 3.100% 28.54 28.54 All repaid Yes No
Bank of China management funds market: protected,
Shanghai products cash&deposit floating rate
Branch
Agricultural Bank wealth 20,000.00 2021/4/6 2021/6/29 Raised Money Principal 3.200% 147.29 147.29 All repaid Yes No
Bank of China management funds market: protected,
Shanghai products cash&deposit floating rate
92 / 258
2021 Annual Report
Branch
Agricultural Bank wealth 20,000.00 2021/4/6 2021/6/29 Self- Money Principal 3.200% 147.29 147.29 All repaid Yes No
Bank of China management owned market: protected,
Shanghai products funds cash&deposit floating rate
Branch
Xiamen Bank wealth 20,000.00 2021/7/2 2021/9/28 Self- Money Principal 1.5%, 173.06 173.06 All repaid Yes No
International management owned market: protected, 3.5% or
Bank Shanghai products funds cash&deposit floating rate 3.6%
Branch
Xiamen Bank wealth 21,500.00 2021/7/2 2021/9/28 Raised Money Principal 1.5%, 186.03 186.03 All repaid Yes No
International management funds market: protected, 3.5% or
Bank Shanghai products cash&deposit floating rate 3.6%
Branch
Fubon Bank Bank wealth 20,000.00 2021/7/2 2021/9/29 Raised Money Principal 1.20%～ 165.81 165.81 All repaid Yes No
Shanghai Xuhui management funds market: protected, 3.46%
Branch products cash&deposit floating rate
Fubon Bank Bank wealth 20,000.00 2021/7/2 2021/9/2 Raised Money Principal 1.20%～ 115.51 115.51 All repaid Yes No
Shanghai Xuhui management funds market: protected, 3.46%
Branch products cash&deposit floating rate
Bank of Beijing Bank wealth 20,000.00 2021/9/7 2021/10/28 Raised Money Principal 1.35%～ 89.42 89.42 All repaid Yes No
Shanghai management funds market: protected, 3.2%
Branch products cash&deposit floating rate
Xiamen Bank wealth 21,500.00 2021/10/11 2021/12/30 Raised Money Principal 1.5%, 174.39 174.39 All repaid Yes No
International management funds market: protected, 3.65% or
Bank Shanghai products cash&deposit floating rate 3.75%
Branch
Xiamen Bank wealth 25,700.00 2021/10/11 2021/12/30 Raised Money Principal 1.5%, 206.17 206.17 All repaid Yes No
International management funds market: protected, 3.61% or
Bank Shanghai products cash&deposit floating rate 3.71%
Branch
Fubon Bank Bank wealth 20,000.00 2021/10/12 2021/12/29 Raised Money Principal 1.20%～ 147.88 147.88 All repaid Yes No
Shanghai Xuhui management funds market: protected, 3.46%
Branch products cash&deposit floating rate
Xiament Bank wealth 5,300.00 2021/1/7 2021/3/31 Self- Money Principal 0.38% or 40.69 40.69 All repaid Yes No
International management owned market: protected, 0.51%
Bank Shanghai products funds cash&deposit floating rate from 7
Branch days to
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2021 Annual Report
less than
14 days,
0.80% or
1.06 %
from 14
days to
less than
21 days,
1.35% or
1.64%
from 21
days to
less than
30 days,
1.40% or
2.31%
from 30
days to
less than
60 days,
1.50% or
2.51%
from 60
days to
less than
83 days,
and
3.33% at
83 days
Xiament Bank wealth 5,300.00 2021/4/2 2021/6/30 Self- Money Principal 0.61% 43.24 43.24 All repaid Yes No
International management owned market: protected, from 7
Bank Shanghai products funds cash&deposit floating rate days to
Branch less than
14 days,
1.16%
from 14
to less
than 21
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2021 Annual Report
days,
1.76%
from 21
days to
less than
30 days,
2.41%
from 30
days to
less than
60 days,
2.61%
from 60
days to
less than
89 days,
3.3 % at
89 days
Xiament Bank wealth 5,400.00 2021/7/2 2021/9/28 Self- Money Principal 1.5%, 46.73 46.73 All repaid Yes No
International management owned market: protected, 3.5% or
Bank Shanghai products funds cash&deposit floating rate 3.6%
Branch
Xiament Bank wealth 500.00 2021/10/11 2021/11/23 Self- Money Principal 1.4%或 2.18 2.18 All repaid Yes No
International management owned market: protected, 3.65%或
Bank Shanghai products funds cash&deposit floating rate 3.75%
Branch
Xiament Bank wealth 5,000.00 2021/10/11 2021/12/30 Self- Money Principal 1.5%, 40.56 40.56 All repaid Yes No
International management owned market: protected, 3.65% or
Bank Shanghai products funds cash&deposit floating rate 3.75%
Branch
Bank of East Bank wealth 3,000.00 2021/1/4 2021/3/30 Self- Money Principal 3.450% 24.10 24.44 All repaid Yes No
Asia Suzhou management owned market: protected,
Branch products funds cash&deposit floating rate
Bank of Suzhou Bank wealth 5,000.00 2021/1/5 2021/3/30 Self- Money Principal 3.200% 36.82 37.78 All repaid Yes No
Kunshan management owned market: protected,
Qiandeng products funds cash&deposit floating rate
Branch
Shanghai Rural Bank wealth 3,000.00 2021/1/8 2021/2/9 Self- Money Principal 3.050% 8.02 7.83 All repaid Yes No
95 / 258
2021 Annual Report
Commercial management owned market: protected,
Bank Kunshan products funds cash&deposit floating rate
Branch
Kunshan Rural Bank wealth 7,000.00 2021/1/6 2021/3/30 Self- Money Principal 3.250% 51.73 51.73 All repaid Yes No
Commercial management owned market: protected,
Bank products funds cash&deposit floating rate
Development
Zone Branch
Bank of Suzhou Bank wealth 3,000.00 2021/1/26 2021/3/30 Self- Money Principal 3.400% 17.61 18.13 All repaid Yes No
Kunshan management owned market: protected,
Qiandeng products funds cash&deposit floating rate
Branch
Shanghai Rural Bank wealth 3,000.00 2021/2/22 2021/3/31 Self- Money Principal 3.080% 9.37 9.03 All repaid Yes No
Commercial management owned market: protected,
Bank Kunshan products funds cash&deposit floating rate
Branch
Industrial and Bank wealth 3,500.00 2021/4/1 2021/6/1 Self- Money Principal 3.500% 20.47 20.55 All repaid Yes No
Commercial management owned market: protected,
Bank of China products funds cash&deposit floating rate
Development
Zone Branch
Kunshan Rural Bank wealth 10,000.00 2021/4/2 2021/6/3 Self- Money Principal 3.700% 62.85 62.85 All repaid Yes No
Commercial management owned market: protected,
Bank products funds cash&deposit floating rate
Development
Zone Branch
Bank of Suzhou Bank wealth 5,000.00 2021/4/2 2021/5/2 Self- Money Principal 3.400% 14.17 14.17 All repaid Yes No
Kunshan management owned market: protected,
Qiandeng products funds cash&deposit floating rate
Branch
China Citic Bank wealth 3,500.00 2021/4/5 2021/5/31 Self- Money Principal 3.400% 18.26 18.26 All repaid Yes No
Bank Kunshan management owned market: protected,
Branch products funds cash&deposit floating rate
Bank of Ningbo Bank wealth 2,000.00 2021/4/19 2021/5/19 Self- Money Principal 3.390% 5.57 5.57 All repaid Yes No
Kunshan management owned market: protected,
Branch products funds cash&deposit floating rate
Bank of Suzhou Bank wealth 3,000.00 2021/4/23 2021/5/23 Self- Money Principal 3.400% 8.50 8.50 All repaid Yes No
96 / 258
2021 Annual Report
Kunshan management owned market: protected,
Qiandeng products funds cash&deposit floating rate
Branch
Kunshan Rural Bank wealth 6,000.00 2021/7/2 2021/8/2 Self- Money Principal 3.700% 18.85 18.85 All repaid Yes No
Commercial management owned market: protected,
Bank products funds cash&deposit floating rate
Development
Zone Branch
Bank of Suzhou Bank wealth 3,000.00 2021/7/13 2021/8/13 Self- Money Principal 3.700% 9.25 9.25 All repaid Yes No
Kunshan management owned market: protected,
Qiandeng products funds cash&deposit floating rate
Branch
Kunshan Rural Bank wealth 3,000.00 2021/8/24 2021/9/29 Self- Money Principal 3.700% 10.95 10.95 All repaid Yes No
Commercial management owned market: protected,
Bank products funds cash&deposit floating rate
Development
Zone Branch
Bank of Suzhou Bank wealth 3,000.00 2021/10/12 2021/11/12 Self- Money Principal 3.600% 9.00 9.00 All repaid Yes No
Kunshan management owned market: protected,
Qiandeng products funds cash&deposit floating rate
Branch
Bank of Suzhou Bank wealth 3,000.00 2021/11/5 2021/12/30 Self- Money Principal 3.600% 16.27 16.27 All repaid Yes No
Kunshan management owned market: protected,
Qiandeng products funds cash&deposit floating rate
Branch
Fubon Bank Bank wealth 10,000.00 2021/1/6 2021/3/31 Self- Money Principal 3.200% 73.64 73.64 All repaid Yes No
management owned market: protected,
products funds cash&deposit floating rate
Xiamen Bank wealth 10,000.00 2021/1/6 2021/3/31 Self- Money Principal 3.260% 76.07 76.07 All repaid Yes No
International management owned market: protected,
Bank North products funds cash&deposit floating rate
Bund Branch
Standard Bank wealth 5,000.00 2021/2/3 2021/3/31 Self- Money Principal 3.200% 24.55 24.55 All repaid Yes No
Chartered management owned market: protected,
products funds cash&deposit floating rate
Fubon Bank Bank wealth 10,000.00 2021/4/2 2021/6/2 Self- Money Principal 3.300% 55.15 55.15 All repaid Yes No
management owned market: protected,
97 / 258
2021 Annual Report
products funds floating rate
cash&deposit
Xiamen Bank wealth 10,100.00 2021/4/2 2021/5/31 Self- Money Principal 0.61% 54.62 54.62 All repaid Yes No
International management owned market: protected, from 7
Bank Shanghai products funds floating rate days
cash&deposit to
Branch less than
14 days,
1.16%
from 14
to less
than 21
days,
1.76%
from 21
days to
less than
30 days,
2.41%
from 30
days to
less than
60 days,
2.61%
from 60
days to
less than
89 days,
3.3 % at
90 days
Bank SinoPac Bank wealth 20,000.00 2021/1/6 2021/3/25 Self- Money Principal 3.470% 148.31 148.31 All repaid Yes No
Guangzhou management owned market: protected,
Branch products funds cash&deposit floating rate
Bank SinoPac Bank wealth 10,000.00 2021/1/7 2021/3/25 Self- Money Principal 3.470% 73.20 73.20 All repaid Yes No
Guangzhou management owned market: protected,
Branch products funds cash&deposit floating rate
E.SUN Bank Bank wealth 20,000.00 2020/1/4 2021/3/25 Self- Money Principal 3.300% 144.66 144.66 All repaid Yes No
Shenzhen Bank management owned market: protected,
products funds cash&deposit floating rate
Bank of Bank wealth 5,000.00 2021/1/8 2021/3/25 Self- Money Principal 4.690% 48.83 48.83 All repaid Yes No
98 / 258
2021 Annual Report
Communications management owned market: protected,
Shenzhen products funds cash&deposit floating rate
Huaqiang
Branch
Bank of Bank wealth 5,000.00 2021/1/8 2021/3/25 Self- Money Principal 1.650% 17.18 17.18 All repaid Yes No
Communications management owned market: protected,
Shenzhen products funds cash&deposit floating rate
Huaqiang
Branch
Industrial Bank Bank wealth 5,000.00 2021/2/3 2021/3/22 Self- Money Principal 3.050% 19.64 19.64 All repaid Yes No
Shenzhen Bank management owned market: protected,
products funds cash&deposit floating rate
Bank SinoPac Bank wealth 7,000.00 2021/4/8 2021/6/30 Self- Money Principal 3.420% 54.44 54.44 All repaid Yes No
Guangzhou management owned market: protected,
Branch products funds cash&deposit floating rate
Industrial Bank Bank wealth 5,000.00 2021/4/2 2021/6/29 Self- Money Principal 3.230% 38.94 38.94 All repaid Yes No
Shenzhen Bank management owned market: protected,
products funds cash&deposit floating rate
E.SUN Bank Bank wealth 6,000.00 2021/4/21 2021/6/29 Self- Money Principal 3.400% 38.56 38.56 All repaid Yes No
Shenzhen Bank management owned market: protected,
products funds cash&deposit floating rate
E.SUN Bank Bank wealth 5,000.00 2021/6/30 2021/6/30 Self- Money Principal 3.400% 22.82 22.82 All repaid Yes No
Shenzhen Bank management owned market: protected,
products funds cash&deposit floating rate
Bank SinoPac Bank wealth 3,000.00 2021/5/27 2021/6/30 Self- Money Principal 3.400% 9.50 7.13 All repaid Yes No
Guangzhou management owned market: protected,
Branch products funds cash&deposit floating rate
Bank SinoPac Bank wealth 10,000.00 2021/7/7 2021/9/30 Self- Money Principal 3.420% 79.64 79.64 All repaid Yes No
Guangzhou management owned market: protected,
Branch products funds cash&deposit floating rate
E.SUN Bank Bank wealth 5,000.00 2021/7/1 2021/8/12 Self- Money Principal 3.400% 19.56 19.56 All repaid Yes No
Shenzhen Bank management owned market: protected,
products funds cash&deposit floating rate
Bank of Bank wealth 5,000.00 2021/7/6 2021/9/6 Self- Money Principal 3.200% 27.18 27.18 All repaid Yes No
Shanghai management owned market: protected,
Shenzhen products funds cash&deposit floating rate
Branch
99 / 258
2021 Annual Report
E.SUN Bank Bank wealth 5,000.00 2021/8/12 2021/9/30 Self- Money Principal 3.400% 22.82 22.82 All repaid Yes No
Shenzhen Bank management owned market: protected,
products funds cash&deposit floating rate
E.SUN Bank Bank wealth 10,000.00 2021/10/27 2021/12/30 Self- Money Principal 3.300% 57.86 57.86 All repaid Yes No
Shenzhen Bank management owned market: protected,
products funds cash&deposit floating rate
Bank SinoPac Bank wealth 10,000.00 2021/10/27 2021/12/30 Self- Money Principal 3.350% 58.74 58.74 All repaid Yes No
Guangzhou management owned market: protected,
Branch products funds cash&deposit floating rate
Others
□Applicable √Not Applicable
100 / 258
2021 Annual Report
(3) Provision for the impairment of entrusted wealth management
□Applicable √Not Applicable
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. Particulars on other major events that have great influence on investors' value judgments
and investment decisions
□Applicable √Not Applicable
101 / 258
2021 Annual Report
Section VII Changes in Share Capital 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
Stock
converted
Percenta New Bonus from Percentage
Number Others Subtotal Number
ge (%) Issue Issue housing (%)
accumulat
ion fund
I. Shares
subject to
25,939,972 1.17 0 0 0 0 0 25,939,972 1.17
selling
restrictions
1. Shares
held by the
25,939,972 1.17 0 0 0 0 0 25,939,972 1.17
foreign
capital
Including:
Shares held
by the
25,939,972 1.17 0 0 0 0 0 25,939,972 1.17
foreign
legal
person
II. Tradable
shares held
2,183,403,
subject to 98.83 829,410 0 0 0 829,410 2,184,232,810 98.83
400
selling
restrictions
1. RMB
2,183,403,
ordinary 98.83 829,410 0 0 0 829,410 2,184,232,810 98.83
400
shares
III. Total
2,209,343,
number of 100 829,410 0 0 0 829,410 2,210,172,782 100
372
shares
2. Particulars on changes in ordinary shares
√ Applicable □Not Applicable
During the reporting period, the Company's total share capital increased from 2,209,343,372 shares to
2,210,172,782 shares, representing an increase of 829,410 shares, due to the exercise of equity
incentives and the 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
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 with trading restrictions
□Applicable √Not Applicable
102 / 258
2021 Annual Report
II. Issuance and listing of securities
(I) Issuance of securities as at the reporting period
√ Applicable □Not Applicable
Unit: Share Currency: RMB
Number of
Type of stocks and Issue price Termination
Issue approved for
derivative Issue date (or interest Listing date date of
number listing and
securities rate) transactions
trading
Convertible corporate bonds, split-trade convertible bonds
Convertible March 4, 100 34,500,000 April 2, 34,500,000 March 3,
corporate bonds 2021 2021 2027
Particulars on issuance of securities as at the reporting period (please provide separate particulars on the
bonds with different interest rates during their duration):
√ Applicable □Not Applicable
The term of the convertible bonds issued during the reporting period is 6 years from the date of issuance,
that is, from March 4, 2021 to March 3, 2027. The coupon rate is 0.10% in the first year, 0.20% in the
second year, 0.60% in the third year, 1.30% in the fourth year, 1.80% in the fifth year, and 2.00% in the
sixth year.
(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
1. Changes in the total number of shares
During the reporting period, the Company's total share capital increased from 2,209,343,372 to
2,210,172,782 shares.
2. Changes in shareholder structure
No controlling shareholder and no actual controller of the Company changed. The controlling
shareholder of the Company was still USI Enterprise Limited, and its shareholding ratio was passively
diluted from 76.21% to 76.18% due to the above change in shares. Except for the controlling shareholder,
the Company had no other major 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 31.070 billion and total
liabilities of RMB 19.020 billion, with the asset-liability ratio of 61.22%; at the end of the reporting
period, the Company had total assets of RMB 35.856 billion and total liabilities of RMB 22.774 billion,
with the asset-liability ratio of 63.51%. The Company's asset-liability ratio increased by 2.29% over the
same period of the previous year.
(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 as at the XX
end of the reporting period
Total number of shareholders of ordinary shares at the end XX
of last month prior to the disclosure date of this 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) as at the end of the reporting period
Unit: share
Shareholdings of the top ten shareholders
103 / 258
2021 Annual Report
Number of Pledge, marking or
Change Number of
Name of shares held freezing
during the shares held as Percentage Nature of
shareholder subject to
reporting at the end of (%) shareholder
(full name) selling Status Number
period the period
restrictions
USI Enterprise Foreign
0 1,683,749,126 76.18 0 None 0
Limited legal person
Hong Kong
Securities - Foreign
63,121,824 2.86 0 Unknown
Clearing 23,081,699 legal person
Company Ltd.
China Securities Domestic
Finance Co., 0 36,750,069 1.66 0 Unknown state-owned
Ltd. legal person
ASDI
Foreign
ASSISTANCE 0 25,939,972 1.17 25,939,972 Pledge 25,939,972
legal person
DIRECTION
Domestic
ASE (Shanghai) non-state-
0 18,098,476 0.82 0 None 0
Inc. owned legal
person
Zoomlion
Domestic
Runshi (Beijing)
non-state-
Investment 5,000 5,998,765 0.27 0 Unknown
owned legal
Company
person
Limited
Bank of Korea -
Foreign
Self-owned 338,400 5,777,005 0.26 0 Unknown
legal person
funds
Bank of China
Co., Ltd. - China
AMC 5G -7,154,459 3,799,069 0.17 0 Unknown Others
Communication
Themed ETF
Domestic
Li Yalian 3,573,900 3,573,900 0.16 0 Unknown natural
person
Domestic
Zhang
3,280,500 3,280,500 0.15 0 Unknown natural
Fangzheng
person
Shareholdings of the top ten shareholders of shares not subject to selling restrictions
Number of tradable shares not subject to Type and number of shares
Name of shareholder
selling restrictions held Type Number
RMB ordinary
USI Enterprise Limited 1,683,749,126 1,683,749,126
shares
Hong Kong Securities RMB ordinary
63,121,824 63,121,824
Clearing Company Ltd. shares
China Securities Finance Co., RMB ordinary
36,750,069 36,750,069
Ltd. shares
RMB ordinary
ASE (Shanghai) Inc. 18,098,476 18,098,476
shares
Zoomlion Runshi (Beijing) RMB ordinary
5,998,765 5,998,765
Investment Company Limited shares
Bank of Korea - Self-owned RMB ordinary
5,777,005 5,777,005
funds shares
Bank of China Co., Ltd. -
RMB ordinary
China AMC 5G 3,799,069 3,799,069
shares
Communication Themed ETF
104 / 258
2021 Annual Report
RMB ordinary
Li Yalian 3,573,900 3,573,900
shares
RMB ordinary
Zhang Fangzheng 3,280,500 3,280,500
shares
RMB ordinary
Lu Jinghua 2,424,512 2,424,512
shares
At the end of the reporting period, there were 25,313,205 tradable shares not
subject to selling restrictions in the Company's special buy-back securities
account. Changes during the reporting period were as follows:
1. On December 31, 2020, there were 11,332,177 tradable shares not subject to
selling restrictions in the Company's special buy-back securities account;
2. On September 22, 2021, 281,200 shares were transferred from the
Particulars on the special buy-
Company's special buy-back securities account to the Company's 2021
back securities account of the
employee stock ownership plan account in the form of non-trade transfer;
top ten shareholders
3. On December 21, 2021, 1,780,050 shares were transferred from the
Company's special buy-back securities account to the Company's second-phase
core employee stock ownership plan account in the form of non-trade transfer;
4. As of December 31, 2021, 16,042,278 shares were increased in the
Company's special buy-back securities account due to the Company's share
repurchase in the secondary market.
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 Company
Related or acting-in-
through indirect shareholding by controlling USI Enterprise Limited and ASE
concert parties among the
(Shanghai) Inc., two of the Company’s shareholders. The Company does not
shareholders above
know whether there are related relationships and concerted actions among other
shareholders.
Particulars on the preference
shareholders with voting
None
rights restored and their
shareholdings
Number of shares held by the top ten shareholders subject to trading restrictions and trading restrictions
√ Applicable □Not Applicable
Unit: Share
Listing and trading of
shares subject to selling
Seria Number of shares restrictions
Selling
l Name of shareholders subject to held subject to Number of
restriction
Num selling restrictions selling new shares
Listing and s
ber restrictions that can be
trading time
listed and
traded
1 ASDI ASSISTANCE DIRECTION 25,939,972 December 0 36
11, 2023 months
from the
delivery
date of
the new
shares
Particulars on the related relationship or None
parties acting in concert among the above
shareholders
105 / 258
2021 Annual Report
(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 beneficial controllers
(I) Controlling shareholder
1 Legal person
√Applicable □Not Applicable
Name USI Enterprise Limited
Person in charge of the Company or
Chen-Yen Wei
legal representative
Establishment date November 13, 2007
Investment consulting services and warehouse management
Main operation businesses
services
Equity of other domestic and overseas
listed companies controlled or invested None
during the reporting period
Particulars on other information None
2 Natural person
□Applicable √Not Applicable
3 Special particulars on the Company not having controlling shareholders
□Applicable √Not Applicable
4 Changes in controlling shareholders during the reporting period
□Applicable √Not Applicable
5 Diagram of the ownership and controlling relationship between the Company and its controlling
shareholders
□Applicable √Not Applicable
USI Enterprise Limited
USI
(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
106 / 258
2021 Annual Report
Main job and title Since 2018, Mr. Chang has served as the chairman and group
CEO of ASE Technology Holding Co., Ltd.; since 1984, he has
served as the chairman of Advanced Semiconductor Engineering,
Inc.
Shareholdings in other domestic or Mr. Chang currently controls 21.55% equity in ASE Investment
overseas listed companies over the Holding Co., Ltd. (a company listed in Taiwan, with the stock
past 10 years 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 48.69% equity in SINO
HORIZON (a company listed in Taiwan, with the stock code of
2923). He once controlled 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
Nationality Hong Kong, China
Acquire right of residence in other No
countries or regions or not
Main job and title Since 2018, has been serving as vice chairman, general manager
and director (representative) of ASE Technology Holding Co.,
Ltd.
Shareholdings in other domestic or As a brother of Jason C.S. Chang, holds 2.85% equity in ASE
overseas listed companies over the Investment Holding Co., Ltd. (a company listed in Taiwan, with
past 10 years the stock code of 3711) and 12.90% equity in Hung Ching
Development & Construction Co. (a company listed in Taiwan,
with the stock code of 2527), and controls 48.69% equity in SINO
HORIZON (a company listed in Taiwan, with 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 Diagram of the ownership and controlling relationship between the Company and its actual
controllers
√Applicable □Not Applicable
107 / 258
2021 Annual Report
Actuall Controllers Jason Chang and Richard Chang
ASE Technology Holding Co., Ltd.
Advanced
Semiconduct
or
Engineering, USI Inc.
Inc.
ASE
(Shanghai)
Inc.
USI Enterprise Limited
Special buy-back securities
account of USI
USI
Note: The data in the diagram is as of December 31, 2021.
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 the Company's shares
held by them
□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
Unit: Yuan Currency: RMB
Name of the share repurchase plan 2021 Plan for Repurchasing Shares through Centralized Bidding
108 / 258
2021 Annual Report
Disclosure time of share repurchase August 26, 2021
plan
Proportion (%) of proposed repurchase 1.01
shares in total share capital
Proposed repurchase amount RMB 200 million - RMB 400 million
Proposed repurchase period August 24, 2021 – February 23, 2022
Repurchase purpose Employee stock ownership plan, equity incentive plan, conversion
of convertible corporate bonds issued by the listed company
Number of repurchased shares (share) 16,042,278
Proportion of repurchased shares in the N/A
target shares involved in the equity
incentive plan (if any)
Progress of reducing shares N/A
repurchased by the Company through
centralized bidding
Note: The proposed repurchase amount is calculated based on the upper limit of the total repurchase
funds of RMB 400 million and the upper limit of the price of RMB 18 per share.
As of February 23, 2022, this share repurchase plan was completed, and the Company repurchased a
total of 17,223,278 shares of the Company, accounting for about 0.78% of the Company's current total
share capital
109 / 258
2021 Annual Report
Section VIII Related Information of Preferred Stocks
□Applicable √Not Applicable
110 / 258
中文草稿
Universal Scientific Industrial (Shanghai) Co., Ltd.
Section IX Related Information of Bonds
I. Corporate bonds, corporate bonds and non-financial corporate debt financing instruments
□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 bonds Convertible corporate bonds publicly
issued by Universal Scientific Industrial
(Shanghai) Co., Ltd. in 2021
Number of convertible bond holders at the end of the period 12,914
Guarantor of the Company's convertible bonds None
Top ten convertible bond holders:
Amount (RMB) of
Name of holders of convertible corporate bonds bonds held as at the Holding ratio (%)
end of the period
USI Enterprise Limited 2,641,802,000 76.57
Industrial and Commercial Bank of China Limited - China Universal Convertible Bond
39,986,000 1.16
Securities Investment Fund
Wisdomshire Asset Management Co., Ltd. - Wisdomshire Zhiyuan No. 1 Private
39,240,000 1.14
Equity Investment Fund
Zhongtai Securities Co., Ltd. 38,548,000 1.12
UBS AG 33,103,000 0.96
ASE (Shanghai) Inc. 28,397,000 0.82
The Hongkong and Shanghai Banking Corporation Limited 21,897,000 0.63
Guoyuan International Holding Co., Ltd. - Customer funds (Exchange) 21,634,000 0.63
Fullgoal Fuyi Progressive Fixed-income Pension Products - Industrial and Commercial
21,045,000 0.61
Bank of China Limited
Agricultural Bank of China Co., Ltd. - Penghua Convertible Bond Securities
18,427,000 0.53
Investment Fund
(III) Changes in convertible bonds during the reporting period
√ Applicable □Not Applicable
Unit: Yuan Currency: RMB
Change
Name of convertible Before the
Transferred After the change
corporate bonds change Redeemed Put
into shares
Convertible corporate
bonds publicly issued by
Universal Scientific 3,450,000,000 26,000 0 0 3,449,974,000
Industrial (Shanghai)
Co., Ltd. in 2021
111 / 258
中文草稿
Universal Scientific Industrial (Shanghai) Co., Ltd.
Cumulative conversion of convertible bonds during the reporting period
√ Applicable □Not Applicable
Name of convertible corporate bonds Convertible corporate bonds
publicly issued by Universal
Scientific Industrial (Shanghai) Co.,
Ltd. in 2021
Conversion amount (RMB) during the reporting period (share) 26,000
Conversion number during the reporting period (share) 1,310
Cumulative conversion number (share) 1,310
Proportion (%) of cumulative conversion number to the total 0.0001
number of issued shares of the Company before the conversion
Unconverted amount (RMB) 3,449,974,000
Proportion (%) of unconverted convertible bonds to the total 99.9992
convertible bonds issued
(IV) Historical adjustments of conversion price
√ Applicable □Not Applicable
Unit: Yuan Currency: RMB
Name of convertible corporate Convertible corporate bonds publicly issued by Universal Scientific
bonds Industrial (Shanghai) Co., Ltd. in 2021
Adjusted
Conversion price Particulars on conversion
conversion Disclosure time Disclosure media
adjustment date price adjustment
price
June 3, 2021 19.75 June 1, 2021 Shanghai The implementation of the
Securities News, profit distribution plan for
China Securities 2020
Journal, Securities
Times, and
Securities Daily
The latest conversion price as of 19.75
the 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 31.07 billion and total liabilities of RMB
19.02 billion, with the debt/asset ratio of 61.22%; at the end of the reporting period, the Company had total assets of RMB
35.86 billion and total liabilities of RMB 22.77 billion, with the debt/asset ratio of 63.51%. The Company's debt/asset ratio
increased by 2.29% over the same period of the previous year. On May 27, 2021, 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 (2021): The Company's main credit rating was AA+, the credit rating for USI Convertible
Bonds remained at 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.
(VI) Particulars on other information of convertible bonds
□Applicable √Not Applicable
112 / 258
中文草稿
Universal Scientific Industrial (Shanghai) Co., Ltd.
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 notes for more details.
113 / 258
中文草稿
Universal Scientific Industrial (Shanghai) Co., Ltd.
Financial Statements and Auditor's Report
For the year ended 31 December 2021
Contents Page(s)
12
Auditor's report 115 - 119
Consolidated balance sheet 120 - 121
Balance sheet of the Company 122 - 123
Consolidated income statement 124
Income statement of the Company 125
Consolidated cash flow statement 126
Cash flow statement of the Company 127
Consolidated statement of changes in shareholders' equity 128 - 129
Statement of changes in shareholders' equity of the Company 130 - 131
Notes to the financial statements 132 - 258
114 / 258
AUDITOR'S REPORT
De Shi Bao (Shen) Zi (22) No. P01010
(Page 1 of 5)
To the Shareholders of Universal Scientific Industrial (Shanghai) Co., Ltd.
1. 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 2021,
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 of 31 December 2021, 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.
2. 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, 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.
3. 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.
115 / 258
AUDITOR'S REPORT - CONTINUED
De Shi Bao (Shen) Zi (22) No. P01010
(Page 2 of 5)
3. Key Audit Matters
Cut-off of Revenue Recognition
Matter Description
As set out in Notes(V)-45 to the financial statements, the Company's revenue in 2021 in the
consolidated financial statements is RMB 55,299,654,770.21, which is significant. The Company’s
sales mainly include sales of goods, and the revenue is recognized at the time point when the
customer obtains the control over the commodity. Under the terms of different sales contracts and
trade terms, 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 control over various transaction models that
revenue involves in may be transferred at different time points, 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 terms
related to the time point of product 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.
116 / 258
AUDITOR'S REPORT - CONTINUED
De Shi Bao (Shen) Zi (22) No. P01010
(Page 3 of 5)
4. 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 2021, 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.
5. 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 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 have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
6. 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 solely to you. 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.
117 / 258
AUDITOR'S REPORT - CONTINUED
De Shi Bao (Shen) Zi (22) No. P01010
(Page 4 of 5)
6. Auditor's Responsibilities for the Audit of the Financial Statements - continued
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 that 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 and 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.
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 communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
118 / 258
AUDITOR'S REPORT - CONTINUED
De Shi Bao (Shen) Zi (22) No. P01010
(Page 5 of 5)
6. Auditor's Responsibilities for the Audit of the Financial Statements - continued
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:
Shanghai, China (Engagement partner)
Yuan, Shou Qing
Chinese Certified Public Accountant:
Hu, Ke
25 March 2022
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.
119 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
At 31 December 2021
Consolidated Balance Sheet
Unit: RMB
31/12/2020
ITEM Notes 31/12/2021
(Restated)
Current Assets:
Cash and bank balances (V)1 6,034,204,042.25 6,332,982,117.63
Held-for-trading financial assets (V)2 96,480,087.56 182,315,272.70
Notes receivable (V)3 78,960,907.84 70,395,770.23
Accounts receivable (V)4 12,459,388,852.15 10,468,619,520.16
Prepayments (V)5 51,467,608.39 41,561,467.16
Other receivables (V)6 129,254,194.21 125,282,807.18
Inventories (V)7 9,037,562,662.64 6,765,336,245.29
Non-current assets due within one year (V)8 991,195.08 813,785.46
Other current assets (V)9 606,392,327.15 596,958,856.20
Total Current Assets 28,494,701,877.27 24,584,265,842.01
Non-current Assets:
Long-term receivables (V)10 11,164,116.06 10,380,472.81
Long-term equity investments (V)11 542,549,818.63 531,527,769.52
Other equity instrument investments (V)12 75,957,194.28 41,351,831.65
Other non-current financial assets (V)13 236,978,820.68 152,935,434.70
Fixed assets (V)14 3,442,205,758.01 2,928,598,187.59
Construction in progress (V)15 798,015,703.22 431,942,421.24
Right-of-use assets (V)16 562,990,794.23 629,762,039.36
Intangible assets (V)17 453,460,831.12 504,241,510.99
Goodwill (V)18 559,021,157.88 618,094,641.27
Long-term prepaid expenses (V)19 227,576,284.98 250,549,262.26
Deferred tax assets (V)20 315,295,836.27 297,009,500.16
Other non-current assets (V)21 136,815,311.18 89,743,706.46
Total Non-current Assets 7,362,031,626.54 6,486,136,778.01
TOTAL ASSETS 35,856,733,503.81 31,070,402,620.02
120 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
At 31 December 2021
Consolidated Balance Sheet – continued
Unit: RMB
31/12/2020
ITEM Notes 31/12/2021
(Restated)
Current Liabilities:
Short-term borrowings (V)22 2,480,500,031.68 375,341,430.81
Derivative financial liabilities (V)23 976,413.16 18,402,480.68
Accounts payable (V)24 12,558,598,243.17 11,835,239,734.29
Contract liabilities (V)25 311,988,551.56 300,864,893.86
Employee benefits payable (V)26 831,186,986.48 869,508,823.23
Taxes payable (V)27 238,676,479.75 179,000,709.13
Other payables (V)28 423,509,465.51 399,836,932.07
Non-current liabilities due within one year (V)29 720,507,781.49 934,981,355.04
Total Current Liabilities 17,565,943,952.80 14,913,176,359.11
Non-current Liabilities:
Long-term borrowings (V)30 1,101,220,467.55 3,011,668,944.64
Bonds payable (V)31 3,115,505,143.28 -
Lease liabilities (V)32 475,125,597.24 534,968,764.47
Long-term payables (V)33 45,581,055.62 43,287,736.00
Long-term employee benefits payable (V)34 297,331,160.14 335,569,680.50
Provisions (V)35 10,046,914.77 11,353,780.46
Deferred income (V)36 59,791,942.70 32,724,563.92
Deferred tax liabilities (V)20 98,179,611.96 132,486,298.52
Other non-current liabilities (V)37 5,642,575.13 4,960,300.38
Total Non-current Liabilities 5,208,424,468.39 4,107,020,068.89
TOTAL LIABILITIES 22,774,368,421.19 19,020,196,428.00
SHAREHOLDERS' EQUITY:
Share capital (V)38 2,210,172,782.00 2,209,343,372.00
Other equity instruments (V)39 409,902,116.17 -
Capital reserve (V)40 2,242,456,606.22 2,180,964,177.00
Less: Treasury shares (V)41 341,236,339.88 134,707,206.58
Other comprehensive income (V)42 (83,600,398.95) (91,215,977.01)
Surplus reserve (V)43 738,004,669.96 542,610,242.85
Retained profits (V)44 7,906,260,771.90 7,342,825,571.69
Total owners' equity attributable to
13,081,960,207.42 12,049,820,179.95
equity holders of the Company
Minority interests 404,875.20 386,012.07
TOTAL SHAREHOLDERS' EQUITY 13,082,365,082.62 12,050,206,192.02
TOTAL LIABILITIES AND
35,856,733,503.81 31,070,402,620.02
SHAREHOLDERS' EQUITY
The accompanying notes form an integral part of these financial statements.
The financial statements on pages 6 to 144 were signed by the following:
Jeffrey Chen Tan-Yang Liu Chern Yuh-Huah
Legal Representative Chief Financial Officer Head of Accounting Department
121 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
At 31 December 2021
Balance Sheet of the Company
Unit: RMB
31/12/2020
ITEM Notes 31/12/2021
(Restated)
Current Assets:
Cash and bank balances 2,490,051,993.72 1,347,901,732.05
Held-for-trading financial assets 8,624,935.00 1,344,484.55
Notes receivable (XV)1 66,256,985.55 58,278,567.16
Accounts receivable (XV)2 3,902,440,554.02 3,473,614,442.75
Prepayments 4,622,731.01 112,463.31
Other receivables (XV)3 635,383,876.68 12,674,360.46
Inventories 1,922,768,039.29 1,652,295,785.91
Other current assets 133,024,889.75 210,124,342.62
Total Current Assets 9,163,174,005.02 6,756,346,178.81
Non-current Assets:
Long-term equity investments (XV)4 5,227,065,594.74 4,439,380,452.93
Other non-current financial assets 21,000,000.00 -
Fixed assets 1,277,668,269.11 1,064,804,401.63
Construction in progress 289,944,861.14 138,283,974.66
Right-of-use assets 63,430,169.07 75,813,653.53
Intangible assets 10,937,758.57 11,119,026.98
Long-term prepaid expenses 67,180,541.49 48,389,460.39
Deferred tax assets 48,694,006.86 25,362,680.78
Other non-current assets 20,979,926.13 17,127,475.53
Total Non-current Assets 7,026,901,127.11 5,820,281,126.43
TOTAL ASSETS 16,190,075,132.13 12,576,627,305.24
122 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
At 31 December 2021
Balance Sheet of the Company - continued
Unit: RMB
31/12/2020
ITEM Notes 31/12/2021
(Restated)
Current Liabilities:
Derivative financial liabilities 43,425.46 -
Accounts payable 4,298,264,852.06 4,055,255,014.35
Contract liabilities 51,371,004.77 55,907,249.31
Employee benefits payable 108,433,802.08 104,198,915.69
Taxes payable 65,202,444.73 37,538,094.59
Other payables 42,476,124.59 934,374,184.23
Non-current liabilities due within one year 14,159,853.97 13,517,397.67
Total Current Liabilities 4,579,951,507.66 5,200,790,855.84
Non-current Liabilities:
Bonds payable 3,115,505,143.28 -
Lease liabilities 56,699,264.24 69,076,116.12
Deferred income 26,066,087.94 14,294,776.44
Other non-current liabilities 1,035,426.50 2,148,500.00
Total Non-current Liabilities 3,199,305,921.96 85,519,392.56
TOTAL LIABILITIES 7,779,257,429.62 5,286,310,248.40
SHAREHOLDERS' EQUITY:
Share capital 2,210,172,782.00 2,209,343,372.00
Other equity instruments 409,902,116.17 -
Capital reserve 2,302,358,003.50 2,240,865,574.28
Less: Treasury shares 341,236,339.88 134,707,206.58
Surplus reserve 738,004,669.96 542,610,242.85
Retained profits 3,091,616,470.76 2,432,205,074.29
TOTAL SHAREHOLDERS' EQUITY 8,410,817,702.51 7,290,317,056.84
TOTAL LIABILITIES AND
16,190,075,132.13 12,576,627,305.24
SHAREHOLDERS' EQUITY
123 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2021
Consolidated Income Statement
Unit: RMB
Amount incurred in the
Amount incurred in
ITEM Notes prior year
the current year
(Restated)
I. Revenue (V)45 55,299,654,770.21 47,696,228,222.53
Less: Costs (V)45 49,981,479,197.84 42,809,550,114.14
Taxes and levies (V)46 49,817,665.75 61,708,512.55
Selling expenses (V)47 311,480,902.10 219,892,291.75
Administrative expenses (V)48 1,169,173,384.77 1,123,158,982.65
Research and development expenses (V)49 1,641,398,512.61 1,576,363,064.48
Financial expenses (V)50 203,398,590.62 95,750,510.66
Including: Interest expenses 201,328,552.68 90,186,351.24
Interest income 67,779,611.82 60,445,860.19
Add: Other income (V)51 50,678,106.85 76,779,477.12
Investment income (V)52 111,678,979.96 83,440,494.33
Including: Income from investments in associates and
22,116,497.85 19,752,692.15
joint ventures
Gains (losses) from changes in fair values (V)53 44,588,222.60 (6,272,200.14)
Impairment gains (losses) of credit (V)54 (1,706,888.48) 7,894,930.75
Impairment gains (losses) of assets (V)55 (18,746,153.38) (11,792,788.58)
Gains (losses) from disposal of assets (V)56 2,414,697.02 1,796,090.81
II. Operating profit 2,131,813,481.09 1,961,650,750.59
Add: Non-operating income (V)57 19,628,576.06 14,978,610.83
Less: Non-operating expenses (V)58 12,583,134.08 3,066,306.86
III. Total profit 2,138,858,923.07 1,973,563,054.56
Less: Income tax expenses (V)59 282,165,880.75 239,997,822.59
IV. Net profit 1,856,693,042.32 1,733,565,231.97
(I) Net profit classified by operating continuity:
1. Net profit from continuing operations 1,856,693,042.32 1,733,565,231.97
2. Net profit from discontinued operations - -
(II) Net profit classified by ownership ascription:
1. Net profit attributable to owners of the Company 1,857,968,074.82 1,739,435,448.10
2. Profit or loss (net losses) attributable to minority (1,275,032.50) (5,870,216.13)
interests
V. Other comprehensive income, net of tax (V)42 8,909,473.69 (97,879,854.60)
Other comprehensive income attributable to owners of the
7,615,578.06 (98,160,522.46)
Company, net of tax
(I) Other comprehensive income that cannot be 36,407,012.60 (9,966,805.24)
subsequently reclassified to profit or loss
1. Changes from re-measurement of defined benefit 1,971,353.84 (10,568,410.72)
plans
2. Changes in fair values of investments in other equity 34,435,658.76 601,605.48
instruments
(II) Other comprehensive income that will be reclassified to (28,791,434.54)
(88,193,717.22)
profit or loss
1. Other comprehensive income that can be reclassified 7,230,128.54 18,090,277.18
to profit or loss under the equity method
2. Translation differences of financial statements (206,339,508.32) 25,410,896.65
denominated in foreign currencies
3. Hedging reserves of net investment in foreign 170,317,945.24
(131,694,891.05)
operations
Other comprehensive income attributable to minority 1,293,895.63
280,667.86
interests, net of tax
VI. Total comprehensive income 1,865,602,516.01 1,635,685,377.37
Total comprehensive income attributable to owners of the 1,865,583,652.88 1,641,274,925.64
Company
Total comprehensive income attributable to minority 18,863.13 (5,589,548.27)
interests
VII. Earnings per share
(I) Basic earnings per share (XVI)2 0.85 0.80
(II) Diluted earnings per share (XVI)2 0.83 0.80
124 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2021
Income Statement of the Company
Unit: RMB
Amount incurred in the
Amount incurred in the
ITEM Notes prior year
current year
(Restated)
I. Revenue (XV)5 18,335,131,740.71 17,598,964,107.12
Less: Costs (XV)5 16,637,188,631.60 15,916,701,463.45
Taxes and levies 11,586,536.18 11,855,339.99
Selling expenses 36,138,632.62 58,397,221.62
Administrative expenses 173,389,504.17 160,325,958.90
Research and development expenses 641,883,187.54 584,315,079.87
Financial expenses 89,326,653.62 (19,049,606.59)
Including: Interest expenses 116,199,066.57 18,390,966.24
Interest income 41,448,876.53 19,159,866.33
Add: Other income 22,684,102.57 14,487,455.41
Investment income (XV)6 1,216,843,686.33 707,491,553.58
Gains (losses) from changes in fair values 14,537,089.99 944,484.55
Impairment gains (losses) of credit 149,203.74 (179,723.41)
Impairment gains (losses) of assets (3,920,601.29) (5,885,658.10)
Gains (losses) from disposal of assets 277,783.36 (925,848.81)
II. Operating profit 1,996,189,859.68 1,602,350,913.10
Add: Non-operating income 2,715,835.51 1,743,218.99
Less: Non-operating expenses 93,892.75 52,041.99
III. Total profit 1,998,811,802.44 1,604,042,090.10
Less: Income tax expenses 44,867,531.36 86,483,029.82
IV. Net profit 1,953,944,271.08 1,517,559,060.28
(I) Net profit from continuing operations 1,953,944,271.08 1,517,559,060.28
(II) Net profit from discontinued operations - -
V. Other comprehensive income, net of tax - -
VI. Total comprehensive income 1,953,944,271.08 1,517,559,060.28
125 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2021
Consolidated Cash Flow Statement
Unit: RMB
Amount incurred in Amount incurred in the
ITEM Notes
the current year prior year
I. Cash Flows from Operating Activities:
Cash receipts from the sale of goods and the rendering of 53,578,337,998.60 45,468,811,547.15
services
Receipts of tax refunds 558,689,618.99 340,578,159.52
Other cash receipts relating to operating activities (V)60(1) 172,788,684.87 187,105,390.24
Sub-total of cash inflows from operating activities 54,309,816,302.46 45,996,495,096.91
Cash payments for goods purchased and services received 50,505,722,379.91 40,923,196,400.49
Cash payments to and on behalf of employees 3,856,150,432.44 2,717,199,681.64
Payments of various types of taxes 419,132,561.12 409,820,523.85
Other cash payments relating to operating activities (V)60(2) 631,257,907.89 509,754,816.83
Sub-total of cash outflows from operating activities 55,412,263,281.36 44,559,971,422.81
Net Cash Flow from Operating Activities (V)61(1) (1,102,446,978.90) 1,436,523,674.10
II. Cash Flows from Investing Activities:
Cash receipts from disposals and recovery of investments 6,647,452,170.32 9,172,427,960.13
Cash receipts from investment income 98,129,245.61 64,140,453.41
Net cash receipts from disposals of fixed assets, intangible
50,849,009.78 19,108,054.99
assets and other long-term assets
Other cash receipts relating to investing activities (V)60(3) - 13,522,846.50
Sub-total of cash inflows from investing activities 6,796,430,425.71 9,269,199,315.03
Cash payments to acquire or construct fixed assets,
1,514,592,361.01 1,056,333,146.16
intangible assets and other long-term assets
Cash payments to acquire investments 6,723,070,803.21 9,243,640,394.90
Net cash payments for acquisitions of subsidiaries and other
(V)61(2) 45,321,801.82 1,980,146,094.91
business units
Sub-total of cash outflows from investing activities 8,282,984,966.04 12,280,119,635.97
Net Cash Flow from Investing Activities (1,486,554,540.33) (3,010,920,320.94)
III. Cash Flows from Financing Activities:
Cash receipts from capital contributions 11,406,983.00 67,060,849.80
Including: cash receipts from capital contributions from
- -
minority shareholders of subsidiaries
Cash receipts from borrowings 13,985,813,402.73 13,803,036,236.54
Cash receipts from issuing bonds 3,427,301,047.72 -
Other cash receipts relating to financing activities 39,236,933.03 23,486,155.84
Sub-total of cash inflows from financing activities 17,463,758,366.48 13,893,583,242.18
Cash repayments of borrowings 13,530,805,981.18 11,474,728,199.05
Cash payments for distribution of dividends or profits or 1,172,715,392.19 444,227,133.59
settlement of interest expenses
Other cash payments relating to financing activities (V)60(4) 368,852,689.67 150,150,075.22
Sub-total of cash outflows from financing activities 15,072,374,063.04 12,069,105,407.86
Net Cash Flow from Financing Activities 2,391,384,303.44 1,824,477,834.32
IV. Effect of Foreign Exchange Rate Changes on Cash and
(87,413,972.12) (29,496,833.12)
Cash Equivalents
V. Net Increase (Decrease) in Cash and Cash Equivalents (285,031,187.91) 220,584,354.36
Add: Opening Balance of Cash and Cash Equivalents (V)61(3) 6,303,224,304.50 6,082,639,950.14
VI. Closing Balance of Cash and Cash Equivalents (V)61(3) 6,018,193,116.59 6,303,224,304.50
126 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2021
Cash Flow Statement of the Company
Unit: RMB
Amount incurred in Amount incurred in
ITEM Notes
the current year the prior year
I. Cash Flows from Operating Activities:
Cash receipts from the sale of goods and the rendering of 17,991,191,683.40 16,354,018,830.88
services
Receipts of tax refunds 295,444,045.61 144,654,241.67
Other cash receipts relating to operating activities 84,581,382.97 31,995,115.48
Sub-total of cash inflows from operating activities 18,371,217,111.98 16,530,668,188.03
Cash payments for goods purchased and services received 16,905,058,714.58 14,784,024,458.76
Cash payments to and on behalf of employees 576,858,051.86 475,732,315.68
Payments of various types of taxes 106,103,694.13 113,552,029.55
Other cash payments relating to operating activities 189,144,854.22 121,869,207.26
Sub-total of cash outflows from operating activities 17,777,165,314.79 15,495,178,011.25
Net Cash Flow from Operating Activities (XV)7 594,051,797.19 1,035,490,176.78
II. Cash Flows from Investing Activities:
Cash receipts from disposals and recovery of investments 3,927,400,000.00 15,000,000.00
Cash receipts from investment income 1,216,889,084.23 707,491,553.58
Net cash receipts from disposals of fixed assets, intangible
assets and other long-term assets
169,779,958.45 42,338,215.51
Other cash receipts relating to investing activities - 100,000,000.00
Sub-total of cash inflows from investing activities 5,314,069,042.68 864,829,769.09
Cash payments to acquire or construct fixed assets, intangible
assets and other long-term assets
635,551,425.24 788,916,610.61
Cash payments to acquire investments 4,694,086,300.00 765,242,490.67
Net cash payments for acquisitions of subsidiaries and other
business units
631,413,000.00 -
Sub-total of cash outflows from investing activities 5,961,050,725.24 1,554,159,101.28
Net Cash Flow from Investing Activities (646,981,682.56) (689,329,332.19)
III. Cash Flows from Financing Activities:
Cash receipts from capital contributions 11,406,983.00 67,060,849.80
Cash receipts from borrowings 1,989,243,101.73 3,407,214,816.84
Cash receipts from issuance of bonds 3,427,301,047.72 -
Other cash receipts relating to financing activities 22,515,886.36 16,859,099.00
Sub-total of cash inflows from financing activities 5,450,467,018.81 3,491,134,765.64
Cash repayments of borrowings 2,869,866,674.48 3,040,310,216.03
Cash payments for distribution of dividends or profits or 1,111,561,940.64 391,543,142.44
settlement of interest expenses
Other cash payments relating to financing activities 247,108,961.01 19,931,490.47
Sub-total of cash outflows from financing activities 4,228,537,576.13 3,451,784,848.94
Net Cash Flow from Financing Activities 1,221,929,442.68 39,349,916.70
IV. Effect of Foreign Exchange Rate Changes on Cash and Cash
Equivalents
(26,849,295.64) (13,418,485.16)
V. Net Increase in Cash and Cash Equivalents 1,142,150,261.67 372,092,276.13
Add: Opening Balance of Cash and Cash Equivalents 1,347,901,732.05 975,809,455.92
VI. Closing Balance of Cash and Cash Equivalents 2,490,051,993.72 1,347,901,732.05
127 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2021
Consolidated Statement of Changes in Shareholders' Equity
Unit: RMB
2021
Attributable to owners of the Company
Other Minority Total shareholders'
Other equity Less: Treasury
Share capital Capital reserve comprehensive Surplus reserve Retained profits interests equity
instruments shares
ITEM income
I. Closing balance of the preceding year 2,209,343,372.00 2,180,964,177.00 (134,707,206.58) (91,215,977.01) 542,610,242.85 7,342,825,571.69 (978,434.26) 12,048,841,745.69
Add: Business combinations not involving
enterprises under common control - - - - - - - 1,364,446.33 1,364,446.33
(Note V, 18)
II. Opening balance of the current year
2,209,343,372.00 - 2,180,964,177.00 (134,707,206.58) (91,215,977.01) 542,610,242.85 7,342,825,571.69 386,012.07 12,050,206,192.02
(Restated)
III. Changes for the year
(I) Total other comprehensive income - - - - 7,615,578.06 - 1,857,968,074.82 18,863.13 1,865,602,516.01
(II) Owners’ contributions and reduction
in capital
1. Ordinary shares contributed by 11,406,983.00
shareholders (Note V, 38) 828,100.00 - 10,578,883.00 - - - - -
2. Capital contribution by owners of 409,928,459.19
other equity instruments (Note V,
38) 1,310.00 409,902,116.17 25,033.02 - - - - -
3. Share-based payment recognized 52,875,000.00
in shareholders' equity (Note V, 40) - - 52,875,000.00 - - - - -
4. Transfer from treasury
shares (Note V, 41) - - (1,986,486.80) 24,502,373.16 - - - - 22,515,886.36
5. Others (Note V, 41) - - (231,031,506.46) - - - - (231,031,506.46)
(III) Profit distribution
1. Transfer to surplus reserve - - - - - 195,394,427.11 (195,394,427.11) - -
2. Distributions to shareholders - - - - - - (1,099,138,447.50) - (1,099,138,447.50)
IV. Closing 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
128 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2021
Consolidated Statement of Changes in Shareholders' Equity - continued
Unit: RMB
2020 (Restated)
Attributable to owners of the Company
ITEM Other Minority Total shareholders'
Less: Treasury interests equity
Share capital Capital reserve comprehensive Surplus reserve Retained profits
shares
income
I. Opening balance 2,179,088,030.00 1,719,118,051.70 (154,978,351.25) 6,944,545.45 390,854,336.82 6,134,589,055.19 31,244,571.54 10,306,860,239.45
II. Changes for the year
(I) Total other comprehensive income - - - (98,160,522.46) - 1,739,435,448.10 (5,589,548.27) 1,635,685,377.37
(II) Owners’ contributions and reduction in capital
1. Ordinary shares contributed by shareholders 30,255,342.00 424,877,744.65 - - - - - 455,133,086.65
2. Share-based payment recognized in
- 44,786,016.39 - - - - - 44,786,016.39
shareholders' equity
3. Transfer from treasury shares - (3,412,045.67) 20,271,144.67 - - - - 16,859,099.00
4. Purchase of minority interests - (4,405,590.07) - - - - (25,355,724.00) (29,761,314.07)
5. Business combination (Restated) - - - - - - 86,712.80 86,712.80
(III) Profit distribution
1. Transfer to surplus reserve - - - - 151,755,906.03 (151,755,906.03) - -
2. Distributions to shareholders - - - - - (379,443,025.57) - (379,443,025.57)
III. Closing balance of the current year (Restated) 2,209,343,372.00 2,180,964,177.00 (134,707,206.58) (91,215,977.01) 542,610,242.85 7,342,825,571.69 386,012.07 12,050,206,192.02
129 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2021
Statement of Changes in Shareholders' Equity of the Company
Unit: RMB
2021
Other equity Total shareholders'
ITEM Share capital Capital reserve Less: Treasury shares Surplus reserve Retained profits
instruments equity
I. Opening balance of the current year 2,209,343,372.00 - 2,240,865,574.28 (134,707,206.58) 542,610,242.85 2,432,205,074.29 7,290,317,056.84
II. Changes for the year
(I) Total other comprehensive income - - - - - 1,953,944,271.08 1,953,944,271.08
(II) Owners’ contributions and reduction
in capital
1. Ordinary shares contributed by
828,100.00 - 10,578,883.00 - - - 11,406,983.00
shareholders
2. Capital contribution by owners of
1,310.00 409,902,116.17 25,033.02 - - - 409,928,459.19
other equity instruments
3. Share-based payment recognized in
- - 52,875,000.00 - - - 52,875,000.00
shareholders' equity
4. Transfer from treasury shares - - (1,986,486.80) 24,502,373.16 - - 22,515,886.36
5. Others - - - (231,031,506.46) - - (231,031,506.46)
(III) Profit distribution
1. Transfer to surplus reserve - - - - 195,394,427.11 (195,394,427.11) -
2. Distributions to shareholders - - - - - (1,099,138,447.50) (1,099,138,447.50)
III. Closing 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
130 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2021
Statement of Changes in Owners’ Equity of the Company - continued
Unit: RMB
2020
Total shareholders'
ITEM Share capital Capital reserve Less: Treasury shares Surplus reserve Retained profits
equity
I. Opening balance of the current year 2,179,088,030.00 1,774,632,757.86 (154,978,351.25) 390,854,336.82 1,445,844,945.61 5,635,441,719.04
II. Changes for the year
(I) Total other comprehensive income - - - - 1,517,559,060.28 1,517,559,060.28
(II) Owners’ contributions and
reduction in capital
1. Ordinary shares contributed by
30,255,342.00 424,877,744.65 - - - 455,133,086.65
shareholders
2. Share-based payment recognized
- 44,767,117.44 - - - 44,767,117.44
in shareholders' equity
3. Transfer from treasury shares - (3,412,045.67) 20,271,144.67 16,859,099.00
(III) Profit distribution
1. Transfer to surplus reserve - - - 151,755,906.03 (151,755,906.03) -
2. Distributions to shareholders - - - - (379,443,025.57) (379,443,025.57)
III. Closing balance of the current year 2,209,343,372.00 2,240,865,574.28 (134,707,206.58) 542,610,242.85 2,432,205,074.29 7,290,317,056.84
131 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(I) BASIC INFORMATION ABOUT THE COMPANY
Universal Scientific Industrial (Shanghai) Co., Ltd. (环旭电子股份有限公司) ("Company" or "the Company")
is a joint-stock limited company changed from Universal Scientific Industrial (Shanghai) Co., Ltd. (环旭电子
(上海)有限公司) (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 District, 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. (环旭电子股份有限公司) in
accordance with the Official Reply (Shang Zi Pi No. [2008] 654) of the Ministry of Commerce of the People’s
Republic of China. As of 31 December 2021, the registered capital of the Company was RMB 2,209,609,072.00.
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.
The Company's and consolidated financial statements were approved by the board of directors of the Company
and authorized for issue on 25 March 2022.
The details of scope of the consolidated financial statements for the year are set out in Note (VII) "Interests in
Other Entities". The change of the consolidated financial statements mainly lay in more subsidiaries of the
Company in the current year, please refer to Note (VI) "Changes in Scope of Consolidation" for more details.
(II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
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 2014).
Going concern
The Group assessed its ability to continue as a going concern for the 12 months from 31 December 2021 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.
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 Group 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.
132 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued
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 recorded 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. Fair value measurement and disclosure in the financial
statements are determined according to the above 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 categorized 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 within Level 1, that are observable for the asset or liability
Level 3 inputs are unobservable inputs for the asset or liability.
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
1. Statement of compliance with the 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 2021, 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.
133 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 Company chooses RMB as its functional currency, while its
domestic subsidiaries adopts 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. The accounting treatment of business combinations involving enterprises under common control and
business combinations not involving enterprises under common control
5.1 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 acquire. 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].
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.
134 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
6. Preparation of consolidated financial statements
6.1 Preparation of consolidated financial statements
The scope of consolidation in the consolidated financial statements is determined on the basis 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.
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.
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.
135 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
7. 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) 13.3.2 "Long-
term equity investments accounted for using the equity method" for details.
8. 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.
9. Translation of transactions and financial statements denominated in foreign currencies
9.1 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 and the amounts in functional currency
remain unchanged. 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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
9 Translation of transactions and financial statements denominated in foreign currencies – continued
9.2 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.
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's 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.
10. Financial instruments
Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual
provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value.
For financial assets purchased or sold in a regular way, the Group recognizes assets acquired and liabilities
assumed on a trade date basis, or derecognizes the assets sold on a trade date basis.
The Group recognizes a financial asset or a financial liability when it becomes a party to the contractual
provisions of a financial instrument.
All regular way purchases or sales of financial assets are recognized and derecognized 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, relevant transaction costs are directly recognized in profit or loss;
transaction costs relating to other categories of financial assets and financial liabilities are included in the value
initially recognized. For accounts receivable recognized that do not contain a significant financing component
or a financing component included in the contracts less than one year which are not considered by the Group,
which are within the scope of Accounting Standards for Business Enterprises No.14 - Revenue (hereinafter
referred to as "revenue standards"), transaction prices defined in the standards shall be adopted on initial
recognition.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
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 gross carrying amount of a financial asset or to the amortized
cost of a financial liability. When calculating the effective interest rate, the Group estimates future cash flows
by considering all the contractual terms of the financial asset or financial liability (for example, prepayment,
extension, call option or similar options) but shall not consider the expected credit losses.
The amortized cost of a financial asset or a financial liability is the amount of a financial asset or a financial
liability initially recognized net of principal repaid, plus or less the cumulative amortized amount arising from
amortization of the difference between the amount initially recognized and the amount at the maturity date using
the effective interest method, net of cumulative credit loss allowance (only applicable to financial assets).
10.1 Classification, recognition and measurement of financial assets
Subsequent to initial recognition, the Group's financial assets of various categories are subsequently measured
at amortized cost, at fair value through other comprehensive income or at fair value through profit or loss.
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 fair value through other comprehensive income ("FVOCI") 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 one of the following conditions is satisfied:
22.
It has been acquired principally for the purpose of selling in the near term; or
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; or
It is a derivative that is not a financial guarantee contract or designated and effective as a hedging instrument.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.1 Classification, recognition and measurement of financial assets - continued
Financial assets measured at fair value through profit or loss ("FVTPL") include those classified as financial
assets at FVTPL and those designated as financial assets 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 designated 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.
10.1.1 Financial assets measured 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.
23.
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.
10.1.2 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-trading equity instrument investments designated as financial assets at FVTOCI
are recognized in other comprehensive income, and the cumulative gains or losses previously recognized in
other comprehensive income allocated to the part derecognized 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 current period when (1) the Group has established the right of collecting
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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.
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.1 Classification, recognition and measurement of financial assets - continued
10.1.3 Financial assets at FVTPL
Financial assets at FVTPL are subsequently measured at fair value. Gain or loss arising from changes in fair
values and dividends and interests related to the financial assets are recognized in profit or loss.
10.2 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.
10.2.1 Significant increase of 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:
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.2 Impairment of financial instruments - continued
10.2.1 Significant increase of credit risk - continued
(1) Significant changes in internal price indicators of credit risk 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. These indicators include the credit spread, the
credit swap prices for the borrower, the length of time or the extent to which the fair value of a financial
asset has been less than its amortized cost and other market information related to the borrower, such as
changes in the price of a borrower's debt and equity instruments.
(3) Significant changes in actual or expected external credit rating for the financial instruments;
(4) An actual or expected internal credit rating downgrade for the borrower
(5) Adverse changes in business, financial or economic conditions that are expected to cause a significant
change 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 change in the 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;
(9) Significant changes in the expected performance and behavior of the debtor;
(10) Changes in the entity'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.
10.2.2 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) A breach of contract by the debtor, such as a default or delinquency in interest or principal payments;
(3) The creditor, for economic or legal reasons relating to the debtor's financial difficulty, granting a
concession to the debtor;
(4) It becoming probable that the debtor will enter bankruptcy or other financial reorganizations;
(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).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.2 Impairment of financial instruments - continued
10.2.3 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 notes receivable and 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.
The Group determines expected credit losses of relevant financial instruments using the following methods:
For a financial asset, 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 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 a financial asset with credit-impaired at the balance sheet date, but not purchased or originated
credit-impaired, a credit losses is the difference between the asset's gross carrying amount and the
present value of estimated future cash flows discounted at the financial asset's 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.
10.2.4 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.
10.3 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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.3 Transfer of financial assets - continued
24.
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.
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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.4 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.
10.4.1 Classification, recognition and measurement of financial liabilities
On initial recognition, financial liabilities are classified into financial liabilities at fair value through profit or
loss and other financial liabilities.
10.4.1.1 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.
A financial liability is classified as held-for-trading if one of the following conditions is satisfied:
It has been assumed principally for the purpose of repurchasing 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 not designated as a financial guarantee contract and effective as a hedging
instrument.
On initial recognition, financial liabilities that meet one of the following conditions are designated as financial
liabilities at fair value through profit or loss: (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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
1 10.4 Classification of financial liabilities and equity instruments - continued
10.4.1 Classification, recognition and measurement of financial liabilities - continued
10.4.1.1 Financial liabilities at FVTPL - continued
The amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of
that liability shall be presented in other comprehensive income, and upon the derecognition of such liability, the
accumulated amount of change in fair value that is attributable to changes in the credit risk of that liability,
which is recognized in other comprehensive income, is transferred to retained earnings. Other 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. If the impact of the change in credit risk of such financial liability dealt with in the
above way 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.
10.4.1.2 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.
10.4.2 Derecognition of financial liabilities
The Group derecognizes 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.
10.4.3 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 in equity. Change in 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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.5 Derivatives and embedded derivatives
Derivative financial instruments include forward exchange contracts, resale option and 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 fair value through
profit or loss.
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.
10.6 Offsetting financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount is reported in the balance sheet if, and only if, the
Company has a current enforceable legal right to set off the recognized amounts and intends to settle on a net
basis, or to realize an asset and settle the liability simultaneously. In all other situations, they are presented
separately in the balance sheet and are not offset.
10.7 Compound instruments
Convertible bonds issued by the Group that contain both the liability, the conversion option, the resale option
and 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 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 redemption option derivatives, representing the conversion option for the holder to convert the
bonds into equity instrument, is included in other equity instruments.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.7 Compound instruments - continued
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 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 redemption option derivative components in proportion to their
respective fair values. Transaction costs relating to the resale option derivative components and 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.
11. Inventories
11.1 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.
11.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
11.3 Basis for determining net realizable 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.
For large quantity and low value items of inventories, provision for decline in value is made based on categories
of inventories. Provision for decline in value of other inventories is made based on the excess of cost of
inventory over its net realizable value on an item-by-item basis.
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.
11.4 Inventory count system
The perpetual inventory system is maintained for stock system.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Inventories - continued
11.5 Amortization method for other reusable materials
Other reusable materials are amortized using the multiple-stage amortization method.
12. Assets 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 include 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.
13. Long-term equity investments
13.1 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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
13. Long-term equity investments - continued
13.2 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 Standards for Business
Enterprises No.22 - Financial Instruments; Recognition and Measurement (CAS 22) and the additional
investment cost.
13.3 Subsequent measurement and recognition of profit or loss
13.3.1 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 recognized in the period in accordance with the attributable share of cash
dividends or profit distributions declared by the investee.
13.3.2 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 recognized in profit or
loss for the period, and the cost of the long-term equity investment is adjusted accordingly.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
13. Long-term equity investments - continued
13.3 Subsequent measurement and recognition of profit or loss - continued
13.3.2 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.
13.4 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.
14. Fixed assets
14.1 Recognition criteria for fixed assets
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.
14.2 Depreciation method
In addition of lands operated overseas for which no depreciation is provided, a fixed asset 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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
14. Fixed assets - continued
14.2 Depreciation method - continued
The useful life, estimated net residual value rate and annual depreciation rate of each category of fixed assets
are as follows:
Depreciation period
Category (years) Residual value rate (%) Annual depreciation 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, fixtures and
3-10 years - 10.00-33.33
furniture
Decoration 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 were already of the age and in
the condition expected at the end of its useful life.
14.3 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 derecognized. 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 recognized 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.
15. 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 capitalized 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.
16. 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.
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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
17. Intangible asset
17.1 Valuation method, useful life and impairment test of intangible assets
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 is amortized over its estimated useful life using the straight-line method.
The amortization methods, useful lives, and estimated net residual value rates of each class of fixed assets are as
follows:
17.1 Valuation method, useful life and impairment test of intangible assets - continued
Category Amortization method Useful life (Years) Residual value rate (%)
Land Use Rights 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.
For the impairment test of intangible assets, see Notes (III), 18 for details.
17.2 Accounting policies on research and development expenditure
Expenditure during the research phase is recognized 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
recognized as intangible asset. Expenditure during development phase that does not meet the following
conditions is recognized 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 Group has the intention to complete the intangible asset and use or sell it;
(3) The Group 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.
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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
18. Impairment of long-term assets
The Group reviews the long-term equity investments, fixed assets, construction in progress, intangible assets
with a finite useful life, and assets relating to contract cost 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 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.
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.
In determining impairment loss of assets associated with contract costs, impairment loss shall be determined in
accordance with other assets associated with contracts and recognized in according to other relevant accounting
standards for business enterprises; then, the Group shall make impairment allowance and recognize an
impairment loss in profit or loss to the extent that the carrying amount of an asset associated with contract costs
recognized exceeds: (i) the remaining amount of consideration that the Group expects to receive in exchange for
the goods or services to which the asset relates; less (ii) the costs expected to be incurred to transfer the relative
goods or services.
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.
Except for impairment loss of assets related to contract costs, once an impairment loss of assets above is
recognized, it will not be reversed in any subsequent period. The Group shall recognize in profit or loss a
reversal of an impairment loss previously recognized when the impairment conditions have changed. The
reversed carrying amount of the asset at the reversal date shall not exceed the amount that would have been
determined if no impairment loss had been recognized previously.
19. 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.
20. 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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
21. Employee benefits
21.1 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.
21.2 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 obligations 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.
21.3 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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
22. 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.
23. 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 include equity-settled share-based payments and cash-settled
share-based payments.
23.1 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.
23.2 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 of 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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
24. Revenue
The revenue of the Group mainly comes from the sales of electronic products. The products sold by the Group
mainly include communication products, consumer electronic products, computer and storage products,
industrial products, automotive electronic products, medical products and other products. Other operating
income is mainly waste sales income.
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 that the Group expects to refund to the customer.
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 obligation. Stand-alone selling price refers to the
price of single sales 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 reasonably acquired relative
information 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).
156 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
24. Revenue - continued
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.
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.
25. 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.
26. 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.
157 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
26. Government grants - continued
26.1 Determination basis and accounting treatment of government grants related to assets
See Notes (V), 36 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.
26.2 Determination basis and accounting treatment of government grants related to income
See Notes (V), 51 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.
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.
27. Deferred tax assets/ deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
27.1 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.
27.2 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 carrying amount of those items that are not recognized as assets or liabilities and their tax base that
can be determined according to tax laws, deferred tax assets and liabilities are recognized 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.
158 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
27. Deferred tax assets/ deferred tax liabilities - continued
27.2 Deferred tax assets and deferred tax liabilities - continued
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 realized 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.
27.3 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.
159 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
28. Leases
Lease is a contract that conveys the right to use an asset for a period of time in exchange for consideration.
For contracts that are signed or modified after the date of initial application, at inception/modification of the
contracts, the Group assesses whether the contract is, or contains, a lease. Unless the terms and conditions of the
contract are changed, the Group does not reassess whether a contract is, or contains, a lease.
28.1 The Group as Lessee
28.1.1 Right-of-use assets
Except for short-term leases and leases for which the underlying asset is of low value, 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;
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.
Right-of-use assets are depreciated by the Group in accordance with the ASBE No.4 Fixed Assets. If the Group
is reasonably certain, that the lease will transfer ownership of the underlying asset to the Group by the end of
the lease term, the right-of-use assets is depreciated from the commencement date to the end of the useful life of
the underlying asset. Otherwise, the right-of-use assets is depreciated from the commencement date to the
earlier of the end of the useful life of the right-of-use assets or the end of the lease term.
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.
28.1.2 Lease liabilities
Except for short-term leases and leases for which the underlying asset is of low value, 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.
The lease payments comprise the following payments by the Group for the right to use the underlying asset
during the lease term:
(1) Fixed payments (including in-substance fixed payments), less any lease incentives;
(2) The exercise price of a purchase option if the Group is reasonably certain to exercise that option;
(3) Payments for terminating the lease, if the lease term reflects the Group exercising an option to
terminate the lease;
(4) Amounts expected to be payable by the Group under residual value guarantees.
160 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
28. Leases - continued
28.1 The Group as Lessee - continued
28.1.2 Lease liabilities - continued
After the lease commencement date, interest expenses on lease liabilities in each period during the lease term
are recognized by the Group by using the fixed periodic rate of interest, and recognized in profit or loss or
related costs of assets.
After the lease commencement date, the Group re-measures lease liabilities and makes a corresponding
adjustment to the related right-of-use assets in case of the following conditions. Where the carrying amount of
the right-of-use assets has been reduced to zero and the lease liabilities still need to be reduced, the deficit is
recognized in profit or loss:
there is a change in the lease term, or in the assessment of an option to purchase the underlying asset, the
Group re-measures the lease liabilities, on the basis of the revised lease term and the revised discount rate;
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.
28.1.3 Short-term leases and leases of low-value assets
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.
28.1.4 Lease modifications
A lease modification should be accounted for as a separate lease if both of the following apply:
the modification increases the scope of the lease by adding the right to use one or more underlying assets;
and
the consideration for the lease increases by an amount commensurate with the stand-alone price for the
increase in scope and any appropriate adjustments to that stand-alone price according to the
circumstances of the particular contract
For a lease medication that is not accounted for as a separate lease, at the effective date of the lease modification,
the Group should allocate the consideration in the modified contract, determine the lease term of the modified
lease and remeasure the lease liability by discounting the revised payments using a revised discount rate.
For lease modifications that decrease the scope of the lease or narrow the term of the lease, the Group should
decrease the carrying amount of the right-of-use asset with any gain or loss relating to the partial or full
termination of the lease should be recognized in profit or loss. For remeasurement of lease liabilities from all
other lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset.
28.2 The Group as Lessor
28.2.1 Classification of leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership. All other leases are classified as operating leases.
161 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
28.2 The Group as Lessor – continued
28.2.1.1 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.
28.2.2 Subleases
As a lessor of the 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.
29. Hedge accounting
29.1. 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 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.
162 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
29 Hedge accounting – continued
29.2 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.
30. 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 balance sheet date, the following are the key assumptions and uncertainties in accounting estimates, it is
probable that carrying amounts of assets and liabilities in future periods may be significantly adjusted:
Impairment of accounts receivable
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
2021, the balance of the Group's provision for credit losses of accounts receivable was RMB 9,974,696.34 (31
December 2020: RMB 5,521,456.88).
163 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
30. Critical Judgments in Applying Accounting Policies and Key Assumptions and Uncertainties in
Accounting Estimate - continued
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 2021,
the balance of the Group's provision for the decline in the value of inventories was RMB 107,428,347.47 (31
December 2020: RMB 98,947,405.40).
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 2021, the Group had recognized the deferred
tax assets of RMB 324,056,763.90 (31 December 2020: RMB 312,238,903.06).
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 flows and discount rates, changes in key assumptions such as discount rates and long-term growth rates
used by the Group may have a significant impact on the present value of future cash flows used in the
impairment testing.
Useful life and estimated net residual value of fixed assets
As disclosed in Note (III) 14, the Group reviews the useful life and estimated net residual value of a fixed asset
at least once at each financial year-end. Technological innovations and intense competition in the industry have
a significant impact on 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.
164 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
31. Changes in important accounting policies and accounting estimates
31.1 Changes in important accounting policies
Interpretation of accounting standards for Business Enterprises No. 14
The implementation of the accounting standards for business enterprises (hereinafter referred to as "the
interpretation of the accounting standards for business enterprises reform No. 14" issued by the Ministry of
Finance on 26 January 2021) resulted in the change of the basis of interest rate.
Accounting treatment for changes in the basis for determining the cash flow of relevant contracts caused by the
reform of benchmark interest rate
In the case that the benchmark interest rate reform leads to the change of the basis for determining the cash
flow of relevant contracts, when only the benchmark interest rate reform directly leads to the change of the basis
for determining the cash flow of financial assets or financial liabilities that use the effective interest rate method
to determine the interest income or expenses, and the determination basis before and after the change is
economically equivalent, the group refers to the treatment method of the change of floating interest rate, The
effective interest rate is recalculated according to the future cash flow changed only due to the benchmark
interest rate reform, and subsequent measurement is carried out on this basis.
In addition to the above changes, if there are other changes in the financial assets or financial liabilities that use
the effective interest rate method to determine the interest income or expenses at the same time, the group will
conduct accounting treatment for the changes caused by the reform of the benchmark interest rate according to
the above provisions, and then evaluate whether other changes lead to the termination of the recognition of the
financial assets or financial liabilities according to the accounting standards for Business Enterprises No. 22 -
recognition and measurement of financial instruments.
Since January 1, 2021, the group has handled the business related to the benchmark interest rate reform in
accordance with the provisions of Interpretation No. 14. After evaluation, the Group believes that the adoption
of this provision has no significant impact on the financial statements of the group.
Interpretation of accounting standards for Business Enterprises No. 15
The Ministry of Finance issued and implemented the interpretation of accounting standards for Business
Enterprises No. 15 (hereinafter referred to as "Interpretation No. 15") on December 30, 2021, which
standardized the presentation of centralized and unified management of the funds of the parent company and
member units through internal settlement centers and financial companies. According to Interpretation No. 15,
the group adjusted the presentation of the parent company's financial statements and adjusted the data of
comparable periods accordingly. The specific adjustments are as follows:
Item Note 31 December 2020 Adjustment 1 January 2021
Short-term Note(XV), 8
880,570,700.00 (880,570,700.00) -
borrowings
Other payables Note(XV), 8 53,803,484.23 880,570,700.00 934,374,184.23
165 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
31. Changes in important accounting policies and accounting estimates- continued
Presentation of freight expense
According to the question and answer on the implementation of the fifth batch of accounting standards for
business enterprises in 2021 issued by the accounting department of the Ministry of Finance on 1 November
2021, the relevant transportation costs incurred by the group for the transportation services that do not constitute
a single performance obligation in order to perform the customer's contract before the transfer of commodity
control to the customer are regarded as the contract performance costs, amortized on the same basis as the
recognition of commodity income and included in the current profit and loss, Listed in "operating costs" in the
income statement.
The group adjusted the data of comparable periods as follows:
Consolidated income statement:
Unit:
RMB
Item 2020 not adjusted Adjustment 2020 adjusted
Operating costs 42,710,970,315.86 98,579,798.28 42,809,550,114.14
Selling expense 318,472,090.03 (98,579,798.28) 219,892,291.75
Income statement of the Company:
Unit: RMB
Item 2020 not adjusted Adjustment 2020 adjusted
Operating costs 15,910,266,317.21 6,435,146.24 15,916,701,463.45
Selling expense 64,832,367.86 (6,435,146.24) 58,397,221.62
166 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(IV) TAXES
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
13%, 9%, 6%, 5% and 3%
income, interest income and
Value-added tax-Chinese (Note 1) lease income. The Company
and its domestic subsidiaries
are general VAT taxpayers
Non-resident enterprises obtain
commission income within 6%
China
VAT payable is the balance of
output tax less deductible input
Value-added tax-French tax of taxable income such as 20%
product sales income, service
income
VAT payable is the balance of
output tax less deductible input
Value-added tax-German tax of taxable income such as 19%
product sales income, service
income
VAT payable is the balance of
output tax less deductible input
Value-added-Tunisian tax of taxable income such as 19%
product sales income, service
income
Taxable income Note 2
Non-resident enterprises obtain
Enterprise income tax investment income and property
10%
transfer income from within
China
Residual value after deducting
Property tax-Chinese 30% from the original value of 1.2%
the property at one time
City maintenance and construction tax-
Turnover tax actually paid 7% and 5%
Chinese
Education surcharge-Chinese Turnover tax actually paid 3%
Local education surcharge-Chinese 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.
167 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(VI) TAXES - continued
1. Major Categories of Taxes and Tax Rates - continued
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. 15% (Note 2)
Universal Global Technology (Kunshan) Co., Ltd. 15% (Note 3)
Universal Global Technology (Shanghai) Co., Ltd. 15% (Note 4)
Universal Global Electronics (Shanghai) Co., Ltd. 25%
Universal Global Technology(Huizhou) Co., Ltd. 25%
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) 31% (Note 11)
Universal Scientific Industrial Vietnam Company Limited 20% (Note 12)
FINANCIRE AFG S.A.S. ("FAFG") 26.5% (Note 13)
USI (Shenzhen) Electronic Technology Innovation Co., Ltd. 20% (Note 14)
The enterprise income tax rate applicable to the Company and its subsidiaries in China is 25%.
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 2020, and obtained
the High-tech Enterprise Certificate (Certificate No. is GR202031004105), which was valid for 3 years.
The Company applies the enterprise income tax rate of 15% from 2020 to 2022.
Note 2 USI Electronics (Shenzhen) Co., Ltd. was approved as a high-tech enterprise by Science and
Technology Innovation Commission of Shenzhen Municipality, Shenzhen Municipal Finance Bureau,
Shenzhen Municipal Office of the State Administration of Taxation and Shenzhen Municipal Bureau of
Local Taxation in 2020, and obtained the High-tech Enterprise Certificate (Certificate No. is
GR202044206366 respectively), which was valid for 3 years. USI Electronics (Shenzhen) Co., Ltd.
applies the enterprise income tax rate of 15% from 2020 to 2022.
168 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(VI) TAXES - continued
1. Major Categories of Taxes and Tax Rates - continued
Note 3 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
2019, and obtained the High-tech Enterprise Certificate (Certificate No.: GR201932005665), which was
valid for 3 years. Universal Global Technology (Kunshan) Co., Ltd. applies the enterprise income tax
rate of 15% from 2019 to 2021.
Note 4 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 2019, and obtained the High-tech Enterprise Certificate (Certificate No.:
GR201931000765), which was valid for 3 years. Universal Global Technology (Shanghai) Co., Ltd.
applies the enterprise income tax rate of 15% from 2019 to 2021.
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 HKD2 million; and 16.5% for the part
with operating profits exceeding HKD2 million.
Note 6 Universal Global Scientific Industrial Co., Ltd. (“UGTW”) and the Universal Scientific Industrial Co.,
Ltd. (“USITW”) 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 USD800 per year according to the Alternative Minimum Tax.
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.
169 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(VI) TAXES - continued
1. Major Categories of Taxes and Tax Rates - continued
Note 11 Universal Scientific Industrial (France) ("USI France") is established and registered in France, and the
applicable enterprise income tax rate is 26.5%.
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 FAFG is established and registered in France, and the applicable enterprise income tax rate is 26.5%
(2020: 28%). The corporate income tax rate applicable to German subsidiary is 30%. The enterprise
income tax rate applicable to the Tunisian subsidiary is 10%. The corporate income tax rate applicable to
its U.S. subsidiaries is 21%.
Note 14 USI (Shenzhen) Electronic Technology Innovation Co., Ltd. is a small low profit enterprise with an
annual taxable income of no more than 1 million yuan, and the applicable enterprise income tax rate is
20%. On the basis of the preferential policies stipulated in Article 2 of the notice of the Ministry of
Finance and the State Administration of Taxation on the implementation of the preferential tax reduction
and exemption policy for small and micro enterprises (Cai Shui [2019] No. 13), the enterprise income tax
shall be reduced by half.
170 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank balances
Unit: RMB
31/12/2021 31/12/2020
Exchan Exchange
Item Foreign currency RMB Foreign currency RMB
ge rate rate
Cash:
RMB 33,087.14 57,879.64
USD 1,780.99 6.3757 11,355.06 3,079.62 6.5249 20,094.21
EUR 6,615.80 7.2211 47,773.35 7,381.41 8.0132 59,148.93
HKD 3,449.00 0.8176 2,819.90 3,449.00 0.8416 2,902.68
GBP 88.69 8.6064 763.30 245.77 8.8733 2,180.79
MXN 58,724.73 0.3097 18,187.05 95,028.58 0.3279 31,155.21
TWD - 0.2303 - 7,000.00 0.2291 1,603.73
PLN 872.35 1.5717 1,371.07 3,996.09 1.7520 7,000.99
TND 3,575.10 2.2027 7,874.87 4,065.80 2.4220 9,847.42
CZK 11,354.00 0.2905 3,298.34 307.11 0.3052 93.74
Bank balances:
RMB 3,223,904,450.96 2,424,611,902.07
USD 354,462,759.18 6.3757 2,259,948,213.70 489,746,536.78 6.5249 3,195,519,234.87
EUR 31,246,531.53 7.2211 225,634,328.83 55,369,519.99 8.0132 443,688,681.50
HKD 1,620,167.96 0.8176 1,324,649.32 678,266.20 0.8416 570,828.83
JPY 156,717,025.00 0.0554 8,682,123.19 154,186,212.00 0.0632 9,750,736.05
GBP 2,048,505.76 8.6064 17,630,259.97 1,444,985.22 8.8733 12,821,787.35
MXN 24,473,638.08 0.3097 7,579,485.71 41,664,873.91 0.3279 13,659,870.58
TWD 789,726,120.00 0.2303 181,873,925.44 524,752,787.00 0.2291 120,223,277.36
SGD 10,662.56 4.7179 50,304.89 - - -
TND 2,197,327.05 2.2027 4,840,052.29 2,562,784.67 2.4220 6,207,095.22
CZK - 0.2905 - 337,377.20 0.3052 102,982.03
PLN 28,624,457.86 1.5717 44,989,060.42 40,036,621.39 1.7520 70,142,559.21
VDN 138,699,105,966.00 0.0003 41,609,731.79 20,259,512,680.00 0.0003 5,733,442.09
Other currency funds:
RMB 6,000,000.00 3,052,500.00
TWD 28,000,000.00 0.2303 6,449,408.00 28,000,000.00 0.2291 6,414,928.80
JPY 1,000,000.00 0.0554 55,420.00 1,000,000.00 0.0632 63,240.00
USD 549,915.72 6.3757 3,506,097.66 3,099,993.00 6.5249 20,227,144.33
Total 6,034,204,042.25 6,332,982,117.63
Including: Total
amounts kept in a 1,534,415,183.17 1,331,906,175.91
foreign country
As at 31 December 2021, the Group's restricted cash and bank balances included in other cash and bank
balances amounted to RMB 16,010,925.66 (31 December 2020: RMB 29,757,813.13), of which RMB
12,504,828.00 (31 December 2020: RMB 9,530,668.80) was the customs deposit and RMB 3,506,097.66 (31
December 2020: RMB 20,227,144.33) was the interest deposit for long-term borrowings. The restricted other
cash and bank balances aforementioned are not included in cash and cash equivalents in the preparation of the
cash flow statements.
171 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
2. Held-for-trading financial assets
Unit: RMB
Item 31/12/2021 31/12/2020
Financial assets at fair value through profit or loss 96,480,087.56 182,315,272.70
Including: Accounts receivable factoring (Note 1) 87,238,983.18 174,458,243.25
Convertible bonds option (Note 2) 8,624,935.00 -
Derivative financial assets (Note 3) 616,169.38 2,582,926.51
Financial products - 5,274,102.94
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: See Note V, 31 for details of convertible bonds.
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 31/12/2021 31/12/2020
Bank acceptances 78,960,907.84 70,395,770.23
(2) As of 31 December 2021, the Group had no notes receivable that have been pledged as security.
(3) As of 31 December 2021, the Group had no notes receivable that have been endorsed or discounted and
were not yet matured at the balance sheet date.
(4) As of 31 December 2021, the Group had no notes that were converted to accounts receivable due to the
default of the issuer.
(5) As of 31 December 2021, 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.
(6) In 2021, the Group had no notes receivable that have been written off.
172 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Accounts receivable
(1) Categories of accounts receivable
Unit: RMB
Category 31/12/2021 31/12/2020
Accounts receivable arising from contracts with customers 12,469,363,548.49 10,474,140,977.04
Less: Bad debt provision 9,974,696.34 5,521,456.88
Total 12,459,388,852.15 10,468,619,520.16
(2) Disclosure of provision made for bad debts
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.
At 31 December 2021, the credit risk and expected credit losses on accounts receivable were as follows:
Unit: RMB
31/12/2021
Aging
Expected average loss rate (%) Book value Bad debt provision Carrying amount
Within the credit
0.01 12,037,509,644.74 1,771,899.34 12,035,737,745.40
term
1-30 days overdue 0.25 365,030,750.34 915,092.02 364,115,658.32
31-60 days overdue 2.67 48,524,104.67 1,297,712.21 47,226,392.46
61-90 days overdue 18.18 6,754,233.22 1,227,837.25 5,526,395.97
91-180 days overdue 26.63 9,244,001.65 2,461,341.65 6,782,660.00
More than 180 days
100.00 2,300,813.87 2,300,813.87 -
overdue
Total 0.08 12,469,363,548.49 9,974,696.34 12,459,388,852.15
At 31 December 2020, the credit risk and expected credit losses on accounts receivable were as follows:
Unit: RMB
31/12/2020
Aging
Expected average loss rate (%) Book value Bad debt provision Carrying amount
Within the credit
0.01 9,958,975,472.79 1,452,775.43 9,957,522,697.36
term
1-30 days overdue 0.30 448,110,129.83 1,340,723.77 446,769,406.06
31-60 days overdue 2.75 51,312,360.95 1,411,540.48 49,900,820.47
61-90 days overdue 1.88 8,497,077.27 159,908.63 8,337,168.64
91-180 days overdue 2.51 6,245,971.95 156,544.32 6,089,427.63
More than 180 days
100.00 999,964.25 999,964.25 -
overdue
Total 0.05 10,474,140,977.04 5,521,456.88 10,468,619,520.16
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 2021, the Group's valuation
method remains unchanged.
173 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Accounts receivable - continued
(3) Changes in bad debt provisions
Unit: RMB
Changes for the year
Exchange differences
Category 31/12/2020 arising on translation 31/12/2021
Provision Write-off or
of financial statements
(Reversal) elimination
denominated in
foreign currencies
Provision for expected
credit loss by aging 5,521,456.88 4,542,957.48 - (89,718.02 ) 9,974,696.34
matrix
Changes in bad debt provisions for accounts receivable:
Unit: RMB
Provision for credit loss Lifetime ECL
Balance at 1 January 2021 5,521,456.88
ECL accrued (reversed) 4,542,957.48
Effect of changes in exchange rate (89,718.02)
Balance at 31 December 2021 9,974,696.34
(4) There are no accounts receivable that have been actually written off in the year.
(5) Top five accounts receivable at 31 December 2021 categorized by debtor
Unit: RMB
Bad debt Percentage of the
Relationship
provision at total accounts
Company name with the Book value
31 December receivable at 31
Company
2021 December 2021(%)
Company A Third party 3,435,277,354.94 505,666.52 27.55
Company B Third party 1,534,343,092.30 225,852.49 12.30
Company C Third party 875,805,385.24 128,916.95 7.02
Company D Third party 616,852,259.82 90,799.52 4.95
Company E Third party 583,233,323.28 85,850.88 4.68
Total 7,045,511,415.58 1,037,086.36 56.50
(6) As of 31 December 2021, no accounts receivable were derecognized due to transfer of financial assets.
(7) As of 31 December 2021, no accounts receivable were reclassified into assets and liabilities arising from
transfer of accounts receivable and continuing involvement.
5. Prepayments
(1) Aging analysis of prepayments is as follows:
Unit: RMB
31/12/2021 31/12/2020
Aging Amount Proportion (%) Amount Proportion
(%)
Within 1 year 51,467,608.39 100.00 41,561,467.16 100.00
174 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
5. Prepayments - continued
(2) Top five balances of prepayments categorized by receivers
Unit: RMB
Proportion of the total
Relationship with the
Company name Book value prepayments at 31
Company
December 2021(%)
Company F Third party 3,175,518.70 6.17
Company G Third party 2,959,999.99 5.75
Company H Third party 2,072,168.72 4.03
Company I Third party 1,972,192.80 3.83
Company J Third party 1,876,877.29 3.65
Total 12,056,757.50 23.43
6. Other receivables
25. (1) Disclosure of other receivables by aging
26. Unit: RMB
31/12/2021
Aging
Amount Provision for credit loss Proportion of provision (%)
Within 1 year 129,254,194.21 - -
(2) Classification by the nature of other receivables
Unit: RMB
Book value at 31 December Book value at 31 December
Nature of other receivables
2021 2020
Advances for third parties 78,923,587.52 81,317,146.05
Service and purchase rebates receivable 23,606,656.50 7,792,501.06
Advance payments for employees 5,160,900.36 3,180,842.98
Performance bonds 87,000.03 12,704,509.96
Receivables from equipment transfer - 534,280.90
Others 21,476,049.80 22,753,526.23
Total 129,254,194.21 128,282,807.18
(3) Accrual of provision for losses
Unit: RMB
Changes for the year
Category 31/12/2020 Write-off or 31/12/2021
Provision Reversal
elimination
Provision for
expected credit loss
3,000,000.00 - (2,836,069.00) (163,931.00) -
accrued on an
individual basis
Changes in the credit provision for other receivables:
Unit: RMB
Stage I Stage II Stage III
Lifetime ECL (not Lifetime ECL (credit-
Credit provision Total
12-month ECL credit-impaired) impaired)
Balance at 1 January 2021 - - 3,000,000.00 3,000,000.00
Reversal - - (2,836,069.00) (2,836,069.00)
Written-off - - (163,931.00) (163,931.00)
Balance at 31 December 2021 - - - -
175 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
(3) Accrual of provision for losses - continued
In the current period, significant reversal or recovery of bad debt provision are as follows:
Unit: RMB
Company name Reversal or recovery Mode
Company M 2,836,069.00 Received in Cash
(4) In the current year, other receivables actually written off are as follows:
Unit: RMB
Company name Write-off
Other receivables actually written off 163,931.00
(5) Top five other receivables at 31 December 2021 categorized by debtor
Unit: RMB
Proportion of
the total other Bad debt
Nature of the
Company name Closing balance Aging receivables at provision at 31
amount
31 December December 2021
2021(%)
Company K Advances 23,397,708.09 Within one year 18.10 -
Company D Advances 17,302,290.36 Within one year 13.39 -
Company L Advances 5,333,890.23 Within one year 4.13 -
Company N Advances 4,325,986.35 Within one year 3.35 -
Company O Advances 1,751,592.51 Within one year 1.36 -
Total 52,111,467.54 40.33 -
As of 31 December 2021, there were no other receivables related to government grants.
As of 31 December 2021, there were no other receivables derecognized due to the transfer of financial assets.
As of 31 December 2021, there was no amount of assets and liabilities arising from transfer of other receivables
and continuing involvement.
7. Inventories
(1) Categories of inventories
Unit: RMB
31/12/2021 31/12/2020 (Restated)
Provision for Provision for
Item
Book value decline in value Carrying amount Book value decline in value Carrying amount
of inventories of inventories
Raw
5,795,831,890.76 65,100,181.38 5,730,731,709.38 3,411,091,344.14 63,081,191.37 3,348,010,152.77
materials
Work-in-
1,506,240,181.84 - 1,506,240,181.84 1,359,250,181.51 - 1,359,250,181.51
progress
Finished
1,761,692,388.59 42,328,166.09 1,719,364,222.50 2,035,065,474.29 35,866,214.03 1,999,199,260.26
goods
Reusable
81,226,548.92 - 81,226,548.92 58,876,650.75 - 58,876,650.75
materials
Total 9,144,991,010.11 107,428,347.47 9,037,562,662.64 6,864,283,650.69 98,947,405.40 6,765,336,245.29
176 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
7. Inventories - continued
(2) Provision for decline in value of inventories
27. Unit:
RMB
Decrease in the Exchange
year differences arising
Item 31/12/2020 Provision 31/12/2021
on translation of
Reversal Write-off
foreign currencies
Raw materials 63,081,191.37 73,509,068.19 61,738,736.48 8,627,390.46 (1,123,951.24) 65,100,181.38
Finished goods 35,866,214.03 63,733,497.16 56,757,675.49 - (513,869.61) 42,328,166.09
Total 98,947,405.40 137,242,565.35 118,496,411.97 8,627,390.46 (1,637,820.85) 107,428,347.47
Reasons for reversal/ provision for
Item Specific determination basis of net realizable value
decline in value of inventories
The higher of the value of estimated selling price of raw materials less
estimated costs necessary to make the sale as well as related taxes and the value
Raw materials Sold or net realizable value recovered
of estimated selling price of finished goods less estimated costs of completion
and estimated costs necessary to make the sale as well as related taxes
Value of estimated selling price less estimated costs of completion and
Work-in-progress Sold or net realizable value recovered
estimated costs necessary to make the sale as well as related taxes
Value of estimated selling price less estimated costs necessary to make the sale
Finished goods Sold or net realizable value recovered
and related taxes
8. Non-current assets due within one year
Unit: RMB
Item 31/12/2021 31/12/2020
Lease receivables 991,195.08 813,785.46
9. Other current assets
Unit: RMB
Item 31/12/2021 31/12/2020
Tax refunds receivable 153,785,608.36 129,990,309.17
FPC expenses to be amortized 150,053,586.17 75,122,983.26
Input taxes to be deducted 131,285,700.65 203,977,541.73
Prepaid income tax 94,493,879.13 66,270,120.55
Mold costs to be amortized 68,803,773.16 68,438,440.79
Others 7,969,779.68 53,159,460.70
Total 606,392,327.15 596,958,856.20
10. Long-term receivables
(1) Long-term receivables
Unit: RMB
Item 31/12/2021 31/12/2020
Lease receivables 920,486.03 884,745.44
Employee borrowings for house purchasing 10,243,630.03 9,116,442.42
Others - 379,284.95
Total 11,164,116.06 10,380,472.81
(2) As of 31 December 2021, no provision for expected credit loss has been made as the Group's long-term
receivables are less likely to be uncollectable.
(3) As of 31 December 2021, there were no long-term receivables derecognized due to transfer of financial
assets.
(4) As of 31 December 2021, there was no amount of assets and liabilities arising from transfer of long-term
receivables and continuing involvement.
177 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Long-term equity investments
Unit: RMB
Changes for the year
Exchange
differences
Impairmen
arising on t provision
Investment Other
translation of at
Investee 1/1/2021 Additional Reduction in profit or loss comprehensive Other equity Cash dividends Impairment 31/12/2021
financial 31/12/202
investment investment recognized under income changes or profit declared provision
equity method adjustments statements 1
denominated in
foreign
currencies
I. Joint ventures
SUMA-USI Electronics Co., Ltd. (Note
108,007,637.50 - - 6,222,797.18 - - - - - 114,230,434.68 -
1)
II. Associates
M-Universe Investments Pte. Ltd. (Note
423,520,132.02 - - 15,893,700.67 7,230,128.54 - 8,521,365.60 - (9,803,211.68) 428,319,383.95 -
2)
Total 531,527,769.52 - - 22,116,497.85 7,230,128.54 - 8,521,365.60 - (9,803,211.68) 542,549,818.63 -
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 of 31 December 2021, Universal Global Technology (Kunshan) Co., Ltd. has actually
contributed RMB 107,800,000.00 in total, accounting for 49% of the capital contribution. 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.
178 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Long-term equity investments - continued
Note 2: 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 SGD1.35 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 the Group accounts for it under the equity method.
179 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Other equity instrument investments
(1) Other equity instrument investments
Unit: RMB
Item 31/12/2021 31/12/2020
Shiding Venture Capital Co., Ltd. 75,957,194.28 41,351,831.65
(2) Non-trading equity instrument investments
Unit: RMB
Reasons for designation as at fair
Dividend income
Item Accumulated gains value through other comprehensive
recognized in the year
income
Shiding Venture Non-trading equity investments that
Capital Co., Ltd. 14,910,026.14 10,694,774.12 the Group does not expect to dispose
(Note) of in the foreseeable future
Note: The Group invested in Shiding Venture Capital Co., Ltd. in 2016, accounting for 5% of the equity interests in
the investee.
13. Other non-current financial assets
Unit: RMB
Item 31/12/2021 31/12/2020(Restated)
PHI FUND, L.P. (Note IX, 4 and Note XII, 1(1)) 93,130,696.47 64,091,002.18
Contingent consideration (Note) 90,969,658.89 88,844,432.52
GaN System Inc. Series (Note IX, 4) 31,878,465.32 -
Senscomm Semiconductor Co., Ltd. (Note IX, 4) 20,000,000.00 -
Suzhou Yaotu Equity Investment Partnership (Note IX, 4 and
1,000,000.00 -
Note XII, 1(1))
Total 236,978,820.68 152,935,434.70
Note: USI France which was incorporated by the Company through its wholly subsidiary Universal Global
Technology Co., Limited, entered into the Share Purchase Contracts with FAFG's shareholders including SPFH
Holding Korlatolt Felelossegu Tarsasag, ASDI and Arkéa Capital Investissement S.A., etc. on 12 December 2019
to acquire the 100% equity of FAFG. The parties to the transaction agreed that an adjustment might be made
accordingly based on the present transaction consideration according to the accumulative performance achieved
for the two years from 1 January 2021 to 31 December 2022.
180 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Fixed assets
(1) Fixed assets
Unit: RMB
Land operated Electronic equipment,
Item Buildings Machinery equipment Transportation Decoration cost Total
overseas appliances and furniture
I. Original carrying amount
1. 31/12/2020 (Restated) 206,534,814.31 884,731,867.01 5,247,844,751.47 28,942,852.21 329,750,572.98 114,789,338.64 6,812,594,196.62
2. Increase in the year - 412,526,033.07 799,305,977.96 462,809.37 121,934,501.36 10,536,000.00 1,344,765,321.76
(1) Purchase - 8,508,679.66 7,313,748.39 164,995.85 15,553,361.30 - 31,540,785.20
(2) Transfer from construction
- 402,869,263.57 785,796,195.50 297,813.52 106,253,195.75 10,536,000.00 1,305,752,468.34
in progress
(3) Increase from business
- 1,148,089.84 6,196,034.07 - 127,944.31 - 7,472,068.22
combination
3. Decrease in the year - 16,419,875.06 132,533,035.09 11,629,426.49 4,686,725.77 2,887,261.57 168,156,323.98
(1) Disposal or retirement - 16,419,875.06 132,533,035.09 11,629,426.49 4,686,725.77 2,887,261.57 168,156,323.98
4. Exchange differences arising
on translation of foreign (5,051,417.53) (15,601,320.66) (16,961,932.48) (1,021,539.34) (5,106,859.20) - (43,743,069.21)
currencies
5. 31/12/2021 201,483,396.78 1,265,236,704.36 5,897,655,761.86 16,754,695.75 441,891,489.37 122,438,077.07 7,945,460,125.19
II. Accumulated depreciation
1. 31/12/2020 - 396,999,360.24 3,136,699,071.87 10,187,424.58 229,776,229.70 110,333,922.64 3,883,996,009.03
2. Increase in the year - 57,205,912.27 629,787,346.24 1,766,011.52 50,969,163.52 4,270,184.48 743,998,618.03
(1) Provision - 57,205,912.27 629,787,346.24 1,766,011.52 50,969,163.52 4,270,184.48 743,998,618.03
3. Decrease in the year - 11,169,198.75 90,035,316.10 22,759.50 3,542,507.74 2,887,261.57 107,657,043.66
(1) Disposal or retirement - 11,169,198.75 90,035,316.10 22,759.50 3,542,507.74 2,887,261.57 107,657,043.66
4. Exchange differences arising
on translation of foreign - (3,291,216.92) (11,569,797.48) 7,626.92 (2,229,828.74) - (17,083,216.22)
currencies
5. 31/12/2021 - 439,744,856.84 3,664,881,304.53 11,938,303.52 274,973,056.74 111,716,845.55 4,503,254,367.18
III. Provision for impairment loss
31/12/2020 & 31/12/2021 - - - - - - -
IV. Carrying amount
1. 31/12/2021 201,483,396.78 825,491,847.52 2,232,774,457.33 4,816,392.23 166,918,432.63 10,721,231.52 3,442,205,758.01
2. 31/12/2020 (Restated) 206,534,814.31 487,732,506.77 2,111,145,679.60 18,755,427.63 99,974,343.28 4,455,416.00 2,928,598,187.59
181 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Fixed assets - continued
(2) As of 31 December 2021, the Group had no significant temporarily idle fixed asset.
(3) As of 31 December 2021, the Group had no fixed assets of which certificates of title have not been obtained
(4) As of 31 December 2021, the Group had no fixed assets that have been pledged.
15. Construction in progress
(1) Construction in progress
Unit: RMB
31/12/2021 31/12/2020
Provision for Provision for
Item
Book value impairment Carrying amount Book value impairment Carrying amount
losses losses
Shengxia factory-
Chip module 179,188,077.68 - 179,188,077.68 54,061,530.54 - 54,061,530.54
production project
Vietnam factory-
Wearable device 6,601,158.52 - 6,601,158.52 17,480,353.06 - 17,480,353.06
production project
Huizohu factory-
Electronic product 310,085,666.90 - 310,085,666.90 48,165,498.02 - 48,165,498.02
production project
Other construction,
decoration and 302,140,800.12 - 302,140,800.12 312,235,039.62 - 312,235,039.62
equipment funds
Total 798,015,703.22 - 798,015,703.22 431,942,421.24 - 431,942,421.24
(2) Changes in construction in progress
Unit: RMB
Amount
Exchange
injected Amount Interest
differences arising Including:
Transferred to as a of capitali
Increase from on translation of capitalize
Transfer to long-term proportio accumulat zation
Item name Budget 31/12/2020 Increase in the year business financial 31/12/2021 d interest Source of funds
fixed assets prepaid expenses n of ed rate for
combination statements for the
in the year budget capitalize the year
denominated in year
amount d interest (%)
foreign currencies
(%)
-
Shengxia
factory-Chip -
Self-owned funds /
module 910,000,000.00 54,061,530.54 438,697,671.47 - (279,159,169.33) (34,411,955.00) - 179,188,077.68 60% - - Raised funds
production
project
-
Vietnam
factory-
Wearable Self-owned funds /
device
1,400,000,000.00 17,480,353.06 338,446,713.50 - (349,050,294.25) - (275,613.79) 6,601,158.52 36% - - - Raised funds
production
project
Huizohu
factory-
Electronic Self-owned funds /
product
1,350,000,000.00 48,165,498.02 279,401,914.74 - (17,481,745.86) - 310,085,666.90 26% - - - Raised funds
production
project
Other
construction,
decoration
and
N/A 312,235,039.62 681,724,184.76 1,104,633.49 (660,061,258.90) (28,279,099.42) (4,582,699.43) 302,140,800.12 N/A - - - Self-owned funds
equipment
funds
(1,305,752,468.3
Total 431,942,421.24 1,738,270,484.47 1,104,633.49 (62,691,054.42) (4,858,313.22) 798,015,703.22
4)
(3) As of 31 December 2021, the Group had no construction in progress that requires provision for impairment
losses.
182 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Right-of-use assets
(1) Right-of-use assets
Unit: RMB
Machinery
Item Buildings Transportation Others Total
equipment
I. Original carrying
amount
1. 31/12/2020 787,300,810.44 1,122,244.22 6,154,901.18 2,166,997.46 796,744,953.30
2. Increase in the year
(1) Increase 20,463,295.65 66,390.18 2,854,843.51 332,101.11 23,716,630.45
(2) Increase from
41,087,402.27 - - - 41,087,402.27
business combination
3. Decrease in the year
(1) Disposal or 47,756,612.87 87,134.92 2,843,665.19 148,788.41
50,836,201.39
retirement
4. Exchange differences (6,565,560.49) (53,114.44) (408,461.50)
arising on translation of (1,477.74) (7,028,614.17)
foreign currencies
5. 31/12/2021 794,529,335.00 1,048,385.04 5,757,618.00 2,348,832.42 803,684,170.46
II. Accumulated
depreciation
1. 31/12/2020 164,371,539.58 55,240.88 2,065,263.31 490,870.17 166,982,913.94
2. Increase in the year
(1) Provision 122,173,196.12 737,357.35 2,552,132.22 571,872.83 126,034,558.52
3. Decrease in the year
(1) Disposal or
47,127,624.74 87,134.92 2,358,287.03 148,788.41 49,721,835.10
retirement
4. Exchange differences
arising on translation of (2,441,672.06) (39,302.06) (116,910.98) (4,376.03) (2,602,261.13)
foreign currencies
5. 31/12/2021 236,975,438.90 666,161.25 2,142,197.52 909,578.56 240,693,376.23
III. Provision for
impairment loss
31/12/2020 &
- - - - -
31/12/2021
IV. Carrying amount
1. 31/12/2021 557,553,896.10 382,223.79 3,615,420.48 1,439,253.86 562,990,794.23
2. 31/12/2020 622,929,270.86 1,067,003.34 4,089,637.87 1,676,127.29 629,762,039.36
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 2021, the short-term lease expenses included in the profit or loss for the current period and treated under a
simplified method is RMB 9,020,463.27 (2020: RMB 4,133,482.5), and the cash outflows related to leases are
RMB 145,961,156.97 (2020: RMB 100,152,845.92).
The assets leased in shall not be used as collateral for borrowings.
As at 31 December 2021, the Group's short-term lease portfolio was similar to the short and medium-term lease
portfolio in the lease expenses described above.
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 of
31 December 2021, the Group had no leases committed but not yet commenced.
183 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
17. Intangible assets
(1) Intangible assets
Unit: RMB
Item Software Patents Trademark right Land use rights Customer relation Total
I. Original carrying
amount
1. 31/12/2020 (Restated) 343,804,124.52 1,954,137.15 412,426.27 130,069,025.23 180,098,504.72 656,338,217.89
2. Increase in the year 77,582,417.08 - - - - 77,582,417.08
(1) Purchase 77,498,662.16 - - - - 77,498,662.16
(2) Increase from business 83,754.92 - - - - 83,754.92
combination
3. Decrease in the year
(1) Disposal or retirement 83,196.15 - - - - 83,196.15
4. Exchange differences
arising on translation of (7,530,490.59) (42,985.85) 1,215.34 (3,530,135.12) (17,802,829.74) (28,905,225.96)
foreign currencies
5. 31/12/2021 413,772,854.86 1,911,151.30 413,641.61 126,538,890.11 162,295,674.98 704,932,212.86
II. Accumulated
amortization
1. 31/12/2020 140,667,895.23 1,954,137.15 393,796.27 9,080,878.25 - 152,096,706.90
2. Increase in the year 87,987,951.35 - 18,630.00 3,358,936.03 11,441,925.13 102,807,442.51
(1) Provision 87,987,951.35 - 18,630.00 3,358,936.03 11,441,925.13 102,807,442.51
3. Decrease in the year 83,196.15 - - - - 83,196.15
(1) Disposal or retirement 83,196.15 - - - - 83,196.15
4. Exchange differences
arising on translation of (2,608,837.46) (42,985.85) 1,215.34 (78,484.20) (620,479.35) (3,349,571.52)
foreign currencies
5. 31/12/2021 225,963,812.97 1,911,151.30 413,641.61 12,361,330.08 10,821,445.78 251,471,381.74
III. Provision for
impairment loss
31/12/2020 & 31/12/2021 - - - - - -
IV. Carrying amount
1. 31/12/2021 187,809,041.89 - - 114,177,560.03 151,474,229.20 453,460,831.12
2. 31/12/2020 (Restated) 203,136,229.29 - 18,630.00 120,988,146.98 180,098,504.72 504,241,510.99
28. (2) As at 31 December 2021, the Group had no land use right of which the certificate of title was still in progress.
29.
30.
184 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Goodwill
(1) Original book value of goodwill
Unit: RMB
Changes for the year
Arising from business Exchange differences
Name of investee 31/12/2020 (Restated) combination arising on translation of 31/12/2021
financial statements
denominated in foreign
currencies
USI Poland 26,656,694.79 - (609,538.67) 26,047,156.12
FAFG 591,437,946.48 - (58,463,944.72) 532,974,001.76
Total 618,094,641.27 - (59,073,483.39) 559,021,157.88
(2) Impairment provision of goodwill
As of 31 December 2021, there is no impairment provision of goodwill.
31.
(3) Relative information of asset group or a set of asset groups where the goodwill is related
USI Poland is located in the southwest of Poland and mainly engages in the manufacture and sale of mainboards
and adapter cards. This acquisition is part of the Group's global industrial layout and is of strategic importance
to the Group, facilitating the acquisition of new production capacity in Eastern Europe rapidly.
FAFG is located in France and mainly engages in the manufacture and sale of mainboards and adapter cards.
This acquisition is part of the Group's global industrial layout and is of strategic importance to the Group.
(4) Specify test procedure, key parameters and recognition method for impairment loss of goodwill
The Group divides reporting segments geographically. For the purpose of impairment testing, the Group
allocates goodwill to three asset groups. As at 31 December 2021, the carrying amount of the goodwill allocated
to the three asset groups and their impairment provision were as below:
Unit: RMB
Impairment
Asset group of goodwill Cost Net book value
provision
European region—USI Poland 26,047,156.12 - 26,047,156.12
European region—FAFG Europe 178,597,316.70 - 178,597,316.70
China mainland—FAFG China 354,376,685.06 - 354,376,685.06
Total 559,021,157.88 - 559,021,157.88
As at 31 December 2021, the Group assessed the recoverability of goodwill related to the USI Poland asset
group, and the recoverable amount of USI Poland asset group was determined based on the present value of
estimated future cash flows. Future cash flows are determined based on the management's projections. The
projections for next five years are based on the financial budgets approved by the management using a discount
rate of 8.70%, while the cash flows in excess of five years are calculated on the basis of a 3% annual
incremental growth rate. Such increasing growth rate is determined on the basis of the estimated growth of
related industries and will not exceed the long-term average growth rate of such industry. The Group's
management believes that any reasonable change in the above assumptions would not cause the carrying amount
of USI Poland asset group to exceed its recoverable amount and therefore has determined that the goodwill is
not impaired.
185 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Goodwill - continued
(4) Specify test procedure, key parameters and recognition method for impairment loss of goodwill - continued
As at 31 December 2021, the Group assessed the recoverability of goodwill related to FAFG Europe asset group,
and the recoverable amount of FAFG Europe asset group was determined based on the present value of
estimated future cash flows. Future cash flows are determined based on the management's projections. The
projections for next five years are based on the financial budgets approved by the management using a discount
rate of 12.24%, while the cash flows in excess of five years are calculated on the basis of a 2.5% annual
incremental growth rate. Such increasing growth rate is determined on the basis of the estimated growth of
related industries and will not exceed the long-term average growth rate. The Group's management believes that
any reasonable change in the above assumptions would not cause the carrying amount of FAFG Europe asset
group to exceed its recoverable amount and therefore has determined that the goodwill is not impaired.
As at 31 December 2021, the Group assessed the recoverability of goodwill related to FAFG China asset group,
and the recoverable amount of FAFG China asset group was determined based on the present value of estimated
future cash flows. Future cash flows are determined based on the management's projections. The projections for
next five years are based on the financial budgets approved by the management using a discount rate of 12.43%,
while the cash flows in excess of five years are calculated on the basis of a 2.5% annual incremental growth rate.
Such increasing growth rate is determined on the basis of the estimated growth of related industries and will not
exceed the long-term average growth rate. The Group's management believes that any reasonable change in the
above assumptions would not cause the carrying amount of FAFG China asset group to exceed its recoverable
amount and therefore has determined that the goodwill is not impaired.
(5) Adjustment on the recognized temporary value within 12 months subsequent to acquisition date
The Group acquired FAFG in December 2020. The Group employed an appraisal agency Duff & Phelps
Consulting (Shenzhen) Limited to assess the fair value of identifiable net assets of FAFG, but the Group has not
received the appraisal report as at the issuance of 2020 Financial Report. Where the fair value of each
identifiable asset, liability and contingent liability acquired in a merger or the cost of a business combination can
only be determined provisionally, the Group recognizes and measures the merger of FAFG on the basis of the
temporary value so determined. The Group recognized inventories, fixed assets and intangible assets as per their
temporary value at RMB 1,080,142,123.19, RMB 380,277,087.35 and RMB 138,226,853.29, respectively, in
the 2020 Consolidated Financial Statements. On the acquisition date, the Group recognized goodwill of RMB
1,048,855,739.68.
In June 2021, the Group obtained the appraisal report of identifiable net assets and recognized RMB
1,096,828,257.66 of inventories, increasing by RMB 16,686,134.47 compared with the original temporary value;
recognized RMB 661,970,691.35 of fixed assets, increasing by RMB 281,693,604.00 compared with the
original temporary value; recognized RMB 348,799,624.31 of intangible assets, increasing by RMB
210,572,771.02 compared with the original temporary value; recognized RMB 87,471,785.94 of other non-
current financial assets; recognized RMB 128,525,419.47 of deferred tax liabilities; and recognized an increase
of RMB 1,343,365.74 of minority interests, the total of which were RMB 466,555,510.22 higher than their
temporary value. Therefore, the Group should reduce RMB 466,555,510.22 of goodwill on the acquisition date.
The comparative financial statements have been restated.
19. Long-term prepaid expenses
Unit: RMB
Translation of
Transfer from financial
Amortization for the
Item 31/12/2020 Increase in the year construction in statements 31/12/2021
year
progress denominated in
foreign currencies
Leased-in plant
decoration 250,549,262.26 9,142,213.08 62,691,054.42 (94,475,344.98) (330,899.80) 227,576,284.98
works
186 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
20. Deferred tax assets/deferred tax liabilities
(1) Deferred tax assets that are not offset
Unit: RMB
31/12/2021 31/12/2020
Deductible
Deductible temporary
Deferred tax assets temporary Deferred tax assets
differences
Item differences
Provision for impairment
193,821,682.25 42,612,195.77 193,865,832.65 44,046,762.07
losses of assets
Provision for credit loss 13,223,761.97 3,596,532.84 15,912,392.17 4,051,200.76
Deferred income 57,000,065.25 8,550,009.79 28,622,780.00 4,293,417.00
Employee benefits payable 199,308,548.75 30,589,364.52 205,940,048.57 31,790,009.74
Defined benefit plans 223,818,884.41 52,394,385.80 289,264,664.53 71,648,237.56
Depreciation differences 10,242,956.06 1,536,443.41 11,328,867.72 1,699,330.16
Provisions 1,293,497.27 194,024.59 1,265,203.27 189,780.49
Unrealized profit 63,019,597.45 11,638,477.17 65,509,806.30 12,272,798.46
Deductible losses 270,300,755.99 73,237,594.45 232,110,435.75 67,704,334.28
Sales discount 394,837,081.32 67,996,678.40 221,495,157.72 41,958,778.64
Others 143,546,039.53 31,711,057.16 163,766,794.31 32,584,253.90
Total 1,570,412,870.25 324,056,763.90 1,429,081,982.99 312,238,903.06
(2) Deferred tax liabilities that are not offset
Unit: RMB
31/12/2021 31/12/2020 (Restated)
Taxable temporary Taxable temporary Deferred tax
Deferred tax liabilities
Item differences differences liabilities
Depreciation differences in
research and development - - 548,175.46 82,226.32
equipment tax credits
Depreciation differences 15,127,571.63 4,538,271.49 41,169,648.33 12,350,894.50
Fair value adjustment for
business combination
372,779,957.00 98,179,611.96 431,335,768.39 132,486,298.52
involving enterprise not
under common control
Others 14,075,520.47 4,222,656.14 9,320,940.27 2,796,282.08
Total 401,983,049.10 106,940,539.59 482,374,532.45 147,715,701.42
(3) Deferred tax assets and deferred tax liabilities that are presented at the net amount after offset
Unit: RMB
31/12/2021 31/12/2020 (Restated)
Offset amount Deferred tax assets or Offset amount between Deferred tax assets
between deferred tax liabilities after offset deferred tax assets and or liabilities after
assets and liabilities at liabilities at the offset
Item the end of the year beginning of the year
Deferred tax assets (8,760,927.63) 315,295,836.27 (15,229,402.90) 297,009,500.16
Deferred tax liabilities 8,760,927.63 98,179,611.96 15,229,402.90 132,486,298.52
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.
187 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
20. Deferred tax assets/deferred tax liabilities - continued
(4) Deferred tax assets not recognized
Unit: RMB
Item 31/12/2021 31/12/2020
Deductible temporary differences 8,989,736.44 2,918,452.30
Deductible losses 178,137,952.50 125,253,995.60
Total 187,127,688.94 128,172,447.90
(5) Deductible losses, for which no deferred tax assets are recognized, will expire in the following years
Unit: RMB
Year 31/12/2021 31/12/2020
2026 30,775,200.93 -
No time limit 147,362,751.57 125,253,995.60
Total 178,137,952.50 125,253,995.60
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.
21. Other non-current assets
Unit: RMB
Item 31/12/2021 31/12/2020
Prepayment for equipment 91,927,638.00 45,040,502.27
Prepayment for enterprise income tax 33,173,383.08 36,812,297.60
Guarantee and deposit 11,240,266.61 7,470,169.68
Others 474,023.49 420,736.91
Total 136,815,311.18 89,743,706.46
22. Short-term borrowings
(1) Categories of short-term borrowings:
Unit: RMB
Item 31/12/2021 31/12/2020
Credit loans 2,480,500,031.68 375,341,430.81
As at 31 December 2021, the Group's short-term borrowings are all composed of credit loans with no pledged,
mortgaged or guaranteed borrowings.
(2) As at 31 December 2021, the Group has no short-term borrowings overdue but not yet repaid.
23. Derivative financial liabilities
Unit: RMB
Item 31/12/2021 31/12/2020
Financial liabilities at FVTPL 976,413.16 18,402,480.68
Including: Derivative financial assets (Note) 976,413.16 18,402,480.68
Note: The derivative financial liabilities held by the Group are foreign exchange forward contract.
188 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
24. Accounts payable
(1) Accounts payable
Unit: RMB
Item 31/12/2021 31/12/2020
Payable for materials 11,527,517,322.76 11,148,789,280.06
Payable for assets 577,303,942.61 190,850,342.60
Expenses payable 453,776,977.80 495,600,111.63
Total 12,558,598,243.17 11,835,239,734.29
(2) As at 31 December 2021, the Group has no significant accounts payable aged more than one year.
25. Contract liabilities
(1) Contract liabilities
Unit: RMB
Item 31/12/2021 31/12/2020
Receipts in advance 311,988,551.56 300,864,893.86
The Group's revenue from sales of goods is recognized when the control over related goods is transferred to the
customer. A contractual 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 300,864,893.86 at the beginning of the year has been
recognized as revenue in the current year, while that of RMB 311,988,551.56 at the end of the year is expected
to be recognized as revenue in 2022.
26. Employee benefits payable
(1) Employee benefits payable
32. Unit:
RMB
Exchange differences arising
Increase from
Increase in the Decrease in the on translation of financial
Item 31/12/2020 business 31/12/2021
year year statements denominated in
combination
foreign currencies
1. Short-term
826,428,786.98 24,093,177.03 3,425,309,380.16 3,476,872,693.74 (5,585,552.82) 793,373,097.61
benefits
2. Post-employment
benefits-defined 29,744,216.98 - 203,954,853.38 205,581,964.75 (1,001,676.23) 27,115,429.38
contribution plan
3. Long-term
employee benefits
13,335,819.27 - 13,813,862.35 16,526,112.29 74,890.16 10,698,459.49
payable due within
one year
Total 869,508,823.23 24,093,177.03 3,643,078,095.89 3,698,980,770.78 (6,512,338.89) 831,186,986.48
189 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
26. Employee benefits payable - continued
(2) Short-term employee benefits
Unit: RMB
Exchange differences
arising on translation
Increase from
Increase in the Decrease in the of financial
Item 31/12/2020 business 31/12/2021
year year statements
combination
denominated in
foreign currencies
1. Wages or
salaries, bonuses,
768,913,089.78 21,426,000.79 2,861,376,060.45 2,918,765,470.60 (2,384,626.41) 730,565,054.01
allowances and
subsidies
2. Staff welfare 12,267,107.72 - 231,001,247.97 224,816,725.73 (1,516,465.82) 16,935,164.14
3. Social security
40,622,040.65 2,667,176.24 265,245,344.15 265,895,880.75 (1,533,667.45) 41,105,012.84
contributions
Including:
32,821,439.60 2,667,176.24 158,726,585.96 160,193,404.23 (1,407,938.32) 32,613,859.25
Medical insurance
Work injury
6,045,891.40 - 49,288,756.04 48,133,007.90 (47,688.58) 7,153,950.96
insurance
Maternity
122,757.56 - 1,560,120.91 1,649,938.82 (766.53) 32,173.12
insurance
Overseas
comprehensive
1,631,952.09 - 55,669,881.24 55,919,529.80 (77,274.02) 1,305,029.51
insurance
expenses
4. Housing funds 3,866,916.07 - 59,723,375.76 60,130,643.00 (117,407.93) 3,342,240.90
5. Union running
costs and
759,632.76 - 7,963,351.83 7,263,973.66 (33,385.21) 1,425,625.72
employee
education cost
Total 826,428,786.98 24,093,177.03 3,425,309,380.16 3,476,872,693.74 (5,585,552.82) 793,373,097.61
(3) Defined contribution plan (Note)
Unit: RMB
Exchange differences
arising on translation of
Increase in the Decrease in the
Item 31/12/2020 financial statements 31/12/2021
year year
denominated in foreign
currencies
1. Basic pensions 28,147,217.16 192,429,296.31 193,348,594.20 (910,603.88) 26,317,315.39
2. Unemployment
1,596,999.82 11,525,557.07 12,233,370.55 (91,072.35) 798,113.99
insurance
Total 29,744,216.98 203,954,853.38 205,581,964.75 (1,001,676.23) 27,115,429.38
Note: The Group participates, as required, in the pension insurance and unemployment plan established by
Chinese government authorities, Mexican authorities and French authorities, etc. 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
192,429,296.31 and RMB 11,525,557.07 (2020: RMB 144,750,813.18 and RMB 2,738,579.86). As at 31
December 2021, 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 26,317,315.39 and RMB
798,113.99 (31 December 2020: RMB 28,147,217.16 and RMB 1,596,999.82). The outstanding contributions
have been paid after the reporting period.
190 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
27. Taxes payable
Unit: RMB
Item 31/12/2021 31/12/2020
Enterprise income tax 162,797,690.95 104,540,485.44
VAT 42,307,371.96 44,484,394.96
Surcharges 12,844,623.85 12,127,282.66
Withholding of income tax 6,774,673.16 3,916,487.97
Stamp duties 5,657,760.52 6,024,978.80
Individual income tax 5,288,608.50 2,769,891.38
Withholding of VAT and levies 499,635.84 268,118.37
Others 2,506,114.97 4,869,069.55
Total 238,676,479.75 179,000,709.13
28. Other payables
(1) Summary of other payables
Item 31/12/2021 31/12/2020
Interest payable 9,995,478.63 8,855,328.84
Other payables 413,513,986.88 390,981,603.23
Total 423,509,465.51 399,836,932.07
(2) Interest payable
Item 31/12/2021 31/12/2020
Interest payable of short-term borrowings 4,242,576.34 2,307,997.54
Interest payable of long-term borrowings 2,888,951.29 6,547,331.30
Interest payable of bonds 2,863,951.00 -
Total 9,995,478.63 8,855,328.84
As at 31 December 2021, the Group has no significant interest payables overdue.
(3) Other payables by nature
Unit: RMB
Item 31/12/2021 31/12/2020
Collection on behalf of third parties 209,375,088.52 172,552,996.84
Professional services fee 76,878,779.18 66,663,965.24
Accrued expenses 65,543,584.98 82,584,370.68
Utilities, storage and transportation costs 18,201,801.15 20,199,333.63
Miscellaneous fees 15,962,956.95 17,368,159.74
Procurement of non-raw materials 7,554,988.90 7,757,290.05
Others 19,996,787.20 23,855,487.05
Total 413,513,986.88 390,981,603.23
As at 31 December 2021, the Group has no significant other payables aged more than one year.
191 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
29. Non-current liabilities due within one year
Unit: RMB
Item 31/12/2021 31/12/2020
Long-term borrowings due within one year (Note (V). 30) 589,495,046.10 798,170,519.68
Lease liabilities due within one year (Note (V). 32) 131,012,735.39 136,810,835.36
Total 720,507,781.49 934,981,355.04
30. Long-term borrowings
Details of long-term borrowings
Unit: RMB
Item 31/12/2021 31/12/2020
Credit loans (Note 1) 1,690,715,513.65 2,862,475,218.51
Pledged borrowings (Note 2) - 947,364,245.81
Less: Long-term borrowings included in non-current liabilities due
589,495,046.10 798,170,519.68
within one year (Note (V). 29)
Total 1,101,220,467.55 3,011,668,944.64
Note 1: In October 2019 (the "effective date"), Universal Global Technology Co., Limited, a subsidiary of the
Group, entered into the Loan Agreement with the bank in the total limit of USD 420,000,000.00. In July 2020,
Universal Global Technology Co., Limited borrowed USD 161,271,000.00 and EUR 225,000,000.00 from the
bank, equivalent to RMB 1,059,505,218.51 and RMB 1,802,970,000.00, respectively, within the limit agreed in
the Loan Agreement. The borrowings shall be repaid at 10%, 15%, 20% and 55% of the borrowings 18 months,
24 months, and 30 months after the effective date of the contract and in October 2022, the final maturity date,
respectively. The interest rate for USD borrowings is three-month or six-month LIBOR plus 95 basis points, and
that for EUR borrowings is three-month or six-month plus 115 basis points. In 2021, Universal Global
Technology Co., Limited repaid a part of long-term borrowings in advance. As at 31 December 2021, the
balance of above borrowings was USD 92,459,658.72, equivalent to RMB 589,495,046.10, which was included
in non-current liabilities due within one year.
In July 2021, Universal Global Technology Co., Limited acquired another EUR 152,500,000.00 (equivalent to
RMB 1,101,220,467.55 as at 31 December 2021) of long-term borrowings bearing an interest rate of 0.4%,
which should be repaid in a lump sum when due.
Note 2: In March 2020, USI France, a subsidiary of the Group, borrowed EUR 118,225,020.68 from the bank,
equivalent to RMB 947,364,245.81. The borrowings shall be repaid at 8.33%, 8.33%, 8.34%, 10%, 10%,
13.75%, 13.75%, 13.75% and 13.75% of the borrowings 12 months, 18 months, 24 months, 30 months, 36
months, 42 months, 48 months, 54 months after the effective date of the contract and in January 2025, the final
maturity date, respectively. The interest rate is EURIBOR plus 195 basis points, and the borrowings are
guaranteed by 100% of the equity interest in FAFG acquired by the Group during the year. In 2021, USI France
repaid such long-term borrowings in advance.
As at 31 December 2021, the Group had no long-term borrowings that were due but not yet repaid.
31. Bonds payable
(1) Bonds payable
Unit: RMB
Item 31/12/2021 31/12/2020
Convertible corporate bonds 3,115,505,143.28 -
192 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
31. Bonds payable - continued
(2) Movements in bonds payable
Unit: RMB
No
31/
mi Interest Amortization of
Name of Date of Te 12/ Issued in this Swap to
nal Amount accrued as per premiums or 31/12/2021
bonds issue rm 20 year equity
val nominal value discounts
20
ue
Universal
6
Global
100 2021/3/4 ye 3,450,000,000.00 - 3,010,541,240.32 2,863,951.00 107,851,300.34 23,446.38 3,115,505,143.28
Convertible
ars
Bonds
(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 (the "convertible bonds"), 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. Holders of the convertible bonds may exercise their right to convert the convertible bonds in this issuance
into A shares of the Company at the current conversion price during the period commencing from the first
trading day after the expiry of nine months from the date of completion of the issue of the convertible bonds (i.e.
10 March 2021) to the maturity date of the convertible bonds (the "conversion period"). Within five trading days
after the expiry of the convertible bonds in this issuance, the Company will redeem the unconverted convertible
bonds at a 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 30,000,000, 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.
193 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
31. Bonds payable - continued
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.
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.
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 107,851,300.34 withdrawn according to the effective interest rate method in the
current period.
As of 31 December 2021, the Company has accumulated assets with face value of RMB 26,000 (book value of
RMB 23,446.38) convertible bonds are converted into A-share ordinary shares, and the number of shares
converted is 1,310 shares.
194 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
32. Lease liabilities
(1) Details of lease liabilities
Unit: RMB
Item 31/12/2021 31/12/2020
Lease liabilities 606,138,332.63 671,779,599.83
Less: Lease liabilities included in non-current liabilities due
131,012,735.39 136,810,835.36
within one year (Note (V). 29)
Total 475,125,597.24 534,968,764.47
33. Long-term payables
Unit: RMB
Item 31/12/2021 31/12/2020
Software licensing fee (Note) 59,328,067.47 55,184,703.96
Less: Long-term payables due within one year 13,747,011.85 11,896,967.96
Total 45,581,055.62 43,287,736.00
Note: It refers to software licensing fee payable by the Group, in which the portion due within one year is
included in accounts payable.
34. Long-term employee benefits payable
(1) Details of long-term employee benefits payable
Unit: RMB
Item 31/12/2021 31/12/2020
1. Post-employment benefits- net liability of defined benefit plans 296,461,708.74 334,565,722.46
2. Termination benefits 869,451.40 1,003,958.04
Total 297,331,160.14 335,569,680.50
(2) Changes in defined benefit plans
Net liability of defined benefit plans
Unit: RMB
Item 2021 2020
I. 31/12/2020 347,901,541.73 116,214,486.00
II. Increase from business combination - 230,957,112.54
III. Defined benefits costs recognized in profit or loss for the year 2,233,934.44 2,127,295.09
IV. Defined benefits costs recognized in other comprehensive
(4,677,068.45) 13,198,594.17
income
V. Amount contributed and paid during the year (16,526,112.29) (16,318,412.08)
VI. Exchange differences arising on translation of foreign
(21,772,127.20) 1,722,466.01
currencies
VII. 31/12/2021 307,160,168.23 347,901,541.73
Less: Long-term employee benefits payable due within one
10,698,459.49 13,335,819.27
year
Long-term employee benefits payable paid after one year 296,461,708.74 334,565,722.46
Contents of defined benefit plans and related risks, and its impact over the Group's future cash flows, timing and
uncertainty:
195 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
34. Long-term employee benefits payable - continued
(2) Changes in defined benefit plans - continued
UGTW and USITW, 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 UGTW and USITW 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 11 to 13 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 11 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 UGTW and USITW in determining the
present value of the defined benefit plan obligations:
31/12/2021 31/12/2020
Discount rate 0.75% 0.9%
Future salary growth rate 2.25% 2.25%
Assumptions made based on the sixth Assumptions made based on the fifth
Mortality rate
Mortality Table in Taiwan Mortality Table in 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
UGTW and USITW will be decreased by RMB 6,009,465.79 (increased by RMB 6,475,205.14) and
RMB4,927,577.68 (increased by RMB 5,309,705.07), respectively.
When the future salary growth rate is up (down) 0.5%, the present value of defined benefit plan
obligations of UGTW and USITW will be increased by RMB 10,858,959.57 (decreased by RMB
10,181,311.11) and RMB 675,345.10 (decreased by RMB 636,418.32), respectively.
196 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
34. Long-term employee benefits payable - continued
(2) Changes in defined benefit plans - continued
The Group hired Willis Towers Watson 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.
The following table lists the significant actuarial assumptions used by FAFG in determining the present value of
the defined benefit plan obligations:
31/12/2021 31/12/2020
Discount rate 0.85%~0.93% 0.65%~0.66%
Future salary growth rate 1%-2% 1%-2%
Mortality rate Life expectancy table of local National Life expectancy table 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 11,517,357.97 (increased by RMB 12,718,085.44).
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 2,679,222.46 (decreased by RMB 2,536,049.36).
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.
35. Provisions
Unit: RMB
Item 31/12/2021 31/12/2020
Products quality warranty 10,046,914.77 11,353,780.46
197 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
36. Deferred income
Unit: RMB
Exchange differences
arising on translation of
Increase in the Decrease in the
Item 31/12/2020 financial statements 31/12/2021 Reason
year year
denominated in foreign
currencies
Government grants 30,407,540.72 45,910,000.00 17,980,271.33 (348,176.24) 57,989,093.15 Note 1
Subsidies for
purchase of fixed 2,317,023.20 249,645.43 757,533.60 (6,285.48) 1,802,849.55
assets
Total 32,724,563.92 46,159,645.43 18,737,804.93 (354,461.72) 59,791,942.70
Note 1: Items involving government grants:
Unit: RMB
Exchange differences
Amount
arising on translation
Increase in the recognized in Asset-related /
Item 31/12/2020 of financial statements 31/12/2021
year other income of Income-related
denominated in foreign
the year
currencies
Funding item for
industrialization 12,147,608.87 1,160,000.00 4,710,284.57 - 8,597,324.30 Asset-related
technology upgrading
Manufacturing
technology reform item
for high transmission,
9,722,221.90 - 8,333,333.40 - 1,388,888.50 Asset-related
high density and
miniaturized wireless
communication module
Technology reform item
for ultra-thin
communication module 4,435,926.03 22,200,000.00 1,975,253.19 - 24,660,672.84 Asset-related
deep intelligent
production line
Upgrading subsidies for
4,101,783.92 - 1,205,090.18 (348,176.24) 2,548,517.50 Asset-related
Poland technology
Government grant
income from matching
funds for key
transformation projects - 11,250,000.00 205,875.00 - 11,044,125.00 Asset-related
for the automation of the
production of smart
wearable products
Government grants for
the sixth batch of high
quality special projects - 11,300,000.00 1,550,434.99 - 9,749,565.01 Asset-related
(technological
transformation)
Total 30,407,540.72 45,910,000.00 17,980,271.33 (348,176.24) 57,989,093.15
37. Other non-current liabilities
Other non-current liabilities refer to guarantee deposits and margins received from suppliers.
38. Share capital
Unit: RMB
Changes for the year
31/12/2020 New issue of shares Convertible bonds transferred to equity 31/12/2021
(Note 1) (Note 2)
Total
shares
2,209,343,372.00 828,100.00 1,310.00 2,210,172,782.00
198 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
38. Share capital - continued
Note 1: In November 2015 and November 2019, the Company implemented the Stock Option Incentive Plan for
Universal Scientific Industrial (Shanghai) Co., Ltd. and the Stock Option Incentive Plan for Universal Scientific
Industrial (Shanghai) Co., Ltd. in 2019 to grant a certain number of stock options to eligible employees to
subscribe for ordinary shares of the Company. In 2021, 318,800 ordinary shares and 509,300 ordinary shares
granted by the Company were exercised at RMB 15.54 per share and RMB 12.67 per share, respectively, and
registered in China Securities Depository and Clearing Co., Ltd. Shanghai Branch, totally increasing the share
capital by RMB 828,100.00 and capital reserve by RMB 10,578,883.00.
Note 2: See Note V, 31 for convertible bonds to equity swap.
39. Other equity instruments
Unit: RMB
Outstanding Opening balance Increase Decrease Closing balance
financial Book Book
Qty. Qty. Book value Qty. Qty. Book value
instruments value value
Convertible
corporate - - 34,500,000.00 409,905,205.31 260.00 3,089.14 34,499,740.00 409,902,116.17
bonds
Note: Other equity instruments are formed by the equity part of convertible corporate bonds. For the details, see
Note (V), 31.
199 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
40. Capital reserve
Unit: RMB
Increase in the Decrease in the
Item 31/12/2020 31/12/2021
year year
Share premium 2,045,171,620.81 14,136,893.22 - 2,059,308,514.03
Including: Share capital invested
by investors (Note V. 3,079,826,697.17 10,578,883.00 - 3,090,405,580.17
(38))
Purchase of minority
(4,405,590.07) - - (4,405,590.07)
interests
Differences resulting from
combination involving
(5,621,108.53) - - (5,621,108.53)
enterprise under
common control
Transfer of capital reserve
(1,087,961,790.00) - - (1,087,961,790.00)
to share capital
Share-based payment
exercise included in 66,745,457.91 5,519,464.00 - 72,264,921.91
owners' equity
Treasury shares transferred
(3,412,045.67) (1,986,486.80) - (5,398,532.47)
out (Note (V). 41)
Exercise of convertible
- 25,033.02 - 25,033.02
bonds (Note (V). 31)
Other capital reserve (Note (V).
135,792,556.19 52,875,000.00 5,519,464.00 183,148,092.19
48)
Total 2,180,964,177.00 67,011,893.22 5,519,464.00 2,242,456,606.22
41. Treasury shares
Unit: RMB
Item 31/12/2020 Increase in the Decrease in the 31/12/2021
year year
Employee stock ownership
134,707,206.58 231,031,506.46 24,502,373.16 341,236,339.88
plan
According to the Proposal on the Plan to Repurchase the Company's Shares in the Form of Centralized
Competitive Bidding at the Twelfth Meeting of the Fifth Session of the Board of Directors held on 26 August
2021 and other proposals, from 1 September 2021 to 31 December 2021, the Company repurchased a total of
16,042,278 shares of the Company in the form of centralized competitive bidding, totaling RMB
231,031,506.46. In 2021, the Group exercised the employee stock ownership plan based on the Core Employee
Stock Ownership Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. (Draft) and Core Employee Stock
Ownership Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2021 (Draft), using 1,780,050
treasury shares to exercise the employee stock ownership plan and transferring 281,200 treasury shares to
employee stock ownership platform in a non-trading manner. A total of 2,061,250 treasury shares were
transferred out, totaling RMB 24,502,373.16. The Group received RMB 22,515,886.36 from employees for the
exercise of the stock ownership plan, with the difference of RMB 1,986,486.80 included in capital reserve.
200 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
42. Other comprehensive income
Unit: RMB
Amount incurred in the current year
Amount incurred for Less: Amount
current year before tax previously included in Attributable to Attributable to
Item 31/12/2020 other comprehensive Less: Income tax owners of the minority 31/12/2021
income and expenses company after interests after
transferred to profit or tax tax
loss for the period
I. Other comprehensive
income that cannot
be subsequently (79,239,470.64) 39,112,727.21 - 2,704,676.57 36,407,012.60 1,038.04 (42,832,458.04)
reclassified to profit
or loss
Including: Recalculation of
the changes in defined (55,498,586.00) 4,677,068.45 - 2,704,676.57 1,971,353.84 1,038.04 (53,527,232.16)
benefit plans
Fair value changes
in other equity
(23,740,884.64) 34,435,658.76 - - 34,435,658.76 - 10,694,774.12
instruments
investment
II. Other comprehensive
income that will be
(11,976,506.37) (27,498,576.95) - - (28,791,434.54) 1,292,857.59 (40,767,940.91)
reclassified to profit
or loss
Including: Other
comprehensive
income that can be
14,257,376.56 7,230,128.54 - - 7,230,128.54 - 21,487,505.10
reclassified to profit
or loss under equity
method
Exchange
differences arising
on translation of
105,461,008.12 (205,046,650.73) - - (206,339,508.32) 1,292,857.59 (100,878,500.20)
financial statements
denominated in
foreign currencies
Net investment
hedging for (131,694,891.05) 170,317,945.24 - - 170,317,945.24 - 38,623,054.19
overseas operations
Total other
(91,215,977.01) 11,614,150.26 - 2,704,676.57 7,615,578.06 1,293,895.63 (83,600,398.95)
comprehensive income
43. Surplus reserve
Unit: RMB
Increase in the Decrease in
Item 31/12/2020 31/12/2021
year the year
Statutory surplus reserve
542,610,242.85 195,394,427.11 - 738,004,669.96
(Note)
Note: According to the Articles of Association, Universal Scientific Industrial (Shanghai) Co., Ltd. is required
to transfer 10% of its net profit in 2021 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.
44. Retained profits
Unit: RMB
Item 2021 2020
Retained profits at the end of prior year 7,342,825,571.69 6,134,589,055.19
Add: Net profit attributable to owners of the Company for
1,857,968,074.82 1,739,435,448.10
the year
Less: Appropriation to statutory surplus reserve (Note 1) 195,394,427.11 151,755,906.03
Dividends on ordinary shares payable (Note 2) 1,099,138,447.50 379,443,025.57
Retained profits at the end of the year (Note 3) 7,906,260,771.90 7,342,825,571.69
(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.
201 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
44. Retained profits - continued
33.
(2) Profit distribution approved in shareholders' meeting during the year
According to the resolution of the Ninth Meeting of the Fifth Session of the Board of Directors of the
Company held on 26 March 2021, a cash dividend of RMB 5.00 (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.
34.
(3) Profit distribution decided after the balance sheet date
35.
As proposed by the resolution of the Fifteenth Meeting of the Fifth Session of the Board of Directors of the
Company held on 25 March 2022, a cash dividend of RMB 2.60 (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
36.
37. As at 31 December 2021, the balance of the Group's retained profits include appropriation to surplus
reserve by subsidiaries amounting to RMB 1,192,741,399.36 (31 December 2020: RMB 1,110,302,383.39).
45. Revenue and Costs
(1) Details of Revenue and costs
Unit: RMB
Amount incurred in the prior year
Amount incurred in the current year
Item (Restated)
Revenue Costs Revenue Costs
Principal operating
activities
55,253,601,963.75 49,978,169,386.77 47,672,101,126.45 42,805,901,732.50
Other operating
activities
46,052,806.46 3,309,811.07 24,127,096.08 3,648,381.64
Total 55,299,654,770.21 49,981,479,197.84 47,696,228,222.53 42,809,550,114.14
(2) Analysis of revenue and costs from principal operating activities by product categories:
Unit: RMB
Amount incurred in the prior year
Amount incurred in the current year
Item (Restated)
Revenue Costs Revenue Costs
Communication products 21,211,368,145.31 19,799,912,823.21 20,283,864,099.07 18,821,255,507.78
Consumer electronic
products
18,566,021,687.70 16,886,497,387.85 17,214,810,675.04 15,524,198,157.79
Industrial products 7,276,135,793.13 6,074,544,645.90 4,350,075,411.92 3,450,426,871.41
Computer and storage
products
4,793,053,315.18 4,079,381,724.91 3,825,855,621.16 3,207,733,423.12
Automotive electronic
products
2,605,088,256.75 2,402,266,475.48 1,691,018,757.11 1,570,822,919.34
Medical products 280,679,550.41 264,285,249.66 71,996,638.77 65,180,848.67
Others 521,255,215.27 471,281,079.76 234,479,923.38 166,284,004.39
Total 55,253,601,963.75 49,978,169,386.77 47,672,101,126.45 42,805,901,732.50
202 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
45. Revenue and costs - continued
(3) Revenue and costs from other operating activities:
Unit: RMB
Item Amount incurred in the current year Amount incurred in the prior year
Revenue Costs Revenue Costs
Scrap income 39,880,978.46 - 16,404,990.55 -
Others 6,171,828.00 3,309,811.07 7,722,105.53 3,648,381.64
Total 46,052,806.46 3,309,811.07 24,127,096.08 3,648,381.64
(4) Fulfillment of contractual obligations with customers:
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, computer 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 revenue at the time 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 when the goods are delivered to the customer or to a location designated by the
customer or when the goods are delivered to the warehouse designated by the customer and the customer signs
for them on the receipt, respectively, according to the specific sales terms or trade terms agreed in the contract.
46. Taxes and levies
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Stamp duties 19,880,734.34 18,669,620.96
City construction and maintenance tax 11,208,526.66 13,467,342.74
Education surcharges 8,532,615.47 10,759,570.57
Real estate tax 2,937,961.06 2,063,216.19
Urban land use tax 900,287.63 655,818.97
Property transfer tax - 13,695,041.12
Others 6,357,540.59 2,397,902.00
Total 49,817,665.75 61,708,512.55
47. Selling expenses
Unit: RMB
Amount incurred in
Amount incurred in
Item the prior year
the current year
(Restated)
Staff costs 211,759,131.73 160,134,549.21
Royalty fees 31,098,633.03 17,325,403.34
Depreciation and amortization 16,027,092.26 3,550,147.86
Labor costs 10,077,652.76 6,709,004.28
After-sales service fee 6,394,645.51 3,116,687.86
Traveling expenses 3,876,257.29 3,004,701.45
Utilities 2,030,392.60 1,996,159.29
Entertainment expenses 1,665,596.94 1,532,933.93
Commission 1,640,768.47 469,481.07
Others 26,910,731.51 22,053,223.46
Total 311,480,902.10 219,892,291.75
203 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
48. Administrative expenses
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Staff costs 726,688,773.52 790,997,524.16
Labor costs and professional services fee 132,225,618.10 87,529,615.76
Depreciation and amortization 110,545,311.91 94,852,567.56
Share-based payments 52,875,000.00 44,777,233.10
Renovation costs 27,748,073.54 23,084,604.23
Traveling expenses 17,718,452.02 11,483,892.35
Software costs 13,172,412.70 6,265,866.72
Utilities 12,473,730.18 10,225,115.70
Insurance 10,571,950.20 4,234,388.75
Material consumption 9,656,422.95 5,913,389.86
Others 55,497,639.65 43,794,784.46
Total 1,169,173,384.77 1,123,158,982.65
49. Research and development expenses
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Staff costs 743,076,797.95 723,044,138.85
Material and sample costs 439,215,347.10 504,747,674.29
Work order expense 180,452,175.26 114,837,338.65
Depreciation and amortization 99,178,889.07 89,082,892.15
Mold costs 44,165,226.63 36,738,835.19
Utilities 21,466,113.30 20,584,510.89
Software 16,600,013.19 6,654,800.09
Renovation costs 16,097,717.66 15,034,257.06
Labor costs 11,803,055.92 13,930,177.23
Consumables and miscellaneous 10,880,322.68 10,061,809.70
Traveling expenses 2,914,798.18 3,471,546.74
Others 55,548,055.67 38,175,083.64
Total 1,641,398,512.61 1,576,363,064.48
50. Financial expenses
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Interest expenses 201,328,552.68 90,186,351.24
Including: Interest expenses on lease liabilities 21,624,108.86 19,570,082.83
Interest expenses on issue of convertible bonds 107,851,300.34 -
Less: Interest income 67,779,611.82 60,445,860.19
Exchange differences 62,658,120.37 63,269,271.70
Others 7,191,529.39 2,740,747.91
Total 203,398,590.62 95,750,510.66
204 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
51. Other 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
Government grants 50,678,106.85 76,779,477.12 50,678,106.85
Government grants in other income included in profit or loss for the period
Unit: RMB
Amount incurred Amount incurred Asset-related/
Item
in the current year in the prior year Income-related
Import interest subsidies 6,519,680.00 3,474,981.00 Income-related
2021 Economic grants by Head Office of Pudong New Area 4,970,000.00 - Income-related
Large Enterprises
French government grants for science and technology research 4,751,654.62 - Income-related
R&D Funding for Shenzhen Science and Technology 2,388,000.00 3,084,000.00 Income-related
Innovation Enterprise
Subsidy for named class of high-skilled talent in Kunshan 1,562,500.00 - Income-related
2021 Integrated subsidy for Technical Transformation of 1,350,000.00 - Income-related
Industrial Enterprises in Kunshan
2021 Special subsidy for staying in Kunshan in the Spring 1,002,800.00 - Income-related
Festival and stable yield by Qiandeng Township
Nurturing grants for High-tech Enterprises by Nanshan Science 1,000,000.00 - Income-related
and Technology Innovation Bureau
Shenzhen government subsidies for commercial and industrial 961,114.00 4,379,089.00 Income-related
electricity consumption
Vocational training subsidies by Kunshan Social Insurance 791,300.00 - Income-related
Fund Management Center
Individual tax service fee refund 664,628.80 1,129,561.66 Income-related
Subsidies for VAT deduction for enterprises employing poor 559,180.13 - Income-related
people with established cards
Award for outstanding contribution to high quality 500,000.00 - Income-related
development in the 30th Anniversary of Kun-Tai Integrated
Development
Intellectual property subsidies of Shanghai Zhangjiang Science 410,800.00 927,402.00 Income-related
City Construction and Management Office
Social Security Bureau stabilization subsidy 150,811.51 8,391,393.09 Income-related
Enterprise social security returned by Shenzhen Social Security - 13,981,600.51 Income-related
Bureau
Incentives for additional industrial value of Industry and - 5,000,000.00 Income-related
Information Technology Bureau of Shenzhen Nanshan District
Subsidies for expansion and capital increase item from Industry - 4,765,000.00 Income-related
and Information Technology Bureau of Shenzhen
2020 Integrated subsidies for technological reform of Kunshan - 1,683,400.00 Income-related
industrial enterprises
French R&D subsidies - 1,589,547.98 Income-related
Top ten growing Taiwanese enterprises awarded by the - 1,000,000.00 Income-related
Qiandeng Branch of Kunshan Finance Bureau
Poland COVID-19 prevention subsidy - 917,604.61 Income-related
District incentives for boiler improvement area in Shanghai - 780,000.00 Income-related
Jinqiao
Taiwan industry innovation platform subsidy - 734,930.47 Income-related
Intellectual property funding in science and technology - 293,500.00 Income-related
development fund
Others 5,115,366.46 5,795,469.70 Income-related
Sub-total 32,697,835.52 57,927,480.02
Amortization of asset-related government grants (Note (V). 36) 17,980,271.33 18,851,997.10 Asset-related
Total 50,678,106.85 76,779,477.12
205 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
52. 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
22,116,497.85 19,752,692.15
method
Investment income from other equity instruments during the
14,910,026.14 -
hold period
Investment income of other non-current financial assets during
1,208,019.49 159,135.20
the hold period
Investment income on disposal of held-for-trading financial
73,489,834.38 63,528,666.98
assets
Other (45,397.90) -
Total 111,678,979.96 83,440,494.33
53. 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 15,525,000.00 2,293,920.33
Including: Gains (losses) from changes in fair values arising
15,525,000.00 -
from derivative financial assets
Derivative financial liabilities 14,031,052.68 (4,968,603.17)
Other non-current financial assets 15,032,169.92 (3,597,517.30)
Total 44,588,222.60 (6,272,200.14)
54. Impairment gains (losses) of credit
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Gains (losses) from bad debts of accounts receivable (4,542,957.48) 7,894,930.75
Gains (losses) from bad debts of other receivables 2,836,069.00 -
Total (1,706,888.48) 7,894,930.75
55. Impairment gains (losses) of assets
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Gains (losses) on decline in value of inventories (18,746,153.38) (11,792,788.58)
56. Gains (losses) from disposal of assets
Unit: RMB
Amount included in
Amount incurred in Amount incurred
Item non-recurring profit
the current year in the prior year
or loss for the period
Gains from disposal of non-current
5,290,613.92 3,024,576.57 5,290,613.92
assets
Less: Losses from disposal of non-current
2,875,916.90 1,228,485.76 2,875,916.90
assets
Total 2,414,697.02 1,796,090.81 2,414,697.02
206 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
57. Non-operating income
Unit: RMB
Amount included in
Amount incurred in Amount incurred
Item non-recurring profit or
the current year in the prior year
loss for the period
Sporadic income 19,628,576.06 14,978,610.83 19,628,576.06
58. 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-current
11,530,686.66 623,754.22 11,530,686.66
assets
Others 1,052,447.42 2,442,552.64 1,052,447.42
Total 12,583,134.08 3,066,306.86 12,583,134.08
59. Income tax expenses
(1) Statement of income tax expenses
Unit: RMB
Amount incurred Amount incurred in
Item
in the current year the prior year
Income tax expenses for the current period 367,358,199.12 282,034,396.01
Settlement differences in income tax (21,432,389.61) (34,737,533.12)
Deferred income taxes (63,759,928.76) (7,299,040.30)
Total 282,165,880.75 239,997,822.59
(2) Reconciliation of income tax expenses to the accounting profit
Unit: RMB
Amount incurred Amount incurred in
in the current year the prior year
Total profit 2,138,858,923.07 1,973,563,054.56
Applicable tax rate 15% 15%
Income tax expenses calculated based on applicable tax rate 320,828,838.43 296,034,458.18
Effect of non-deductible cost, expense and loss 33,989,887.10 25,564,146.43
Effect of deemed sales on income taxes 3,153,974.75 846,732.13
Effect of non-taxable income (615,775.56) (5,265,214.57)
Tax effect of additional deductible expenses (109,649,252.29) (69,986,753.57)
Effect of deductible temporary difference or deductible loss
8,850,428.82 13,674,720.96
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 prior (7,142.67) (6,881,354.58)
period
Share based incentive scheme 6,239,839.26 -
Settlement differences in income tax (21,432,389.61) (34,737,533.12)
Effect of different tax rates applied by subsidiaries 30,384,135.90 12,866,903.28
Effect of levy on undistributed earnings of Taiwan subsidiaries - 4,774,002.78
Effect of changes in income tax rates of subsidiaries on the
6,004,696.00 -
opening balance of deferred tax assets
Others 4,418,640.62 3,107,714.67
Income tax expenses 282,165,880.75 239,997,822.59
207 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
60. Items in the cash flow statement
(1) Other cash receipts relating to operating activities
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Interest income 72,145,391.15 56,728,713.26
Subsidy income 78,607,835.52 57,927,480.02
Others (Note) 22,035,458.20 72,449,196.96
Total 172,788,684.87 187,105,390.24
Note: It mainly refers to advance payment on behalf of third parties.
(2) Other cash payments relating to operating activities
Unit: RMB
Amount incurred in Amount incurred in
the current year the prior year
Export expenses and freight paid 156,029,510.00 88,461,795.13
Other expenses paid 472,254,238.69 411,762,352.90
Payment of customs deposit 2,974,159.20 9,530,668.80
Total 631,257,907.89 509,754,816.83
(3) Other cash receipts relating to investing activities
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Subsidy for purchase of fixed assets - 13,522,846.50
(4) Other cash payments relating to financing activities
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Repurchase of treasury shares 231,031,506.46 -
Payment of lease principal and interest 136,940,693.70 100,152,845.92
Payment of deposits on long-term loans - 20,227,144.33
Purchase of minority interests - 24,500,000.00
Others 880,489.51 5,270,084.97
Total 368,852,689.67 150,150,075.22
208 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
61. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
Unit: RMB
Supplementary information 2021 2020
1. Reconciliation of net profit to cash flow from operating
activities:
Net profit 1,856,693,042.32 1,733,565,231.97
Add: Losses (gains) on impairment of assets 18,746,153.38 11,792,788.58
Gains on impairment of credit 1,706,888.48 (7,894,930.75)
Depreciation of fixed assets 743,998,618.03 461,584,134.19
Depreciation of right-of-use assets 126,034,558.52 94,604,372.28
Amortization of intangible assets 102,807,442.51 40,126,621.54
Amortization of long-term prepaid expenses 94,475,344.98 79,481,660.45
Amortization of deferred income (18,737,804.93) (20,865,298.64)
Gains on disposal of fixed assets, intangible assets and
(2,414,697.02) (1,796,090.81)
other long-term assets
Losses on retirement of fixed assets 11,530,686.66 623,754.22
Losses (gains) on changes in fair values (44,588,222.60) 6,272,200.14
Financial expenses (income) 263,986,673.05 35,304,650.47
Gains arising from investments (111,678,979.96) (83,440,494.33)
Share-based payments settled by equity 52,875,000.00 44,786,016.39
Decrease (increase) in deferred tax assets (18,286,336.11) 16,583,165.40
Increase in deferred tax liabilities (34,306,686.56) (23,882,205.70)
Decrease (increase) in inventories (2,203,751,438.05) (1,381,853,828.82)
Decrease (increase) in receivables from operating
(2,319,617,462.56) (2,611,537,261.99)
activities
Increase (decrease) in payables from operating activities 378,080,240.96 3,043,069,189.51
Net cash flow from operating activities (1,102,446,978.90) 1,436,523,674.10
2. Significant investing and financing activities that do not
involve cash receipts and payments:
Acquisition of long-term assets with debt 601,020,573.06 297,166,665.61
3. Net changes in cash and cash equivalents:
Closing balance of cash 6,018,193,116.59 6,303,224,304.50
Less: Opening balance of cash 6,303,224,304.50 6,082,639,950.14
Add: Closing balance of cash equivalents - -
Less: Opening balance of cash equivalents - -
Net increase (decrease) in cash and cash equivalents (285,031,187.91) 220,584,354.36
(2) Net cash payments to acquire subsidiaries for the year
Unit: RMB
Item Amount
Cash or cash equivalents paid in current year for business
49,613,369.15
combination incurred in current year
Less: Cash and cash equivalents held by subsidiaries at the date
4,291,567.33
of purchase
Net cash paid to acquire subsidiaries 45,321,801.82
209 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
61. Supplementary information to the cash flow statement - continued
(3) Composition of cash and cash equivalents
Unit: RMB
Item 31/12/2021 31/12/2020
I. Cash 6,018,193,116.59 6,303,224,304.50
Including: Cash on hand 126,530.08 191,907.34
Bank deposits that can be readily withdrawn on
6,018,066,586.51 6,303,032,397.16
demand
II. Cash equivalents - -
III. Closing balance of cash and cash equivalents 6,018,193,116.59 6,303,224,304.50
62. Assets with limited ownership or use right
Unit: RMB
Item Closing balance of Reasons for the restrictions
carrying amount
Other cash and bank
12,504,828.00 Customs deposit
balances
Other cash and bank
3,506,097.66 Deposit for interest on long-term loans
balances
Total 16,010,925.66
210 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
63. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
Closing balance of foreign
Item Exchange rate Closing RMB equivalent
currency
Cash and bank balances
Including: RMB 41,632,970.98 1.0000 41,632,970.98
USD 196,270,303.76 6.3757 1,251,360,575.68
EUR 1,101,362.38 7.2211 7,953,047.88
HKD 1,623,616.96 0.8176 1,327,469.23
JPY 36,727,091.00 0.0554 2,034,680.84
MXN 24,532,362.81 0.3097 7,597,672.76
SGD 10,662.56 4.7179 50,304.89
CZK 11,354.00 0.2905 3,298.34
TND 2,197,327.05 2.2027 4,840,052.28
VDN 138,699,105,966.00 0.0003 41,609,731.79
Accounts receivable
Including: USD 1,536,343,162.72 6.3757 9,795,263,102.55
EUR 2,279,934.40 7.2211 16,463,634.30
MXN 5,750,025.93 0.3097 1,780,783.03
Other receivables
Including: USD 2,116,392.86 6.3757 13,493,485.96
EUR 50,847.34 7.2211 367,173.73
MXN 19,982,224.39 0.3097 6,188,494.89
VDN 1,193,942,258.00 0.0003 358,182.68
Short-term borrowings
Including: USD 74,414,621.52 6.3757 474,445,302.43
EUR 173,000,000.00 7.2211 1,249,250,300.00
Accounts payable
Including: USD 1,380,870,716.48 6.3757 8,804,017,427.06
EUR 4,080,014.21 7.2211 29,462,190.61
HKD 2,415,775.14 0.8176 1,975,137.75
JPY 751,300,626.00 0.0554 41,622,054.68
MXN 122,504,778.30 0.3097 37,939,729.84
VDN 115,144,116,687.00 0.0003 34,543,235.01
Other payables
Including: USD 25,567,860.44 6.3757 163,013,007.81
EUR 5,100.00 7.2211 36,827.61
MXN 36,418,224.24 0.3097 11,278,724.05
VDN 3,655,122,490.00 0.0003 1,096,536.75
Long-term borrowings
Including: EUR 152,500,000.00 7.2211 1,101,220,467.55
211 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
63. Foreign currency monetary items - continued
(2) Description of overseas operating entities
38.
Major
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 Hong Kong Major currencies used in operating
USD
("UGI") activities
Universal Global Electronics Co., Limited Hong Kong Major currencies used in operating
USD
("UGE") activities
UGTW Taiwan TWD Currency in major economic environment
USITW 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
FINANCIRE AFG S.A.S. France EUR Currency in major economic environment
Universal Scientific Industrial Vietnam Major currencies used in operating
Vietnam USD
Company Limited activities
64. Hedge
Disclose by category the following information: hedge items, 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 and long-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 and long-term borrowings 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.
212 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
64. Hedge - continued
Hedging instrument
A summary of hedging instrument:
Unit: EUR
31/12/2021
Hedging instrument Within 6 months 6 to 12 months After 12 months
Hedges for net investment in foreign operations (Note (V). 22 and 30)
Foreign exchange risk -
Nominal
Short-term borrowings in 120,000,000.00 - -
amount
EUR
Foreign exchange risk -
Nominal
Long-term borrowings in - - 152,500,000.00
amount
EUR
Unit: RMB
31/12/2021 31/12/2021 Items presented 2021
Carrying amount of the hedging for assets and Changes in fair
Nominal amount of the instrument liabilities that value of the
hedging instrument include hedging invalid part of
Assets Liabilities instruments hedge
Hedges for net investment in foreign operations
Foreign exchange risk - 866,534,138.40 866,534,138.40
Short-term
Short-term borrowings in - -
borrowings
EUR
Foreign exchange risk - 1,101,220,467.55 1,101,220,467.55
Long-term
Long-term borrowings in - -
borrowings
EUR
Total 1,967,754,605.95 - 1,967,754,605.95 -
Details of hedged items:
Unit: RMB
Changes in
Hedge reserve
fair value
Items presented for for net
of the
Carrying amount of hedged items at assets and liabilities investment in
invalid part
31/12/2021 that include hedged foreign
of hedged
instruments operations at
items in
31/12/2021
2021
Assets Liabilities
Hedges for net investment in foreign operations
Foreign exchange The Group's net
risk investment in
1,967,754,605.95 - - 38,623,054.19
- Long-term FAFG's foreign
equity investment operations
213 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
64. Hedge - continued
Hedge effect
Unit: RMB
2021 2021 Amount
reclassified
Changes in hedge The invalid part from hedge Items listed in
reserves for net of hedge Items listed in the
reserves for the income
investment in included in income statement
net investment statement
Hedges for net investment foreign operations profit or loss for including invalid
in foreign including
in foreign operations of hedging the current part of hedge
operations to reclassification
instruments period recognized
profit or loss adjustment
included in other for the current
comprehensive period in 2021
income
Foreign exchange risk -
Short-term borrowings in 70,928,489.69 - N/A N/A N/A
EUR
Foreign exchange risk -
Long-term borrowings in 99,389,455.55 - N/A N/A N/A
EUR
Total 170,317,945.24 - N/A N/A N/A
(VI) CHANGES IN SCOPE OF CONSOLIDATION
1. Business combinations not involving enterprises under common control
(1) Business combinations not involving enterprises under common control incurred in the current year
Unit: RMB
Revenue of
Determinati Net loss of the
Timing of Proportion the acquiree
Name of Acquisition Acquisitio on basis of acquiree from the
equity Acquisition cost acquired from the date
acquiree approach n date acquisition date of purchase
acquisition (%) of purchase to
date to the year-end
the year-end
SER S.A.S 2 November 2 November Acquisition
49,613,369.15 100% Cash 51,748,866.10 (116,814.90)
(“SER”) 2021 2021 of control
Note: The Company entered into the Share Purchase Agreement with Idemia Identity & Security France (the
former shareholder of SER) through Asteelflash France (the subsidiary of the Company's wholly-owned
subsidiary FAFG) to acquire the 100% equity interest of SER. At 2 November 2021, Asteelflash France
completed the delivery of the 100% equity interest of SER to acquire the control over SER and thus included
SER in the scope of consolidation.
(2) Combination cost and goodwill
Unit: RMB
Combination cost SER
Cash 49,613,369.15
Less: Share of fair value of identifiable net asset acquired 49,613,369.15
Goodwill -
214 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(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 at the date of acquisition
Unit: RMB
Item SER
Fair value at acquisition date Carry amount at acquisition date
Assets:
Cash and bank balances 4,291,567.33 4,291,567.33
Accounts receivable 8,146,821.67 8,146,821.67
Inventories 85,583,311.83 85,583,311.83
Other current assets 1,095,235.04 1,095,235.04
Fixed assets 7,472,068.22 7,472,068.22
Construction in progress 1,104,633.49 1,104,633.49
Right-of-use assets 41,087,402.27 41,087,402.27
Intangible assets 83,754.92 83,754.92
Other non-current assets 1,362,253.79 1,362,253.79
Liabilities:
Accounts payable 18,893,268.66 18,893,268.66
Taxes payable 5,935,563.37 5,935,563.37
Employee benefits payable 24,093,177.03 24,093,177.03
Other payables 10,541,727.40 10,541,727.40
Non-current liabilities due within 3,939,488.59 3,939,488.59
one year
Lease liabilities 37,210,454.36 37,210,454.36
Net assets 49,613,369.15 49,613,369.15
Determination of fair value of intangible assets and liabilities:
The management of the Group believes that there is no significant difference between the fair value and
carrying amount of SER's identifiable assets and liabilities on the acquisition date.
215 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(VII) EQUITY IN OTHER ENTITIES
1. Equity in major subsidiaries
(1) Composition of enterprise group
Name of subsidiary Principal Registered place Business nature Proportion of Acquisition
operation shareholding (%) method
place
Direct Indirect
Universal Global Room 229, 2nd Floor, No.8 Jia Acquisition
Trade and
Electronics (Shanghai) Shanghai Feng Road, China (Shanghai) Pilot 100 - through
investment
Co., Ltd. Free Trade Zone establishment
Production and Acquisition
Universal Global No.501 Longgui Road, Jinqiao sales, product through
Technology (Shanghai) Shanghai Export Processing Zone, Pudong design and 100 - establishment
Co., Ltd. New Area, Shanghai research
development
Universal Global No.397 Huangpu Road, Qiandeng Acquisition
Production and
Technology (Kunshan) Kunshan Town, Kunshan City, Jiangsu 100 - through
sales
Co., Ltd. Province establishment
Production and Acquisition
No. 141, Lane 351, Sec. 1, Taiping sales, product through
UGTW Taiwan Road, Caotun Town, Nantou design and - 100 establishment
County, Taiwan research
development
Acquisition
through business
No. 141, Lane 351, Sec. 1, Taiping Production and
combinations
USITW Taiwan Road, Caotun Town, Nantou sales, product - 100
involving
County, Taiwan maintenance
enterprises under
common control
Room 2702-3, 27th Floor, Bank of Acquisition
Universal Global
Hong East Asia Harbour Centre, No. 56 Trade and through
Technology Co., 100 -
Kong Gloucester Road, Wanchai, Hong investment establishment
Limited
Kong
Hong Room 2702-3, 27th Floor, Bank of Acquisition
Universal Global Kong East Asia Harbour Centre, No. 56 Trade and through
- 100
Industrial Co., Ltd. Gloucester Road, Wanchai, Hong investment establishment
Kong
Hong Room 2702-3, 27th Floor, Bank of Acquisition
Kong East Asia Harbour Centre, No. 56 Trade and through
UGE - 100
Gloucester Road, Wanchai, Hong investment establishment
Kong
Acquisition
Huanxu Electronics Park, North of through business
USI Electronics Hi-Tech Park , Nanshan District, Production and combinations
Shenzhen 50 50
(Shenzhen) Co., Ltd. Shenzhen City, Guangdong sales involving
Province enterprises under
common control
Acquisition
Contractual
through business
manufacturing,
1255 East Arques Avenue combinations
USI America Inc. America product - 100
Sunnyvale, CA 94085 involving
maintenance and
enterprises under
related services
common control
Acquisition
through business
Sumitomo Fudosan Shin-yokohama Product
combinations
USI Japan Co., Ltd. Japan Bldg. 10F 2-5-5. Shin-yokohama, maintenance and - 100
involving
Kouhoku-ku, Yokohama, Japan related services
enterprises under
common control
Acquisition
Contractual
Anillo Periferico Manuel Gomez through business
Universal Scientific manufacturing,
Morin 656 Residental Santa Isabel combinations
Industrial De Mexico product - 100
CP44290, Guadalajara, Jalisco, involving
México S.A. De C.V. maintenance and
México enterprises under
related services
common control
216 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(VII) EQUITY IN OTHER ENTITIES - continued
1. Equity in major subsidiaries - continued
(1) Composition of enterprise group - continued
Name of subsidiary Principal Registered place Business nature Proportion of Acquisition
operation shareholding (%) method
place
Direct Indirect
8th Floor, Innovation Building, Production and Acquisition
Universal Global
No.1 Science and Technology sales through
Technology (Huizhou) Huizhou 100 -
Road, Middle Shihua Avenue, establishment
Co., Ltd.
Daya Wan, Huizhou
Investment Acquisition
Universal Scientific 95 rue La Boetie 75008 Paris,
France - 100 through
Industrial (France) France
establishment
Production and Acquisition
sales through business
Universal Scientific Biskupice Podgórne ul.
combinations not
Industrial Poland Sp. z Poland Innowacyjna 4, 55-040, Wrocaw, - 100
involving
o.o. Polska
enterprises under
common control
Land Plot CN4.1H, Dinh Vu Production and Acquisition
Universal Scientific Industrial Zone, Dinh Vu – Cat Hai sales, product through
Industrial Vietnam Vietnam Economic Zone, Dong Hai 2 Ward, design and - 100 establishment
Company Limited Hai An District, Hai Phong City, research &
Vietnam development
Product design Acquisition
101 Huanxu Electronics Factory,
and research & through
USI (Shenzhen) Gaoxin North District,
development, establishment
Electronic Technology Shenzhen Songpingshan North Ring Road, - 100
real estate
Innovation Co., Ltd. Songpingshan Community, Xili
development and
Street, Nanshan District, Shenzhen
operation
Acquisition
through business
FINANCIRE AFG 6 Rue Vincent Van Gogh 93360 Production and combinations not
France 10.42 89.58
S.A.S. Neuilly-Plaisance sales involving
enterprises under
common control
(2) The Group has no significant non-wholly subsidiaries.
2. Equity in joint ventures or associates
(1) Significant associates or joint ventures
Princi Shareholding proportion (%)
Accounting
pal
Name of associate or treatments for
operat Registered place Business nature
joint venture Direct Indirect investments in joint
ing
ventures or associates
place
I. Joint venture
Production and
Room 8, No. 232,
sales, product
Kunsh Yuanfeng Road,
SUMA-USI design and - 49.00 Equity method
an Yushan Town,
research
Kunshan City
development
II. Associate
Singa 1 Marina Boulevard Production and
M-Universe - 42.23 Equity method
pore #28-00, Singapore sales
217 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(VII) EQUITY IN OTHER ENTITIES - continued
2. Equity in joint ventures or associates - continued
(2) Major financial information of significant joint ventures
Unit: RMB
SUMA-USI
31/12/2021/Amount incurred in the current
31/12/2020/Amount incurred in the prior period
period
Current assets 639,944,748.59 314,624,525.13
Including: Cash and cash 96,396,102.06
equivalent
171,416,102.88
Non-current assets 14,238,749.45 14,056,139.00
Total assets 654,183,498.04 328,680,664.13
Current liabilities 421,010,161.96 108,206,914.14
Non-current liabilities 50,000.00 50,000.00
Total liabilities 421,060,161.96 108,256,914.14
Total shareholders' equity 233,123,336.08 220,423,749.99
Share of net assets
calculated based on 114,230,434.68 108,007,637.50
shareholding proportion
Carrying amount of equity
investments in joint 114,230,434.68 108,007,637.50
ventures
Fair value of equity
investments in joint
ventures where there is
N/A N/A
quoted price
Revenue 424,530,768.25 109,828,047.02
Income tax expenses 3,758,368.69 3,909.15
Net profit 12,699,586.09 596,512.39
Total comprehensive 12,699,586.09
income
596,512.39
39.
218 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(VII) EQUITY IN OTHER ENTITIES - continued
2. Equity in joint ventures or associates - continued
(3) Major financial information of significant associates
Unit: RMB
M-Universe
31/12/2021/Amount incurred in the current 31/12/2020/Amount incurred in the prior
period period
Current assets 986,288,911.50 969,698,013.50
Including: Cash and cash equivalent 148,547,434.30 171,996,364.00
Non-current assets 484,452,265.86 442,341,620.01
Total assets 1,470,741,177.36 1,412,039,633.51
Current liabilities 401,547,961.70 363,547,853.30
Non-current liabilities 52,746,166.10 44,010,450.50
Total liabilities 454,294,127.80 407,558,303.80
Minority interests 2,193,240.80 1,592,075.60
Equity attributable to shareholders of 1,014,253,808.76
the Company
1,002,889,254.11
Share of net assets calculated based on 428,319,383.95
shareholding proportion
423,520,132.02
Carrying amount of equity investments 428,319,383.95
in joint ventures
423,520,132.02
Fair value of equity investments in joint N/A
ventures where there is quoted price
N/A
Revenue 1,341,385,113.60 1,153,224,305.60
Net profit attributable to owners of the 37,636,042.32
Company
46,081,934.83
Other comprehensive income 17,120,834.81
attributable to owners of the Company, 42,837,502.20
net of tax
Total comprehensive income 54,756,877.13
attributable to owners of the Company
88,919,437.03
Dividends received from joint ventures 8,521,365.60
in the current period
8,879,460.13
(4) There is no significant limitations over the ability of joint ventures or associates to transfer funds to the
Group.
(5) The Group has no unrecognized commitment relating to investments in joint ventures.
(6) The Group has no contingent liabilities relating to investments in joint ventures and associates.
(VIII) 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, non-current assets due within one year, other current assets,
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, bonds payable, lease liabilities, 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.
219 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
Unit: RMB
31/12/2021 31/12/2021 (Restated)
Financial assets
At FVTPL
Held-for-trading financial assets 96,480,087.56 182,315,272.70
Other non-current financial assets 236,978,820.68 152,935,434.70
Subtotal 333,458,908.24 335,250,707.40
At FVTOCI
Other equity instrument investment 75,957,194.28 41,351,831.65
Subtotal 75,957,194.28 41,351,831.65
Measured at amortized cost
Cash and bank balances 6,034,204,042.25 6,332,982,117.63
Notes receivable 78,960,907.84 70,395,770.23
Accounts receivable 12,459,388,852.15 10,468,619,520.16
Other receivables 124,093,293.85 121,079,752.84
Other current assets 153,785,608.36 129,990,309.17
Non-current assets due within one year 991,195.08 813,785.46
Long-term receivables 11,164,116.06 10,380,472.81
Other non-current assets 11,240,266.61 7,470,169.68
Subtotal 18,873,828,282.20 17,141,731,897.98
Total financial assets 19,283,244,384.72 17,518,334,437.03
Financial liabilities
At FVTPL
Derivative financial liabilities 976,413.16 18,402,480.68
Measured at amortized cost
Short-term borrowings 2,480,500,031.68 375,341,430.81
Accounts payable 12,558,598,243.17 11,835,239,734.29
Other payables 397,047,553.23 382,052,467.52
Non-current liabilities due within one year 720,507,781.49 934,981,355.04
Long-term borrowings 1,101,220,467.55 3,011,668,944.64
Bonds payable 3,115,505,143.28 -
Lease liabilities 475,125,597.24 534,968,764.47
Long-term payables 45,581,055.62 43,287,736.00
Other non-current liabilities 5,642,575.13 4,960,300.38
Subtotal 20,899,728,448.39 17,122,500,733.15
Total financial liabilities 20,900,704,861.55 17,140,903,213.83
The Group adopts sensitivity analysis technique to analyze how the profit and loss for the period or
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.
220 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
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 2021 and 31 December 2020, 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 31/12/2021 31/12/2020
USD
Cash and bank balances 1,251,361 2,559,972
Accounts receivable 9,795,263 8,635,997
Other receivables 13,493 26,823
Short-term borrowings (474,445) (15,396)
Accounts payable (8,804,017) (8,552,722)
Other payables (163,013) (123,925)
Subtotal 1,618,642 2,530,749
221 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(VIII) 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 31/12/2021 31/12/2020
EUR
Cash and bank balances 7,953 8,481
Accounts receivable 16,464 21,040
Other receivables 367 230
Short-term borrowings (1,249,250) -
Accounts payable (29,462) (22,747)
Other payables (37) (14)
Non-current liabilities due within one year - (450,743)
Long-term borrowings (1,101,220) (1,352,228)
Subtotal (2,355,185) (1,795,981)
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
2021 2020
Effect on Effect on
Item Change in exchange rate
Effect on profit shareholders' Effect on profit shareholders'
equity equity
USD 5% appreciation against RMB (13,736) (13,736) 27,023 27,023
USD 5% depreciation against RMB 13,736 13,736 (27,023) (27,023)
USD 5% appreciation against TWD 122,196 122,196 81,662 81,662
USD 5% depreciation against TWD (122,196) (122,196) (81,662) (81,662)
USD 5% appreciation against EUR (21,539) (21,539) 17,642 17,642
USD 5% depreciation against EUR 21,539 21,539 (17,642) (17,642)
USD 5% appreciation against PLN 1,972 1,972 210 210
USD 5% depreciation against PLN (1,972) (1,972) (210) (210)
EUR 5% appreciation against RMB (380) (380) 149 149
EUR 5% depreciation against RMB 380 380 (149) (149)
EUR 5% appreciation against TWD (23) (23) (13) (13)
EUR 5% depreciation against TWD 23 23 13 13
EUR 5% appreciation against USD (117,802) (117,802) (90,295) (90,295)
EUR 5% depreciation against USD 117,802 117,802 90,295 90,295
EUR 5% appreciation against PLN 284 284 360 360
EUR 5% depreciation against PLN (284) (284) (360) (360)
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). 22 & 30 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.
222 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
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
2021 2020
Change in interest Effect on Effect on
Item
rate Effect on profit shareholders' Effect on profit shareholders'
equity equity
Financial
instruments at +100 basis points (13,465) (13,465) (22,024) (22,024)
floating interest rate
Financial
instruments at -100 basis points 13,465 13,465 22,024 22,024
floating interest rate
1.1.3. Other price risk
The price risk of the Group mainly arises from held-for-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
40.
As at 31 December 2021, 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), portion of other receivables (Note (V). 6), non-current assets due within one year (Note (V). 8),
portion of other current assets (Note (V). 9), long-term receivables (Note (V). 10), portion of other non-current
assets (Note (V). 21) 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 2021, the balance of bank acceptance bills held by the Group was RMB 78,960,907.84, 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.
As at 31 December 2021, the balance of accounts receivable of the Group's top 5 customers was
RMB 7,045,433,457.45 (31 December 2020: RMB 6,418,226,754.66), accounting for 56.50% (31 December
2020: 61.28%) 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.
223 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
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. As at 31 December 2021, the Group has available unutilized bank loan facilities of approximately
RMB 17.539 billion.
The following is the maturity analysis for liabilities held by the Group which is based on undiscounted
remaining contractual obligations:
Unit: RMB
Less than 1 year 1 to 5 years Over 5 years Total
Short-term borrowings 2,484,292,320.15 - - 2,484,292,320.15
Accounts payable 12,558,598,243.17 - - 12,558,598,243.17
Other payables 423,509,465.51 - - 423,509,465.51
Long-term borrowings 599,204,325.22 1,103,789,981.98 - 1,702,994,307.20
Long-term payables 14,603,600.51 34,229,123.85 13,083,682.23 61,916,406.59
Bonds payable 3,449,974.00 134,548,986.00 3,656,972,440.00 3,794,971,400.00
Lease liabilities 141,162,788.40 404,952,136.09 109,594,213.94 655,709,138.43
Other non-current liabilities - 5,642,575.13 - 5,642,575.13
Derivative financial
976,413.16 - - 976,413.16
liabilities
(IX) DISCLOSURE OF FAIR VALUE
1. Closing fair value of assets and liabilities measured at fair value
Unit: RMB
Closing balance
Item
Level 1 Level 2 Level 3 Total
I. Continuous fair value measurement
(I) Financial assets at FVTPL
1. Derivative financial assets - 616,169.38 8,624,935.00 9,241,104.38
2. Fund investment - - 94,130,696.47 94,130,696.47
3. Accounts receivable factoring - - 87,238,983.18 87,238,983.18
4. Equity instrument investment - - 51,878,465.32 51,878,465.32
5. Contingent consideration - - 90,969,658.89 90,969,658.89
(II) Financial assets at FVTOCI
1. Equity instrument investments - - 75,957,194.28 75,957,194.28
Total assets continuously measured at fair value - 616,169.38 408,799,933.14 409,416,102.52
(III) Derivative financial liabilities
1. Financial liabilities at FVTPL - 976,413.16 - 976,413.16
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.
224 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(IX) DISCLOSURE OF FAIR VALUE - continued
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 December
Valuation technique Inputs
2021
Derivative financial Forward exchange rate
Method of discounted cash
assets 616,169.38 Discount rate reflecting credit risk of
flow analysis
(Note (V). 2) counterparties
Derivative financial Forward exchange rate
Method of discounted cash
liabilities 976,413.16 Discount rate reflecting credit risk of
flow analysis
(Note (V). 23) counterparties
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 December
Valuation technique Significant unobservable inputs
2021
Accounts receivable
Method of discounted Discount rate reflecting credit risk of
factoring 87,238,983.18 cash flow analysis counterparties
(Note (V). 2)
Convertible bond
Binomial tree evaluation Risk free interest rate, discount rate and
option 8,624,935.00 model Volatility
(Note V, 2)
Contingent
Monte-Carlo analogy
consideration 90,969,658.89 method
Net interest rate
(Note (V). 13)
Fund investment
(Note (V). 13)
94,130,696.47 Market approach Liquidity discount
Equity instrument
investments 127,835,659.60 Market approach Liquidity discount
(Note (V). 12 & 13)
5. Reconciliation between opening and closing carrying amounts for continuous level 3 fair value
measurement items
Unit: RMB
Changes in
Translation of unrealized
Recognized in financial gains or
1 January 2021 Recognized in other statements Purchase 31 December losses for
Item Settlement
(Restated) profit or loss comprehensive denominated in /Increase 2021 assets held at
income foreign the end of the
currencies reporting
period
(I) Financial assets at
FVTPL
1. Financial products - 6,643,000,000.
5,274,102.94 73,489,834.38 - 6,721,763,937.32 - -
00
2. Accounts -
receivable factoring 174,458,243.25 - (13,234,738.22) 715,060,459.12 789,044,980.97 87,238,983.18 -
3. Fund investment -
64,091,002.18 4,990,173.85 (1,934,797.96) 28,192,337.89 1,208,019.49 94,130,696.47 3,782,154.36
4. Equity instrument -
investment - - - 51,878,465.32 - 51,878,465.32 -
5. Contingent - 11,250,015.5
consideration 88,844,432.52 11,250,015.56 (9,124,789.19) - - 90,969,658.89
6
6. Convertible bond -
option - 15,525,000.00 - (6,900,000.00) 65.00 8,624,935.00 8,624,935.00
(II) Financial assets
at FVTOCI
Other equity
instrument 41,351,831.65 14,910,026.14 34,435,658.76 169,703.87 - 14,910,026.14 75,957,194.28 -
6. There are no changes in valuation techniques in the year.
225 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(IX) DISCLOSURE OF FAIR VALUE - continued
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.
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS
1. Parent of the Company
Proportion of the
Proportion of the
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 76.18 77.06
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.
226 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
4. Other related parties of the Company
Name of other related party Relationship between other related parties and the
Company
USI Inc. Indirect holding company
ASE (Shanghai) Inc. The same ultimate holding company
ASE (KunShan) Inc. (Note) The same ultimate holding company
ASE Inc. The same ultimate holding company
ASE Assembly & Test (Shanghai) Limited The same ultimate holding company
Suzhou ASEN Semiconductors Co., Ltd. (Note) The same ultimate holding company
ASE(US)Inc. The same ultimate holding company
ASE KOREA, 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 Test Inc. The same ultimate holding company
ASE Marketing & Service Japan Co., Ltd. The same ultimate holding company
Shanghai Ding Hui Real Estate Development 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
Shanghai Youhong Electronic Engineering Technology Consulting
The same ultimate holding company
Co., Ltd.
Rirong Semiconductor (Shanghai) Co., Ltd. (Note) The same ultimate holding company
Shanghai Ding Gu Estate Management Co., Ltd. The same ultimate holding company
Siliconware Precision Industries Co., Ltd The same ultimate holding company
DECELECT SOISSONS Company controlled by key management
DECELECT SAINT VIT Company controlled by key management
ASDI Assistance Direction Company controlled by key management
SHANGHAI HONGRONG PROPERTY MANAGEMENT CO.,
Associate of the ultimate holding company
LTD.
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
Note: In 2021, the Company's ultimate controlling company ASE Investment Holding Limited sold all of its
equity interests of Rirong Semiconductor (Shanghai) Co., Ltd., Suzhou ASEN Semiconductors Co., Ltd. and
ASE (KunShan) Inc. to independent third parties.
227 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(X) 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 party Amount incurred in Amount incurred in the
Related party
transaction the current year prior year
Taitech Precision Electronic (Kunshan) Co., Purchase of materials
44,964,569.02 37,669,511.29
Ltd.
ASE Electronics Inc. Purchase of materials 35,395,020.12 36,974,401.57
Memtech Development (H.K.) Co., Limited Purchase of materials 33,805,960.04 29,025,496.83
Dongguan Memtech Electronics Co., Ltd. Purchase of materials 21,142,669.59 13,751,524.45
Siliconware Precision Industries Co., Ltd Purchase of materials 2,396,432.75 -
DECELECT SAINT VIT Purchase of materials 1,419,113.28 -
Nantong Memtech Technologies Co., Ltd. Purchase of materials 1,244,612.87 998,543.35
ASE Inc. Purchase of materials 887,380.86 2,036,861.76
Rirong Semiconductor (Shanghai) Co., Ltd. Purchase of materials 567,548.09 -
SUMA-USI Purchase of materials 329,035.08 17,200.09
ASE KOREA, Inc. Purchase of materials 185,560.55 27,356.06
DECELECT SOISSONS Purchase of materials 162,939.14 -
Wuxi Tongzhi Microelectronics Co., Ltd. Purchase of materials - 30,450.93
Total 142,500,841.39 120,531,346.33
ASE Inc. Receipt of services 1,485,559,571.92 2,205,671,003.49
ASE (Shanghai) Inc. Receipt of services 38,163,009.12 40,295,014.64
ASE (KunShan) Inc. Receipt of services 36,299,124.27 33,258,241.10
USI Inc. Receipt of services 15,146,692.07 14,081,791.53
USI Enterprise Limited Receipt of services 3,450,020.58 3,044,204.41
ASDI Assistance Direction Receipt of services 1,976,673.00 -
SHANGHAI DINGXU PROPERTY
Receipt of services 1,953,179.19 2,364,304.11
MANAGEMENT CO., LTD
ASE KOREA, Inc. Receipt of services 1,133,819.86 10,409,020.39
ASE Marketing & Service Japan Co., Ltd. Receipt of services 846,602.40 930,315.60
ASE (US) Inc. Receipt of services 106,965.60 35,969.09
SUMA-USI Receipt of services 61,627.40 106,790.49
Memtech Development (H.K.) Co., Limited Receipt of services 23,377.92 -
Taitech Precision Electronic (Kunshan) Co.,
Receipt of services 17,500.00 23,270.00
Ltd.
Dongguan Memtech Electronics Co., Ltd. Receipt of services 13,613.15 -
SHANGHAI HONGRONG PROPERTY
Receipt of services - 364,492.80
MANAGEMENT CO., LTD.
ASE Assembly & Test (Shanghai) Limited Receipt of services - 56,463.78
Rirong Semiconductor (Shanghai) Co., Ltd. Receipt of services - 14,238.32
Total 1,584,751,776.48 2,310,655,119.75
The above transactions are executed at the prices agreed on by both parties.
228 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(X) 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 Amount incurred in the Amount incurred in the
Related party party transaction current year prior year
ASE Inc. Sales of goods 6,524,003.25 3,619,961.48
SUMA-USI Sales of goods 107,841.18 8,340,234.29
DECELECT SOISSONS Sales of goods 25,590.38 -
ASE Test Inc. Sales of goods - 2,537,953.91
Suzhou ASEN Semiconductors Co., Ltd. Sales of goods - 41,004.00
Total 6,657,434.81 14,539,153.68
ASE Inc. Provision of services 4,186,289.70 2,053,269.85
ISE labs, China. Ltd. Provision of services 611,327.88 757,657.98
SUMA-USI Provision of services 603,545.70 1,286,929.02
Taitech Precision Electronic (Kunshan) Co., 276,588.89 48,042.45
Provision of services
Ltd.
Rirong Semiconductor (Shanghai) Co., Ltd. Provision of services 4,500.00 -
ASE Assembly & Test (Shanghai) Limited Provision of services - 1,957,515.58
Advanced Semiconductor Engineering (China) - 377,182.30
Provision of services
Ltd.
Suzhou ASEN Semiconductors Co., Ltd. Provision of services - 109,150.94
Shanghai Ding Gu Estate Management Co., Provision of services - 17,711.25
Ltd.
Shanghai Ding Hui Real Estate Development Provision of services - 3,542.18
Co., Ltd.
Total 5,682,252.17 6,611,001.55
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
recognized in the recognized in the prior
Name of lessee Type of leased assets current year year
ASE Inc. Plant 3,597,504.88 3,642,717.71
ISE labs, China. Ltd. Machinery and equipment 200,510.00 462,889.00
Rirong Semiconductor (Shanghai) Co., Ltd. Machinery and equipment 105,000.00 -
Suzhou ASEN Semiconductors Co., Ltd. Machinery and equipment - 1,322,782.94
Total 3,903,014.88 5,428,389.65
The above transactions are executed at the prices agreed on by both parties.
229 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - CONTINUED
5. Related party transactions - continued
(2) Leases with related parties - continued
Leases where the Group is the lessee
Unit: RMB
Right-of-use
Type of leased Lease interest for Deposit interest
Name of lessor assets leased in
assets the yearincome
this year
ASE Assembly & Test (Shanghai) Leasing of
Limited business premises
- 3,668,609.46 -
Leasing of
ASE (KunShan) Inc.
business premises
- 4,517,463.39 29,894.40
Advanced Semiconductor Engineering Leasing of
(China) Ltd. business premises
- 1,908,208.31 36,050.71
Leasing of
USI Inc.
business premises
- 3,127,879.21 -
ISE Labs, Inc. Leasing of
business premises
- 20,231.02 14.84
Total 13,242,391.39 65,959.95
Unit: RMB
Right-of-use
Type of leased Lease interest for Deposit interest
Name of lessor assets leased in
assets prior year income
prior year
ASE Assembly & Test (Shanghai) Leasing of
Limited business premises
- 3,837,597.08 -
Leasing of
ASE (KunShan) Inc.
business premises
47,559.64 4,521,389.29 23,001.49
Advanced Semiconductor Engineering Leasing of
(China) Ltd. business premises
- 2,566,545.47 35,255.51
Leasing of
USI Inc.
business premises
- 3,759,869.12 -
ASE (US) Inc. Leasing of
business premises
- 8,500.76 220.06
ISE Labs, Inc. Leasing of
business premises
- 35,258.99 16.56
Total 47,559.64 14,729,160.71 58,493.62
Unit: RMB
Lease income Lease income
Name of lessor Type of leased assets recognized in the recognized in the prior
current year year
ASE (US) Inc. Leasing of business
premises
458,432.15 -
SUMA-USI Machinery and equipment 32,312.09 -
ASE (KunShan) Inc. Machinery and equipment 24,162.60 -
ASE Assembly & Test (Shanghai) Leasing of business
Limited premises
- 39,691.43
ASE KOREA, Inc. Staff dormitory - 46,768.85
Total 514,906.84 86,460.28
The above transactions are executed at the prices agreed on by both parties.
230 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - CONTINUED
5. Related party transactions - continued
(3) Assets transfer/debt restructuring with related parties
Unit: RMB
Details of related party Amount incurred in Amount incurred in the
Related party
transaction the current year prior year
ASE Test Inc. Sales of fixed assets 12,545,380.16 -
ASE Test Inc. Purchase of fixed assets - 13,211,965.96
ISE labs, China. Ltd. Sales of fixed assets 10,071,875.88 -
ASE Inc. Sales of fixed assets 3,478,999.00 -
Shanghai Youhong Electronic Engineering
Technology Consulting Co., Ltd.
Purchase of fixed assets 505,387.14 1,883,582.14
Rirong Semiconductor (Shanghai) Co., Ltd. Sales of fixed assets 21,740.65 -
Total 26,623,382.83 15,095,548.10
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 80,914,020.40
USI Enterprise Limited -
convertible bonds
Interest expenses on 869,753.10
ASE (Shanghai) Inc. -
convertible bonds
Total 81,783,773.50 -
In 2021, the Group issued 34,500,000 convertible bonds with a face value of RMB 100. See Note (V), 31 for
details, of which 26,418,020 were subscribed by USI Enterprise Limited and 283,970 by ASE (Shanghai) Inc.
(5) Compensation for key management personnel
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Compensation for key management personnel 30,519,010.96 19,963,423.42
6. Amounts due from / to related parties
(1) Amounts due from related parties
Unit: RMB
31/12/2021 31/12/2020
Item Related party Bad debt Bad debt
Book value Book value
provision provision
Accounts receivable ASE Inc. 1,158,180.69 - 1,658,203.45 -
Accounts receivable SUMA-USI 160,167.11 - 382,002.29 -
Accounts receivable ASE Test Inc. - - 363,853.44 -
Total 1,318,347.80 - 2,404,059.18 -
231 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from / to related parties - continued
(1) Amounts due from related parties - continued
Unit: RMB
31/12/2021 31/12/2020
Item Related party Bad debt Bad debt
Book value Book value
provision provision
Other receivables ASE Inc. 1,144,700.73 - 3,232,749.33 -
Other receivables ISE labs, China. Ltd. 192,606.48 - 339,909.17 -
Other receivables USI Inc. 55,570.86 - 64,882.44 -
Other receivables ASE Assembly & Test - -
- 407,122.42
(Shanghai) Limited
Total 1,392,878.07 - 4,044,663.36 -
Unit: RMB
31/12/2021 31/12/2020
Item Related party Bad debt Bad debt
Book value Book value
provision provision
Other non-current assets Advanced Semiconductor
1,412,962.98 1,412,962.98 -
Engineering (China) Ltd.
Other non-current assets ISE Labs, Inc. 21,644.74 22,151.25 -
Other non-current assets ASE (KunShan) Inc. - 1,366,613.20 -
Other non-current assets ASE (US) Inc. - 391,494.00 -
Total 1,434,607.72 3,193,221.43 -
(2) Amounts due to related parties
Unit: RMB
Item Related party 31/12/2021 31/12/2020
Accounts payable ASE Inc. 340,399,410.06 873,672,163.55
Accounts payable Taitech Precision Electronic (Kunshan) Co., Ltd. 27,560,169.90 21,613,585.65
Accounts payable Memtech Development (H.K.) Co., Limited 15,169,729.44 16,910,583.12
Accounts payable USI Inc. 11,616,822.99 11,457,428.86
Accounts payable ASE Electronics Inc. 10,591,402.08 4,647,678.81
Accounts payable Dongguan Memtech Electronics Co., Ltd. 9,476,508.78 8,811,288.04
Accounts payable SUMA-USI 320,185.81 139,767.99
Accounts payable USI Enterprise Limited 288,607.33 254,216.81
Accounts payable Nantong Memtech Technologies Co., Ltd. 164,619.78 496,816.60
Accounts payable ASDI Assistance Direction 86,739.49 -
Accounts payable DECELECT SAINT VIT 59,874.12 -
Accounts payable DECELECT SOISSONS 56,411.81 -
Accounts payable Siliconware Precision Industries Co., Ltd 6,694.49 -
Accounts payable ASE KOREA, Inc. - 1,671,206.97
Accounts payable ASE (KunShan) Inc. - 8,687.56
Total 415,797,176.08 939,683,423.96
232 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(X) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from / to related parties - continued
(2) Amounts due to related parties - continued
Unit: RMB
Item Related party 31/12/2021 31/12/2020
Other payables ASE (Shanghai) Inc. 3,898,185.67 4,485,287.19
Other payables ASE Inc. 2,682,192.50 4,766,284.80
Other payables USI Enterprise Limited 2,193,057.52 -
Other payables Memtech Development (H.K.) Co., Limited 667,119.11 39,998.69
SHANGHAI DINGXU PROPERTY
Other payables 240,956.60 167,348.25
MANAGEMENT CO., LTD
Other payables Siliconware Precision Industries Co., Ltd 234,039.09 -
Other payables USI Inc. 7,370.75 7,331.35
Other payables ASE (KunShan) Inc. - 5,023,662.49
Other payables Dongguan Memtech Electronics Co., Ltd. - 873,921.64
Other payables ASE Assembly & Test (Shanghai) Limited - 24,275.32
Other payables Rirong Semiconductor (Shanghai) Co., Ltd. - 16,089.31
Total 9,922,921.24 15,404,199.04
Unit: RMB
Item Related party 31/12/2021 31/12/2020
Long-term
USI Inc. 37,610,084.54 43,287,736.00
payables
Unit: RMB
Item Related party 31/12/2021 31/12/2020
Bonds payable USI Enterprise Limited 2,399,279,839.68 -
Bonds payable ASE (Shanghai) Inc. 25,790,104.50 -
Total 2,425,069,944.18 -
Unit: RMB
Item Related party 31/12/2021 31/12/2020
Lease liabilities USI Inc. 145,924,337.73 174,470,551.10
Lease liabilities ASE Assembly & Test (Shanghai) Limited 70,337,306.54 82,153,151.12
Advanced Semiconductor Engineering (China)
Lease liabilities 46,106,208.08 46,379,823.96
Ltd.
Lease liabilities ASE (KunShan) Inc. - 99,034,866.63
Total 262,367,852.35 402,038,392.81
7. Related party commitments
As at 31 December 2021, there are no related party commitments.
233 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XI) SHARE-BASED PAYMENTS
1. Summary of share-based payments
Unit: share
Core Employee Core Employee
Stock Option Stock Option Stock Option
Share Share
Incentive Plan Incentive Plan Incentive Plan Core Employee
Ownership Plan Ownership Plan
of Universal of Universal of Universal Share Ownership
of Universal of Universal
Scientific Scientific Scientific Plan of Universal
2021 Scientific Scientific
Industrial Industrial Industrial Scientific Industrial
Industrial Industrial
(Shanghai) (Shanghai) Co., (Shanghai) Co., (Shanghai) Co., Ltd.
(Shanghai) Co., (Shanghai) Co.,
Co., Ltd. in Ltd. in 2019 Ltd. in 2020 in 2021 (Note 6)
Ltd. in 2019 Ltd. in 2020
2015 (Note 1) (Note 2) (Note 4)
(Note 3) (Note 5)
Total number of the Company's
equity instruments outstanding at
the beginning of the year 13,416,130 16,710,000 5,122,400 1,140,000 424,700 -
Total number of the Company's
equity instruments granted during - - - - - 281,200
the year
Total number of the Company's
equity instruments vested during
the period 318,800 509,300 1,780,050 - - -
Total number of the Company's
equity instruments lapsed during
the period 178,200 624,100 461,000 150,000 22,100 -
Total number of the Company's
equity instruments outstanding at
the end of the year 12,919,130 15,576,600 2,881,350 990,000 402,600 281,200
Total number of equity
instruments exercisable at the end
of the year 12,919,130 5,933,700 - 396,000 - -
Range of exercise Exercise prices
prices and remaining of stock RMB 15.54 RMB 12.67 RMB 12.67 RMB 21.25 RMB 0 RMB 0
contractual life of the options
Company's stock
options outstanding at Remaining About 4 years About 3 years About 2.5 years About 3 years About 1 years About 2 years
the end of the year contractual life
Range of exercise prices and
remaining contractual life of the
Company's other equity None None None None None None
instruments outstanding at the end
of the period
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
Stock Option
Incentive Plan
of Universal Universal Scientific
25 November 2015 to 25 November 2017 to
Scientific Industrial 25 November 2015
24 November 2020 24 November 2025
Industrial (Shanghai) Co., Ltd.
(Shanghai) Co.,
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 in the
company and individual level.
234 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XI) SHARE-BASED PAYMENTS - continued
1. Summary of share-based payments - continued
Note 1: - continued
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%
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.
The Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd in 2019 (Draft)
stipulates: "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 13th meeting of the 5th board of directors held on 26 October 2021
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 RMB13.34 to RMB 12.67
per share.
Plan No. Granted by Grant date Vesting period Exercise period
Stock Option
Incentive Plan of Universal
Universal Scientific
28 November 2019 to 28 November 2021 to
Scientific Industrial 28 November 2019
27 November 2023 27 November 2024
Industrial (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 two years and meeting the performance assessment in 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%
235 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XI) SHARE-BASED PAYMENTS - continued
1. Summary of share-based payments - continued
Note 2: - continued
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.
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. (Draft) (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". In 2021, the transfer price of the Company's core employee share
ownership plan was adjusted from RMB 13.17 per share to RMB 12.67 per share as a result of
distribution of profits in 2020.
Plan No. Granted by Grant date Vesting period Exercise period
Core Employee
Share Ownership Universal
Plan of Universal Scientific
18 November 2019 to 30 April 2020 to 30
Scientific Industrial 18 November 2019
17 November 2022 April 2024
Industrial (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 one year and meeting the performance assessment in the
company level.
Accumulated maximum
vested proportion
1 year after the grant date 20%
2 years after the grant date 55%
3 years after the grant date 100%
236 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XI) SHARE-BASED PAYMENTS - continued
1. Summary of share-based payments - continued
Note 3: - continued
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.
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.
The Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd in 2019 (Draft)
stipulates: "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 13th meeting of the 5th board of directors held on 26 October 2021
approved the proposal on adjusting and canceling some rights and interests related to the reserved grant
of stock option incentive plan in 2019, and the exercise price was adjusted from RMB 24.65 to RMB
21.15 per share.
Plan No. Granted by Grant date Vesting period Exercise period
Stock Option Incentive
Universal Scientific
Plan of Universal 9 September 2020 to 9 November 2021 to
Industrial 9 September 2020
Scientific Industrial 8 November 2023 8 November 2024
(Shanghai) Co., Ltd.
(Shanghai) Co., 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 in
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.
237 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XI) SHARE-BASED PAYMENTS - continued
1. Summary of share-based payments - continued
Note 5: In September 2020, 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 core talents with strategic value to the Company, including key
employees in key positions of the Company and holding subsidiaries that are important to the
implementation of the Company's development strategy and business objectives 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 Universal
Share Ownership Scientific
25 September 2020 to 24 25 January 2022 to 15
Plan of Universal Industrial 25 September 2020
January 2022 September 2022
Scientific Industrial (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 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 cancelled, 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 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 "Core 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.
238 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XI) SHARE-BASED PAYMENTS - continued
1. Summary of share-based payments - continued
Note 6: -continued
Plan No. Granted by Grant date Vesting period Exercise period
Core Employee Universal
Share Ownership Scientific
13 September 2021 to 12 13 January 2023 to 13
Plan of Universal Industrial 13 September 2021
January 2023 September 2023
Scientific Industrial (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 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 cancelled, 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.
239 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XI) SHARE-BASED PAYMENTS - continued
2. Equity-settled share-based payments
Unit: RMB
Stock Option
Incentive Plan of Stock Option Incentive Core Employee Share Stock Option Incentive Core Employee Share Core Employee Share
Universal Plan of Universal Ownership Plan of Plan of Universal Ownership Plan of Ownership Plan of
Scientific Scientific Industrial Universal Scientific Scientific Industrial Universal Scientific Universal Scientific
Industrial (Shanghai) Co., Ltd. in Industrial (Shanghai) (Shanghai) Co., Ltd. in Industrial (Shanghai) Industrial (Shanghai)
(Shanghai) Co., 2019 Co., Ltd. in 2019 2020 Co., Ltd. in 2020 Co., Ltd. in 2021
Ltd. in 2015
The method of
determining the
fair value of Black-Scholes
Binomial Tree Model Binomial Tree Model Binomial Tree Model Binomial Tree Model Binomial Tree Model
equity Model
instruments at
the grant date
When the optionee
reaches the
When the optionee When the optionee
exercise period in When the optionee When the optionee When the optionee
reaches the exercise reaches the exercise
the stock options reaches the exercise reaches the exercise reaches the exercise
period in the stock period in the stock
The basis of plan and meets the period in the stock period in the stock period in the stock
options plan and meets options plan and meets
determining the performance options plan and meets options plan and meets options plan and meets
the performance the performance
number of equity assessment in the the performance the performance the performance
assessment in the assessment in the
instruments company and assessment in the assessment in the assessment in the
company and individual company and individual
expected to be individual level, company level, and the individual level, and the individual level, and the
level, and the level, and the
vested and the corresponding equity corresponding equity corresponding equity
corresponding equity corresponding equity
corresponding instrument is that instrument is that instrument is that
instrument is that instrument is that
equity instrument expected to be vested expected to be vested expected to be vested
expected to be vested expected to be vested
is that expected to
be vested
Reasons for the
significant
difference
between the
None None None None None N/A
estimate in the
current year and
that in the prior
year
Amounts of
equity-settled
share-based
139,923,402.85 81,395,000.00 563,000.00 5,179,000.00 6,848,000.00 688,000.00
payments
accumulated in
capital reserve
Total expenses
recognized
arising from
- 42,747,000.00 238,000.00 3,859,000.00 5,343,000.00 688,000.00
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
Stock Option Core Employee Share Stock Option Core Employee Share Core Employee Share
Incentive Plan of
Incentive Plan of Ownership Plan of Incentive Plan of Ownership Plan of Ownership Plan of
Universal Scientific
Universal Scientific Universal Scientific Universal Scientific Universal Scientific Universal Scientific
Industrial
Industrial (Shanghai) Industrial (Shanghai) Industrial (Shanghai) Industrial (Shanghai) Industrial (Shanghai)
(Shanghai) Co., Ltd.
Co., Ltd. in 2019 Co., Ltd. In 2019 Co., Ltd. in 2020 Co., Ltd. in 2020 Co., Ltd. in 2021
in 2015
Weighted average
share price RMB 15.54 RMB 13.34 RMB 13.34 RMB 21.65 RMB 0 RMB 0
Weighted average
exercise price RMB 15.54 RMB 13.34 RMB 13.34 RMB 21.65 RMB 0 RMB 0
Expected volatility 40.33%~45.00% 45.07%~51.8% 47.77% 48.14%~53.57% 57.21% 47.15%
3 years ~ 5 years 1.5 years ~ 3.5 2.17 years ~4.17
Expected life 6 years ~ 7.5 years
years years 1.33 years 1.33 years
Risk-free interest rate 3.06%~3.13% 2.80%-2.97% 2.7% 2.80%-2.99% 2.63% 2.34%
Expected dividend 0.00% 0.00%
0.87%
yield 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.
41.
4. In this year, the Group has no modification to or termination of share-based payments.
240 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XII) COMMITMENTS AND CONTINGENCIES
1. Significant commitments
(1) Capital commitments
Unit: RMB’000
Closing balance Opening balance
Capital commitments that have been entered into but have not been recognized in the
financial statements:
- Commitment for acquisition and construction of long-term assets (Note 1) 224,350 769,169
- External investment commitment (Note 2) 92,757 92,816
Total 317,107 861,985
Note 1: As at 31 December 2021, the construction of long-term asset commitments mainly included equipment
purchased by the Company and its subsidiary Universal Global Technology (Kunshan) Co., Ltd. and FAFG,
equivalent to RMB 41,212,848.73, RMB 44,406,793.92 and RMB 31,566,331.66, respectively.
Note 2: For the commitment of foreign investment, according to the partnership agreement concluded between
UGE and the investee PHI FUND, L.P., UGE needs to pay a total subscription amount of USD 25,000,000.00,
in which the amount of USD 4,201,990.00, equivalent to RMB 27,192,337.89 has been paid this period. As at
31 December 2021, the Group has paid USD 15,000,000.00, equivalent to RMB 95,635,500.00 in total; but
remains a subscription amount of USD 10,000,000.00, equivalent to RMB 63,757,000.00 unpaid.
For the commitment of foreign investment, according to the partnership agreement concluded between the
Company and the investee Suzhou Yaotu Equity Investment Partnership, the Company needs to pay a total
subscription amount of RMB 30,000,000.00, in which the amount of RMB 1,000,000.00 has been paid this
period. As at 31 December 2021, the Group has paid RMB 1,000,000.00 in total; but remains a subscription
amount of RMB 29,000,000.00 unpaid.
2. Contingencies
The Group has no significant contingencies to be disclosed.
(XIII) EVENTS AFTER THE BALANCE SHEET DATE
1. Profit appropriation
42.
As proposed by the resolution of the Fifteenth Meeting of the Fifth Session of the Board of Directors of the
Company held on 25 March 2022, a cash dividend of RMB 2.60 (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.
241 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XIV) 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, Taiwan, China, Europe and other countries/regions. At the same time, the products are divided into
communication products, consumer electronics products, computer 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 acquisition of FAFG in 2020, the Group's internal
organizational structure changes, resulting in changes in the composition of reporting segments. The Group restates the previous data.
(2) Financial information of reporting segments
2021
Unit: RMB’000
Chinese mainland Taiwan, China Europe Other countries/regions Inter-segment offsetting Total
Segment sub- Segment sub- Segment sub- Segment Segment sub- Segment
Revenue Costs Revenue Costs Revenue Costs Revenue Costs Revenue Costs Revenue Costs
total total total sub-total total total
Communication products 12,743,061 11,600,159 1,142,902 8,230,235 8,017,048 213,187 373,154 369,499 3,655 621,725 622,895 (1,170) (756,807) (809,688) 52,881 21,211,368 19,799,913 1,411,455
Consumer electronics products 17,456,916 15,933,736 1,523,180 1,735,643 1,578,573 157,070 277,744 277,398 346 3,313,241 3,313,902 (661) (4,217,522) (4,217,112) (410) 18,566,022 16,886,497 1,679,525
Computer and storage products 3,393,072 2,827,357 565,715 2,522,317 2,345,820 176,497 84,748 84,212 536 1,572,519 1,590,865 (18,346) (2,779,603) (2,768,872) (10,731) 4,793,053 4,079,382 713,671
Industrial products 3,461,571 3,077,203 384,368 4,072,604 3,442,420 630,184 1,266,377 1,135,812 130,565 3,927,362 3,864,155 63,207 (5,451,778) (5,445,045) (6,733) 7,276,136 6,074,545 1,201,591
Automotive electronics products 980,758 852,615 128,143 123,458 109,548 13,910 370,951 275,905 95,046 1,285,923 1,331,823 (45,900) (156,001) (167,624) 11,623 2,605,089 2,402,267 202,822
Medical products 29,779 30,094 (315) - - - 249,760 233,171 16,589 1,140 1,020 120 - - - 280,679 264,285 16,394
Others 234,398 177,183 57,215 367,115 160,838 206,277 180,476 166,466 14,010 244,766 177,440 67,326 (505,500) (210,646) (294,854) 521,255 471,281 49,974
Revenue/cost from principle
38,299,555 34,498,347 3,801,208 17,051,372 15,654,247 1,397,125 2,803,210 2,542,463 260,747 10,966,676 10,902,100 64,576 (13,867,211) (13,618,987) (248,224) 55,253,602 49,978,170 5,275,432
operating activity of segment
Other operating income/cost of
24,042 330 23,712 6,390 3,239 3,151 94 - 94 22,701 12,888 9,813 (7,174) (13,147) 5,973 46,053 3,310 42,743
segment
Total operating revenue/cost of
38,323,597 34,498,677 3,824,920 17,057,762 15,657,486 1,400,276 2,803,304 2,542,463 260,841 10,989,377 10,914,988 74,389 (13,874,385) (13,632,134) (242,251) 55,299,655 49,981,480 5,318,175
segment
Less: Taxes and levies 42,271 1,261 6,088 198 - 49,818
Selling expenses 186,704 95,387 30,754 35,714 (37,078) 311,481
Administrative expenses 474,417 466,044 147,812 139,217 (58,317) 1,169,173
R&D expenses 1,226,244 500,895 1,305 15,514 (102,559) 1,641,399
Financial expenses 78,559 8,350 62,470 54,776 (758) 203,399
Including: Interest expenses 120,745 11,034 34,371 44,508 (9,330) 201,329
Interest income 77,163 759 2,407 6,581 (19,130) 67,780
Add: Other income 42,837 238 7,603 - - 50,678
Investment income 79,307 17,426 (2,297) 17,243 - 111,679
Including: Investment
income from associates 6,223 - - 15,894 - 22,117
and joint ventures
Gains (losses) from changes
13,686 (1,737) 28,845 3,793 - 44,588
in fair value
Gains (losses) from credit
4,098 842 (1,378) (5,269) - (1,707)
impairment
Gains (losses) from assets
5,473 (11,523) (830) (11,866) - (18,746)
impairment
Gains (losses) from disposal
764 93 (18) 1,576 - 2,415
of assets
242 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Operating income 1,962,890 333,678 44,337 (165,552) (43,541) 2,131,812
Net profit 1,777,455 281,203 38,666 (219,748) (20,883) 1,856,693
(XIV) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Financial information of reporting segments - continued
2020(Restated):
Unit: RMB’000
Chinese mainland Taiwan, China Europe Other countries/regions Inter-segment offsetting Total
Segment sub- Segment sub- Segment sub- Segment Segment sub- Segment
Revenue Costs Revenue Costs Revenue Costs Revenue Costs Revenue Costs Revenue Costs
total total total sub-total total total
Communication products 12,452,107 11,373,825 1,078,282 8,020,296 7,752,302 267,994 6,423 11,844 (5,421) 788,671 791,856 (3,185) (983,633) (1,108,572) 124,939 20,283,864 18,821,255 1,462,609
Consumer electronics products 16,951,794 15,394,748 1,557,046 1,431,129 1,305,608 125,521 9,007 9,419 (412) 2,146,849 2,140,871 5,978 (3,323,968) (3,326,448) 2,480 17,214,811 15,524,198 1,690,613
Computer and storage products 2,508,190 2,062,275 445,915 2,183,090 2,019,993 163,097 2,598 2,338 260 1,143,992 1,143,049 943 (2,012,014) (2,019,921) 7,907 3,825,856 3,207,734 618,122
Industrial products 2,333,854 2,018,558 315,296 3,279,129 2,767,949 511,180 179,185 163,355 15,830 2,989,180 2,938,045 51,135 (4,431,273) (4,437,480) 6,207 4,350,075 3,450,427 899,648
Automotive electronics products 696,893 592,979 103,914 129,685 127,284 2,401 135,942 99,555 36,387 877,386 889,085 (11,699) (148,887) (138,079) (10,808) 1,691,019 1,570,824 120,195
Medical products 33,697 28,562 5,135 - - - 38,300 36,634 1,666 - - - - (15) 15 71,997 65,181 6,816
Others 191,956 117,809 74,147 451,827 160,459 291,368 2,538 2,060 478 162,152 115,095 47,057 (573,993) (229,139) (344,854) 234,480 166,284 68,196
Revenue/cost from principle
35,168,491 31,588,756 3,579,735 15,495,156 14,133,595 1,361,561 373,993 325,205 48,788 8,108,230 8,018,001 90,229 (11,473,769) (11,259,654) (214,114) 47,672,102 42,805,903 4,866,199
operating activity of segment
Other operating income/cost of
19,747 2,306 17,441 6,070 3,307 2,763 1,537 - 1,537 144 - 144 (3,371) (1,965) (1,406) 24,127 3,648 20,479
segment
Total operating revenue/cost of
35,188,238 31,591,062 3,597,176 15,501,226 14,136,902 1,364,324 375,530 325,205 50,325 8,108,374 8,018,001 90,373 (11,477,140) (11,261,619) (215,520) 47,696,229 42,809,551 4,886,678
segment
Less: Taxes and levies 44,460 1,415 1,188 14,646 - 61,709
Selling expenses 154,326 85,875 5,833 20,926 (47,067) 219,893
Administrative expenses 447,484 586,716 16,926 118,508 (46,475) 1,123,159
R&D expenses 1,207,856 480,522 856 9,013 (121,884) 1,576,363
Financial expenses 13,544 11,066 15,593 55,705 (157) 95,751
Including: Interest expenses 36,426 11,921 5,170 56,164 (19,495) 90,186
Interest income 64,210 5,995 1,678 7,138 (18,575) 60,446
Add: Other income 72,195 735 3,850 - - 76,779
Investment income 60,024 1,204 2,223 19,989 - 83,440
Including: Investment
income from associates 292 - - 19,460 - 19,753
and joint ventures
Gains (losses) from changes
2,290 853 (5,827) (3,588) - (6,272)
in fair value
Gains (losses) from credit
3,830 (803) 654 4,214 - 7,895
impairment
Gains (losses) from assets
15,128 (18,483) 119 (8,557) - (11,792)
impairment
Gains (losses) from disposal
1,627 145 25 - - 1,798
of assets
Operating income 1,884,602 182,382 10,972 (116,366) 62 1,961,651
Net profit 1,682,647 173,942 8,271 (129,164) (2,131) 1,733,565
243 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XIV) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Financial information of reporting segments - continued
Closing balance
Unit: RMB’000
Other
Chinese Inter-segment
Taiwan, China Europe countries/region Total
mainland offsetting
s
Total assets of 5,770,75
20,740,377 7,945,438 7,931,818 (7,171,046) 35,217,338
segment 1
Total liabilities 2,309,20
13,528,439 5,672,142 7,991,935 (6,727,353) 22,774,368
of segment 5
Opening balance (Restated)
Unit: RMB’000
Other
Chinese Inter-segment
Taiwan, China Europe countries/region Total
mainland offsetting
s
Total assets of 4,167,03
20,297,817 8,083,869 3,466,360 (5,446,353) 30,568,725
segment 2
Total liabilities 2,858,42
10,253,273 6,126,772 5,320,432 (5,538,710) 19,020,196
of segment 9
External revenue by geographical area of source and non-current assets by geographical
location of assets
Unit: RMB
Item 2021 2020
External revenue from Chinese mainland 1,849,642,217.15 1,552,658,131.45
External revenue outside Chinese mainland 53,450,012,553.06 46,143,570,091.08
Total 55,299,654,770.21 47,696,228,222.53
Unit: RMB
Opening balance
Item (Note) Closing balance
(Restated)
Non-current assets located in Chinese mainland 3,670,766,522.73 3,187,435,517.86
Non-current assets located in France 861,843,609.68 1,046,354,493.35
Non-current assets located in Taiwan, China 716,969,088.71 782,649,415.64
Non-current assets located in Mexico 466,431,691.41 337,432,330.20
Non-current assets located in Hong Kong 428,342,492.16 423,590,922.10
Non-current assets located in Vietnam 367,247,653.39 55,988,428.34
Non-current assets located in Poland 134,049,045.77 149,103,465.85
Non-current assets located in the United States 76,599,618.10 1,686,773.50
Non-current assets located in Japan 385,937.29 218,191.85
Total 6,722,635,659.24 5,984,459,538.69
Note: The above non-current assets exclude long-term receivables, investments in other equity
instruments, other non-current financial assets and deferred tax assets.
Degree of reliance on major customers
Information of major customers whose revenue accounts for 10% or more of the total revenue
Unit: RMB
2021 2020
Customer name Proportion in total Proportion in total
Total revenue Total revenue
revenue (%) revenue (%)
Entity A 18,036,500,419.83 32.62 19,926,626,059.23 41.78
Entity B 8,388,844,842.56 15.17 7,691,845,393.04 16.13
Total 26,425,345,262.39 47.79 27,618,471,452.27 57.91
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.
244 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL
STATEMENTS
1. Notes receivable
(1) Categories of notes receivable
Unit: RMB
Category 31/12/2021 31/12/2020
Bank acceptances 66,256,985.55 58,278,567.16
(2) As of 31 December 2021, the Company had no notes receivable that have been pledged as
security.
(3) As of 31 December 2021, the Company had no notes receivable that have been endorsed or
discounted and were not yet matured at the balance sheet date.
(4) As of 31 December 2021, the Company had no notes that were converted to accounts
receivable due to the default of the issuer.
(5) As of 31 December 2021, 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.
(6) As of 31 December 2021, the Company had no notes receivable that have been actually
written off.
2. Accounts receivable
(1) Categories of accounts receivable
Unit: RMB
Category 31/12/2021 31/12/2020
Accounts receivable arising from contracts with customers 3,902,506,561.61 3,473,829,654.08
Less: Bad debt provision 66,007.59 215,211.33
Total 3,902,440,554.02 3,473,614,442.75
(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 2021, the credit risk and expected credit losses on accounts receivable were
as follows:
Unit: RMB
31/12/2021
Aging Expected average loss rate Book value Bad debt provision Carrying amount
(%)
Within the credit
term
- 3,842,770,679.08 - 3,842,770,679.08
1-30 days overdue 0.01 58,521,002.52 260.56 58,520,741.96
31-60 days overdue 5.18 1,203,660.94 62,381.31 1,141,279.63
61-90 days overdue 30.00 11,219.07 3,365.72 7,853.35
Total 0.01 3,902,506,561.61 66,007.59 3,902,440,554.02
245 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL
STATEMENTS - continued
2. Accounts receivable - continued
(2) Disclosure of accrual method for credit loss - continued
At 31 December 2020, the credit risk and expected credit losses on accounts receivable were
as follows:
Unit: RMB
31/12/2020
Aging Expected average loss rate Book value Bad debt provision Carrying amount
(%)
Within the credit
0.01 3,391,437,624.66 204,604.27 3,391,233,020.39
term
1-30 days overdue 0.01 81,315,730.50 8,131.57 81,307,598.93
31-60 days overdue 0.23 1,076,298.92 2,475.49 1,073,823.43
Total 0.01 3,473,829,654.08 215,211.33 3,473,614,442.75
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 2021,
the Group's valuation method and significant assumptions remain unchanged.
(3) Changes in bad debt provisions
Unit: RMB
Changes for the year
Category 31/12/2020 Write-off or 31/12/2021
Provision (Reversal)
elimination
Bad debt provisions by
ageing matrix
215,211.33 (149,203.74) - 66,007.59
(4) There are no accounts receivable that have been actually written off in the year.
(5) Top five accounts receivable at 31 December 2021 categorized by debtor
Unit: RMB
Proportion of the
Relationship Bad debt total accounts
Company name with the Book value provision at 31 receivable at 31
Company December 2021 December
2021(%)
Company B Third party 1,534,265,134.17 - 39.32%
Company A Third party 985,937,436.05 - 25.26%
Company E Third party 583,233,323.28 - 14.95%
Company P Third party 139,373,167.97 - 3.57%
Company Q Third party 125,365,514.19 - 3.21%
Total 3,368,174,575.66 - 86.31%
(6) As at 31 December 2021, there is no accounts receivable derecognized due to the transfer of
financial assets.
(7) As at 31 December 2021, there is no amount of assets and liabilities arising from transfer of
accounts receivable and continuing involvement.
246 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL
STATEMENTS - continued
3. Other receivables
(1) Disclosure of other receivables by aging
Unit: RMB
31/12/2021
Aging
Amount Bad debt provision Proportion of provision (%)
Within 1 year 635,383,876.68 - -
(2) Classification by the nature of other receivables
Unit: RMB
Nature of other receivables Book value at 31/12/2021 Book value at 31/12/2020
Cash pooling receivables from
624,818,600.00 -
related parties
Advances for third parties 5,333,890.23 1,897,188.07
Amounts due from related parties 2,370,349.91 5,439,431.58
Advance payments for employees 1,487,451.18 430,997.72
Others 1,373,585.36 4,906,743.09
Total 635,383,876.68 12,674,360.46
(3) Provision for ECL is neither made nor reversed or recovered since the Company's other
receivables are less likely to be unrecovered.
(4) There were no other receivables actually written off in the year.
(5) As of 31 December 2021, there were no other receivables related to government grants.
(6) As of 31 December 2021, there were no other receivables derecognized due to the transfer of
financial assets.
(7) As of 31 December 2021, there was no amount of assets and liabilities arising from transfer
of other receivables and continuing involvement.
247 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL
STATEMENTS - continued
4. Long-term equity investments
Details of long-term equity investments:
Unit: RMB
Changes for the year Proportio
Explanation of the
n of the
Accounti Proportion of inconsistency between
ownershi
ng the voting the proportions of the Cash dividends
Investee 1/1/2021 31/12/2021 p interest
methodol power held in ownership interest and for this year
Capital increase in the Increase from stock held in
ogy investee (%) the voting power in the
year option grants (Note) investee
investee
(%)
Universal
Global Cost
1,768,859,657.00 421,086,300.00 - 2,189,945,957.00 100 100 N/A -
Technology method
Co., Limited
The remaining 50%
equity interest is held
USI Electronics by Universal Global
Cost
(Shenzhen) Co., 388,998,994.64 - 3,322,155.99 392,321,150.63 50 100 Technology Co., 675,000,000.00
method
Ltd. Limited, the
Company's wholly-
owned subsidiary.
Universal
Global
Cost
Technology 263,577,336.48 - 3,492,605.32 267,069,941.80 100 100 N/A 200,000,000.00
method
(Kunshan) Co.,
Ltd.
Universal
Global
Cost
Technology 1,343,726,297.88 - 4,192,911.52 1,347,919,209.40 100 100 N/A 300,000,000.00
method
(Shanghai) Co.,
Ltd.
Universal
Global
Cost
Electronics 50,000,000.00 - - 50,000,000.00 100 100 N/A -
method
(Shanghai) Co.,
Ltd.
The 100% equity
interest is held by
Universal Global
UGTW N/A 99,955,754.29 - 30,591,168.98 130,546,923.27 N/A N/A Technology Co., -
Limited, the
Company's wholly-
owned subsidiary.
Universal
Global
Cost
Technology 130,920,090.82 325,000,000.00 - 455,920,090.82 100 100 N/A -
method
(Huizhou) Co.,
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.
Total 4,439,380,452.93 746,086,300.00 41,598,841.81 5,227,065,594.74 1,175,000,000.00
Note: The amount refers to the share-based payments settled under equity in 2021 arising from
the stock option incentive plan offered by the Company to relevant personnel of USI Electronics
(Shenzhen) Co., Ltd., Universal Global Technology (Kunshan) Co., Ltd., Universal Global
Technology (Shanghai) Co., Ltd. and UGTW.
As at 31 December 2021, the ability of the investee, in which the Company holds long-term
equity investments, to transfer funds to the Company is not restricted.
5. Revenue and costs
(1) Revenue and costs
Unit: RMB
Amount incurred in the current year Amount incurred in the prior year
Item
Revenue Cost Revenue Cost
Principal operating 16,637,068,444.9 17,595,425,180.82 15,915,867,003.76
activities 18,331,017,029.05
6
Other operating 3,538,926.30 834,459.69
activities
4,114,711.66 120,186.64
16,637,188,631.6 17,598,964,107.12 15,916,701,463.45
Total 18,335,131,740.71
0
248 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL
STATEMENTS - continued
5. Revenue and costs - continued
(2) Analysis of revenue and costs from principal operating activities by product categories:
Unit: RMB
Amount incurred in the current year Amount incurred in the prior year
Item
Revenue Cost Revenue Cost
Communication
12,086,981,745.92 11,027,496,344.34 10,680,017,144.99
products 11,656,912,252.68
Consumer
electronic 5,315,414,614.15 4,926,749,381.37 5,138,470,453.70 4,665,877,385.73
products
Computer and
storage 494,840,322.98 318,826,137.31 335,952,886.48 204,878,855.06
products
Automotive
electronic 407,360,175.63 351,751,177.93 419,604,035.04 346,901,820.92
products
Others 26,420,170.37 12,245,404.01 44,485,552.92 18,191,797.06
Total 18,331,017,029.05 16,637,068,444.96 15,915,867,003.76
17,595,425,180.82
(3) Revenue and costs from other operating activities:
Unit: RMB
Item Amount incurred in the current year Amount incurred in the prior year
Revenue Cost Revenue Cost
Scrap income 3,598,507.79 - 1,777,533.15 -
Others 516,203.87 120,186.64 1,761,393.15 834,459.69
Total 4,114,711.66 120,186.64 3,538,926.30 834,459.69
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 1,175,000,000.00 700,000,000.00
Investment income on disposal of held-for-trading financial
41,843,686.33 7,491,553.58
assets
Investment income of held-for-trading financial assets during
- -
the hold period
Total 1,216,843,686.33 707,491,553.58
249 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL
STATEMENTS - continued
7. Supplementary information to the cash flow statement
Unit: RMB
Supplementary information 2021 2020
1. Reconciliation of net profit to cash flow from operating
activities:
Net profit 1,953,944,271.08 1,517,559,060.28
Add: Provision for impairment losses of assets 3,920,601.29 5,885,658.10
Provision for impairment of credit (149,203.74) 179,723.41
Depreciation of fixed assets 270,000,465.98 200,404,712.46
Depreciation of right-of-use assets 13,036,830.13 10,864,733.80
Amortization of intangible assets 1,419,871.53 940,875.52
Amortization of long-term prepaid expenses 21,476,416.14 15,749,595.46
Amortization of deferred income (14,487,455.41) (14,487,455.41)
Losses (gains) on disposal of fixed assets, intangible assets
(277,783.36) 925,848.81
and other long-term assets
Losses (gains) on changes in fair values (14,537,089.99) (944,484.55)
Financial expenses (income) 149,695,634.97 (38,209,472.92)
(1,216,843,686.33
Losses (gains) arising from investments (707,491,553.58)
)
Share-based payments settled by equity 11,276,158.19 8,471,385.42
Decrease (increase) in deferred tax assets (23,331,326.08) (7,443,985.91)
Decrease (increase) in inventories (274,392,854.67) (527,177,277.49)
Decrease (increase) in receivables from operating (1,317,311,951.12
(364,746,551.48)
activities )
Increase (decrease) in payables from operating activities 78,047,498.94 1,887,574,764.50
Net cash flow from operating activities 594,051,797.19 1,035,490,176.78
2. Significant investing and financing activities that do not
involve cash receipts and payments:
Acquisition of long-term assets with debt 352,812,380.40 22,639,986.00
3. Net changes in cash and cash equivalents:
Closing balance of cash 2,490,051,993.72 1,347,901,732.05
Less: Opening balance of cash 1,347,901,732.05 975,809,455.92
Add: Closing balance of cash equivalents - -
Less: Opening balance of cash equivalents - -
Net increase in cash and cash equivalents 1,142,150,261.67 372,092,276.13
250 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL
STATEMENTS - continued
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 (X). 4.
(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 party Amount incurred in the Amount incurred in the
Related party transaction current year prior year
Universal Global Technology Co.,
Limited
Purchase of materials 568,153,489.57 821,941,909.66
ASE Electronics Inc. Purchase of materials 5,994,201.48 23,518,506.57
Universal Global Industrial Co., Ltd. Purchase of materials 3,575,706.92 3,396,636.89
Universal Global Technology (Kunshan)
Co., Ltd.
Purchase of materials 2,040,667.28 1,764,033.53
Universal Scientific Industrial De
México S.A. De C.V.
Purchase of materials 653,887.18 754,652.06
Rirong Semiconductor (Shanghai) Co.,
Ltd.
Purchase of materials 567,548.09 -
Universal Global Technology
(Shanghai) Co., Ltd.
Purchase of materials 254,978.42 121,979.78
ASE Inc. Purchase of materials 254,237.55 1,261,004.02
USI Electronics (Shenzhen) Co., Ltd. Purchase of materials 21,271.35 22,421.08
Taitech Precision Electronic (Kunshan)
Co., Ltd.
Purchase of materials 5,548.00 4,191.00
Wuxi Tongzhi Microelectronics Co.,
Ltd.
Purchase of materials - 9,987.29
Total 581,521,535.84 852,795,321.88
UGTW Test service fee 60,434,620.49 33,083,680.00
ASE (Shanghai) Inc. Receipt of services 25,363,860.80 23,840,115.72
Universal Global Technology Co.,
Limited
Receipt of services 11,577,370.00 3,626,759.60
UGTW Sales commission 8,497,870.63 33,083,680.96
USI (Shenzhen) Electronic Technology
Innovation Co., Ltd.
Receipt of services 3,981,132.13 452,830.19
SHANGHAI DINGXU PROPERTY
MANAGEMENT CO., LTD
Receipt of services 1,953,179.19 2,364,304.11
SHANGHAI HONGRONG
PROPERTY MANAGEMENT CO., Receipt of services - 198,880.00
LTD.
ASE Inc. Receipt of services - 184,953.65
ASE Assembly & Test (Shanghai)
Limited
Receipt of services - 56,463.78
Rirong Semiconductor (Shanghai) Co.,
Ltd.
Receipt of services - 14,238.32
Total 111,808,033.24 96,905,906.33
The above transactions are executed at the prices agreed on by both parties.
251 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL
STATEMENTS - continued
8. Related party relationship 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 Amount incurred in the
Related party party transaction the current year prior year
Universal Global Industrial Co., Ltd. Sales of goods 327,749,153.96 30,526,790.53
Universal Global Technology
(Shanghai) Co., Ltd.
Sales of goods 96,252,005.06 126,445,788.88
Universal Global Technology Co.,
Limited
Sales of goods 77,760,751.81 8,147,037.40
Universal Scientific Industrial De
México S.A. De C.V.
Sales of goods 5,663,804.25 983,857.57
Universal Global Technology
(Kunshan) Co., Ltd.
Sales of goods 1,496,435.78 2,251,464.78
USI Electronics (Shenzhen) Co., Ltd. Sales of goods 23,291.50 248,323.42
Universal Scientific Industrial Poland
Sp. z o.o.
Sales of goods 13,879.96 10,825.36
FINANCIRE AFG S.A.S. Sales of goods 1,715.83 -
USI Japan Co., Ltd. Sales of goods - 42,660.02
Total 508,961,038.15 168,656,747.96
Universal Global Technology
(Kunshan) Co., Ltd.
Provision of services 10,092,815.02 10,073,636.64
ISE labs, China. Ltd. Provision of services 611,327.88 757,657.98
ASE Inc. Provision of services 12,374.95 -
Rirong Semiconductor (Shanghai) Co.,
Ltd.
Provision of services 4,500.00 -
Universal Global Industrial Co.,Ltd Provision of services 3,206.33 -
USI Electronics (Shenzhen) Co., Ltd. Provision of services - 13,996,248.00
ASE Assembly & Test (Shanghai)
Limited
Provision of services - 1,957,515.58
Suzhou ASEN Semiconductors Co.,
Ltd.
Provision of services - 109,150.94
Universal Scientific Industrial De
México S.A. De C.V.
Provision of services - 57,097.87
Total 10,724,224.18 26,951,307.01
The above transactions are executed at the prices agreed on by both parties.
(2.2) Leases with related parties
Leases where the Company is the lessor
Unit: RMB
Lease income Lease income
recognized in the recognized in the
Name of lessee Type of leased assets current year prior year
ISE labs, China. Ltd. Office 200,510.00 462,889.00
Rirong Semiconductor (Shanghai) Co., Ltd. Machinery and
105,000.00 -
equipment
Machinery and
Universal Global Technology (Shanghai) Co., Ltd. 49,285.70 -
equipment
Suzhou ASEN Semiconductors Co., Ltd. Machinery and
- 797,224.26
equipment
Total 354,795.70 1,260,113.26
The above transactions are executed at the prices agreed on by both parties.
252 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL
STATEMENTS - continued
8. Related party relationship and transactions - continued
(2). Related party transactions - continued
(2.2) Leases with related parties - continued
Leases where the Company is the lessee
Unit: RMB
Right-of-use assets Lease interest for the
Name of lessor Type of leased assets leased in this year year
Leasing of business
ASE Assembly & Test (Shanghai) Limited
premises
- 3,668,609.46
The above transactions are executed at the prices agreed on by both parties.
Unit: RMB
Right-of-use assets Lease interest for prior
Name of lessor Type of leased assets leased in prior year year
Leasing of business
ASE Assembly & Test (Shanghai) Limited - 3,837,597.08
premises
The above transactions are executed at the prices agreed on by both parties.
Unit: RMB
Short-term lease Short-term lease payments
Name of lessor Type of leased assets payments for the year for prior year
Universal Global Technology (Shanghai) Machinery and
210,232.57 1,103,234.91
Co., Ltd. equipment
ASE Assembly & Test (Shanghai) Leasing of business
- 39,691.43
Limited premises
Total 210,232.57 1,142,926.34
The above transactions are executed at the prices agreed on by both parties.
(2.3) Borrowings/loans with related parties
Unit: RMB
Amount at the end of the
Annual interest Amount incurred in the current year
Related party year
rate
Amount lent Amount collected Amount
Lent to - Cash pool trading (Note 1)
Universal Scientific
One month Libor
Industrial Vietnam 438,213,000.00 - 433,547,600.00
+40 basis points
Company Limited
Universal Scientific
One month Libor
Industrial De México 193,200,000.00 - 191,271,000.00
+40 basis points
S.A. De C.V.
Unit: RMB
Annual Amount at the end of prior
Amount incurred in the prior year
Related party interest year
rate Amount lent Amount collected Amount
Lent to - Cash pool trading (Note 1)
Universal Global Technology
1.75% - 100,000,000.00 -
(Shanghai) Co., Ltd.
The interest income for 2021 is RMB 762,855.43 (2020: RMB 395,125.80 yuan), and there is no interest yet
received at the end of the year (31 December 2020: None).
253 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL
STATEMENTS - CONTINUED
8. Related party relationship and transactions - continued
(2). Related party transactions - continued
(2.3) Borrowings/loans with related parties - continued
The interest income for the year is RMB 762,855.43 (2020: RMB 395,125.80), and there is no
outstanding interest at the end of the year (31 December 2020: None).
Unit: RMB
Amount at the end of the
Annual Amount incurred in the current year
Related party year
interest rate
Amount borrowed Amount repaid Amount
Borrowed from - Cash pool trading (Note 1)
USI Electronics
(Shenzhen) Co., Ltd.
1.75% - 782,697,200.00 -
Universal Global
Technology (Shanghai) 0.60% - 97,873,500.00 -
Co., Ltd.
Unit: RMB
Annual Amount at the end of prior
Amount incurred in the prior year
Related party interest year
rate Amount borrowed Amount repaid Amount
Borrowed from - Cash pool trading (Note 1)
USI Electronics (Shenzhen)
1.75% 782,697,200.00 - 782,697,200.00
Co., Ltd.
Universal Global Technology
0.60% 97,873,500.00 - 97,873,500.00
(Shanghai) Co., Ltd.
The interest paid in this year was RMB 2,620,456.27 (2020: RMB 7,771,090.02), and the
outstanding interest at the end of the year was RMB 0 (31 December 2020: RMB 7,765,440.12).
Note 1: 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 Scientific Industrial Vietnam Company Limited and Universal Scientific
Industrial De México S.A. De C.V. are participants,
254 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL
STATEMENTS - CONTINUED
8. Related party relationship and transactions - continued
(2). Related party transactions - continued
(2.4) Assets transfer with related parties
Unit: RMB
Details of related party Amount incurred in Amount incurred in the
Related party
transaction the current year prior year
Universal Global Technology
(Shanghai) Co., Ltd.
Purchase of fixed assets 13,231,008.93 76,016,365.58
Universal Global Technology Purchase of fixed assets 21,201.96 150,051.15
(Kunshan) Co., Ltd.
ASE Test Inc. Purchase of fixed assets - 13,211,965.96
Total 13,252,210.89 89,378,382.69
Universal Global Technology
(Shanghai) Co., Ltd.
Sales of fixed assets 35,820,700.83 447,016.60
Universal Scientific Industrial
Vietnam Company Limited
Sales of fixed assets 25,213,949.19 -
ASE Test Inc. Sales of fixed assets 12,545,380.16 -
ISE labs, China. Ltd. Sales of fixed assets 10,071,875.88 -
ASE Inc. Sales of fixed assets 3,478,999.00 -
Universal Global Technology 187,724.78 2,051,002.83
Sales of fixed assets
(Kunshan) Co., Ltd.
UGTW Sales of fixed assets 29,304.00 6,688.10
Rirong Semiconductor (Shanghai) 21,740.65 -
Sales of fixed assets
Co., Ltd.
USI Electronics (Shenzhen) Co.,
Ltd.
Sales of fixed assets - 297,333.64
Total 87,369,674.49 2,802,041.17
Universal Global Technology Sales of intangible assets
(Shanghai) Co., Ltd.
984,479.74 983,362.50
USI Electronics (Shenzhen) Co., Sales of intangible assets
Ltd.
232,446.60 232,182.81
Universal Global Technology Sales of intangible assets
(Kunshan) Co., Ltd.
150,406.63 -
Total 1,367,332.97 1,215,545.31
Universal Global Technology Sales of molds
(Shanghai) Co., Ltd.
1,945,670.63 -
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
USI Enterprise Limited Interest expenses 80,914,020.40
on convertible -
bonds
ASE (Shanghai) Inc. Interest expenses 869,753.10
on convertible -
bonds
Total 81,783,773.50 -
255 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL
STATEMENTS - CONTINUED
8. Related party relationship and transactions - continued
(2). Related party transactions - continued
(2.6) Compensation for key management personnel
Unit: RMB
Amount Amount
Item incurred in the incurred in the
current year prior year
Compensation for key management personnel 30,519,010.96 19,963,423.42
(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. and UGTW. See Note (XV) 4 for details.
(3). Amounts due from / to related parties
(3.1) Amounts due from related parties
Unit: RMB
31/12/2021 31/12/2020
Item Related party
Book value Book value
Accounts receivable Universal Global Industrial Co., Ltd. 196,438,433.79 5,044,052.76
Accounts receivable Universal Global Technology (Shanghai) Co., Ltd. 34,233,779.97 43,823,875.48
Universal Scientific Industrial De México S.A. De
Accounts receivable
C.V.
462,683.64 60,592.43
Accounts receivable Universal Global Technology (Kunshan) Co., Ltd. 353,769.09 804,623.10
Accounts receivable Universal Global Technology Co., Limited 132,622.23 7,997,863.50
Accounts receivable FINANCIRE AFG S.A.S. 1,938.89 -
Accounts receivable USI Electronics (Shenzhen) Co., Ltd. 1,436.31 81,254.29
Accounts receivable Universal Scientific Industrial Poland Sp. z o.o. - 10,718.76
Total 231,624,663.92 57,822,980.32
Unit: RMB
31/12/2021 31/12/2020
Item Related party
Book value Book value
Universal Scientific Industrial Vietnam Company
Other receivables
Limited (Note)
433,547,600.00 -
Universal Scientific Industrial De México S.A. De
Other receivables
C.V. (Note)
191,271,000.00 -
Other receivables Universal Global Technology (Kunshan) Co., Ltd. 2,177,743.43 1,331,910.52
Other receivables ASE Assembly & Test (Shanghai) Limited 192,606.48 339,909.17
Other receivables USI Electronics (Shenzhen) Co., Ltd. - 3,358,627.98
Other receivables ISE labs, China. Ltd. - 407,122.42
Other receivables Universal Global Industrial Co., Ltd. - 1,861.49
Total 627,188,949.91 5,439,431.58
256 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL
STATEMENTS - CONTINUED
8. Related party relationship and transactions - continued
(3). Amounts due from / to related parties - continued
(3.2) Amounts due to related parties
Unit: RMB
Item Related party 31/12/2021 31/12/2020
187,121,413.6
Accounts payable Universal Global Technology Co., Limited 189,755,304.27
6
Accounts payable Universal Global Technology (Shanghai) Co., Ltd. 7,576,389.56 2,209,450.45
USI (Shenzhen) Electronic Technology Innovation Co.,
Accounts payable
Ltd.
1,170,000.00 -
Accounts payable Universal Global Industrial Co., Ltd. 797,128.16 985,111.56
Accounts payable Universal Global Technology (Kunshan) Co., Ltd. 534,179.42 190,570.56
Accounts payable ASE Electronics Inc. 472,446.13 1,228,898.49
Accounts payable Universal Scientific Industrial De México S.A. De C.V. 327,441.04 34,821.69
Accounts payable USI Electronics (Shenzhen) Co., Ltd. 4,186.46 5,460.39
Accounts payable UGTW - 10,584,600.33
Accounts payable ASE Inc. - 33,113.85
198,003,184.4
Total 205,027,331.59
3
Unit: RMB
31/12/2020
Item Related party 31/12/2021
(Restated)
Other payables USI Enterprise Limited 2,193,057.52 -
Other payables ASE (Shanghai) Inc. 2,035,944.03 2,229,775.05
Other payables SHANGHAI DINGXU PROPERTY MANAGEMENT
CO., LTD
240,956.60 167,348.25
Other payables USI Electronics (Shenzhen) Co., Ltd. (Note) - 782,697,200.00
Other payables Universal Global Technology (Shanghai) Co., Ltd. (Note) - 97,873,500.00
Other payables USI Electronics (Shenzhen) Co., Ltd. - 7,659,410.58
Other payables USI (Shenzhen) Electronic Technology Innovation Co., Ltd. - 480,000.00
Other payables Universal Global Technology (Shanghai) Co., Ltd. - 284,123.26
Other payables ASE Assembly & Test (Shanghai) Limited - 24,275.32
Other payables Rirong Semiconductor (Shanghai) Co., Ltd. - 16,089.31
Total 4,469,958.15 891,431,721.77
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 Scientific Industrial Vietnam Company Limited and Universal Scientific
Industrial De México S.A. De C.V are participants.
Unit: RMB
Item Related party 31/12/2021 31/12/2020
Lease liabilities ASE Assembly & Test (Shanghai) Limited 70,337,306.54 82,153,151.12
Unit: RMB
Item Related party 31/12/2021 31/12/2020
Bonds payable USI Enterprise Limited 2,399,279,839.68 -
Bonds payable ASE (Shanghai) Inc. 25,790,104.50 -
Total 2,425,069,944.18 -
257 / 258
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(XVI) SUPPLEMENTARY INFORMATION
1. Breakdown of non-recurring profit or loss for the current period
Unit: RMB
Item Amount Description
See Notes (V), 56 and 58 for
Profit or loss on disposal of non-current assets (9,115,989.64) details
Government grants recognized in profit or loss (other than grants
which are closely related to the Company's business and are
either in fixed amounts or determined under quantitative methods
50,678,106.85 See Notes (V), 51 for details
in accordance with the national standard)
Profit or loss on changes in the fair value of held-for-trading
financial assets and held-for-trading financial liabilities and
investment income on disposal of held-for-trading financial See Notes (V), 52 and 53 for
assets, held-for-trading financial liabilities and available-for-sale
134,150,704.71 details
financial assets, other than those used in the effective hedging
activities relating to normal operating business
Reversal of impairment losses for accounts receivable and
contract assets of which impairment loss is tested individually
2,836,069.00 See Notes (V), 6 for details
See Notes (V), 57 and 58 for
Other non-operating income or expenses other than the above 18,576,128.64 details
Tax effects (34,238,090.20)
Effects attributable to minority interests (After tax) (2,710.00)
Total 162,884,219.36
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 EPS
Profit for the reporting year average return on
Basic EPS Diluted EPS
net assets (%)
Net profit attributable to ordinary shareholders of the
Company
14.83% 0.85 0.83
Net profit after deduction of non-recurring profits or
losses attributable to ordinary shareholders of the 13.53% 0.77 0.76
Company
258 / 258
