2022 Annual Report
Stock Code: 601231 Abbreviated Name: USI
Convertible Bond Code: 113045 Abbreviated Name: USI Convertible Bond
Universal Scientific Industrial (Shanghai) Co., Ltd.
2022 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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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. Absent directors
Position of absent directors Name of absent directors Reason for absence Name of trustee
Independent Director Yunwei Tang Personal health Yiyun Chu
III. Deloitte Touche Tohmatsu Certified Public Accountants LLP has issued a standard
unqualified audit report for the Company.
IV. Jeffrey Chen, person in charge of the Company, Tan-Yang Liu, person in charge of accounting,
and Yuh-Huah Chern, person in charge of the accounting firm (accountant in charge) declare that
the financial report in the annual report is truthful, accurate and complete.
V. The proposal of profit distribution for the reporting period deliberated and passed by the
Board
Regarding its profit distribution plan for 2022, USI is going to distribute a cash dividend of RMB 4.30
(tax included) for every 10 shares on the basis of the total share capital on the record date for
implementing the plan after deducting the number of shares in its special buy-back securities account,
without bonus share or transfer of public reserve into share capital, and all the remaining undistributed
profits shall be carried forward for distribution in the following years. In case of any change in the total
share capital of the Company and the number of shares in its buy-back securities account prior to the
record date for implementing the plan, the cash dividend per share shall remain unchanged, and the total
amount of cash dividend shall be adjusted accordingly.
The Company's Profit Distribution Plan for the 2022 was deliberated and approved at the 22th meeting
of the fifth session of the Board of Directors of the Company, and it still needs to be deliberated at the
Company's 2022 annual general meeting of shareholders.
VI. Risk disclosure for forward-looking statements
√Applicable □ Not Applicable
This report involves forward-looking statements such as future plans and does not constitute a material
commitment of the Company to investors. Investors are requested to pay attention to investment risks.
VII. Are there any funds occupied by controlling shareholder or other related parties for non-
operational purposes?
No
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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Contents
Section I Definitions ................................................................................................................................... 4
Section II Company Profile and Key Financial Indicators ......................................................................... 6
Section III Management Discussion and Analysis .................................................................................... 10
Section IV Corporate Governance ............................................................................................................ 45
Section V Environmental and Social Responsibility ................................................................................ 68
Section VI Major Events ........................................................................................................................... 78
Section VII Changes in Share Capital and Information of Shareholders ................................................ 104
Section VIII Related Information of Preferred Stocks ............................................................................ 112
Section IX Related Information of Bonds............................................................................................... 113
Section X Financial Statements .............................................................................................................. 116
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, the controlling shareholder of the Company,
USIE
registered in Hong Kong
Universal Scientific Industrial Co., Ltd., a company listed on the
Universal Scientific Industrial
Taiwan Stock Exchange under the stock code 2350, which terminated
Co., Ltd.
its listing on June 17, 2010
ASE Technology Holding Co., Ltd., a company listed on the Taiwan
ASE Technology Holding
Stock Exchange under the stock code 3711
Advanced Semiconductor Engineering, Inc., formerly listed on the
ASE Inc. Taiwan Stock Exchange under the stock code 2311 and delisted in
2018.
ASE (Shanghai) Inc., a subsidiary of ASE Inc. in which it holds 100%
ASE Shanghai
shares
Universal Global Technology Co., Limited, a subsidiary of the
UGT Company in which the Company holds 100% shares, registered in
Hong Kong
UGT Shanghai, Jinqiao Universal Global Technology (Shanghai) Co., Ltd., a subsidiary of the
Subsidiary, Jinqiao Factory Company in which the Company holds 100% shares
USI Shenzhen, Shenzhen USI Electronics (Shenzhen) Co., Ltd., a subsidiary of the Company in
Subsidiary, Shenzhen Factory which the Company holds 100% shares
UGT Kunshan, Kunshan Universal Global Technology (Kunshan) Co., Ltd., a wholly-owned
Subsidiary, Kunshan Factory subsidiary of the Company
Universal Global Electronics Co., Ltd., a subsidiary of the Company in
UGE
which the Company holds 100% shares
UGT Huizhou, Huizhou Universal Global Technology (Huizhou) Co., Ltd., a subsidiary of the
Subsidiary, Huizhou Factory Company in which the Company holds 100% shares
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 Universal Scientific Industrial Vietnam Company Limited, a subsidiary
Subsidiary, Vietnam Factory of the Company in which the Company holds 100% shares
Financiere AFG, a simplified joint stock company established and
FAFG validly existing under the laws of France and a subsidiary of the
Company in which the Company holds 100% shares
ASDI Assistance Direction, a simplified joint stock company
ASDI established and validly existing under the laws of France, controlled by
Gilles Baruk Benhamou, a director of the Company
Asteelflash Group, a simplified joint stock company established and
validly existing under the Laws of France. It is a subsidiary of FAFG in
AFG
which FAFG holds 100% shares. Since January 1, 2022, it has been
merged into its parent company FAFG.
Asteelflash Suzhou, Suzhou Asteelflash (Suzhou) Co., Ltd., a subsidiary of FAFG in which FAFG
Subsidiary, Suzhou Factory holds 100% shares
Formerly known as Chung Hong Electronics Poland SP.Z. O.O; the
Company completed the acquisition of 100% of its equity on June 22,
USI Poland, Poland Factory
2020, and it was renamed Universal Scientific Industrial Poland Sp.z
o.o.
Memtech International Ltd., which was listed on the Singapore Stock
Memtech Exchange in 2004, and was delisted on August 22, 2019. The Company
indirectly holds 42.23% of its equity.
EMEA Abbreviation for Europe, the Middle East, and Africa
APAC Abbreviation for the Asia-Pacific region
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Americas North and South America
Electronic Manufacturing Services, the services provided by
EMS manufacturers for electronic brand owners, such as manufacturing,
procurement, partial design and logistics
ODM Original Design and Manufacturer
DMS Design and Manufacturing Services
D(MS)2 An acronym for DMS combined with Miniaturization and Solution
Surface Mount Technology, a new generation of electronic assembly
technology, which compresses traditional electronic components into
components that mare tens of times smaller than their original volume
and realizes high-density, highly reliable, miniaturized and low-cost
SMT
assembly of electronic products, as well as automated production. The
process for assembling components onto printed (or other) substrates is
called SMT process, and the associated assembly equipment is called
SMT equipment.
Printed Circuit Board, known as the “cornerstone” of electronic
products. A large number of electronic parts used in electronic products
PCB are embedded on PCBs of different sizes. In addition to fixing parts, the
main function of PCBs is to provide circuit connections between
various parts.
System in Package; multiple functional wafers, including processors
and memory wafers, are integrated into a package according to the
SiP application scenarios, the number of package substrate layers and other
factors, so as to achieve a basic package scheme with complete
functions
CAGR Compound Annual Growth Rate
YoY Year Over Year
The reporting period or the
January 1, 2022 to December 31, 2022
current period
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Section II Company Profile and Key Financial Indicators
I. Company Profile
Name in Chinese Universal Scientific Industrial (Shanghai) Co., Ltd.
Abbreviation in Chinese USI
Name in English Universal Scientific Industrial (Shanghai) Co., Ltd.
Abbreviation in English USISH
Legal representative Jeffrey Chen
II. Contact
Secretary of the Board of Directors Securities affairs representative
Name Jinpeng Shi 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
1558 Zhangdong Road, Integrated Circuit Industrial Zone,
Registered address
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 which the Shanghai Securities News, China Securities Journal, and
Company discloses its annual report Securities Times
Website of the stock exchange on which the www.sse.com.cn
Company discloses its annual report
Annual report available at Securities Department of the Company
V. The Company's Stocks
The Company's Stocks
Former
Abbreviated
Stock Class Listed on Stock Code Abbreviated
Name
Name
A-share Shanghai Stock Exchange USI 601231 None
Corporate bonds convertible USI Convertible
Shanghai Stock Exchange 113045 None
into the Company‘s A shares Bond
VI. Other Related Information
Deloitte Touche Tohmatsu Certified Public
Name
Domestic accounting Accountants LLP
firm hired by the Office address F/30, 222 East Yan’an Road, Shanghai
Company Names of accountants who
Yuan Shouqing, and Hu Ke
give their signatures
Sponsor organization Name Haitong Securities Co., LTd.
that performs the duty of Office address 689 Guangdong Road, Shanghai
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continuous supervision Names of sponsor
during the reporting representatives who give Zhang Zihui, and Chen Hengrui
period their signatures
Period of continuous
April 2, 2021 to December 31, 2022
supervision
Note: The company has not used up the raised funds, and the sponsor will continue to perform its
responsibility of continuous supervision over the use of the raised funds.
VII. Key Accounting Data and Financial Indicators in the Past Three Years
(I) Key accounting data
Unit: yuan Currency: RMB
Key accounting data 2022 2021 YoY (%) 2020
Revenue 68,516,075,963.26 55,299,654,770.21 23.90 47,696,228,222.53
Net profits attributable to
shareholders of the listed 3,059,967,081.20 1,857,968,074.82 64.69 1,739,435,448.10
company
Net profit attributable to
shareholders of the listed
3,010,200,488.88 1,695,083,855.46 77.58 1,615,438,890.95
company after deducting non-
recurring gains and losses
Net cash flow from operating
3,435,196,255.50 -1,102,446,978.90 Not applicable 1,436,523,674.10
activities
End of 2022 End of 2021 YoY (%) End of 2020
Net assets attributable to
shareholders of the listed 15,749,394,179.86 13,081,960,207.42 20.39 12,049,820,179.95
company
Total assets 38,574,464,731.16 35,856,733,503.81 7.58 31,070,402,620.02
(II) Key financial indicators
Key financial indicators 2022 2021 YoY (%) 2020
Basic EPS (yuan/share) 1.40 0.85 64.71 0.80
Diluted EPS (yuan/share) 1.35 0.83 62.65 0.80
Basic EPS net of non-recurring gains/losses (yuan/share) 1.38 0.77 79.22 0.74
Weighted average return on equity (%) 21.43 14.83 Up 6.60 pct. 15.88
Weighted average ROE net of non-recurring gains/losses (%) 21.08 13.53 Up 7.55 pct. 14.75
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
During the reporting period, the net profit attributable to shareholders of the listed company increased by
64.69% YoY, and the earnings per share and return on net assets both significantly increased YoY.
During the reporting period, the net cash flow from operating activities significantly increased YoY,
mainly due to the increase in revenue and gross profit margin and the normal collection of receivables.
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
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(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 2022
Unit: yuan Currency: RMB
Q1 Q2 Q3 Q4
(Jan.-Mar.) (Apr – Jun) (Jul – Sep) (Oct – Dec)
Revenue 13,953,702,502.36 14,986,799,765.27 20,589,521,347.67 18,986,052,347.96
Net profits attributable to
shareholders of the listed 438,949,141.54 645,697,780.56 1,086,396,958.63 888,923,200.47
company
Net profits attributable to
shareholders of the listed
412,760,005.79 682,199,841.71 1,093,143,268.02 822,097,373.36
company net of non-recurring
gains/losses
Net cash flow from operating
1,693,989,778.99 -1,626,902,475.96 1,098,606,198.41 2,269,502,754.06
activities
Explanation for differences between the quarterly data and formerly disclosed data in periodic reports
□ Applicable √Not Applicable
X. Non-recurring profit or loss
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
Notes (if Amount in Amount in
Items of non-recurring gains/losses Amount in 2022
applicable) 2021 2020
See Notes
Profit or loss on disposal of non-current
2,724,930.03 X(V), 57 and -9,115,989.64 1,172,336.59
assets
59 for details
Government grants recognized in profit
or loss (other than grants which are
closely related to the Company's See Notes
business and are either in fixed amounts 56,144,655.78 X(V), 52 for 50,678,106.85 76,779,477.12
or determined under quantitative details
methods in accordance with the national
standard)
Enterprise restructuring expenses, such
as employee placement expenses, -65,435,485.39
integration costs, etc
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- See Notes
for-trading financial assets, held-for- 96,937,973.50 X(V), 53 and 134,150,704.71 57,415,602.04
trading financial liabilities and available- 54 for details
for-sale financial assets, other than those
used in the effective hedging activities
relating to normal operating business
Write-back of receivables and provisions See Notes
2,836,069.00
for contract assets impairment subject to X(V), 14 for
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separate impairment tests details
The impact of one-time adjustment of
See Notes
current profit and loss in accordance with
-49,852,343.57 X(V), 14 for
tax, accounting and other laws and
details
regulations
See Notes
Other non-operating income or expenses
22,281,394.77 X(V), 58 and 18,576,128.64 11,899,780.26
other than the above
59 for details
Tax effects 13,033,613.18 34,238,090.20 22,910,526.54
Effects attributable to minority interests
919.62 2,710.00 360,112.32
(After tax)
Total 49,766,592.32 162,884,219.36 123,996,557.15
Explanations for the Company’s extraordinary gain or loss items as defined in the “Explanatory
Announcement No.1 for Public Company Information Disclosures –Extraordinary Gains or Losses”, and
the extraordinary gain or loss items as illustrated in the “Explanatory Announcement No.1 for Public
Company Information Disclosures –Extraordinary Gains or Losses” which has been defined as its
recurring gain or loss items.
□ 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 amount Closing balance
current period the current period
Held-for-trading financial assets 96,480,087.56 271,243,519.53 174,763,431.97 71,926,419.80
Other equity instrument
75,957,194.28 38,420,782.40 -37,536,411.88 17,034,226.73
investments
Other non-current financial
236,978,820.68 170,126,278.86 -66,852,541.82 10,294,727.64
assets
Financial liabilities held for
-976,413.16 -3,118,891.32 -2,142,478.16 -2,317,400.67
trading
Total 408,439,689.36 476,671,689.47 68,232,000.11 96,937,973.50
XII. Others
□ Applicable √Not Applicable
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Section III Management Discussion and Analysis
I. Discussion and Analysis of Corporate Operations
The Company realized total revenue of RMB 68.52 billion in 2022, up 23.90% from RMB 55.30 billion
in 2021.
The Company achieved an operating profit of RMB 3.46 billion in 2022, an increase of 62.34% from
RMB 2.13 billion in 2021; a total profit of RMB 3.48 billion, an increase of 62.57% from RMB 2.14
billion in 2021; net profit attributable to shareholders of the listed company of RMB 3.06 billion, an
increase of 64.69% from RMB 1.86 billion in 2021; net profit attributable to shareholders of the listed
company after deducting non-recurring gains and losses of RMB 3.01 billion, an increase of RMB 1.32
billion from RMB 1.70 billion in 2021, a YoY increase of 77.58%.
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.
Electronic manufacturing services mainly include 3C (i.e. Computer, Communication, Consumer
Electronics) products, industrial, automobile, medical, transportation, energy, aerospace and other fields,
among which consumer electronics occupies an important position. The growing demand for smart
phones, smart wearable devices, XR devices, computers and cloud, smart home and other products has
driven the rapid development and continuous upgrading of chips, storage, electronic components,
modules and smart manufacturing.
China has the world's largest market share and the most competitive supply chain in the electronics
manufacturing service industry. As the demand for “glocalization” continues to increase, low-cost
manufacturing regions such as Southeast Asia, Mexico, and Eastern Europe are gradually heating up,
and production capacity is growing rapidly.
(II) Industry characteristics and development trends
1. The industry has a large overall scale, with high industry concentration and fierce competition
In 2022, the industrial scale of the global EMS industry has exceeded USD 720 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 so as to increase product added value.
2. "AI+" powers 3C product intelligence and subversive innovation
5G has ushered in the era of "Internet of Everything". The implementation and promotion of new
technologies and products are expedited such as cloud computing, AI, Internet of Things, smart
wearables, and XR. The application depth and breadth of intelligent interactive products are
continuously expanding, including smartphones, smart wearable devices, XR equipment, automotive
electronics, and computers. 3C product innovation is the incremental demand that attracts most attention
in the electronics manufacturing service industry.
Intelligence, a main feature of the next generation 3C products, will introduce the "Internet+" era to the
"AI+" era, and "AI+" will lead the intelligence and the subversive innovation of 3C products. The
realization of intelligent 3C products requires stronger chip computing power, higher transmission speed,
lower latency and higher reliability. The rapid development of advanced chipmaking process leads to the
progress of computing power, and the processing capabilities of "cloud" and "end" devices are
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continuously strengthened to meet the increasingly high requirements of AI for computing power. At the
same time, with the continuous growth of AI, cloud computing and metaverse, cloud related business of
technology giants continues to expand in scale, and the investment in cloud infrastructure continues to
increase, which also leads to accelerated growth in demand for servers, switches, and storage-related
electronic products. The constant upgrading of communication technology strengthens the "cloud-to-
end" and "end-to-end" transmission capabilities, which better meet the needs of future large-volume data
transmission and real-time interaction, and empower AI through data transmission to realize 3C product
intelligence. With the gradual application and promotion of new-generation communication technologies
such as Wi-Fi 6E, Wi-Fi 7, millimeter waves, and low-earth orbit satellite communications, they are
integrated with 5G and even 6G networks, and, by using edge computing and artificial intelligence
technologies, achieve intelligent management and optimized network resources, potentially expected to
build an integrated communication network with seamless global coverage of land, sea and air space.
3. "Carbon neutrality" promotes the rapid growth of electric vehicles and energy storage
In the global context of “carbon neutrality”, the sales volume of electric vehicles has greatly increased
and the proportion of electric vehicles in the global sales of new vehicles will continue to grow rapidly.
As the demand for automotive electronics related to electric vehicles has surged, the upgrading of
technologies such as intelligent cockpit and ADAS has accelerated, and the proportion of manufacturing
service outsourcing has increased. The energy storage industry has also benefited from the global
demand for "carbon neutrality" with its prosperity rising continuously.
(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, China and the Chinese mainland. At present, China, Southeast Asia, India,
Mexico, Eastern Europe have become the regional centers of low-cost manufacturing in the EMS
industry, and the current demand for "glocalization" services has increased significantly. Low-cost
manufacturing areas require a relatively complete supply chain system in which upstream and
downstream companies cooperate and form an industrial cluster. Component companies sell their
products to terminal assembly companies, and after the assembly is completed, the terminal products are
directly sold to downstream brand companies for global sales.
3. Seasonal characteristics of industry operation
Affected by traditional consumption patterns, orders from consumer electronics brand customers tend to
concentrate in the second half of the year, resulting in certain degree of seasonality in the shipment and
revenue of the EMS industry. The first and second quarters of each year are the traditional off-season,
while the third quarter is start of peak season of sales, the fourth quarter is the peak season of shipment.
(IV) Competitive position of the Company in the industry
The Company is a world-renowned manufacturer in the EMS industry. In 2021, 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
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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.
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-level packaging (SiP)
module, system-level Internet of Things (IoT) module, IoT module, low-power consumption
telecommunication module, enterprise-level wireless router, etc.
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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
present, smart wearable SiP modules include smart watch SiP module, true wireless earbuds (TWS)
module, and optical heart rate module. With the continuous development of "Metaverse" related fields,
the Company will also continue to deploy SiP modules in XR smart head-mounted display devices,
including Wi-Fi modules and multi-functional SiP modules.
In addition to smart wearable SiP modules, consumer electronics products also involve video devices,
connection devices, mainly including X-Y bar control board, miniLED display control, timing control
board, smart stylus, electromagnetic sensing board, etc.
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), smart handheld device (SHD) and industrial
control panel.
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4. Cloud and storage products
On the market of 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 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. The motherboards manufactured by the Company are widely used in cloud
computing, data centers, edge computing and other fields. The Company continues to introduce new
generation technologies such as DDR5 and PCIe-G5 with the service model of Join Design Manufacture
(JDM).
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
Fiber Optic 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 manufacturing services and hardware design, product verification and
customized development of production and test platform services; the switches and host channel adaptor
products are must-have devices for enterprises, institutions, computing and data center.
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.
USI's automotive electronic products mainly include power modules, power inverters, BMS, On-Board
Charger, electronic pumps, domain controllers, vehicle NAD modules, LED lights, ADAS-related
controllers, other body controllers, etc.
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Following the development trend of “electrification, intelligence, and connectivity” in automotive
electronics, the Company focuses on “electrification” and invests heavily in research and development
of power modules, power inverters, BMS, On-Board Charger and other automotive power products to
serve power chip manufacturers, Tier 1 suppliers and OEMs; at the same time, the Company takes into
account “intelligence” and “connectivity”, and expands new products and businesses in the fields of
smart cockpits, ADAS, and vehicle communications.
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. SiP module is based on heterogeneous
integration technology, which integrates chips and passive components of different processes into one
module, effectively reducing the area of functional modules, improving the efficiency of circuit system,
and ensuring 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.
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, metaverse 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.
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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, smart wearables, XR devices,
automotive electronics, computers, base stations for wireless communications, industrial electronics,
solid-state storage and other products, the Company will also expand the application of miniaturization
technology and develop modular products such as SOM (System on Module) and SiPSet.
The Company's module products mainly include Wi-Fi modules, UWB modules, millimeter wave
antenna modules, smart wearable modules, SiPlet, notebook SiPSet modules, SOM, vehicle NAD and
power modules, etc.
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 2021, with its annual revenue growth rate and
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net operating margin of main business ranking top in the industry. The Company is a leading
manufacturer in many business segments and an industry leader in SiP miniaturization technology, with
a prominent position in the industry.
The company attaches great importance to internal control and corporate governance, strictly abides by
the requirements of laws and regulations, and follows the relevant regulatory requirements of the
Shanghai Stock Exchange as well as the Taiwan Stock Exchange and the New York Stock Exchange
where its parent company ASE Technology Holding Co., Ltd is listed. In the past five consecutive years,
the Company has been awarded the A-level rating on information disclosure by the Shanghai Stock
Exchange, and has won a series of honors in the field of business operation and corporate governance.
(II) Global layout and advantages in localized services
The global supply chain is shifting from efficiency-oriented offshoring to nearshoring or friendshoring,
so as to better control its supply chain security. Facing the trend of the industrial supply chain, the
Company has launched a glocalization strategic landscape in 2018: in 2018, USI acquired the Polish
facility; in 2020, the Company acquired FAFG, the second largest EMS company in Europe, and has
ever since continued to integrate; in 2021, the Vietnam Facility started mass production; by 2022, the
efforts of the glocalization strategy has paid off – the Vietnam Facility achieved profitability, the second
factory in Nankang was put into operation, the project of the second factory in Mexico started, and the
synergy of integrating FAFG emerged with overseas factories generating more than 30% of the total
revenue. By adopting a new operating model of “global platform, localized service”, the Company
promotes sustainable and sound growth.
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. At present, the Company has 28 manufacturing 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. To meet customers' differentiated needs, the
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Company provide global customers with diversified manufacturing service solutions based on localized
operating systems in North America, Europe, Asia Pacific and North Africa, and form a competitive
advantage in global operations and differentiated services.
(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 has a diversified and balanced product portfolio covering five major fields of
communication electronics, consumption electronics, cloud and storage products, industrial and medical
electronics, and automotive electronics. On the basis of “selecting the very best”, the Company
implements horizontal integration across sub-sectors and industries, conforms to the development trend
of continuous integration of electronic industry, realizes dynamically optimal product portfolios, and
promotes sustainable and stable development. Meanwhile, 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.
Due to long-term partnership with the world-class electronic brands for their essential products and
keeping a close eye on 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.
The Company attaches importance to judging the industry development and grasping market
opportunities. The trend of automotive electrification and intelligence is mostly driven by the
development of the power system and its internal power modules and semiconductor components. The
automotive power module business is a differentiated growth market. The Company follows the market
trend to expand its advantages, and provides a complete range of key process technologies from chips,
modules to systems based on more than 40 years of experience in the automotive EMS business and its
cooperation with its parent company. In 2022, the Company's revenue from automotive electronics
increased by 72% YoY, accounting for 6.6% of the total revenue, up 1.8 percentage points from 4.8% in
2021.
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(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 has formulated the “five-star factory standard” with reference to the industry practice, that
is, the machines are 100% automated, more than 80% of the production lines can be operated with the
lights out, and the direct manpower is less than 30%. It plans to upgrade all factories of Industry 4.0 to
3-star or 4-star factories, with an average of 3.2 stars, and four of the factories will be upgraded to five-
star lights-out factories that achieve fully automated production in 2025.
The company uses Industry 4.0 automation technology to realize the intelligent manufacturing roadmap.
At present, technologies that have been introduced include internal automation equipment
communication network supporting 4G and 5G, Automatic Material Handling Systems (AMHS), fully
automated manipulator testing unmanned workshop, and real-time production equipment status
monitoring platform with remote access dashboard; AI technology has been applied to the management
of key production equipment, production systems and product inspection systems.
In addition, the Company set up a digital transformation committee in 2022 to continuously strengthen
digital management, comprehensively improve and upgrade its entire process with the help of IT
technology platforms and enhance its competitiveness.
(V) Product innovation driven by R&D
The company always attaches great importance to technology research and development, and continues
to increase investment in research and development . From 2020 to 2022, the Company's R&D
investment was RMB 1.58 billion, 1.64 billion, and 2.03 billion respectively. As of the end of 2022, the
Company had an R&D team of 2,728 employees, and obtained 786 patents and 224 potential patents
under application.
The company is a global leader in SiP technology. In 2022, it integrated a number of advanced
technologies with the miniaturized and multifunctional SiP, such as high-density SMT part design
(40um pitch), 150um pitch WLCSP packaging and filling technology, double layer stacking technology
of passive components, more complex double-sided packaging technology with more connectors,
double-sided special-shaped selective electromagnetic shielding, etc. In addition, to meet the needs of
high-performance computing, the Company cooperates deeply with ASUS to develop the first SiP CPU
module among industry peers, which reduces the core area of the motherboard by 38%, increases
Thermal Design Power (TDP) from 145W to 155W, increases Total Graphic Power (TGP) by 15%, and
improves the memory bandwidth from 6Gbps to 7.5Gbps.
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.
In 2021, the Company's automotive electronic business obtained the ISO26262 certification for
manufacturing, and formally started mass production of power systems, battery management systems,
and heat dissipation systems of electric vehicles. In the second half of 2022, it has passed customer
verification and officially started mass production of IGBT power modules used in inverters of electric
vehicles. In 2023, the Company will begin mass production of SiC power modules and continue to
invest in research and development of advanced process technology and participate in the early stages of
customer product development, and expectedly become a leading Outsource Semiconductor Assembly
and Test (OSAT) company in this field in the future.
(VI) Long-term adherence to sustainable management
In face of a complex and ever-changing business environment, corporate resilience has increasingly
become a part of the core competitiveness for company to achieve sustainable operations. Highly
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resilient companies can cope with a variety of unpredictable dynamic changes, recover quickly from
crises, and survive and thrive in adversity. USI not only focuses on risk control and crisis management,
but also pays attention to forging resilience in corporate strategy, organizational system, operating
system, cultural development, and technological innovation.
The Company always takes “be a most reliable provider for electronic design and manufacturing service”
as its vision, and according to the United Nations Sustainable Development Goals (SDGs), it focuses on
the four dimensions of its Sustainability Strategy, i.e. Low Carbon, Circular, Collaborative and Inclusive,
strengthens employees' awareness of SDGs, and cooperates with partners and communities to promote
economic growth and enhance productivity through sustainable development
.
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 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. Since 2019, the Company has launched employee stock ownership plans and stock option
incentive plans according to operational needs. As of the end of March 2023, the Company has launched
two stock option incentive plans, granting a total of 44,946,500 stock options with 14,293,875 shares
exercised by employees, and five employee stock ownership plans, transferring a total of 5,481,800
shares from treasury shares to the plans.
While operating steadily, the Company takes the mission of “creating value for shareholders and sharing
growth with shareholders”. In order to fully protect the interests of shareholders and enhance investor
confidence, the Company has continuously launched share repurchase plans, repurchasing 13,037,477,
16,042,278, and 9,356,317 shares in 2019, 2021, and 2022 respectively. As of the end of 2022, the
Company has achieved a cumulative net profit of RMB 13.81 billion, and a cumulative cash dividend
(including the 2022 dividend plan) of RMB 4.79 billion since its listing in 2012, with an average cash
payout ratio of 34.70%.
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V. Main Business Operations during the Reporting Period
The Company realized total revenue of RMB 68.52 billion in 2022, up 23.90% from RMB 55.30 billion
in 2021. Specifically, the revenue of automotive electronics increased by 72.24% YoY; the revenue of
cloud and storage products increased by 41.08% YoY; the revenue of communication electronics
increased by 21.69% YoY; the revenue of consumer electronics increased by 18.28% YoY; the revenue
of industrial electronics increased by 17.45% YoY. The main reasons for revenue growth include the
following: (1) The market share of existing customers was stable, and the increase in customer demand
has brought about an increase in sales; (2) The expansion of new businesses and new customers brought
about an increase in revenue; (3) RMB's depreciation relative to USD had a positive impact on the
Company's revenue; (4) The company's efforts in global expansion and landscape paid off.
The total sales, administrative, R&D and financial expenses of the Company in 2022 were RMB 3.80
billion, an increase of RMB 474 million or 14.24% over RMB 3.33 billion in 2021.
The Company achieved operating profit of RMB 3.46 billion in 2022, an increase of 62.34% over RMB
2.13 billion in 2021; the total profit was RMB 3.48 billion, an increase of 62.57% over RMB 2.14 billion
in 2021; the net profit attributable to shareholders of the listed company was RMB 3.06 billion, an
increase of 64.69% over RMB 1.86 billion in 2021. In 2022, the net profit attributable to shareholders of
the listed company net of non-recurring gains/losses was RMB 3.01 billion, an increase of RMB 1.32
million and 77.58% over RMB 1.70 billion in the same period of 2021.
(I) Main business analysis
1. Analysis of changes in related items in income statement and cash flow statement
Unit: yuan Currency: RMB
Change in
Item 2022 2021
percentage (%)
Revenue 68,516,075,963.26 55,299,654,770.21 23.90
COGS 61,327,074,531.73 49,981,479,197.84 22.70
Sales expense 323,833,862.87 311,480,902.10 3.97
Administrative expense 1,421,848,997.88 1,169,173,384.77 21.61
Financial expenses 18,865,406.63 203,398,590.62 -90.72
R&D expenses 2,034,461,775.71 1,641,398,512.61 23.95
Net cash flow from operating activities 3,435,196,255.50 -1,102,446,978.90 Not applicable
Net cash flow from investing activities -1,524,248,331.61 -1,486,554,540.33 Not applicable
Net cash flow from financing activities -502,415,196.59 2,391,384,303.44 -121.01
Reasons for changes in financial expenses: mainly due to the increase in gains from realized foreign
currency exchange, resulting in a decrease in financial expenses.
Reasons for the change in net cash flow from operating activities: the significant YoY increase in 2022
was mainly due to the increase in revenue and gross profit margin and the normal collection of
receivables.
Reasons for changes in net cash flow from investing activities: Net outflow was maintained in 2022,
mainly due to investment in fixed assets.
Reasons for changes in net cash flow from financing activities: significant decrease from 2021 to a net
outflow, mainly due to dividend distribution, repurchase of treasury shares in 2022 and issuance of
convertible corporate bonds in the first quarter of 2021.
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
In the current period, the Company's main business income increased by 23.92% over the same period
last year, and COGS increased by 22.70% over the same period last year. The detailed analysis is as
follows:
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(1). Main business by sector, product, region and by sales mode
Unit: yuan Currency: RMB
Main business by product
Gross
COGS Gross profit
profit Revenue
Product Revenue COGS YoY margin YoY
margin YoY (%)
(%) (%)
(%)
Communication
25,520,857,428.25 23,213,641,775.47 9.04 21.69 18.65 Up 2.33 pct.
electronics
Consumer electronics 21,898,114,544.44 19,960,343,272.38 8.85 18.28 18.52 Down 0.18 pct.
Industrial products 8,767,396,642.14 7,350,004,279.64 16.17 17.45 17.62 Down 0.13 pct.
Cloud and storage
6,989,468,417.07 5,919,995,989.47 15.30 41.08 39.95 Up 0.68 pct.
products
Automotive
4,551,947,156.28 4,167,640,175.20 8.44 72.24 70.48 Up 0.95 pct.
electronics
Medical electronics 137,139,250.98 120,908,484.94 11.84 -27.93 -32.15 Up 5.48 pct.
Others 605,170,421.43 591,232,816.89 2.30 17.47 25.93 Down 6.57 pct.
Total 68,470,093,860.59 61,323,766,793.99 10.44 23.92 22.70 Up 0.89 pct.
Main business by region
Gross
COGS Gross profit
profit Revenue
Region Revenue COGS YoY margin YoY
margin YoY (%)
(%) (%)
(%)
Chinese Mainland 45,258,700,717.39 40,624,437,219.50 10.24 18.17 17.76 Up 0.31 pct.
APAC (excluding
22,910,938,044.81 20,744,213,071.31 9.46 30.41 28.34 Up 1.46 pct.
Chinese Mainland)
Europe 3,685,983,088.14 3,317,008,855.38 10.01 31.49 30.46 Up 0.71 pct.
Others 4,202,541,904.39 3,947,059,004.57 6.08 65.24 58.76 Up 3.84 pct.
Tradeoff -7,588,069,894.14 -7,308,951,356.76 3.68 27.30 27.94 Up 0.49 pct.
Total 68,470,093,860.59 61,323,766,793.99 10.44 23.92 22.70 Up 0.89 pct.
Explanation of the main business by sector, product, region and sales mode
None
(2). Analysis of production and sales volume
√Applicable □ Not Applicable
Sales
Production Production Inventory
Main products Sales volume Inventory volume
volume YoY(%) YoY (%)
YoY (%)
Communication
673,410,591.00 672,264,234.00 30,275,124.00 13.94 11.70 3.94
electronics
Consumer
291,088,670.00 294,832,926.00 8,223,884.00 10.20 14.33 -31.29
electronics
Industrial
42,965,000.00 42,721,365.00 862,485.00 13.32 0.88 39.37
products
Cloud and
storage 20,565,656.00 20,411,915.00 916,353.00 3.82 3.70 20.16
products
Automotive
56,958,300.00 57,220,736.00 3,198,606.00 10.67 3.10 -7.58
electronics
Medical
935,427.00 955,013.00 25,329.00 - -94.21 -43.61
electronics
Others 5,755,546.00 5,752,393.00 55,464.00 -15.19 -15.89 6.03
Total 1,091,679,190.00 1,094,158,582.00 43,557,245.00 12.41 9.35 -5.39
Explanation of production and sales volume
Due to changes in medical customers in 2022, the sales of low-unit-price products have dropped
significantly, resulting in significant changes in sales and inventory of medical products.
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(3). Performance of major procurement contracts and major sales contracts
□ Applicable √Not Applicable
(4). Cost analysis
Unit: yuan
Cost analysis by product
Percentage Percentage
YoY
Product Cost item 2022 in total 2021 in total Note
(%)
cost (%) cost (%)
Communication Raw
21,143,709,312.12 91.08 17,563,315,933.47 86.21 20.39
electronics materials
Consumer Raw
18,493,279,012.23 92.65 15,480,396,654.47 93.08 19.46
electronics materials
Industrial Raw
6,251,468,184.63 85.05 5,081,919,122.30 86.60 23.01
products materials
Cloud and
Raw
storage 5,031,207,050.30 84.99 3,463,510,159.58 88.04 45.26
materials
products
Automotive Raw
3,417,746,384.46 82.01 1,793,876,098.35 73.50 90.52
electronics materials
Medical Raw
93,155,828.61 77.05 195,058,601.05 78.88 -52.24
electronics materials
Raw
Others 339,113,565.60 57.36 355,017,372.12 91.46 -4.48
materials
Raw
Total 54,769,679,337.96 89.31 43,933,093,941.35 88.42 24.67
materials
Explanation of other aspects of cost analysis
In 2022, the revenue from cloud and storage products and automotive electronics products grew by
41.08% and 72.24% respectively. Therefore, the cost of raw materials in this period increased
correspondingly YoY along with increase in revenue; the revenue of medical products dropped by 27.93%
in 2022 with the sales of low-margin products decreasing significantly, so the YoY decrease in raw
material costs was greater than the decrease in revenue.
(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
√Applicable □ Not Applicable
The sales to the top five customers amounted to RMB 32.71 billion, accounting for 47.75% of the total
annual sales; among the top five customers, the sales to related parties amounted to 0 RMB, accounting
for 0% of the total annual sales.
During the reporting period, the proportion of sales to a single customer exceeded 50% of the total, and
there were new customers among the top 5 customers or heavy dependence on a few customers.
□ Applicable √Not Applicable
B. Main suppliers of the Company
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√Applicable □ Not Applicable
The purchase amount from the top five suppliers was RMB 27.18 billion, accounting for 48.38% 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 to the Company's top five customers are as follows:
Unit: 10,000 yuan Currency: RMB
No. Customer name 2022 Proportion to total annual sales (%)
1 Customer A 1,735,264.25 25.33
2 Customer B 900,319.22 13.14
3 Customer C 270,958.42 3.95
4 Customer D 223,482.07 3.26
5 Customer E 141,444.01 2.06
Total 3,271,467.97 47.75
The purchase amount of the Company's top five suppliers is as follows:
Unit: 10,000 yuan Currency: RMB
No. Supplier name 2022 Proportion to total annual sales (%)
1 Supplier A 1,275,590.38 22.70
2 Supplier B 1,166,605.60 20.76
3 Supplier C 103,818.62 1.85
4 Supplier D 94,112.80 1.68
5 Supplier E 78,092.44 1.39
Total 2,718,219.84 48.38
3. Expenses
√Applicable □ Not Applicable
Item 2022 2021 Change YoY (%) Remark
Mainly due to the increase
in gains from realized
Financial
18,865,406.63 203,398,590.62 -184,533,183.99 -90.72 foreign currency exchange,
expenses
resulting in a decrease in
financial expenses
Mainly due to the
provision for impairment
of factory buildings and
Loss on assets inventory in accordance
-98,869,591.53 -18,746,153.38 -80,123,438.15 Not applicable
impairment with accounting standards
for the relocation of the
subsidiary’s factory in the
current period.
Mainly due to the
provisions for credit
Loss on credit
-10,116,849.95 -1,706,888.48 -8,409,961.47 Not applicable impairment in accordance
impairment
with accounting policies in
the current period
Gain from Mainly due to the increase
disposal of 8,615,113.60 2,414,697.02 6,200,416.58 256.78 in income from fixed asset
assets (losses disposal in the reporting
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are period.
represented by
'-')
Mainly due to the increase
Income tax in income tax provision for
417,205,449.46 282,165,880.75 135,039,568.71 47.86
expense the increase in profit in 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 2,034,461,775.71
Total R&D investment 0
Total R&D investment 2,034,461,775.71
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 2,728
Proportion of R&D personnel in the total number of employees of the Company (%) 11.47%
Breakdown by educational background
Number of
Educational background
personnel
Doctor’s degree 11
Master’s degree 1,026
Bachelor’s degree 1,351
Junior college 265
Senior high school and under 75
Breakdown by age
Number of
Age
personnel
Under 30 years old (excluding 30 years old) 435
30-40 years old (including 30 years old and excluding 40 years old) 1,120
40-50 years old (including 40 years old and excluding 50 years old) 875
50-60 years old (including 50 years old and excluding 60 years old) 290
60 years old and above 8
(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 2022 2021 Reasons for changes
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A significant YoY increase in 2022
Net cash flow from was mainly due to the increase in
3,435,196,255.50 -1,102,446,978.90
operating activities revenue and gross profit margin and
the normal collection of receivables.
Net outflow was maintained in 2022,
Net cash flow from
-1,524,248,331.61 -1,486,554,540.33 mainly due to investment in fixed
investing activities
assets.
A significant decrease from 2021 to a
net outflow, mainly due to dividend
Net cash flow from distribution, repurchase of treasury
-502,415,196.59 2,391,384,303.44
financing activities shares in 2022 and issuance of
convertible corporate bonds in the first
quarter of 2021.
(II) Explanation of significant changes in profit caused by non-essential business
□ Applicable √Not Applicable
(III) Analysis of assets and liabilities
√Applicable □ Not Applicable
1. Assets and Liabilities
Unit: yuan
Proportion Proportion
to total to total
Item End of 2022 assets (%) End of 2021 assets (%) YoY Remark
by June 30, December
2022 31, 2020
Mainly due to the
transfer of financial
assets - contingent
Held-for-trading consideration from
271,243,519.53 0.70 96,480,087.56 0.27 181.14
financial assets other non-current
financial assets to
current assets in the
current period.
Mainly due to the
shortened turnover
days of accounts
Accounts
11,119,120,760.11 28.83 12,459,388,852.15 34.75 -10.76 receivable and faster
receivable
collections of
receivables in the
current period
Mainly due to the
Prepayments 73,390,129.45 0.19 51,467,608.39 0.14 42.59 increase in advance
payment for materials
Mainly due to
preparation of
materials for
production according
Inventory 10,909,893,675.82 28.28 9,037,562,662.64 25.20 20.72 to operational needs.
Although the
inventory balance has
increased YoY, it is
still on normal level
Mainly due to cash
Non-current
received for lease
assets due 322,815.55 0.00 991,195.08 0.00 -67.43
receivables in the
within one year
current period
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Mainly due to the
Other equity changes in the fair
instrument 38,420,782.40 0.10 75,957,194.28 0.21 -49.42 value of industrial
investments fund investment in the
current period
Mainly due to transfer
of completed
production lines to
Fixed assets 4,456,780,136.30 11.55 3,442,205,758.01 9.60 29.47
fixed assets and
investment in new
equipment
Mainly due to the
Construction in
303,432,536.69 0.79 798,015,703.22 2.23 -61.98 transfer to fixed assets
progress
in the current period
Mainly due to the
cash demand for
operating activities,
Short-term the repayment of
4,499,463,404.21 11.66 2,480,500,031.68 6.92 81.39
borrowings long-term loans, and
the increase in short-
term bank loans in the
current period
Mainly due to
shortened turnover
Accounts
11,056,190,855.43 28.66 12,558,598,243.17 35.02 -11.96 days of accounts
payable
payable in the current
period
It is mainly due to the
increase in salary
expenditure and the
Employee
1,161,885,093.89 3.01 831,186,986.48 2.32 39.79 accrual of bonuses
benefits payable
based on operating
performance in the
current period
Mainly due to the
increase in profits and
Taxes payable 388,090,724.55 1.01 238,676,479.75 0.67 62.60 the accrual of income
tax in the current
period
Mainly due to
deposits for raw
Other payables 716,932,703.77 1.86 423,509,465.51 1.18 69.28 material received
from customers in the
current period
Mainly due to
Non-current
repayment of long-
liabilities due 506,820,025.23 1.31 720,507,781.49 2.01 -29.66
term borrowings from
within one year
banks
Mainly resulted from
Derivative the changes in fair
financial 3,118,891.32 0.01 976,413.16 0.00 219.42 value caused by
liabilities derivative financial
products
Mainly due to the
Other current relocation expenses of
3,661,569.01 0.01 - -
liabilities Shenzhen factory in
the current period
Long-term Mainly due to
59,427,538.88 0.15 1,101,220,467.55 3.07 -94.60
borrowings repayment of long-
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term borrowings from
banks
Due to the adjustment
of the amount of the
Long-term pension account in
employee 199,342,510.02 0.52 297,331,160.14 0.83 -32.96 accordance with the
benefits payable pension actuarial
report and relevant
regulations
Mainly due to the
transfer of payables
Long-term
31,113,295.71 0.08 45,581,055.62 0.13 -31.74 expected to be paid
payables
within one year to
current liabilities
Mainly due to transfer
Other non-
of deposits to be
current 3,692,335.61 0.01 5,642,575.13 0.02 -34.56
repaid within one year
liabilities
to current liabilities
Mainly due to the
gains on foreign
Other currency statement
Not
comprehensive 111,850,168.58 0.29 -83,600,398.95 - 0.23 translation caused by
applicable
income changes in foreign
exchange rate in the
current period
Other explanations
None
2. Overseas assets
√Applicable □ Not Applicable
(1) Asset size
Including: overseas assets 18,098,362,925.16 (unit: yuan; currency: RMB), accounting for 46.92% of the
total assets.
(2) Relevant explanations on the relatively high proportion of overseas assets
□ Applicable √Not Applicable
3. Restrictions on major assets at the end of the reporting period
□ Applicable √Not Applicable
4. Other explanations
□ Applicable √Not Applicable
(IV) Analysis of industry business information
√Applicable □ Not Applicable
1. In terms of communication products, according to the data compiled by the Company, Apple smart
phones accounted for 19% of the global smart phone market in 2021, with sales volume reaching 223
million units, a decrease of 2% over that of 2021.
WW Smart Phone Estimated Market Share
2021 2022 21'22
Shipments Shipments
Market Share Market Share YoY
(M units) (M units)
Worldwide 1,319 - 1,176 - -11%
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Total
Samsung 265 20% 259 22% -2.4%
Apple 228 17% 223 19% -2.0%
Xiaomi 180 14% 153 13% -15%
OPPO 132 10% 107 9.1% -19%
Vivo 124 9% 105 8.9% -16%
Others 391 30% 329 28% -16%
Source: USI, Feb. 2023
2. In terms of consumer electronics products, according to the market research report compiled by USI,
the wearable product shipments grew by 13% overall, 15% for earphones and 17% for watches.
WW Wearable Market Forecast
21/22 21-25
Product 2021 2022 2023 2024 2025
YoY CAGR
Total Shipment (M Units) 503 569 626 667 701 13% 8.6%
Earwear 310 357 392 417 438 15% 9.0%
Watch 137 160 182 199 212 17% 12%
Wrist Band 55 51 50 49 48 -7.3% -3.3%
Other 2.0 2.1 2.5 3.0 3.4 3.2% 14%
Market Share
Earwear 61% 63% 63% 62% 62%
Watch 27% 28% 29% 30% 30%
Wrist Band 11% 9.0% 8.0% 7.3% 6.8%
Other 0.4% 0.4% 0.4% 0.5% 0.5%
Source: USI, Feb. 2023
3. In terms of cloud and storage products, according to the data compiled by the Company, the market
demand for server mainboards and switches will maintain stable growth. By strengthening cooperation
with major customers, the Company strives for more market shares and orders.
3.1 WW Server Shipment Forecast
21-25
2021 2022 2023 2024 2025
CAGR
Shipments (thousand units) 17,008 18,045 18,821 19,762 21,244 5.7%
YoY 4.6% 6.1% 4.3% 5.0% 7.5%
Source: USI, Feb. 2023
3.2 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 2022 was 9.6%. The compound growth rate
of SSD market from 2021 to 2025 is about 10.5%. While actively maintaining existing customers, the
Company is striving to develop new customers and focus on developing enterprise-level products.
21'22 21-25
2021 2022 2023 2024 2025
YoY CAGR
Total SSD
38.4 42.1 46.7 51.2 57.3 9.6% 10.5%
revenue ($B)
Source: USI, Feb. 2023
4. In terms of industrial products, according to the data compiled by the Company, the market of the
main products, smart handheld devices and POS, grew by 9.0% in 2021 due to the growth of logistics
and warehousing demand and the recovery of retail industry.
21'22 21-25
2021 2022 2023 2024 2025
YoY CAGR
Total POS
74 80 88 95 104 9.0% 9.1%
revenue ($B)
Source: USI, Feb. 2023
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5. In terms of automotive products, according to the information compiled by the Company, the
automotive electronics industry has resumed growth under the slowdown of the epidemic and the
improvement of material shortages. The overall market growth rate in 2022 is 8.3%, and the compound
growth rate in 2021-2025 is 7.4%. At the same time, the electric vehicle market is showing rapid growth,
and the sales volume will increase by 53% in 2022.
5.1 Global Automotive Electronics Market Forecast
21'22 21-25
2021 2022 2023 2024 2025
YoY CAGR
Total AE
272 295 316 338 362 8.3% 7.4%
revenue ($B)
Source: USI, Feb. 2023
5.2 Global Energy Car Sales Forecast
21'22 21-25
K units 2021 2022 2023 2024 2025
YoY CAGR
Total 10,080 15,407 21,080 28,877 34,453 53% 36%
HEV 3,333 4,667 7,000 10,110 13,333 40% 41%
BEV 4,667 8,000 10,000 13,667 14,667 71% 33%
PHEV 2,010 2,667 4,000 5,000 6,333 33% 33%
FCY 70 73 80 100 120 4% 14%
Source: USI, Feb. 2023
5.3 Total Auto Power Module
Unit: $M
21'22 21-25
2021 2022 2023 2024 2025
YoY CAGR
Total Auto Power Module 1,728 2,119 2,534 3,056 3,955 22.6% 23.0%
IGBT Power Module 1,490 1,874 2,245 2,645 3,112 26% 20%
MOSFET Power Module 225 227 251 268 278 0.9% 5.4%
Wide Bandgap Power Module 13 18 38 143 565 38% 157%
Source: USI, Feb. 2023
6. In terms of medical products, according to the data compiled by the Company, the market demand for
electronic manufacturing services has grown steadily.
Medical Product Assembly Value, 2021-2025
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2022 Annual Report
21'22 21-25
Medical Product Assembly Value ($M) 2021 2022 2023 2024 2025
YoY CAGR
Total 50,303 52,827 55,498 58,240 61,029 5.0% 5.0%
Medical Diagnostics 19,820 20,871 21,977 23,120 24,276 5.3% 5.2%
Therapeutic 11,603 12,113 12,646 13,202 13,783 4.4% 4.4%
Monitoring & Surgical 18,880 19,843 20,875 21,918 22,970 5.1% 5.0%
Source: USI, Feb. 2023
(V) Analysis of investment
Overall analysis of foreign equity investment
√Applicable □ Not Applicable
The investment project of the Company's raised funds involves capital contribution to the Huizhou factory and the Vietnam factory. For details of the investment,
please refer to the “Special Report on the Deposit and Use of Raised Funds in 2022” disclosed by the Company on the same day (announcement number: Lin 2023-
032).
1. Significant equity investment
□ Applicable √Not Applicable
2. Significant non-equity investment
□ Applicable √Not Applicable
3. Financial assets measured at fair value
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
Cumulative
Gain or loss Impairment
Opening changes in fair Purchase amount Sales/redemption
Category of assets from change in provision in Other changes Ending balance
balance value included in 2022 amount in 2022
fair value 2022
in equity
Stocks 127,835,659.60 2,963,517.43 -35,929,801.41 0.00 0.00 0.00 1,326,600.49 96,195,976.11
Private equity funds 94,130,696.47 2,310,884.24 0.00 0.00 37,169,261.04 -35,982,785.94 14,723,029.34 112,351,085.15
Derivatives -360,243.78 30,257,247.19 0.00 0.00 0.00 -11,663,859.38 14,706,450.25 32,939,594.28
Others 186,833,577.07 -3,692,451.36 0.00 0.00 983,897,925.66 -968,304,400.05 36,450,382.61 235,185,033.93
Financial products 0.00 0.00 0.00 0.00 0.00 -28,337,773.05 28,337,773.05 0.00
-Accounts receivable factoring 87,238,983.18 0.00 0.00 0.00 983,897,925.66 -939,966,627.00 4,642,559.87 135,812,841.71
- Contingent consideration 90,969,658.89 4,932,483.64 0.00 0.00 0.00 0.00 3,470,049.69 99,372,192.22
- Convertible bond option 8,624,935.00 -8,624,935.00 0.00 0.00 0.00 0.00 0.00 0.00
Total 408,439,689.36 31,839,197.50 -35,929,801.41 0.00 1,021,067,186.70 -1,015,951,045.37 67,206,462.69 476,671,689.47
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Note:
1. Stocks: equity investment in TriKnight Capital Corporation, GaN System Inc, Senscomm
Semiconductor Co., Ltd.
2. Private-equity fund: PHI FUND, L.P. and Suzhou Yaotu Equity Investment Partnership
3. Derivatives: Forward exchange contract
4. Other changes include realized income and foreign currency translation in the current period
Investment in securities
□ Applicable √Not Applicable
Investment in private equity funds
√Applicable □ Not Applicable
The Company signed the Suzhou Yaotu Equity Investment Partnership (Limited Partnership) Agreement
with Shanghai Glory Ventures Investment Management Co.,LTD and 21 other limited partners (LP).
USI invested in Suzhou Yaotu Equity Investment Partnership as an LP. The target total capital
contribution of the partnership shall not exceed RMB 1.5 billion, raised in series of closings. A total of
RMB 793 million and RMB 1.128 billion was raised in the first and second closing. USI has subscribed
and contributed RMB 30 million. As of December 31, 2022, the Company has paid in capital of RMB
12 million.
According to the partnership agreement signed by UGE and the investee PHI FUND, L.P., UGE shall
pay is a total of USD 25,000,000.00 for subscription, and USD 3,754,206.00 was paid in this period,
equivalent to RMB 26,169,261.04. As of December 31, 2022, the Group has accumulatively paid USD
18,754,206.00, equivalent to RMB 130,615,543.11, and the remaining USD 6,245,794.00, equivalent to
RMB 43,499,456.89, has not yet been paid.
Investment in derivatives
√Applicable □ Not Applicable
The Fifteenth Meeting of the Fifth Session of the Board of Directors and the Thirteenth Meeting of the
Fifth Session of the Board of Supervisors reviewed and approved the Proposal on the Amount of
Financial Derivatives Trading for 2022, which allowed the Company to carry out financial derivatives
transactions within the amount of USD 2 billion or equivalents in other currencies (the transaction in
extension is calculated once) in 2022. In 2022, the actual amount of transactions was USD 1.705 billion,
with the realized gains of RMB 14.71 million and the unrealized gains of RMB 30.26 million.
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4. Specific progress of material asset restructuring and integration during the reporting period
□ Applicable √Not Applicable
(VI) Sale of material assets and equity
√Applicable □ Not Applicable
On January 19, 2023, the Company's Kunshan subsidiary signed the Agreement on the Equity Transfer
of SUMA-USI Electronics Co., Ltd (SUMA-USI) with SUMA to transfer 49% equity of SUMA-USI to
SUMA at a transfer price of RMB 110.88 million. As of March 8, 2023, the equity transfer has been
completed, and Kunshan Facility no longer holds equity in SUMA-USI.
(VII) Analysis of major holding and joint stock companies
√Applicable □ Not Applicable
1. Holding subsidiaries
Unit: RMB 10,000 yuan
Currency of
Registered Total Net Net
Company Name Main business registered
capital (RMB) assets assets profit
capital
Production and sales,
Universal Global Scientific product design and
NTD 1,980,000,000 684,854 209,551 58,246
Industrial Co., Ltd. research and
development
UNIVERSAL GLOBAL
TECHNOLOGY(KUNSHA Production and sales RMB 550,000,000 367,275 184,542 41,492
N)CO., LTD.
Universal Global
trade and investment USD 410,000,000 753,725 394,778 -2,278
Technology Co., Limited
Production and sales,
Universal Global
product design and
Technology (Shanghai) Co., RMB 1,330,000,000 362,972 204,092 43,966
research and
Ltd.
development
Universal Global
Technology (Huizhou) Co., Production and sales RMB 800,000,000 261,857 79,130 472
Ltd
USI Electronics (Shenzhen)
Production and sales USD 75,000,000 182,447 157,642 18,679
Co., Ltd.
Universal Global Industrial
trade and investment USD 11,000,000 185,911 10,818 847
Co., Limited
Contract
Universal Scientific
Manufacturing,
Industrial De México S.A. MXN 1,258,077,326 241,274 52,816 3,630
Product Repair and
De C.V.
Related Services
Production and sales,
UNIVERSAL SCIENTIFIC
product design and
INDUSTRIAL VIETNAM USD 100,000,000 147,835 69,238 4,433
research and
COMPANY LIMITED
development
Universal Scientific
Investment EUR 321,374,822 265,994 243,891 703
Industrial (France)
Universal Scientific Production and sales,
NTD 1,399,727,400 168,314 88,836 7,037
Industrial Co., Ltd. product maintenance
Universal Scientific
Production and sales PLN 80,852,300 31,392 28,539 5,036
Industrial Poland Sp. z o.o.
Asteelflash(Suzhou)Co.,Ltd. Production and sales USD 18,000,000 177,075 133,037 13,238
Note 1: the registered capital includes the amount of re-investment to other subsidiaries, and the amount
of total assets, net assets and net profit is from standalone financial statements, not including subsidiaries.
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2022 Annual Report
Note 2: the above are subsidiaries within the scope of the consolidated statements that meet the
conditions that one of the indicators of total assets, operating income, and net profit accounts for more
than 5% of the corresponding amount in the consolidated statements.
2. Affiliates
Unit: RMB 10,000 yuan
Currency
Registered
of Total Net Net
Company Name % capital
registered assets assets profit
(RMB)
capital
Universal Global Technology Co., Limited 49 RMB 220,000,000 78,920 22,621 4,859
M-Universe Investments PTE.LTD. 42.23 USD 138,969,126 164,448 112,428 11,321
Note: the above are affiliates that meet the conditions that one of their indicators of net assets and net
profit accounts for more than 1% of the corresponding amount in the consolidated statement.
3. Subsidiaries or affiliates that contributed over 10% to the net profit of the Company
Unit: RMB 10,000 yuan
Operatin Contribution to
Company Name Revenue Net profit
g profit consolidated net profit
Universal Global Technology Co.,
1,565,977 71,543 58,246 19.03%
Limited
Universal Global Technology
908,175 48,590 43,966 14.37%
(Shanghai) Co., Ltd.
UNIVERSAL GLOBAL
TECHNOLOGY(KUNSHAN)CO., 667,712 47,630 41,492 13.56%
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
revenue of global EMS industry exceeded USD 720 billion in 2022, and is expected to reach USD 940
billion in 2026, growing at an average CAGR of 6.8% from 2021 to 2026. The overall market shows a
steady growth trend, and the Asia-Pacific region will maintain a leading growth rate.
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Source: USI, Feb. 2023
The Worldwide CM, EMS and ODM Market by Region, 2021-2026
Unit: USD 100 million
The Worldwide CM, EMS and ODM Market by Region (2021-2026)
2021 2022 2023 2024 2025 2026 CAGR
CM Revenue
Americas 1,137 1,176 1,225 1,280 1,337 1,397 4.30%
EMEA 803 874 909 945 982 1,018 4.00%
APAC 4,887 5,205 5,626 6,083 6,552 7,050 7.70%
Total 6,827 7,255 7,761 8,308 8,870 9,465 6.80%
EMS Revenue
Americas 1,096 1,135 1,182 1,235 1,291 1,349 4.40%
EMEA 762 823 856 890 924 959 4.00%
APAC 3,578 3,818 4,138 4,489 4,850 5,233 8.00%
Total 5,436 5,775 6,176 6,614 7,065 7,541 6.80%
ODM Revenue
Americas 40.1 41.2 42.6 44.1 45.9 48.1 3.90%
EMEA 41.5 51.4 53.4 55.3 57.3 59.4 3.90%
APAC 1,309 1,387 1,489 1,594 1,702 1,817 6.90%
Total 1,390 1,480 1,584 1,693 1,805 1,925 6.70%
Source: USI, Feb. 2023
2. Global competitive landscape and industry ranking
According to the latest ranking of global EMS providers (2021), USI ranked 12th.
Name of Operating income Operating income Annual Net operating
Rank manufacturer (USD 100 million) (USD 100 million) growth rate margin
Year 2020 2021 20'21 2021
1 Honghai 1,823 2,144 18% 2.3%
2 PEGATRON 475 453 -4.6% 2.0%
3 COMPAL 353 443 25% 1.1%
4 Quanta 371 404 8.9% 3.0%
5 BYD 228 335 47% 1.8%
6 Wistron 286 309 7.9% 1.7%
7 Jabil Circuit, Inc. 276 300 8.8% 2.5%
8 Flextronics 233 255 9.1% 4.0%
9 INVENTEC 173 186 8.0% 1.1%
10 Delta 99 113 14% 8.9%
11 TPV 92 109 19% 1.7%
12 USI 70 86 23% 3.4%
Whole Industry 5,647 6,827 21% 2.6%
Source: USI, Feb. 2023
3. Industry trend of profit level and analysis of net profit margin
The Company's operating net profit margin was 3.4% in 2021, above the average level of the world's top
ten EMS providers, and 5.1% in 2022, a significant YoY growth.
The reasons for a higher net profit margin than the industry average are as follows:
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(1) Diversified and balanced product mix, and high technology-based products USI has competitive
advantages in various segments of the Company’s product categories with a diversified and balanced
product mix. Meanwhile, USI provides design and manufacturing services in key parts and components,
rather than merely end product assembly.
(2) Industry-leading automated high-quality manufacturing and cost control. By introducing intelligent
automation into its self-developed intelligent manufacturing system, the Company optimizes existing
processes and builds intelligent factories, transforming labor-intensive manufacturing into high-
productivity intelligent manufacturing, improving yield, process techniques and stability, enhancing on-
time delivery capabilities, and maximizing cost-effectiveness.
(3) Benefits from economies of scale and gains from changes in foreign exchange. In 2022 the
Company's revenue was RMB 68.52 billion, an increase of 23.90% YoY, and the proportion of period
costs to revenue was 5.54%, a YoY decrease of 0.47 percentage points, showing the benefits from
economies of scale; Meanwhile, the depreciation of RMB against USD had a positive impact on its
revenue.
(4) Strengthening R&D and design capabilities, and moving towards the high-value added end of the
smiling curve The Company provides R&D and manufacturing services for key customers in
EMS+/JDM model, and creates more value for customers and improves profitability through technology
and product innovation.
4. Industry landscape
(1) Consumer electronics will enter an era of “intelligence”
PCs and mobile phones, which once drove the rapid growth of the electronics industry, have entered the
maturity stage. The slight innovations in product technology cannot effectively entice buyers for
consumption, resulting in prolonged replacement cycles for traditional consumer electronics products,
slowing down the growth rate of incremental demand, and featuring the competition over existing
customers.
Since the beginning of 2023, ChatGPT has quickly become a hot topic. The core of ChatGPT is artificial
intelligence generated content (AIGC), which shows powerful intelligence through deep learning neural
network model and massive data set training. After the API of the ChatGPT model is opened, more and
more applications will be equipped with AI technology, and the huge demand for computing power will
be stimulated, requiring complete supporting systems such as data centers, GPU servers, and low-latency
networks. With the further evolution of the GPT algorithm and the diversification of application
scenarios, the development potential of “AI+” will continue to be demonstrated, and the iteration
towards intelligence of traditional CPU, operating system, database and other products will be
accelerated. New AI chips, efficient cloud services, deep learning frameworks, advanced AI algorithms,
etc. will become the core areas of technological development, bringing the consumer electronics into the
era of “intelligence” and stimulating a huge increase in demand for comprehensive upgrades and
iterations.
(2) Development opportunities brought by 5G and construction of a digital China
With the accelerated integration of 5G with Industrial Internet, cloud computing, big data, 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 devices, communication and storage.
China has built the largest and most advanced 5G network, and the R&D of 6G technology has begun. A
very important change in the 6G network architecture is its transformation from traditional ground
access to all-dimensional and multi-dimensional access in space, land and sea. Satellite Internet will be
an important part of the 6G network architecture, which is an emerging information communication
infrastructure after fixed communication networks and mobile communication networks, and is one of
the key directions for the future development of global information communication networks.
The construction of a digital China and the AI computing power revolution will reinforce each other.
During China's 14th Five-Year Plan period, the development of digitization, connectivity, and
intelligence of the whole society will reach a new high. China is implementing the “strategy to channel
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2022 Annual Report
more computing resources from the eastern areas to the less developed western region” from 2022 to
2025. As the data center industry has a long industrial chain, wide coverage and great influence, many
core industries in digital economy including electronic information manufacturing, software and
information technology services will be stimulated in terms of transformation, upgrading and innovative
development.
(3) Accelerated growth of automotive electronics driven by new energy vehicles
The automotive industry is undergoing a transformation of “electrification, intelligence, and
connectivity”. New energy vehicles control the vehicle's power system through electronic control,
electric drive, and batteries, with higher efficiency and precision than traditional gas vehicles. The
technologies of electronic control, electric drive, and batteries make it easier to realize autonomous
driving, and intelligent driving will see long-term growth. The evolution of technology has given rise to
new application scenarios and business models. The smart cockpit are integrated with more intelligent
and digital functions, which greatly increases the value of vehicles.
With the increase in the penetration rate of high-end automotive systems and the development of
intelligent vehicles, the scale of the automotive electronics industry is expected to expand continuously,
and growth of related fields such as smart cockpits, smart driving, power electronics, electronic control,
and energy storage will speed up.
(II) Corporate Development Strategy
√Applicable □ Not Applicable
1. Industry development trend
The demand for “glocalization” in the current EMS industry chain has grown significantly. The supply
chain is shifting from efficiency-oriented offshoring in the past to near-shoring or friendshoring in order
to make sure supply chain security. EMS providers are generally more concerned about the changes in
the global industrial chain. The demand for some consumer products and communication products will
be partially transferred to India or Vietnam; servers and automotive electronic products will be partially
transferred to Mexico close to US market; A similar situation exists in Eastern Europe as well.
The global EMS outsourcing demand will continue to grow. According to the market analysis report and
the data compiled by the Company, the global EMS/ODM market maintains a steady growth trend, with
an average growth rate of about 6.8% from 2021 to 2026.
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
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2022 Annual Report
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 electronics manufacturing industry are relatively stable, and the top
three segments also maintain relatively stable growth.
According to the statistics from professional institutions collected by the Company, in 2021, the revenue
of the top three categories in the EMS 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 EMS industry.
From 2019 to 2025, the three categories will grow at a CAGR of 6.7%, 5.8%, 1.8% respectively.
Based on the technology and resources accumulated in the EMS industry, following trend of
electrification and intelligence of automobiles, the demand for automotive electronic products related to
electric vehicles has surged, the upgrading of technologies such as smart cockpits and ADAS has
accelerated, and the proportion of manufacturing service outsourcing has increased. Leading electronics
manufacturers are extending their businesses to the field of automotive electronics.
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.
(4) The company has become an international company with multinational operations. Facing the
operating environment with varied cultural backgrounds, languages, ethnicities, and time zones, the
Company needs to communicate and learn from each other openly and inclusively in terms of
management model, team building, strategy execution, operation system, employee ability improvement
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and incentive system, so as to achieve inclusiveness and common improvement. These are the
difficulties for the Company to build a glocalized operation system.
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) Considering the Company's development strategy, USI will create a more competitive remuneration
and incentive system, recruit professionals with experience in world-renowned companies, strengthen
job skills training for employees, develop internal talent training mechanisms, and improve coordination
in operations with global sites.
(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: The Company adheres to the strategy of “modularization, diversification, and globalization”,
focusing on the five major fields of communication electronics, consumer electronics, cloud and storage,
industrial and medical electronics, and automotive electronics, based on a diversified and balanced
product line with miniaturization solutions as its core technology, develops its business blueprint with a
global vision, and strives to create value for customers through technological innovation.
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, smart wearables and other sub-
sectors. Meanwhile, the Company adheres to the 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, technologies and manufacturing sites 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 accumulated more than 40
years of experience in the automotive business. At present, the Company has entered into the assembly,
production and testing of power modules of international power semiconductor manufacturers, and
formally started mass production of IGBT and SiC power modules used in inverter for electric vehicles
in 2022. It is expected that by 2025, the proportion of revenue from automotive electronics will rise to
more than 10%, of which power system and power module will account for more than half.
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Based on the global layout of production capacity, the Company plans to actively develop new
customers. On the basis of the localized operation system in North America, Europe, Asia Pacific and
North Africa, in the fields of SiP, smart wearable modules, automotive electronics, industrial electronics
and other high-growth fields, USI give full play to the differentiated competitive advantages of local
manufacturing services and resources, and explore local leading customers in the industry. By 2027, the
Company will have about 25 customers with sales revenue exceeding USD 100 million, and more
balanced customer structure, revenue distribution and global talent pool.
2. Supply chain plan
As global trade conflicts and geopolitical risks heat up, more and more companies are no longer just
pursuing concentrated production at the lowest-cost locations, but are beginning to disperse their supply
bases and emphasize regionalization or localization in order to reduce the uncertainties brought by “long
chain” as well as transportation costs, and build a more flexible supply chain. At the beginning of 2020,
the Covid pandemic spread across the world, causing an unprecedented imbalance between supply and
demand in the industry, and accelerating the development of glocalization. The Company began to
deploy globalized manufacturing services long before this trend formed. After acquiring FAFG, USI has
28 production site across four continents around the world. The supply chain management unit supports
the Company's expansion of manufacturing locations and actively establishes a more resilient supply
chain to provide flexible, stable and efficient services that meet customer needs.
The following are the Company's main strategies for the development of supply chain:
(1) Strategically cooperate with large-scale international original manufacturers or agents, integrate the
needs of the whole company to seek support from suppliers, and supply each factory locally in the
Company's production area;
(2) Develop local suppliers in each region to reduce time and costs of transportation, increase supply
flexibility and speed up response, including localized manufacturers for large-size materials (such as
mechanical parts, packaging materials, wires, etc.) and process materials, chemicals, and consumables
that have a limited shelf life or require special delivery; explore printed circuit board manufacturers
outside Greater China, especially in Southeast Asia; explore production equipment manufacturers,
automation equipment manufacturers, or other localizable non-raw material manufacturers;
(3) Set up factories near the new base with existing partners and provide services nearby;
(4) Continue to develop local suppliers in China, and use the advantages of scale and efficiency to meet
the needs of products in large quantities or demand of domestic customers;
(5) Actively assess risks, pre-arrange supply bases and formulate supply chain emergency plans to fully
prevent and disperse risks.
3. Production plan
The Company continues to implement the glocalization strategy, and currently has 28 production bases
in 10 countries or regions around the world, and has acquired part of the equity of Memtech to
strengthen the vertical integration of the industry. In 2022, the Company's Vietnam factory, which was
put into operation in 2021, began to make a profit, the second Nankang factory was put into operation,
and the construction project of the second Mexican factory started. The synergy from the merger and
acquisition of FAFG was appearing with revenue of overseas factories accounting for more than 30% of
the total revenue. . In the future, the Company will expand the capacity of manufacturing based on
customer demands and development plans.
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
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.
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4. Human resources and capital expenditure plan
According to the glocalization development strategy, the Company formulates a global human resource
plan, which is a prediction and plan for its future manpower demand, talent recruitment and employee
training in order to deal with challenges brought by various cultural backgrounds, languages, ethnicities
and time zones of the multinational operations. 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.
In 2023, facing slow down in the macroeconomic growth, the Company will more prudently arrange
human resources and capital expenditure, balance the annual financial goals and long-term investment
plans, and expand digital management according to the needs of business development and global
operations to contribute to the intelligent and automatic production. Compared with the upstream of the
industrial chain, the Company's industrial chain links are relatively stable, and the Company will
continue to track the trend of changes in the supply chain, rationally deploy global production capacity,
actively expand new customers, and increase performance growth points.
5. 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. In addition, network and
intelligent devices have been developing vigorously, driven by the improved bandwidth of 5G NR
network. 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 2023, the Company will continue to study the functional integration of SiP modules and
communication antennas, and expand more application functions of SiP modules by introducing more
process technologies into SiP module design. The Company will develop a new water washing
technology used after laser cutting to avoid the damage to sensitive components in the current dry ice
cleaning. In addition, due to the Covid pandemic, the Company have begun to add antibacterial agents or
use disinfection-resistant materials in structural parts, especially plastics ones, while enhancing the
durability of materials. 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 directions:
(1) Develop 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 including Power Module, Powertrain, smart cockpit, network access
products;
(3) Continuously expand the application of miniaturized products into the IoT field, and constantly
improving manufacturing process;
(4) Cooperate with other industry-leading technology companies to produce module products with
higher integration and more functions, and expand to IoT and other fields;
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(5) Develop 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.
6. Sustainability plan
The Company integrates the corporate core values of “realizing IDEAS together” into the Company's
business strategy and management, pursues sustainable development in Environment (E), Society (S)
and Governance (G): in terms of the Environment (E), the Company works to reduce environmental
impacts, promote resource recycling, and actively seek solutions to climate change governance; In terms
of Social (S), the Company continues to care for employees and promote
social participation activities to fulfill corporate responsibility, realizing global partnerships; In terms of
Governance (G), the Company protects the rights and interests of investors, strengthen operational risk
management, and ensure information security 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. The risk of weak macroeconomic recovery and insufficient demand
The EMS industry chain has shifted from supply chain-driven to demand-driven, and has a strong
correlation with the macroeconomic environment. Affected by many unfavorable factors such as the
Russia-Ukraine conflict, geopolitics, high inflation, tightening financial environment and repeated Covid
pandemics, the global economic growth rate will further decline, which will have a certain impact on
terminal demand, which may affect the Company's operating performance. The currently excessive
inventory in the upstream of the supply chain will return to a reasonable level in about half a year, which
will have a short-term impact on the supply chain. The Company will continue to follow the trend of the
industrial chain pattern, maintain close interaction with customers to grasp customer needs, strengthen
the collection and analysis of market information to reduce the impact of product demand changes on the
Company, participate in product design or cooperative product development of leading customers in the
industry, Realize resource sharing and ensure that R&D technology can meet customer product needs.
2. Industry competition risks
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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 Company’s revenue from its top five customers accounted for 47.75%
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
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. New product development and R&D investment risk
Communication electronics, consumer electronics, cloud and storage products account for more than 80%
of its revenue. 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 increase investment reasonably and
continuously 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.
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 28 large-scale
production bases in 10 countries and regions. Overseas companies need to abide by the laws and
regulations of the country and region where they are located when conducting business or establishing
institutions abroad. 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, there are differences between operating sites located in various countries or
regions and the listed company in terms of accounting and taxation systems, business practices,
company management systems, and corporate culture. If the relevant integration plan is not effectively
implemented, there may be risks such as a lack of synergy from mergers and acquisitions or newly
established companies, loss of core personnel, and decline in financial performance.
6. Exchange rate risk
The Company is a global electronic design and manufacturing service provider, with sales service and
manufacturing sites across the four continents of Asia, Europe, America and Africa. The purchase of
materials, sales and shipments are mainly settled in foreign currencies (mainly USD). During the
reporting period, the appreciation of the USD at the time of material procurement and product shipment
as well as gains from exchange-related hedging operations had a positive impact on the Company, With
the expansion of the business scale, however, the volume of businesses settled in foreign currencies are
expected to rise, and volatilities in exchange rate may affect the Company's gross profit and gains or
losses from foreign currency translations, and pose operational risks for the Company. In the face of the
complex political and economic landscape and business environment across the world, the Company
will pay close attention to the changes in the foreign exchange market according to its own operational
needs, adequately carry out foreign exchange hedging, and minimize exchange rate risks.
7. Emerging risks
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(1) Geopolitical risks
Influenced by multiple factors such as global trade instability, increased market volatility, and rising
protectionism, regional conflicts have led to continued sanctions by various countries, resulting in the
continuous rise of commodity and energy prices, fueling inflation in various countries, negatively
affecting the post-epidemic economic growth, and posing long-term risks for business operations and
investment. The Company continues to evaluate changes in the overall economy, industry trends, and
emerging risks, and maintains close interaction with stakeholders including customers, and takes timely
action plans to strengthen its core competitiveness and operational resilience. In addition, in response to
trade frictions and the regionalization of the supply chain derived from the pandemic, the Company
flexibly adjust the allocation of manufacturing sites, and actively strengthen the deployment outside the
Greater China region through the strategy of internal growth and external M&A simultaneously, and
adjust production sites flexibly with customers , continue to improve the value of products and services,
make good use of the unique resources of each region as its own competitive advantages, and enhance
global manufacturing service capabilities.
(2) Short-supply chain risk
The global economy and industries are changing rapidly, and the new business operation model has
brought about disruptive changes. In 2022, due to the continuous impact of the epidemic and natural
disasters, the supply chain was disrupted repeatedly, causing companies to face manpower shortages,
global logistics chaos, shortages of key components and even production interruptions. Following the
trend of short-supply chain, the Company deploys global manufacturing services and actively develops
local suppliers to build a more flexible supply chain. In addition, the Company establishes a dynamic
supplier management mechanism, conducts irregular business review meetings, and follow the supplier's
market business trends; pays close attention to the suppliers' operating and financial status, and conducts
credit checks; keep a close eye on market demand, and takes timely countermeasures.
(V) Others
□ 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 IV Corporate Governance
I. Particulars on corporate governance
√Applicable □ Not Applicable
During the reporting period, the Company, in strict accordance with the relevant requirements of the
Company Law the Securities Law and the Code of Corporate Governance for Listed Companies, China
Securities Regulatory Commission, and Shanghai Stock Exchange, strengthened information disclosure
efforts, continuously optimized the corporate legal person governance structure, established the sound
internal control system, and standardized the business operation, to effectively guarantee the interests of
the Company and its all shareholders. The Company's general meeting of shareholders, Board of
Directors, Board of Supervisors, and all operation levels had clear responsibilities. All directors,
supervisors and members of the senior management were diligent and responsible. Directors and
supervisors actively participated in the Company's general meetings of shareholders, meetings of the
Board of Directors, and meetings of the Board of Supervisors, and earnestly performed their
responsibilities. Related directors voluntarily abstained from voting on relevant related transactions to
ensure the safe, stable, healthy and sustainable development of the Company.
(I) Shareholders and general meetings of shareholders: The Company convened and held general
meetings of shareholders in accordance with the requirements of the Company Law, the Articles of
Association, and the Rules of Procedure for the General Meeting of Shareholders. The general meetings
of shareholders complied with the relevant provisions in aspects of preparations, proposals, procedures,
voting and resolutions, resolution execution and information disclosure, and ensured that all
shareholders, especially minority shareholders, fully exercised their voting rights and maintained equal
status. 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
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senior management; the members of the senior management of the Company were appointed in an open
and transparent manner and in compliance with the provisions of relevant laws and regulations.
(VI) Information disclosure and transparency: The Company truthfully, accurately, completely and
timely disclosed relevant information through Shanghai Securities News, China Securities Journal,
Securities Times, and the website of Shanghai Stock Exchange, in strict accordance with relevant laws
and regulations and the requirements of the Information Disclosure Management Regulations formulated
by the Company, and did a good job in confidentiality before information disclosure, and earnestly
fulfilled the obligation of information disclosure as a listed company, to ensure the openness, fairness
and impartiality of information disclosure by the Company and actively safeguard the legitimate rights
and interests of the Company and its investors, especially minority shareholders. During the reporting
period, the Company was not criticized, condemned or punished by regulatory agencies for information
disclosure violations.
(VII) Investor relations and related stakeholders: The Company, in accordance with the relevant
requirements of the Self-disciplinary Rules Listed Companies No. 3 - Cash Dividends of Listed
Companies by China Securities Regulatory Commission and the Guidelines for the Self-supervision of
Listed Companies No. 1 - Standardized Operation of Shanghai Stock Exchange, firmly established the
awareness of rewarding shareholders, improved the cash dividend regulations, maintained the
consistency, rationality and stability of the cash dividend policy, and ensured the authenticity of cash
dividend information disclosure. The Company actively received all kinds of investors, and set up an
investor relations section on the Company's website, which further strengthened investors' understanding
and recognition of the Company, promoted the benign interaction between the Company and investors,
and was conducive to effectively protecting the interests of investors. The Company could fully respect
and safeguard the legitimate rights and interests of its employees, suppliers, customers, banks and other
stakeholders, and achieved mutual benefits in economic exchanges to promote the sustainable and
healthy development of the Company.
(VIII) Establishment and improvement of the internal control system: The Company continuously
improved the internal control system and strengthened the execution and implementation of internal
control norms in strict accordance with the regulatory requirements, and performed the self-inspection
and self-evaluation over the effectiveness of internal control of the Company's key business processes
and key control links on the basis of strengthening daily supervision and special inspections.
(IX) Registration and management of insiders: The Company strictly implemented the Administrative
Regulations for Registration of Information Insiders in accordance with the requirements of regulatory
agencies.
Whether there are significant differences between the Company’s corporate governance and laws,
administrative regulations and the requirements of China Securities Regulatory Commission on
corporate governance of listed companies; if there are significant differences, the reasons shall be
explained.
□ Applicable √Not Applicable
II. Specific measures taken by the Company's controlling shareholder and actual controller to
ensure the independence of the Company's assets, personnel, finance, organization, and business,
and solutions, work progress and subsequent work plans adopted by them to affect the Company's
independence
√Applicable □ Not Applicable
For details, see the “Commitment to Guarantee the Independence of the Listed Company” in “Section VI
Important Events”.
Situation that the Company's controlling shareholder, actual controller, and other units under their
control are engaged in the same or similar business as or with the Company, impact of horizontal
competition or major changes in horizontal competition on the Company, settlement measures taken,
settlement progress and subsequent settlement plans
□ Applicable √Not Applicable
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III. Brief Introduction to the General Meetings of Shareholders
Query index of Disclosure
the designated date when
Meeting
Date website on which the Proposals and Resolutions
Session
the resolution is resolution is
published published
The following proposals were deliberated and adopted:
1. Proposal on the 2021 Work Report of the Board of
Directors
2. Proposal on the 2021 Work Report of the Board of
Supervisors
3. Proposal on 2021 Annual Report of Final Accounts
4. Proposal on the 2021 Annual Report and its
Summary
5. Proposal on 2021 Profit Distribution Plan
6. Proposal on Regular Related Party Transactions in
2021
7. Proposal on Predicted Regular Related Transactions
in 2022
8. Proposal on Signing Framework Agreement on
Regular Related Party Transactions with ASE
Technology Holding Co., Ltd.
9. Proposal on the Amount of Wealth Management
Products Using Self-owned Idle Funds Allowed for
2021 annual 2022
www.sse.com.cn
general April 19, April 20, 10. Proposal on Bank Credit Lines in 2022
(Announcement
meeting of 2022 2022 11. Proposal on the Amount of Financial Derivative
No.: 2022-044)
shareholders Trading Allowed for 2022
12. Proposal on Guarantee Between Holding
Subsidiaries
13. Proposal on Formulating the Administrative Rules
of Internal Control within the Group
14. Proposal on Amending the Rules of Decision-
making on Related Party Transactions
15. Proposal on Amending the Administrative Rules of
Raised Funds
16. Proposal on Amending the Procedures for Loaning
of Funds
17. Proposal on Amending the Rules of Investment
Management
18. Proposal on Amending the Rules of External
Guarantee Management
19. Proposal on Purchasing Liability Insurance for
Directors, Supervisors and Senior Executives
20. Proposal on Cancellation of Unused Shares
Repurchased in 2019
1. Proposal on Renewing the Contract with the
Financial Audit Institution
2. Proposal on Renewing the Contract with the Internal
The First Control Audit Institution
Extraordinary 3. Proposal on Guarantee Between Holding Subsidiaries
www.sse.com.cn
General September September 4. Proposal on Amending the Articles of Association
(Announcement
Meeting of 16, 2022 17, 2022 5. Proposal on Amending Procedural Rules of General
No.: 2022-088)
Shareholders Meeting of Shareholders
in 2021 6. Proposal on Amending Procedural Rules of the Board
of Supervisors
7. Proposal on Amending the Rules of Independent
Directors
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Convening of an extraordinary 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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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
Number Number
remuneration Whether
of shares of
from the received
Commencement Termination held at shares Change in
Reasons Company remuneration
Name Position (note) Sex Age date of term of date of term the held at share of
for change during the from related
office of office beginning the end the year
reporting parties of the
of the of the
period (RMB Company
year year
10,000)
Chairman of the Board of
Jeffrey Chen Male 59 2018-06-28 2023-04-27 Exercise Yes
Directors 0 93,200 93,200 ＞250
of options
Jeffrey Chen Director Male 59 2016-04-19 2023-04-27 Yes
Exercise
Chen-Yen Wei Director and President Male 69 2008-06-20 2023-04-27 0 80,000 80,000 ＞250 No
of options
Not
Dtuang Wang Director Male 64 2018-07-16 2023-04-27 0 0 0 30 Yes
applicable
Not
Rutherford Chang Director Male 44 2010-03-10 2023-04-27 0 0 0 30 Yes
applicable
Not
Neng Chao Chang Director Male 45 2017-04-17 2023-04-27 0 0 0 30 Yes
applicable
Gilles Baruk Not
Director Male 69 2021-04-23 2023-04-27 0 0 0 150~250 Yes
Benhamou applicable
Not
Yiyun Chu Independent Director Male 59 2017-04-17 2023-04-27 0 0 0 36 No
applicable
Not
Yunwei Tang Independent Director Male 79 2017-04-17 2023-04-27 0 0 0 36 No
applicable
Not
Michael Chung Independent Director Male 61 2020-04-28 2023-04-27 0 0 0 36 No
applicable
Chairman of the Board of Not
Meng-Kuo Shih Male 60 2008-06-19 2023-04-27 0 0 0 30 Yes
Supervisors applicable
Not
Andrew Robert Tang Supervisor Male 48 2016-04-19 2023-04-27 0 0 0 30 Yes
applicable
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Not
David Huang Employee supervisor Male 51 2020-04-28 2023-04-27 0 0 0 50~100 No
applicable
Exercise
Ta-I Lin Senior Vice President Male 60 2011-02-09 2023-04-27 20,700 89,900 69,200 150~250 No
of options
Stock
option
Feng-Ta Chen Senior Vice President Male 61 2008-06-20 2023-04-27 0 69,200 69,200 150~250 No
incentive
exercise
Not
Yuan-Hsin Sheng Vice President Male 65 2009-12-09 2023-04-27 0 0 0 50~100 No
applicable
Not
Jing Cao Senior Vice President Male 64 2017-04-27 2023-04-27 0 0 0 ＞250 No
applicable
Not
Chen-Lung Wei Senior Vice President Male 60 2017-04-27 2023-04-27 0 0 0 150~250 No
applicable
Not
Jeh-Chang Lee Senior Vice President Male 60 2020-04-28 2023-04-27 0 0 0 100~150 No
applicable
Not
Yung-Che Fang Senior Vice President Male 58 2020-04-28 2023-04-27 0 0 0 100~150 No
applicable
Senior Vice President Not
Johnson Lien Male 55 2020-04-28 2022-06-24 0 0 0 50~100 No
(Resigned) applicable
Stock
option
Chia-Hsiung Yu Vice President Male 64 2020-04-28 2023-04-27 0 40,000 40,000 100~150 No
incentive
exercise
Stock
option
Yueh-Ming Lin Vice President Male 57 2020-04-28 2023-04-27 0 47,000 47,000 150~250 No
incentive
exercise
Stock
Vice President and Chief option
Tan-Yang Liu Male 58 2008-06-20 2023-04-27 20,000 40,000 20,000 100~150 No
Financial Officer incentive
exercise
Stock
Senior Vice President and
option
Jinpeng Shi Secretary to the Board of Male 47 2018-06-28 2023-04-27 52,000 52,000 0 ＞250 No
incentive
Directors
exercise
Total / / / / / 92,700 511,300 418,600 / /
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Note: During the reporting period, the Company assumed expenses of options and employee stock ownership plan granted to the directors, supervisors and members
of the senior management, totaling RMB 2.31 million, which were not included in the pre-tax remuneration they received from the Company.
Name Work Experience
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.,
Jeffrey Chen 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. Currently he serves as chairman of the Board of Directors
of the Company, director of ASE Technology Holding Co., Ltd. and independent director of Mercuries & Associates Holding, LTD.
Chen-Yen Wei from Taiwan, China, holds a bachelor’s degree from National Chiao Tung 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
Chen-Yen Wei
communication product business group, senior vice president of corporate service unit, and president of the Company. Currently he serves as the director
and president of the Company.
Dtuang Wang, from Taiwan, China, holds a bachelor’s degree in laws from National Taiwan University, a master’s degree in laws from National Chung
Hsing University, and a doctorate in law from National Chengchi University. He was the CEO of ASE 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
Dtuang Wang
Chuan University. Currently he serves as Group Chief Executive and Corporate Governance Director of ASE Technology Holding Co., Ltd. and a member
of the company’s Risk Management Committee, a director of ASE Semiconductor Manufacturing Co., Ltd., and the professor of Ming Chuan University
Law School.
Rutherford Chang, American, holds a bachelor’s degree in Psychology from Wesleyan University. Mr. Chang served as the special assistant to the
Rutherford
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
Chang
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, is a former analyst at Morgan Stanley. He currently serves as
Chang 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 Benhamou, French, born in June, 1953, graduated from cole Polytechnique in Paris with a master’s degree in science. Mr. Gilles Benhamou
Gilles Baruk
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
Benhamou
CEO of ASDI Assistance Direction, the CEO of Saphir, a director of Decelect, and the CEO of Retail Evolution.
Yunwei Tang, Chinese, with a doctorate in accounting from SUFE, is the founder of the Chinese Accounting Professors Association. Mr. Tang worked for
SUFE where he held the following positions including a lecturer, associate professor, assistant to the president, professor, vice president and president. He
previously served as a member of the China Accounting Standards Committee, a member of Chinese Auditing 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
Yunwei Tang 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 Ping An Healthcare and Technology Company Limited, China Jushi Co., Ltd., Maitrox Enterprise Services Inc. (not listed) and Shanghai
Lujiazui International Financial Asset Exchange Co.,Ltd (already resigned).
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
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the School of Accounting, SUFE, a researcher at Key Research Institute of Accounting and Finance, SUFE, and member of the First Session of the Senior
Accounting Qualification Review Committee of the National Government Offices Administration, 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 Insurance
(Group) Company Of China, Ltd., Bank Of Hebei Co.,Ltd. (not listed), and an external supervisor of Bank Of China Limited.
Michael Chung, from Taiwan, China, has a bachelor’s degree in Electrical Engineering from 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
Michael Chung
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 CEO of LOROM INDUSTRIAL CO., LTD.
Meng-Kuo Shih, from Taiwan, China, has a master’s degree in management science from Taiwan Jiaotong University. Mr. Shih used to serve as deputy
Meng-Kuo director of finance of TECO Electric & Machinery Co., Ltd., director of finance of TECO OPTRONICS CORPORATION, chief financial officer and
Shih 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 Robert Tang, American, graduated from Yale University. Mr. Tang previously worked for private investment companies and Morgan Stanley, and
Andrew Robert
joined Advanced Semiconductor Engineering, Inc. in 2014 where he currently assumes the Vice President and deputy CEO. He also serves as a director of
Tang
Guam Capital Investment Company.
David Huang, from Taiwan, China, holds an EMBA from Shanghai Jiaotong University. Mr. Huang previously worked for Universal Scientific Industrial
David Huang
Co., Ltd. Currently he serves as the director of USI's manufacturing services.
Chen-Lung Wei, from Taiwan, China, holds an MBA's degree from Tunghai University. In July 1987, Mr. Hou joined in Universal Scientific Industrial
Chen-Lung 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,
Wei the senior vice general manager of the business division, and the general manager of the Company. Currently, he serves as the senior vice president of the
Company.
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
Ta-I Lin
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 Chen, from Taiwan, China, once served as deputy manager of SAMPO CORP., manager of wireless network card operation management of
Universal Scientific Industrial Co., Ltd., associate manager of ERP project management, associate manager of global human resources administration, and
Feng-Ta Chen
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, American, holds a double master's degree in engineering from Arizona State University. Once served as the senior Vice President of Mindspeed,
Jing Cao 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 Systems Taiwan, the vice president of ASE Inc., and the vice
Sheng president of Universal Scientific Industrial Co., Ltd. Currently, serves as the vice president of the Company.
Tan-Yang Liu, from Taiwan, China, holds a master's degree from the University of Southampton, UK. Once worked as director of Audit Department of
Tan-Yang Liu
KPMG, deputy manager of Underwriting Department of Taiwan International Securities Investment Consulting Corp., the deputy manager of International
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2022 Annual Report
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 an EMBA degree from China
Europe International Business School. Mr. Shi worked as the project manager of International Business Department of Guotai Junan Securities, the
Jinpeng Shi 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 China Great Wall Securities. Currently, he serves as the senior vice president and the secretary
to the Board of Directors of the Company.
Yung-Che Fang, from Taiwan, China, holds a doctor's degree in Mechanical and Aeronautical Engineering from Case Western Reserve University. Mr.
Yung-Che
Fang worked as the executive vice president at SOCLE Technology Corporation, and the vice president at GIGABYTE Technology Co., Ltd. and First
Fang
International Computer, Inc. Currently, he serves as the senior vice president of the Company.
Jeh-Chang Lee from Taiwan, China, holds a MBA's degree from University of Maryland. Mr. Lee once worked as the deputy director of Taiwan
Jeh-Chang Lee
Semiconductor Manufacturing Co., Ltd. and 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 University. Currently, serves as the vice president of the
Yu Company.
Yueh-Ming Lin, from Taiwan, China, holds a bachelor's degree of Electrical Engineering from Feng Chia University. Mr. Lin Joined in Universal
Yueh-Ming Lin
Scientific Industrial Co.，Ltd. In 1995. Currently, serves as the vice president of the Company.
Johnson Lien, from Taiwan, China, holds an MBA degree from Chung Hsing University. Mr. Lien once worked as the special assistant to the general
Johnson Lien 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. After June 24, 2022, he resigned from the position of senior vice president of the Company for personal reasons.
Particulars on other information
□ Applicable √Not Applicable
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(II) Employment of directors, supervisors and senior management currently employed and retired
during the reporting period
1. Employment in shareholders’ companies
√Applicable □ Not Applicable
Name of Name of Commencement Termination
person shareholder’s Position held in shareholder’s company date of term of date of term
employed company office of office
Director (representative) of ASE
Technology Holding Co., Ltd., Advanced
Semiconductor Engineering, Inc. and ASE
TEST, Inc.; supervisor of ASE (Shanghai)
Inc., and ASE (Korea) Inc.; director of
Wuxi Tongzhi Microelectronics Co., Ltd.,
ASE Test Limited (Singapore), ASE Test
Holdings Ltd. and Omniquest Industrial
Ltd.; supervisor of ASE Assembly & Test
(Shanghai) Limited; director of Shanghai
Ding Hui Real Estate Development Co.,
Ltd.; director (representative) of ASE
Electronics Inc.; director of Advanced
ASE Technology Semiconductor Engineering (HK) Limited,
Jeffrey Chen Holding Co., Ltd., Shanghai Ding Wei Real Estate / /
etc. 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 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
Director of USI Inc., HUNTINGTON
HOLDINGS INTERNATIONAL CO.
Chen-Yen LTD., UNITECH HOLDINGS
USI Inc., etc. / /
Wei INTERNATIONAL CO. LTD., REAL
TECH HOLDINGS LIMITED, and USI
Enterprise Limited.
Chief executive and corporate governance
director, member of the Risk Management
Committee and chief risk officer, chief
information security officer of ASE
Technology Holding Co., Ltd.; director
(representative), and chief executive of
Advanced Semiconductor Engineering,
ASE Technology Inc.; chairman of the Board of Directors
Dtuang
Holding Co., Ltd., and general manager at Advanced / /
Wang
etc. 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.,Ltd; director and general manager of
Hung Chin Hsin Co., Ltd.; director of ASE
Cultural and Education Foundation;
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2022 Annual Report
director and CEO of ASE Environmental
Protection and Sustainability Foundation
Director of ASE Technology Holding Co.,
Ltd., director (representative) of Advanced
ASE Technology Semiconductor Engineering, Inc., director
Rutherford
Holding Co., Ltd., (representative) of ASE TEST, Inc., / /
Chang
etc. director and general Manager of ASE
Investment (Kunshan) Limited, and director
(representative) of USI Inc.
Advanced Director (representative) of Advanced
Neng Chao Semiconductor Semiconductor Engineering, Inc., director
/ /
Chang Engineering, Inc., (representative) of ASE TEST, Inc., and
etc. director (representative) of USI Inc.
Director of USI Inc., HUNTINGTON
HOLDINGS INTERNATIONAL CO.
LTD., UNITECH HOLDINGS
Meng-Kuo
USI Inc., etc. INTERNATIONAL CO. LTD., REAL / /
Shih
TECH HOLDINGS LIMITED, Universal
ABIT Holding Co.,Ltd. and USI Enterprise
Limited.
Deputy chairman, director (representative),
deputy CEO of Advanced Semiconductor
Engineering, Inc.; supervisor
(representative) of ASE Test Inc.; director
of Shanghai Ding Hui Real Estate
Advanced
Development Co., Ltd., Shanghai Ding Wei
Andrew Semiconductor
Real Estate Development Co., Ltd., and / /
Robert Tang Engineering, Inc.,
Shanghai Ding Yu Real Estate
etc.
Development Co., Ltd.; supervisor
(representative) of USI Inc.; director of
ASE Cultural and Education Foundation
and ASE Environmental Protection and
Sustainability Foundation
Director of USI Inc., director of
HUNTINGTON HOLDINGS
Chen-Lung
USI Inc., etc. INTERNATIONAL CO. LTD., and / /
Wei
director of Universal ABIT Holding Co.,
Ltd.
Tan-Yang USI Enterprise Director
/ /
Liu Limited
Particulars None
on
employment
in
shareholders’
companies
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
Mercuries & Independent Director
Jeffrey Chen Associates / /
Holding, LTD
MUtek Director of MUtek Electronics Co.,Ltd.,
Chen-Yen Wei Electronics independent director of Lelon Electronics / /
Co.,Ltd., etc Corp.
Dtuang Wang School of Law Director and CEO of Zhang Yao Hongying / /
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2022 Annual Report
of Ming Chuan Social Welfare and Charity Foundation and
University, etc. Honorary Professor at School of Law of
Ming Chuan University
Saphir, etc. CEO of Saphir, director of Decelect, CEO of
Retail Evolution, and CEO of ASDI / /
Assistance Direction
MUtek Supervisor of MUtek Electronics Co.,Ltd.,
Meng-Kuo
Electronics director of Universal Venture Capital / /
Shih
Co.,Ltd., etc Investment Corporation
Andrew Robert Guam Capital Director
/ /
Tang Investment
Ping An Independent director of Ping An Healthcare
Healthcare and and Technology Company Limited, China
Technology Jushi Co., Ltd., Maitrox Enterprise Services
Yunwei Tang / /
Company Inc. (not listed) and Shanghai Lujiazui
Limited, etc. International Financial Asset Exchange
Co.,Ltd (already resigned)
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
Yiyun Chu 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)
Chairman of the Board of Directors of
AcSiP, independent director of LuxNet
Corp., and director of Savitech Corp.,
Michael Chung AcSiP, etc. / /
Dasheng Venture Capital Co., Ltd., FENG
TAY ENTERPRISES CO., LTD., and CEO
of LOROM INDUSTRIAL CO., LTD.
GJS Capital Director of GJS Capital Co., Ltd. and
Jinpeng Shi / /
Co., Ltd., etc. supervisor of Questyle Audio
Particulars on None
employment in
other
companies
(III) Remuneration of directors, supervisors and members of the senior management
√Applicable □ Not Applicable
The relevant proposals on the annual remuneration of members of
Decision-making procedures for the
the senior management personnel shall be reviewed by the
remuneration of directors,
Remuneration Committee under the Board of Directors and then
supervisors and members of the
submitted to the Board of Directors for deliberation and approval
senior management
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
supervisors and members of the
and progress of annual business objectives.
senior management
Actual payment of the remuneration For details, see Section IV-I (I) Shareholding change and
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2022 Annual Report
of directors, supervisors and remuneration of directors, supervisors and members of the senior
members of the senior management management currently employed and retired during the reporting
period.
Total remuneration actually received
by all directors, supervisors and
RMB 33.84 million
members of the senior management
at the end of the Reporting Period
(IV) Changes in directors, supervisors and members of the senior management of the Company
√Applicable □ Not Applicable
Name Position Change Reasons for changes
Johnson Lien Senior Vice President Resigned Personal reasons
(V) Particulars on punishments by securities regulatory authorities in the past three years
□ Applicable √Not Applicable
(VI) Others
□ Applicable √Not Applicable
V. Meetings of the Board of Shareholders held during the reporting period
Meeting Session Date Proposals and Resolutions
1. Proposal on the 2021 Work Report of the Board of Directors
2. Proposal on the 2021 Work Report of the General Manager
3. Proposal on 2021 Annual Report of Final Accounts
4. Proposal on the 2021 Annual Report and its Summary
5. Proposal on 2021 Annual Internal Control Self-Assessment Report
6. Proposal on 2021 Sustainability Report
7. Proposal on the Special Report on the Deposit and Actual Usage of the Raised
Funds in 2021
8. Proposal on 2021 Profit Distribution Plan
9. Proposal on Recognition of Loss of Assets Deductible Against Taxable Income
in 2021
10. Proposal on the Remuneration of the Company's Senior Management in 2021
11. Proposal on Regular Related Party Transactions in 2021
12. Proposal on Predicted Regular Related Party Transactions in 2022
13. Proposal on Signing Framework Agreement on Regular Related Party
Transactions with Major Related Parties
The Fifteenth
14. Proposal on the Amount of Wealth Management Products Using Self-owned
Meeting of the
March 25, Idle Funds Allowed for 2022
Fifth Session of
2022 15. Proposal on Bank Credit Lines in 2022
the Board of
16. Proposal on the Amount of Financial Derivative Trading Allowed for 2022
Directors
17. Proposal on Using Idle Raised Funds for Cash Management
18. Proposal on the Company's Provision of Financial Assistance to Subsidiaries
19. Proposal on Guarantee Between Holding Subsidiaries
20. Proposal on Changes in Accounting Policies
21. Proposal on Formulating 2022 Internal Audit Plan
22. Proposal on Formulating the Administrative Rules of Internal Control within
the Group
23. Proposal on Formulating ESG Code of Practice
24. Proposal on Amending the Rules of Decision-making on Related Party
Transactions
25. Proposal on Amending the Administrative Rules of Raised Funds
26. Proposal on Amending the Procedures for Loaning of Funds
27. Proposal on Amending the Rules of Investment Management
28. Proposal on Amending the Rules of External Guarantee Management
29. Proposal on Amending the Rules for Shareholding by Directors, Supervisors
and Senior Executives and Related Changes
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2022 Annual Report
30. Proposal on Amending the Procedures for Loaning of Funds
31. Proposal on Capital Injection to Vietnam Subsidiary
32. Proposal on Purchasing Liability Insurance for Directors, Supervisors and
Senior Executives
33. Proposal on Cancellation of Unused Shares Repurchased in 2019
34. Proposal on the Plan for Share Buy-back by Centralized Bidding Transactions
in 2022
35. Proposal on Holding 2021 Annual General Meeting of Shareholders
1. Proposal on Quarterly Report for Q1 2022
2. Proposal on Amending the Rules of Procedure for the Audit Committee of the
The Sixteenth
Board of Directors
Meeting of the
April 26, 3. Proposal on Amending the Rules of Procedure of General Manager
Fifth Session of
2022 4. Proposal on Amending the Rules of Secretary of the Board of Directors
the Board of
5. Proposal on Amending the Rules of Registration and Management of Insiders
Directors
6. Proposal on Amending the Internal Reporting Rules for Major Issues
7. Proposal on Amending the Rules of Investor Relations Management
The Seventeenth Proposal on Adjusting the Exercise Price of Incentive Stock Option Plan 2019
Meeting of the After Profit Distribution
May 23,
Fifth Session of
2022
the Board of
Directors
1. Proposal on the 2022 Semi-Annual Report and its Summary
2. Proposal on the Special Report on the Deposit and Actual Usage of the Raised
Funds in the First Half of 2022
3. Proposal on Renewing the Contract with the Financial Audit Institution
4. Proposal on Renewing the Contract with the Internal Control Audit Institution
5. Proposal on Applying for Financial Assistance for Kunshan subsidiary
The Eighteenth
6. Proposal on Guarantee Between Holding Subsidiaries
Meeting of the
August 24, 7. Proposal on Completion and Termination of 2020 Employee Stock Ownership
Fifth Session of
2022 Plan
the Board of
8. Proposal on Amending the Articles of Association
Directors
9. Proposals on Amending Rules of Procedures of General Meeting of
Shareholders
10. Proposal on Amending the Rules for Independent Directors
11. Proposal on Formulating the Policy on Diversity of the Board of Directors
12. Proposal on Holding the First Extraordinary General Meeting of Shareholders
in 2022
1. Proposal on Quarterly Report for Q3 2022
2. Proposal on Using Raised Funds to Provide Loans for the Electronic Product
Project in Huizhou Factory
3. Proposal on Adjustment of Participants and Cancellation of Part of the Options
in the Incentive Stock Option Plan 2015
The Nineteenth
4. Proposal on the Second Exercise Period of Incentive Stock Option Plan 2019
Meeting of the
October Part I and the Method of Independent Exercise
Fifth Session of
25, 2022 5. Proposal on the Adjustment of Participants and Cancellation of Part of the
the Board of
Stock Options in the Incentive Stock Option Plan 2019 Part I
Directors
6. Proposal on the First Second Period of Incentive Stock Option Plan 2019 Part II
and the Method of Independent Exercise
7. Proposal on Confirmation of the Participants and Vesting price of Core
Employee Stock Ownership Plan Phase III
8. Proposal on Estimated Amount of Financial Derivatives Trading in Q1 2023
1. Proposal on Cancellation of the Expired, Unexercised Shares of the First
The Twentieth
Exercise Period of the Incentive Stock Option Plan 2019 Part I
Meeting of the
December 2. Proposal on Cancellation of the Expired, Unexercised Shares of the First
Fifth Session of
5, 2022 Exercise Period of the Incentive Stock Option Plan 2019 Part II
the Board of
3. Proposal on Additional Estimated Amount of Regular Related Party
Directors
Transactions in 2022
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2022 Annual Report
VI. Performance of functions and duties by directors
(I) Attendance of directors at meetings of the Board of Directors and general meetings of
shareholders
Attendance
at general
Attendance at meetings of the Board of Directors
meetings of
Independent shareholders
Director
director or Two
Name Number Number
not Number of Times of Number consecutive
of of Number of
attendance by attendance of absences in
attendance attendance attendance
communication by proxy absence person or
required in person
not
Jeffrey
No 6 6 3 0 0 No 2
Chen
Rutherford
No 6 6 3 0 0 No 0
Chang
Neng Chao
No 6 6 3 0 0 No 0
Chang
Dtuang
No 6 6 3 0 0 No 0
Wang
Chen-Yen
No 6 6 3 0 0 No 1
Wei
Gilles
Baruk No 6 6 3 0 0 No 0
Benhamo
Yiyun Chu Yes 6 6 3 0 0 No 1
Yunwei
Yes 6 6 3 0 0 No 1
Tang
Michael
Yes 6 6 3 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 2021 6
Including: on site 0
by communication 3
on site x by communication 3
(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
Name of members of special committees
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
Yiyun Chu, Jeffrey Chen, Chen-Yen Wei, Michael Chung, and Yunwei Tang
Appraisal Committee
Strategic Committee Jeffrey Chen, Chen-Yen Wei, Gilles Baruk Benhamou, Neng Chao Chang, and
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Michael Chung
(2). 5 meetings held by the Audit Committee during the reporting period
Other information on
Important comments and
Date Contents performance of functions
suggestions
and duties
1. Proposal on Financial Final The Company's financial report
Accounts Report of 2021 was true, complete and accurate,
2. Proposal on 2021 Annual with no related cheating, fraud
Report of Final Accounts and material misstatement, and
3. Proposal on 2021 Annual the Company had no significant
Internal Control Self- accounting error adjustments, no
Assessment Report changes in significant accounting
4. Proposal on the Special policies and estimates, no matters
Report on the Deposit and involving important accounting
Actual Usage of the Raised judgments, and no matters
Funds in 2021 resulting in a non-standard audit
5. Proposal on 2021 Profit report with unqualified opinions.
Distribution Plan The actual operation of the
6. Proposal on Regular Related Company's internal control
Party Transactions in 2021 complied with the requirements of
7. Proposal on Predicted the corporate governance norms
Regular Related Party for listed companies issued by the
Transactions in 2022 China Securities Regulatory
8. Proposal on Signing Commission.
Framework Agreement on
Regular Related Party
Transactions with ASE
Technology Holding Co., Ltd. Communicated with the
March 25, 9. Proposal on the Amount of management on the
2022 Wealth Management Products Company's operations and
Using Self-owned Idle Funds development.
Allowed for 2022
10. Proposal on Bank Credit
Lines in 2022
11. Proposal on the Amount of
Financial Derivative Trading
Allowed for 2022
12. Proposal on Using Idle
Raised Funds of Convertible
Bonds for Cash Management
13. Proposal on Changes in
Accounting Policies
14. Proposal on Formulating
2022 Internal Audit Plan
15. Proposal on Capital
Injection to Vietnam
Subsidiary
16. Proposal on 2021 Annual
Work Report on Internal
Control
17. Proposal on 2021
Performance Report of the
Audit Committee
1. Proposal on Quarterly The Company's financial report
Report for Q1 2022 was true, complete and accurate,
April 26,
2. Proposal on Work Report on with no related cheating, fraud None
2022
Internal Control for Q1 2021 and material misstatement, and
the Company had no significant
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accounting error adjustments, no
changes in significant accounting
policies and estimates, no matters
involving important accounting
judgments, and no matters
resulting in a non-standard audit
report with unqualified opinions.
The actual operation of the
Company's internal control
complied with the requirements of
the corporate governance norms
for listed companies issued by the
China Securities Regulatory
Commission.
1. Proposal on the 2021 Semi- The Company's financial report
Annual Report and its was true, complete and accurate,
Summary with no related cheating, fraud
2. Proposal on Internal Audit and material misstatement, and
Work Report for the First Half the Company had no significant
of 2022 accounting error adjustments, no
3. Proposal on the Special changes in significant accounting
Report on the Deposit and policies and estimates, no matters
Actual Usage of the Raised involving important accounting
Funds in the First Half of 2022 judgments, and no matters
4. Proposal on Renewing the resulting in a non-standard audit
Contract with the Financial report with unqualified opinions. Communicated with the
August 24, Audit Institution After the internal audit work management on the
2022 5. Proposal on Renewing the report was reviewed, no major Company's operations and
Contract with the Internal problems were found in the development.
Control Audit Institution 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.
1. Proposal on Quarterly The Company's financial report
Report for Q3 2022 was true, complete and accurate,
2. Proposal on Work Report on with no related cheating, fraud
Internal Control for Q3 2022 and material misstatement, and
3. Proposal on Using Raised the Company had no significant
Funds to Provide Loans for the accounting error adjustments, no
Electronic Product Project in changes in significant accounting
October 25, Huizhou Factory policies and estimates, no matters
None
2022 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.
1. Proposal on Additional
Learned and discussed the
December Estimated Amount of Regular
situation before the
5, 2022 Related Party Transactions in
meeting.
2022
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2022 Annual Report
(3). 1 meeting held by the Strategic Committee during the reporting period
Other information on
Important comments and
Date Contents performance of functions
suggestions
and duties
Reviewed the Proposal on the Learned and discussed the Listened to and discussed
Plan for Share Buy-back by background and purpose of the the 2022 Annual Strategic
March 25, Centralized Bidding 2022 share repurchase plan and Plan by Mr. Chen-Yen
2022 Transactions in 2022 agreed to submit the proposal to Wei, president of the
the Board of Directors for Company.
consideration.
(4).1 meeting held by the Nomination Committee during the reporting period
Other information on
Important comments and
Date Contents performance of
suggestions
functions and duties
Reviewed the Proposal on The Company regards ESG as an
Formulating the Policy on important mission of business
August 24, Diversity of the Board of Directors operation, and the introduction of
None
2022 this policy is conducive to the
diversification of the Company's
Board members
(5).4 meetings held by the Remuneration Committee during the reporting period
Other information on
Important comments and
Date Contents performance of
suggestions
functions and duties
Reviewed the Proposal on Confirmed the performance
March 3, Confirming the Evaluation Results results of ESOP participants
None
2022 of 2020 Employee Stock
Ownership Plan
The following proposals were The remunerations paid by the None
deliberated and submitted to the Company to directors, supervisors
Board of Directors: and members of the senior
1. Proposal on the Remuneration of management were in line with the
the Company's Senior Management Company's remuneration system
in 2021 standards, and the remuneration
2. Proposal on Purchasing Liability data disclosed were true,
Insurance for Directors, reasonable and accurate.
March 25,
Supervisors and Senior Executives Purchasing liability insurance is
2022
conducive to protecting the rights
and interests of the Company,
directors, supervisors, and senior
managers, reducing the
Company's operational risks, and
promoting the full exercise of
rights and duties by directors,
supervisors, and senior executives
The following proposals were The exercise conditions for the
deliberated and submitted to the second exercise period of the
Board of Directors: Incentive Stock Option Plan 2019
1. Proposal on Adjustment of Part I and Part II, and the
Participants and Cancellation of Company's implementation of the
October
Part of the Options in the Incentive exercise was in line with the None
25, 2022
Stock Option Plan 2015 provisions of the Incentive Plan
2. Proposal on the Second Exercise and relevant laws and regulations.
Period of Incentive Stock Option The adjustment and cancellation
Plan 2019 Part I and the Method of were performed in line with the
Independent Exercise relevant provisions of the
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3. Proposal on the Adjustment of Company's Stock Option
Participants and Cancellation of Incentive Plan (Draft) and
Part of the Stock Options in the Appraisal Administrative
Incentive Stock Option Plan 2019 Measures for Implementation of
Part I the Stock Option Incentive Plan.
4. Proposal on the First Second
Period of Incentive Stock Option
Plan 2019 Part II and the Method of
Independent Exercise
5. Proposal on Confirmation of the
Participants and Vesting price of
Core Employee Stock Ownership
Plan Phase III
The following proposals were The cancellation of expired,
deliberated and submitted to the unexercised shares is in line with
Board of Directors: the Listed Companies' Equity
1. Proposal on Cancellation of the Incentive Management Measures,
Expired, Unexercised Shares of the the Company's Stock Option
First Exercise Period of the Incentive Plan (Draft) and other
Incentive Stock Option Plan 2019 relevant regulations, and the
December
Part I review process is legal and None
5, 2022
2. Proposal on Cancellation of the compliant.
Expired, Unexercised Shares of the
First Exercise Period of the
Incentive Stock Option Plan 2019
Part II
3. Proposal on the Accrual of
Incentive Funds in 2022
(6). Specific particulars on matters of objection
□ Applicable √Not Applicable
VIII. Particulars on risks in the Company identified by the Board of Supervisors
□ Applicable √Not Applicable
The Board of Supervisors had no objection to the supervision during the reporting period.
IX. Employees of the parent company and major subsidiaries at the end of the period
(I) Employees
Number of on-the-job employees of the parent company 2,260
Number of on-the-job employees of the main subsidiaries 21,514
Total number of on-the-job employees 23,774
Number of retirees of whom the parent company and major subsidiaries
6
are responsible for the expenses
Breakdown by function
Function Number
Production 15,373
Sales 788
Technical 4,582
Financial 201
Administrative 2,830
Total 23,774
Breakdown by education background
Education background Number
Doctor’s degree 15
Master’s degree 1,592
Bachelor’s degree 6,028
Junior college 2,970
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Senior high school and under 13,169
Total 23,774
(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.
(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 8,844,943.00
Total remuneration paid for labor outsourcing 258,094,705.88
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 2021, USI intended 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. The total share capital of the
Company on the record date for implementing the plan for 2021 was 2,210,393,238 shares. USI paid out
the cash dividends on the basis of 2,179,265,633 shares, excluding 31,127,605 shares in its special buy-
back securities account. 2021 profit distribution was completed on June 13, 2022.
Regarding its profit distribution plan for 2022, USI is going to distribute a cash dividend of RMB 4.30
(tax included) for every 10 shares on the basis of the total share capital on the record date for
implementing the plan after deducting the number of shares in its special buy-back securities account,
without bonus share or transfer of 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 2022 was deliberated and approved at the 22th meeting
of the fifth session of the Board of Directors of the Company, and it still needs to be deliberated at the
Company's 2022 annual general meeting of shareholders.
(II) Special description of the cash dividend policy
√Applicable □ Not Applicable
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2022 Annual Report
Whether in compliance with provisions of the Articles of Association or requirements of
√Yes □No
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 complete √Yes □No
Whether independent directors performed their duties responsibly and played their due
√Yes □No
roles
Whether minority shareholders were given the opportunity to fully express their opinions
√Yes □No
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
□ Applicable √Not Applicable
(IV) Profit distribution and conversion of capital reserve into share capital in the reporting period
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
Number of bonus shares distributed for every 10 shares held 0
Dividend per 10 shares held (tax included) 2.60
Number of shares transferred from public reserve for every 10 shares held 0
Amount of cash dividend (tax included) 566,609,064.58
Net profits attributable to common shareholders of the listed company in 2021 1,857,968,074.82
Proportion of cash dividend to net profits attributable to common shareholders of the
30.50
listed company (%)
Amount of share repurchase included in the cash dividend distribution 230,980,615.06
Total amount of dividend (tax included) 797,589,679.64
Proportion of total dividend distributed to net profits attributable to common shareholders
42.93
of the listed company (%)
XI. Equity incentive plan, employee stock ownership plan or other employee incentive measures of
the Company and their impacts
(I) Incentive matters disclosed in temporary announcements and without further progress or
change in subsequent implementation
√Applicable □ Not Applicable
Overview Index
Option exercise of the Incentive Stock Option Plan 2015: In the fourth
quarter of 2022, a total of 573,250 shares were exercised and
registered for transfer. As of December 31, 2022, a total of 8,554,320
shares were exercised and registered for transfer, accounting for For details, see the announcement
41.65% of the total number of exercisable stock options. (No.: 2023-002) disclosed by the
Option exercise of the Incentive Stock Option Plan 2019 Part I: In the Company on the website of Shanghai
fourth quarter of 2022, a total of 2,785,155 shares were exercised and Stock Exchange (www.sse.com.cn)
registered for transfer. As of December 31, 2022, a total of 5,739,555 on January 5, 2023
shares were exercised and registered for transfer, accounting for
42.71% of the total number of exercisable stock options.
Option exercise of Incentive Stock Option Plan 2019 Part II: In the
fourth quarter of 2022, no option was exercised yet.
Termination of the 2020 Employee Stock Ownership Plan: As all the For details, see the announcement
underlying stocks held by the Company's 2020 Employee Stock (No.: 2022-081) disclosed by the
Ownership Plan were sold and the relevant liquidation and Company on the website of Shanghai
distribution was completed, the Company held the second 2020 Stock Exchange (www.sse.com.cn)
Employee Stock Ownership Plan Participant Meeting where the on August 26, 2022.
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2022 Annual Report
holders agreed to terminate the 2020 Employee Stock Ownership Plan
and submitted the proposal to the Board of Directors for consideration
and approval. The Eighteenth Meeting of the Fifth Session of the
Board of Directors and the Sixteenth Meeting of the Fifth Session of
the Board of Supervisors held on August 24, 2022 approved the
Proposal on Completion and Termination of the 2020 Employee
Stock.
Confirmation of participants and vesting price of Core Employee
Stock Ownership Plan Phase III: The company held the Seventeenth
For details, see the announcement
Meeting of the Fifth Session of the Board of Directors on October 25,
(No.: 2022-103) disclosed by the
2022, and reviewed and approved the Proposal on Confirmation of the
Company on the website of Shanghai
Participants and Vesting Price of Core Employee Stock Ownership
Stock Exchange (www.sse.com.cn)
Plan Phase III, confirming that the transfer price was adjusted to RMB
on October 27, 2022
12.405 yuan per share, the number of participants was 12, and a total
of 1,715,250 shares were to be vested.
(II) Incentive matters not disclosed in temporary announcements or with further progress
Equity incentive
□ Applicable √Not Applicable
Other explanations
□ Applicable √Not Applicable
Employee stock ownership plan
√Applicable □ Not Applicable
The Core Employee Stock Ownership Plan Phase I held a total of 800,700 shares on December 31, 2021,
and as of December 31, 2022, 698,100 shares have been sold, with 102,600 shares remaining; Core
Employee Stock Ownership Plan Phase II held a total of 1,780,050 shares on December 31, 2022, and as
of December 31, 2022, 509,000 shares had been sold with 1,271,050 shares remaining.
Other incentive measures
□ Applicable √Not Applicable
(III) Equity incentives granted to directors and members of the senior management during the
reporting period
□ Applicable √Not Applicable
(IV) Establishment and implementation of appraisal mechanism and the incentive mechanism for
senior management during the reporting period
√Applicable □ Not Applicable
The Company had an appraisal and incentive mechanism. The Remuneration 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 Articles of Association, Procedural Rules of the
General Meeting of Shareholders, Procedural Rules of the Board of Supervisors, Rules for Independent
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2022 Annual Report
Directors, Procedures for Loaning of Funds, and continued to strengthen internal control, and maintained
effective internal control in all major aspects of financial reporting 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
The internal control audit report is disclosed on the website of the Shanghai Stock Exchange at
www.sse.com.cn.
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
□ Applicable √Not Applicable
XVI. Others
□ Applicable √Not Applicable
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2022 Annual Report
Section V Environmental and Social Responsibility
I. Environmental information
Whether relevant mechanisms for environmental protection are established Yes
Investment in environmental protection during the reporting period (unit: RMB 10,000 yuan) 2,991
(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 (not including subsidiaries) in
2022 is as follows:
Information on Wastewater Discharge in 2022
Entrust Shanghai
Weizheng Test
Monitoring
Number & position of Technology Co.,Ltd.
DW001 units and
wastewater discharge port and Shanghai Huihuan
methods
Environmental Testing
Co., Ltd. to test
“Integrated It is discharged from the
Wastewater Discharge mode pipe and enters the
Discharge standard
Discharge Standard” and destination urban sewage treatment
DB31/199 plant
Test date
Testing items Standard value
2022/7/25
pH 6-9 7.2
Chemical Oxygen Demand
500 61
(COD) (mg/L)
Anionic Surfactant (mg/L) 20 0.26
Biochemical Oxygen Demand
300 19.4
(BOD5) (mg/L)
Ammonia Nitrogen (NH3-N)
45 1.5
(mg/L)
Total Phosphorus (mg/L) 8 2.58
Total Nitrogen (mg/L) 70 5.8
Suspended Solids (SS) (mg/L) 400 37
Petroleum (mg/L) 15 0.06
Animal and Vegetable Oils
100 0.07
(mg/L)
Dissolved Solids (mg/L) 2000 179
Note / Qualified
Information on Solid (Hazardous) Waste Discharge in 2022
Name Category Code Output Transfer Storage Disposal or recovery
(tons) amount capacity
(tons) (tons)
Handed over to a
PCB dust, board edge, Hazardous
900-045-49 63.863 63.863 0 qualified unit for
PCB with parts waste
processing
Empty barrels, rags, Handed over to a
Hazardous
filter elements and 900-041-49 47.556 47.556 0 qualified unit for
waste
sludge contaminated processing
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2022 Annual Report
with chemicals
Handed over to a
Hazardous
Organic resin 900-014-13 41.371 41.371 0 qualified unit for
waste
processing
Handed over to a
Hazardous
Bromopropane 900-404-06 125.772 125.772 0 qualified unit for
waste
processing
Handed over to a
Waste isopropanol Hazardous
900-402-06 22.831 22.831 0 qualified unit for
and other solvents waste
processing
Handed over to a
Hazardous
Waste oil 900-249-08 0.498 0.498 0 qualified unit for
waste
processing
Handed over to a
Hazardous
Waste cutting fluid 900-006-09 0.12 0.12 0 qualified unit for
waste
processing
Handed over to a
Waste activated Hazardous
900-039-49 13.391 13.391 0 qualified unit for
carbon waste
processing
Handed over to a
Hazardous
200L iron drum 900-041-49 14 14 0 qualified unit for
waste
processing
Handed over to a
Waste fluorescent Hazardous
900-023-29 0.055 0.055 0 qualified unit for
tubes waste
processing
Handed over to a
Lead-acid waste Hazardous
900-044-49 0 0 0 qualified unit for
battery waste
processing
Handed over to a
Lead–tin paste and tin Hazardous
900-025-31 0 0 0 qualified unit for
slag waste
processing
Handed over to a
Hazardous
Laboratory waste 900-047-49 0.187 0.187 0 qualified unit for
waste
processing
(2) The treatment information of industrial waste gas and hazardous waste in Shenzhen Factory in 2022
is as follows:
Discharge Is there any Is the total
Discharge
port Types of pollutants Implementation standards excessive emission
mode
information emission? approved?
Tin, lead and their
Emission Limits of Air
compounds Non- Organized
A1 Pollutants in Guangdong None None
methane total emission
Province DB4427-2001
hydrocarbons
Tin, lead and their
Emission Limits of Air
compounds Non- Organized
A2 Pollutants in Guangdong None None
methane total emission
Province DB4427-2001
hydrocarbons
Tin, lead and their
Emission Limits of Air
compounds Non- Organized
A3 Pollutants in Guangdong None None
methane total emission
Province DB4427-2001
hydrocarbons
Tin, lead and their Emission Limits of Air
Organized
B4 compounds Non- Pollutants in Guangdong None None
emission
methane total Province DB4427-2001
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2022 Annual Report
hydrocarbons
Tin, lead and their
Emission Limits of Air
compounds Non- Organized
B5 Pollutants in Guangdong None None
methane total emission
Province DB4427-2001
hydrocarbons
Emission Limits of Air
Total non-methane Organized
C6 Pollutants in Guangdong None None
hydrocarbons emission
Province DB4427-2001
Hazardous waste generation information is as follows:
Delivery situation
Output
Species Delivery Collection and
T/a Delivery date
volume T/a transportation unit
Waste organic solvent 13.878 13.878 January to December 2022
Waste circuit board 41.08 41.08 January to December 2022
Waste fluorescent tubes 0.095 0.095 January to December 2022
Abandoned packing 1. Zhaoqing
1.695 1.695 January to December 2022 Xinrongchang
drums/empty containers
Environmental
Waste emulsion 0.35 0.35 January to December 2022 Protection Co.,Ltd.
Waste dry battery 0.325 0.325 January to December 2022 2. Shenzhen Yaxin
Waste cloth/paper/sand/cotton Technology
swabs/wood chaff/gloves/other 14.51 14.51 January to December 2022 Co.,Ltd.
wastes containing solvents 100% legally
handled
Waste mineral oil 0.07 0.07 January to December 2022
Waste activated carbon 16.335 16.335 January to December 2022
waste filter element, filter bag 0.14 0.14 January to December 2022
Total 88.478 88.478 January to December 2022
(3) Information on wastewater detection, waste treatment and industrial waste gas emission of
Asteelflash Suzhou in 2022 is as follows:
Information on Wastewater Discharge in 2022
Suzhou Youlian
Monitoring Checking &
Number & position of wastewater Coordinates: x=53452. 745
units and Measuring
discharge port Y=31496.402
methods Technology
Service Co.,Ltd.
Discharge It is discharged
Water Quality Standard for
mode and from the pipe and
Sewage Discharged into
Discharge standard destination enters the urban
Urban Sewers > GB/T31962-
sewage treatment
2015
plant
Test date
Testing items Standard value
2022/01/20 2022/06/22 2022/09/20
PH 6.5-9.5 7.3 7.3 7.1
Suspended Solids (SS) (mg/L) ≤400 35 22 28
Chemical Oxygen Demand (COD) ≤500 277 61 179
(mg/L)
Biochemical Oxygen Demand ≤350 102 21.2 84.2
(BOD5) (mg/L)
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2022 Annual Report
Ammonia Nitrogen (NH3-N) (mg/L) ≤45 27.2 9.60 19.7
Total Nitrogen (mg/L) ≤70 45.3 15.1 29
Total Phosphorus (mg/L) ≤8 3.47 1.22 2.38
Animal and Vegetable Oils (mg/L) ≤100 0.24 ND 0.06
Note / Qualified Qualified Qualified
Information on Solid (Hazardous) Waste Discharge in 2022
Transfer Storage
Output
Name Category Code amount capacity Disposal or recovery
(tons)
(tons) (tons)
Handed over to a
Empty barrels for Hazardous
900-041-49 15.39 15.39 0 qualified unit for
chemicals waste
processing
Handed over to a
Wipes containing Hazardous
900-041-49 1.051 1.051 0 qualified unit for
chemicals waste
processing
Handed over to a
Waste soldering Hazardous
900-402-06 4.661 4.661 0 qualified unit for
flux waste
processing
Handed over to a
Waste activated Hazardous
900-039-49 0.224 0.224 0 qualified unit for
carbon waste
processing
Handed over to a
Waste cleaning Hazardous
900-402-06 3.05 3.05 0 qualified unit for
agent waste
processing
Handed over to a
Waste circuit board Hazardous
900-045-49 36.7643 36.7643 0 qualified unit for
scraps waste
processing
Information on Industrial Exhaust Emission in 2022
Test result Remarks:
Standard Particulate matter Voc Reporting
Sampling point dry flue Emission Emission Emission Emission date:
position gas flow concentration rate Kg/h concentration rate January 20,
rate Mg/m3 Mg/m3 Kg/h 2022
SMT Vent 1# 1953 1.2 2.34*10-3 NA NA
SMT Vent 2# 3154 1.1 3.47*10-3 NA NA
SMT Vent 3# 1332 1.2 1.6*10-3 NA NA
SMT Vent 4# 1722 1 1.72*10-3 NA NA
SMT Vent 5# 3020 1.1 3.32*10-3 NA NA
SMT Vent 6# 1158 1.3 1.51*10-3 NA NA Entrusted
SMT Vent 7# 2943 1.2 3.53*10-3 NA NA third party:
Cleaning Room Vent 7.78*10- Suzhou
1161 NA NA 0.67 4
13# Youlian
Cleaning Room Vent Checking
1601 NA NA 0.45 7.2*10-4 &
14#
Rinsing Machine Measuring
3804 NA NA 0.63 2.4*10-3 Technology
Vent 18#
2.67*10- Service
Coating Vent 20# 4169 NA NA 0.64 3 Co.,Ltd.
9.59*10-
Coating Vent 19# 2040 NA NA 0.47 4
In reference to Integrated
Emission Standard of Air ---- ---- ----
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Pollutants (DB32/4041-2021)
2. Construction status: A new sewage treatment station is built in 2021 to treat the wastewater
after cleaning with water-based cleaning agent.
√Applicable □ Not Applicable
(1) USI (not including subsidiaries)
Construction status: In 2022, 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.
3 discharge ports in Building A: Water spray + activated carbon adsorption
2 discharge ports in Building B: Activated carbon adsorption
Total emissions: hazardous waste 315.644 tons / VOCs 2.739 tons
Excessive emissions: N/A
Approved total discharge: wastewater CODcr: 11.1341ton/year ammonia nitrogen: 0.5592ton/year;
exhaust gas particulate matter: 1.795 ton/year ; SO2: 0.013 ton/year; NOx: 1.1098 ton/year; VOCs:
12.1229 ton/year
(2) Shenzhen Factory
Construction status: The pollution treatment facilities remained unchanged in 2022 from 2021. However,
since the factory has moved away from Shenzhen in December 2022, the pollution facilities have been
approved for demolition and are yet to be demolished.
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 2023, the waste gas treatment facilities are in good operation, with regular operation
and maintenance. The outsourced monitoring results of each waste gas outlet show that the waste gas
reaches the standard.
Total emissions: 5.3 tons (according to testing results)
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
Operation status: In 2023, the waste gas treatment facilities are in good operation, with regular operation
and maintenance. The outsourced monitoring results of each waste gas outlet show that the waste gas
reaches the standard.
Total emissions: hazardous waste 61.14 tons / VOCs 0.036 tons
Excessive emissions: N/A
Approved total emissions: currently no relevant requirements by Suzhou government
3. Environmental impact assessment (EIA) of construction projects and other environmental
protection administrative licenses
√Applicable □ Not Applicable
(1) USI (not including subsidiaries)
Name of Production or Content
Project file name Document No.
administrative approval unit description
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license
Pudong New Area
Pollutant Pollutant
Ecological 91310000745611834X001U None
discharge permit discharge permit
Environment Bureau
Display & touch
chip module
Pudong New Area
Environmental technology R&D
Ecological H.P.H.B.X.P.[2022] No. 145 None
Impact Report and
Environment Bureau
industrialization
project
(2) Shenzhen Factory
Name of
EIA/Administrative Licensing Authority Licensing Date License File No.
License
Approved by
Shenzhen Nanshan
EIA Reply (Expansion District
June 17, 2015 S.N.H.S.P.X [2015] No.113
Project) Environmental
Protection and Water
Affairs Bureau
Nanshan
Administration Sub-
Pollutant discharge Permit No.:
bureau of Shenzhen December 9, 2022
permit 91440300723001066L001Q
Ecological
Environment Bureau
(3) Asteelflash Suzhou
Name of
EIA/Administrative Licensing Authority Licensing Date License File No.
License
Production technical
transformation project
Suzhou Wujiang
with an annual output of
Ecological Environment July 8, 2019 W.H.J [2019] No.180
150 million automatic
Bureau
canned cigarette oil
boxes
Suzhou Wujiang
Pollutant discharge Permit No.:
Ecological Environment July 7, 2022
permit 91320509734422894M001Y
Bureau
4. Emergency plan for environmental emergencies
√Applicable □ Not Applicable
Project file name Filing Date Filing Department Record No.
Environmental Emergency Plan of Pudong New Area
Universal Scientific Industrial 2022.11.30 Ecological Environment 02-310115-2022-532-L
(Shanghai) Co., Ltd. Bureau
Emergency Plan for Environmental
Shenzhen Ecological
Emergencies of USI Electronics 2020.11.30 440305-2020-0067-L
Environment Bureau
(Shenzhen) Co., Ltd.
Environmental Emergency Plan of USI Wujiang Environment
2016-05-20 SST-WI-FA-009
Electronics (Shenzhen) Co., Ltd. Bureau
5. Environmental self-monitoring scheme
√Applicable □ Not Applicable
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The Company entrusts a third-party environmental testing agency to conduct environmental monitoring
work for the Company in strict accordance with the relevant requirements of the Technical Guide for
Self-Monitoring of Pollutant Discharge Units. At the same time, the Company has also formulated a
detailed daily monitoring plan to monitor emission sources of various pollutants regularly and routinely.
After being tested by a third-party environmental testing agency, pollutants in all processes of the
Company meet the discharge standards.
6. The situation of administrative punishment due to environmental problems during the
reporting period
□ Applicable √Not Applicable
7. Other environmental information that should be disclosed
√Applicable □ Not Applicable
Participation in environmental
None
pollution liability insurance
Payment of environmental tax Pay environmental tax on time every quarter
Complying with laws and regulations, responding to
Environmental policy and annual environmental protection, hazard prevention, communication
environmental objectives and training, pollution prevention, continuous improvement, energy
results saving and waste reduction, effective utilization, setting goals and
sustainable operation.
Every year, special funds are invested in environmental
protection projects to ensure that environmental protection funds
Environmental protection
are earmarked. The funds are used for annual environmental
investment and environmental
testing, pollution prevention and control, waste reduction and
technology development
recycling to ensure that all environmental emissions meet the
requirements of environmental protection laws and regulations.
A waste management plan has been formulated, in which
hazardous wastes are handed over to qualified units for treatment
Recycling of waste products
and non-hazardous wastes are recycled by licensed recycling
units.
USI (not including subsidiaries): 221,751 tons of water,
77,051,730 KWH of electricity
Total resource consumption in Shenzhen Factory: 72,277 tons of water, 18,756,956 KWH of
2022 electricity
Asteelflash Suzhou: 153,205 tons of water, 13,426,930 KWH of
electricity
Environmental violations of law
None
in 2022
Environmental awards in 2022 None
(II) Description of environmental protection of companies other than key pollutant-discharging
units
□ Applicable √Not Applicable
(III) Relevant information conducive to protecting ecology, preventing and controlling pollution
and fulfilling environmental responsibilities
√Applicable □ Not Applicable
1. Recycling of electronic waste
USI adheres to the principles of “pollution prevention and continuous improvement” and “energy saving,
waste reduction and effective use” and lists waste reduction and reuse as the Company’s policies which
are implemented by all factories and listed as annual performance indicators. It strengthens the effective
control of wastes through regular data recording, tracking and monitoring of use and output. Among
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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 2022, the recovery rate of waste reached 90%. 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.
(IV) Measures taken to reduce their carbon emissions during the reporting period and their effects
Whether carbon reduction measures were
Yes
taken
Reduction of carbon dioxide equivalent
99,958
emissions (unit: tons)
Types of carbon reduction measures 1. In 2022, USI (not including subsidiaries) and Shenzhen
(such as using clean energy to generate subsidiary used 100% renewable energy certificates to offset
electricity, using carbon reduction greenhouse gas emissions from electricity consumption
technologies in the production process, 2. In December 2022, USI (not including subsidiaries)
developing and producing new products completed the integration and transformation of the air
that help reduce carbon emissions, etc.) handling units in the workshop
Detailed introductions
√Applicable □ Not Applicable
1. In 2022, USI (not including subsidiaries) and Shenzhen subsidiary used 100% renewable energy
certificates to offset greenhouse gas emissions from electricity consumption, totaling about 99,729 tons
of CO2
2. In December 2022, USI (not including subsidiaries) completed the integration and transformation of
air handling units in the workshop, reducing 229 tons of CO2 through actual operation.
3. Shenzhen subsidiary, which was in the relocation process in 2022, had no carbon reduction projects in
2022.
II. Social Responsibility Work
(I) Whether social responsibility report, sustainability report or ESG report is disclosed separately
√Applicable □ Not Applicable
Since 2013, the Company has issued sustainable development reports annually on the Sustainability
section of USI's website (https://www.usiglobal.com/csr) for the public.
(II) Social Responsibility Work
√Applicable □ Not Applicable
Donations, public welfare projects Quantity/Content Remark
Total investment (Unit: RMB 10,000 yuan) 416.1
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Including funds (Unit: RMB 10,000 yuan) 372.1
Materials (Unit: RMB 10,000 yuan) 44.0
Number of beneficiaries 5,161
Detailed introductions
√Applicable □ Not Applicable
The Company has been adhering to the concept of “Realizing IDEAS together”, actively fulfilling
corporate social responsibilities by participating in social welfare, and practicing its commitment of
“actively investing in public welfare activities that promote social well-being, and encouraging
employees to participate in social welfare activities” in its “Sustainability Policy”, hoping to become an
excellent example of corporate citizenship. During the severe pandemic situation, USl gathered internal
resources and manpower, and invested RMB 4,160,652 yuan in support of social welfare projects in
2022, and promote social engagement in the four aspects of Education, Contributing to Society,
Promoting Arts & Culture, and External Participation to make a positive impact on surrounding
communities.
In addition to social welfare activities in poverty alleviation and rural revitalization, USI also continued
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
its efforts in social activities and practice in education, society, environment and arts, USI created more
positive energy to society and made our world a better place.
III. Efforts in consolidating the achievements in poverty alleviation and rural revitalization
√Applicable □ Not Applicable
Poverty Alleviation and Rural Revitalization Projects Quantity/Content Remark
Total investment (Unit: RMB 10,000 yuan) 81.8
Including funds (Unit: RMB 10,000 yuan) 71.6
Materials (Unit: RMB 10,000 yuan) 10.2
Number of beneficiaries 1,848
Forms of assistance (such as poverty alleviation by industrial Poverty alleviation
development, poverty alleviation by job creation, poverty alleviation by educational
by educational support, etc.) support
Detailed introductions
√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 2022, USI promoted revitalization activities such as “Rural Science
and Technology Education Program”, “Hope for Pearl”, “Love Library”, “Western Student Assistance
Plan”, “Safety Package” by Kunshan Charity Federation, with a total investment of RMB 818,000 to
help 1,848 poor students.
1. Rural Science and Technology Education Program
USI adheres to the concept of science and technology for good, and attaches great importance to
education in poverty-stricken areas. By donating computers and building computer classrooms, USI
helps children in remote areas to obtain better educational resources. The program aimed to narrow the
gap between urban and rural education development by giving educational support to rural students. On
the basis of the previous plan, USI not only upgraded and optimized the educational equipment and
infrastructure, but also focused on cultivating rural teachers and talents with scientific and technological
knowledge. It provided teachers in 5 schools with customized and step-by-step technological support, by
developing video teaching contents and materials on technology applications and designing interesting
quizzes and competitions to reinforce students' learning outcome, and helped teachers to achieve the
purpose of developing students' scientific and technological knowledge. In 2022, a total of three new
computer classrooms in Henan and Gansu were built, and 197 computers were donated by USI,
benefiting 1,573 students.
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2. 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 six
consecutive years. On the occasion of “99 Giving Day”, the Company called on employees to participate
in the activity of “Start Again in 2022, Helping Pearls Realize their Dream”. As the result of employees'
5,000 steps per day for a month, the activity was successfully completed on schedule. USI donated RMB
100,000 yuan to Yezhai Middle School in Qianshan, Anhui Province, which helped 40 impoverished
students in the “2021 USI Shuijing Pearl Class” complete their studies. In addition to material support,
USI also cares for students' mental health. Under the escort of love, 100% students of the “2019 USI
Shuijing Pearl Class” were successfully admitted to the their ideal undergraduate school, 94% admitted
to key universities.
3. Love Library
Reading is the basis for accumulating innovative research and development capabilities. In order to
implement the concept of “promoting education”, the Company built a Love Library in Gaiguo Primary
School, Fengtai Town, Jingchuan County, Pingliang City, Gansu Province, which is a targeted county of
rural revitalization in China. During the construction of the library, the Company invited employees to
participate in the activity of “Donating Books for Children, Passing on Love”, bringing better
educational resources to 173 children in remote areas. When the library was completed, USI sent 1,241
books donated by 51 colleagues and 20 speakers loaded with 200 audiobooks to the reading ream to
enrich the teaching resources of the primary school. By providing practical assistance, USI intended to
narrow the gap between urban and rural education development, and promote the balanced development
of education in the country. The library was built so that students can gain knowledge and positive
energy from books, keep up with the pace of technological development, and develop in an all-round
way like children in cities.
4. Western Student Assistance Plan
As the saying goes, “it takes ten years nurture a tree, but a hundred years to train a man”, investment in
the education brings pains for the moment, gains for the millennia. USI carried out the Western Student
Assistance Plan through China Charity Federation in western rural areas such as Yunnan and Sichuan
Province, invested RMB 48,000 yuan to support 12 college students, guaranteed students' educational
opportunities in the form of subsidies, helped outstanding students in remote villages to further their
education, and escorted their growth to successfully complete their education, so that they can help more
people with the knowledge they learned.
5. “Safety Package” for rural revitalization by Kunshan Charity Federation
In the case of epidemic prevention and control, the vulnerable groups are often the first ones to be
impacted. This year's Spring Festival Gift Package and Children's Day Wishes activities have been
canceled due to the pandemic. Adhering to the concept of “doing small things with great love”, the
Company donated “Safety Packages” worth a total of RMB 5,000 that contained school and sports
supplies, epidemic prevention supplies, etc.. The packages were sent to 50 primary school students,
either migrants or students in need.
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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
Whether If not
performed
Whether strictly performed in a
in a timely
Commitment Commitment Commitment Commitment time there is a performed timely manner,
Party making the commitment manner,
background type content and term deadline for in a describe the
describe
performance timely specific
the next
manner reasons
step
USI Enterprise Limited,
directors, supervisors, members
Others Note 1 December 12, 2019 No Yes
of the senior management, and
actual controllers of USI
Others USI, ASDI and FAFG Note 2 December 12, 2019 No Yes
USI Enterprise Limited and
Others Note 3 December 12, 2019 No Yes
actual controllers of USI
Commitments related to Settlement
USI Enterprise Limited and
major asset of horizontal Note 4 December 12, 2019 No Yes
actual controllers of USI
restructuring competition
Settlement
USI Enterprise Limited and
of related Note 5 December 12, 2019 No Yes
actual controllers of USI
transactions
Others ASDI Note 6 December 12, 2019 No Yes
Restriction
December 8, 2020 to
on sale of ASDI Note 7 Yes Yes
December 7, 2023
shares
Settlement
Commitments related to USI Enterprise Limited and
of horizontal Note 8 Long term No Yes
IPO ASE Inc.
competition
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Settlement
of horizontal Actual controller of USI Note 9 Long term No Yes
competition
Others USI Enterprise Limited Note 10 Long term No Yes
Others ASE (Shanghai) Inc. Note 11 Long term No Yes
Others Actual controller of USI Note 12 Long term No Yes
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
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.
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(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
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.
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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, 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. (2) During the period of participating in this
transaction, the listed 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 (2) From the commitment date to the closing date of the transaction, ASDI and FAFG will, in
accordance with relevant laws, administrative regulations and rules, and relevant provisions of China Securities Regulatory Commission (CSRC) and Shanghai
Stock Exchange, reasonably and timely provide information on this transaction to relevant intermediaries and ensure that such information is true, accurate and
complete, and contains no false records, misleading representations or material omissions. (3) If ASDI is placed on file for investigation by the judicial authority or
by the CSRC since the information provided 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 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 of the listed company applies to the 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 stock exchange and the registration and clearing company and apply for lock-up after verification; if the Board of Directors fails to do so, ADSI
agreed that the stock exchange and the registration and clearing company shall be authorized to directly lock the relevant shares. If the official investigation of the
judicial authority or the CSRC 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 listed company or any of its related parties 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.
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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. (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 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 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.
(3) As of the date of issuance of this letter of commitment, 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 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 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.
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
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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;
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.
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(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 and
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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:
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(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 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
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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.
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 other enterprises controlled by the person making the commitment have already carried out production and operation of such expanded business,
the person making the commitment agrees that USI has the right of first refusal to purchase the relevant business under the same commercial conditions; If other
enterprises controlled by the person making the commitment have not yet produced or operated such expanded business, the person making the commitment shall
ensure that the enterprise under their control does not engage in new business that competes with USI. (5) Other enterprises controlled by the person making the
commitment shall, in future business operations, avoid operating business that constitutes horizontal competition with USI. If the new business that other enterprises
controlled by the person making the commitment intend to carry out may constitute horizontal competition with USI, such other enterprises shall be obliged to
notify USI of the new business. If USI objects to this, such other enterprises shall unconditionally give up the development of the new business. If USI believes that
the new business is beneficial to its development, such other enterprises shall not only unconditionally give up the development of the new business, but also
promote the new business to be carried out by USI. If USI determines that a certain business such other enterprises has already conducted is in competition with USI,
such other enterprises controlled by the person making the commitment shall transfer the business to a third party or terminate the business on its own in a timely
manner after USI raises an objection. If USI makes a transfer request, such other enterprises shall unconditionally transfer the above-mentioned business and assets
to USI in priority at a fair price assessed by an intermediary with qualifications for securities business. (5) Other enterprises controlled by the person making the
commitment shall not engage in business or activities that do or may adversely affect the operation and development of USI in any way. Such way includes but is
not limited to: utilizing the social resources and customer resources of the person making the commitment to hinder or limit the independent development of USI;
spreading news or information that is unfavorable to USI in the society and among customers; using the control position of the person making the commitment to
exert influence, resulting in abnormal changes or fluctuations of USI's management personnel and R&D technicians, which are not conducive to the development of
USI.
Note 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.,
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Ltd., in order to protect the interests of USI and its minority shareholders, the person making the commitment hereby commits that: if Universal Scientific Industrial
Co., Ltd. (including other enterprises controlled by Universal Scientific Industrial Co., Ltd. except USI and enterprises controlled by USI) causes any right
infringement and economic losses to USI and enterprises controlled by USI when exercising its patent application co-ownership and patent co-ownership, the person
making the commitment shall be legally liable for the losses suffered by USI and enterprises controlled by USI and shall also pay full compensation. (2) Before the
IPO of USI, if USI must be jointly and severally liable for damages to the dispatched personnel due to the fact that the labor dispatch unit is in arrears with the
dispatched personnel’s wages, the person making the commitment agrees to compensate USI for the entire economic loss. (3) If USI and its subsidiaries need to pay
social insurance premiums or housing provident fund for employees as required or decided by the competent department, or USI and its subsidiaries are fined or
suffer losses 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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(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
□ Applicable √Not Applicable
(I) Analysis by the Company on reasons for and impacts of changes in accounting policies and
accounting estimates
□ Applicable √Not Applicable
(II) The Company's analysis and explanation for the effects and correction of major 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 yuan Currency: RMB
Current accounting firm
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Deloitte Touche Tohmatsu
Name of domestic accounting firm
Certified Public Accountants LLP
Remuneration of domestic accounting firm 457
Number of years of audit services by the domestic accounting firm 12
Name of CPAs from domestic accounting firm Yuan Shouqing, and Hu Ke
Number of consecutive years of audit services of CPAs in domestic
12
accounting firms
Name Remuneration
Internal control audit Deloitte Touche Tohmatsu Certified Public
68.3
accounting firm Accountants LLP
Sponsor Haitong Securities Co., LTd. 0
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.
√Applicable □ Not Applicable
The Company's 2022 First Extraordinary Meeting of Shareholders was held on September 16, 2022, and
this meeting deliberated and approved the appointment of Deloitte Touche Tohmatsu Certified Public
Accountants LLP as the Company's 2022 financial and internal control audit institution.
VII. Risk of suspension of listing
(I) Reasons for the suspension of listing risk warning
□ Applicable √Not Applicable
(II) Measures to be taken by the Company
□ Applicable √Not Applicable
(III) Circumstances and reasons for termination of listing
□ Applicable √Not Applicable
VIII. Material litigation and arbitration
□ 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
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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 Party For details, see the announcement (No.: 2022-
Transactions 022) on the website of the Shanghai Stock
Exchange (www.sse.com.cn)
Announcement on Additional Estimated Amount of For details, see the announcement (No.: 2022-
Regular Related Party Transactions in 2022 118) on the website of 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
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
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(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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(II) Guarantees
√Applicable □ Not Applicable
Unit: 10,000 Currency: RMB
The Company's external guarantees (excluding guarantees to subsidiaries)
Relatio
Whet
nship Guara Whet
Whet her it
betwee ntee her
her Guar Coun is a
n the date the
Guar Guar Guar Colla the antee ter- guara Relate
Guaran guarant Guara (date Guara guara
antee antee antee teral guara overd guara ntee d
tying ying nteed of ntee ntee
amou start expir (if ntee ue ntee for relatio
party party party signin type has
nt date y date any) is amou situat relate nship
and the g the been
overd nt ion d
listed agree fulfill
ue partie
compa ment) ed
s
ny
/ / / / / / / / /
Total amount of guarantees during the reporting period
0
(excluding guarantees to subsidiaries)
Total balance of guarantees at the end of the reporting
0
period (A) (excluding guarantees to subsidiaries)
Guarantee of the Company and its subsidiaries to subsidiaries
Total amount of guarantees to subsidiaries during the
20,784.12
reporting period
Total balance of guarantees to subsidiaries at the end
14,115.87
of the reporting period (B)
Total amount of the Company's guarantees (including guarantees to subsidiaries)
Total amount of guarantees (A+B) 14,115.87
Proportion of the total amount of guarantees in the
0.90
Company's net assets (%)
Including:
Amount of guarantee provided to shareholders, actual
0
controllers and related parties (C)
Amount of debt guarantee provided directly or
indirectly for the guaranteed object whose asset- 17,814.96
liability ratio exceeds 70% (D)
Amount of the total guarantee exceeding 50% of the
0
net assets (E)
Total amount of the above three guarantees (C+D+E) 17,814.96
Particulars on the situation that unexpired guarantees
None
may bear joint liability for repayment
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-owned subsidiaries within the scope
Particulars on guarantees
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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(III) Entrusting others to manage cash assets
1. Entrusted wealth management
(1) Overall condition of entrusted wealth management
√Applicable □ Not Applicable
Unit: 10,000 yuan Currency: RMB
Amount Undue Overdue uncollected
Type Source of fund
incurred balance amount
Bank wealth management
Self-owned funds 288,200 0 0
products
Bank wealth management
Raised funds 215,300 0 0
products
Others
□ Applicable √Not Applicable
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2022 Annual Report
(2) Individual entrusted wealth management
√Applicable □ Not Applicable
Unit: 10,000 yuan Currency: RMB
Future
Type of Expected Actual Legal Impairment
Type of Annual Principal entrusted
Trustee Entrusted Amount Start Date End date Source Direction return (If gain procedures provision
Returns Return repayment investment
Investment any) or loss conducted (if any)
plan
Principal
China Merchants Bank wealth Money
Raised protected,
Bank Shanghai management 22,300.00 2022/1/5 2022/3/31 market: 2.9200% 155.79 151.64 All repaid Yes No
funds floating
the Bund Branch products cash&deposit
rate
Xiamen Principal
Bank wealth Money
International Raised protected,
management 20,000.00 2022/1/5 2022/3/31 market: 3.3200% 156.78 156.78 All repaid Yes No
Bank Shanghai funds floating
products cash&deposit
Branch rate
Principal
Fubon Bank Bank wealth Money
Raised protected,
Shanghai Xuhui management 16,600.00 2022/1/5 2022/3/29 market: 3.2900% 124.19 124.19 All repaid Yes No
funds floating
Branch products cash&deposit
rate
Xiamen Principal
Bank wealth Money
International Raised protected,
management 20,000.00 2022/4/8 2022/6/30 market: 3.4000% 156.78 156.78 All repaid Yes No
Bank Shanghai funds floating
products cash&deposit
Branch rate
Principal
Fubon Bank Bank wealth Money
Raised protected,
Shanghai Xuhui management 16,600.00 2022/4/8 2022/6/30 market: 3.2900% 124.19 124.19 All repaid Yes No
funds floating
Branch products cash&deposit
rate
Principal
China Merchants Bank wealth Money
Raised protected,
Bank Shanghai management 13,300.00 2022/4/12 2022/6/13 market: 3.0000% 67.78 67.78 All repaid Yes No
funds floating
the Bund Branch products cash&deposit
rate
China Merchants Bank wealth Money Principal
Raised
Bank Shanghai management 9,000.00 2022/4/12 2022/6/30 market: protected, 3.2000% 58.44 62.33 All repaid Yes No
funds
the Bund Branch products cash&deposit floating
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2022 Annual Report
rate
Xiamen Principal
Bank wealth Money
International Raised protected,
management 20,000.00 2022/7/4 2022/9/29 market: 3.3500% 161.92 161.92 All repaid Yes No
Bank Shanghai funds floating
products cash&deposit
Branch rate
Principal
Fubon Bank Bank wealth Money
Raised protected,
Shanghai Xuhui management 18,000.00 2022/7/4 2022/9/29 market: 3.3900% 145.44 145.44 All repaid Yes No
funds floating
Branch products cash&deposit
rate
Principal
Fubon Bank Bank wealth Money
Raised protected,
Shanghai Xuhui management 8,500.00 2022/7/4 2022/9/29 market: 3.3900% 68.68 68.68 All repaid Yes No
funds floating
Branch products cash&deposit
rate
Xiamen Principal
Bank wealth Money
International Raised protected,
management 10,000.00 2022/10/11 2022/11/9 market: 3.3000% 26.58 26.58 All repaid Yes No
Bank Shanghai funds floating
products cash&deposit
Branch rate
Xiamen Principal
Bank wealth Money
International Raised protected,
management 8,000.00 2022/10/11 2022/12/29 market: 3.3200% 58.28 58.28 All repaid Yes No
Bank Shanghai funds floating
products cash&deposit
Branch rate
Xiamen Principal
Bank wealth Money
International Raised protected,
management 8,000.00 2022/10/11 2022/12/29 market: 3.3200% 58.28 58.28 All repaid Yes No
Bank Shanghai funds floating
products cash&deposit
Branch rate
China Principal
Bank wealth Money
Construction Raised protected,
management 20,000.00 2022/10/10 2022/12/30 market: 3.2000% 133.15 142.03 All repaid Yes No
Bank Shanghai funds floating
products cash&deposit
Branch rate
Principal
China Merchants Bank wealth Money
Raised protected,
Bank Daya Bay management 5,000.00 2022/2/11 2022/2/28 market: 2.8300% 3.84 6.59 All repaid Yes No
funds floating
Branch products cash&deposit
rate
Bank of Bank wealth Self- Money Principal
20,000.00 2022/1/12 2022/3/31 2.9600% 132.49 126.51 All repaid Yes No
Communications management owned market: protected,
96/264
2022 Annual Report
Shanghai Branch products funds cash&deposit floating
rate
Principal
Bank of Bank wealth Self- Money
protected,
Communications management 20,000.00 2022/4/8 2022/6/7 owned market: 3.2900% 111.12 108.16 All repaid Yes No
floating
Shanghai Branch products funds cash&deposit
rate
Xiamen Principal
Bank wealth Self- Money
International protected,
management 5,000.00 2022/1/5 2022/3/31 owned market: 3.3400% 39.43 39.43 All repaid Yes No
Bank Shanghai floating
products funds cash&deposit
Branch rate
Xiamen Principal
Bank wealth Self- Money
International protected,
management 5,000.00 2022/4/8 2022/6/30 owned market: 3.4000% 39.19 39.19 All repaid Yes No
Bank Shanghai floating
products funds cash&deposit
Branch rate
Xiamen Principal
Bank wealth Self- Money
International protected,
management 4,600.00 2022/7/4 2022/9/29 owned market: 3.3000% 36.69 36.69 All repaid Yes No
Bank Shanghai floating
products funds cash&deposit
Branch rate
Xiamen Principal
Bank wealth Self- Money
International protected,
management 500.00 2022/10/11 2022/12/20 owned market: 3.4200% 3.23 3.33 All repaid Yes No
Bank Shanghai floating
products funds cash&deposit
Branch rate
Xiamen Principal
Bank wealth Self- Money
International protected,
management 4,100.00 2022/10/11 2022/12/29 owned market: 3.3200% 29.87 29.87 All repaid Yes No
Bank Shanghai floating
products funds cash&deposit
Branch rate
Kunshan Rural
Principal
Commercial Bank wealth Self- Money
protected,
Bank management 3,000.00 2022/1/5 2022/2/7 owned market: 3.6000% 9.76 9.76 All repaid Yes No
floating
Development products funds cash&deposit
rate
Zone Branch
Bank of Suzhou Principal
Bank wealth Self- Money
Kunshan protected,
management 5,000.00 2022/1/7 2022/3/30 owned market: 3.7000% 42.65 42.65 All repaid Yes No
Qiandeng floating
products funds cash&deposit
Branch rate
97/264
2022 Annual Report
Kunshan Rural
Principal
Commercial Bank wealth Self- Money
protected,
Bank management 3,000.00 2022/1/14 2022/3/30 owned market: 3.6000% 22.19 22.19 All repaid Yes No
floating
Development products funds cash&deposit
rate
Zone Branch
Kunshan Rural
Principal
Commercial Bank wealth Self- Money
protected,
Bank management 3,000.00 2022/2/8 2022/3/30 owned market: 3.6000% 14.79 14.79 All repaid Yes No
floating
Development products funds cash&deposit
rate
Zone Branch
Bank of China Principal
Bank wealth Self- Money
Kunshan protected,
management 980.00 2022/2/17 2022/2/28 owned market: 1.4900% 0.89 0.44 All repaid Yes No
Qiandeng floating
products funds cash&deposit
Branch rate
Bank of China Principal
Bank wealth Self- Money
Kunshan protected,
management 1,020.00 2022/2/17 2022/2/28 owned market: 4.5167% 0.92 1.39 All repaid Yes No
Qiandeng floating
products funds cash&deposit
Branch rate
Bank of Suzhou Principal
Bank wealth Self- Money
Kunshan protected,
management 5,000.00 2022/4/7 2022/5/4 owned market: 3.6000% 13.32 13.50 All repaid Yes No
Qiandeng floating
products funds cash&deposit
Branch rate
Kunshan Rural
Principal
Commercial Bank wealth Self- Money
protected,
Bank management 5,000.00 2022/5/31 2022/6/30 owned market: 3.6500% 15.00 15.00 All repaid Yes No
floating
Development products funds cash&deposit
rate
Zone Branch
Bank of Suzhou Principal
Bank wealth Self- Money
Kunshan protected,
management 5,000.00 2022/6/2 2022/6/30 owned market: 3.6000% 14.00 14.00 All repaid Yes No
Qiandeng floating
products funds cash&deposit
Branch rate
Bank of Suzhou Principal
Bank wealth Self- Money
Kunshan protected,
management 5,000.00 2022/7/6 2022/8/2 owned market: 3.5900% 13.46 13.46 All repaid Yes No
Qiandeng floating
products funds cash&deposit
Branch rate
98/264
2022 Annual Report
Bank of Suzhou Principal
Bank wealth Self- Money
Kunshan protected,
management 3,000.00 2022/8/5 2022/9/1 owned market: 3.5500% 7.99 7.99 All repaid Yes No
Qiandeng floating
products funds cash&deposit
Branch rate
Bank of Suzhou Principal
Bank wealth Self- Money
Kunshan protected,
management 5,000.00 2022/8/16 2022/9/29 owned market: 3.3600% 20.07 20.07 All repaid Yes No
Qiandeng floating
products funds cash&deposit
Branch rate
Bank of Suzhou Principal
Bank wealth Self- Money
Kunshan protected,
management 3,000.00 2022/8/25 2022/9/29 owned market: 3.3500% 9.49 9.49 All repaid Yes No
Qiandeng floating
products funds cash&deposit
Branch rate
Bank of Suzhou Principal
Bank wealth Self- Money
Kunshan protected,
management 5,000.00 2022/9/5 2022/9/29 owned market: 3.3000% 11.00 11.00 All repaid Yes No
Qiandeng floating
products funds cash&deposit
Branch rate
Bank of Suzhou Principal
Bank wealth Self- Money
Kunshan protected,
management 3,000.00 2022/9/5 2022/9/29 owned market: 3.3000% 6.60 6.60 All repaid Yes No
Qiandeng floating
products funds cash&deposit
Branch rate
Bank of Suzhou Principal
Bank wealth Self- Money
Kunshan protected,
management 5,000.00 2022/10/11 2022/11/2 owned market: 3.2000% 9.78 9.78 All repaid Yes No
Qiandeng floating
products funds cash&deposit
Branch rate
Kunshan Rural
Principal
Commercial Bank wealth Self- Money
protected,
Bank management 5,000.00 2022/10/13 2022/11/1 owned market: 3.3000% 8.71 8.59 All repaid Yes No
floating
Development products funds cash&deposit
rate
Zone Branch
Kunshan Rural
Principal
Commercial Bank wealth Self- Money
protected,
Bank management 10,000.00 2022/11/2 2022/12/26 owned market: 3.2000% 47.34 47.34 All repaid Yes No
floating
Development products funds cash&deposit
rate
Zone Branch
Kunshan Rural Bank wealth 10,000.00 2022/11/3 2022/12/26 Self- Money Principal 3.3000% 47.92 47.92 All repaid Yes No
99/264
2022 Annual Report
Commercial management owned market: protected,
Bank products funds cash&deposit floating
Development rate
Zone Branch
Bank of Suzhou Principal
Bank wealth Self- Money
Kunshan protected,
management 5,000.00 2022/11/3 2022/12/1 owned market: 3.2000% 12.06 12.44 All repaid Yes No
Qiandeng floating
products funds cash&deposit
Branch rate
Bank of Suzhou Principal
Bank wealth Self- Money
Kunshan protected,
management 5,000.00 2022/11/3 2022/12/1 owned market: 3.2000% 12.06 12.44 All repaid Yes No
Qiandeng floating
products funds cash&deposit
Branch rate
Kunshan Rural
Principal
Commercial Bank wealth Self- Money
protected,
Bank management 5,000.00 2022/11/24 2022/12/29 owned market: 3.0000% 14.38 14.38 All repaid Yes No
floating
Development products funds cash&deposit
rate
Zone Branch
Xiamen Principal
Bank wealth Self- Money
International protected,
management 5,000.00 2022/1/5 2022/3/31 owned market: 3.3900% 40.02 40.02 All repaid Yes No
Bank Shanghai floating
products funds cash&deposit
Branch rate
Xiamen Principal
Bank wealth Self- Money
International protected,
management 5,000.00 2022/4/8 2022/5/31 owned market: 3.4000% 25.03 25.03 All repaid Yes No
Bank Shanghai floating
products funds cash&deposit
Branch rate
Principal
Bank wealth Self- Money
E.SUN Bank protected,
management 10,000.00 2022/1/4 2022/3/30 owned market: 3.3000% 76.85 76.85 All repaid Yes No
Shenzhen Bank floating
products funds cash&deposit
rate
Principal
Bank SinoPac Bank wealth Self- Money
protected,
Guangzhou management 10,000.00 2022/1/6 2022/3/30 owned market: 3.4000% 77.32 77.32 All repaid Yes No
floating
Branch products funds cash&deposit
rate
Bank of Bank wealth Self- Money Principal
2,000.00 2022/1/21 2022/2/22 3.1000% 5.44 5.44 All repaid Yes No
Communications management owned market: protected,
100/264
2022 Annual Report
products funds cash&deposit floating
rate
Principal
Bank wealth Self- Money
E.SUN Bank protected,
management 10,000.00 2022/4/1 2022/6/30 owned market: 3.2170% 86.30 79.32 All repaid Yes No
Shenzhen Bank floating
products funds cash&deposit
rate
Principal
Bank SinoPac Bank wealth Self- Money
protected,
Guangzhou management 7,000.00 2022/4/2 2022/6/2 owned market: 3.2000% 37.44 37.44 All repaid Yes No
floating
Branch products funds cash&deposit
rate
Principal
Bank wealth Self- Money
E.SUN Bank protected,
management 10,000.00 2022/7/1 2022/9/30 owned market: 3.3670% 84.77 83.02 All repaid Yes No
Shenzhen Bank floating
products funds cash&deposit
rate
Principal
Bank SinoPac Bank wealth Self- Money
protected,
Guangzhou management 5,000.00 2022/7/6 2022/9/30 owned market: 3.4000% 40.05 40.05 All repaid Yes No
floating
Branch products funds cash&deposit
rate
Principal
Bank SinoPac Bank wealth Self- Money
protected,
Guangzhou management 10,000.00 2022/10/10 2022/12/9 owned market: 2.7100% 50.96 44.55 All repaid Yes No
floating
Branch products funds cash&deposit
rate
Principal
Bank wealth Self- Money
E.SUN Bank protected,
management 10,000.00 2022/10/11 2022/12/29 owned market: 2.7115% 71.42 58.69 All repaid Yes No
Shenzhen Bank floating
products funds cash&deposit
rate
Principal
Bank wealth Self- Money
Industrial Bank protected,
management 10,000.00 2022/10/18 2022/12/30 owned market: 2.9200% 58.40 58.40 All repaid Yes No
Shenzhen Bank floating
products funds cash&deposit
rate
Principal
Bank SinoPac Bank wealth Self- Money
protected,
Guangzhou management 10,000.00 2022/10/21 2022/12/29 owned market: 2.5536% 58.60 48.27 All repaid Yes No
floating
Branch products funds cash&deposit
rate
Industrial Bank Bank wealth 10,000.00 2022/10/26 2022/12/30 Self- Money Principal 2.7000% 51.82 48.08 All repaid Yes No
101/264
2022 Annual Report
Shenzhen Bank management owned market: protected,
products funds cash&deposit floating
rate
Principal
Bank SinoPac Bank wealth Self- Money
protected,
Guangzhou management 10,000.00 2022/11/2 2022/12/1 owned market: 2.1034% 23.84 16.71 All repaid Yes No
floating
Branch products funds cash&deposit
rate
Principal
China Merchants Bank wealth Self- Money
protected,
Bank Daya Bay management 5,000.00 2022/11/2 2022/12/30 owned market: 1.8500% 22.25 14.70 All repaid Yes No
floating
Branch products funds cash&deposit
rate
102/264
2022 Annual Report
Others
□ Applicable √Not Applicable
(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
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2022 Annual Report
Section VII Changes in Share Capital and Information of Shareholders
I. Changes in share capital
(I) Table of changes in shares
1. (I) Table of changes in shares
Before the change Change After the change
Stock
converted
New Bonus from
Number % Others Subtotal Number %
Issue Issue housing
accumulat
ion fund
I. Shares subject
to selling 25,939,972 1.17 0 0 0 0 0 25,939,972 1.18
restrictions
1. Shares held by
25,939,972 1.17 0 0 0 0 0 25,939,972 1.18
the foreign capital
Including: Shares
held by the
25,939,972 1.17 0 0 0 0 0 25,939,972 1.18
foreign legal
person
II. Tradable shares
held subject to 2,184,232,810 98.83 5,988,084 0 0 -9,296,627 -3,308,543 2,180,924,267 98.82
selling restrictions
1. RMB ordinary
2,184,232,810 98.83 5,988,084 0 0 -9,296,627 -3,308,543 2,180,924,267 98.82
shares
III. Total number
2,210,172,782 100 5,988,084 0 0 -9,296,627 -3,308,543 2,206,864,239 100
of shares
2. Particulars on changes in ordinary shares
√Applicable □ Not Applicable
During the reporting period, the total share capital of the Company was increased by 5,988,084 shares
due to exercise of stock options and conversion of convertible bond, and decreased by 9,296,627 shares
due to cancellation of unused repurchased shares, resulting in a total decrease of 3,308,543 shares to
2,206,864,239 shares from 2,210,172,782 shares.
3. Impact of changes in shares on the earnings per share, net asset value per share and other
financial indicators in the last year and period (if any)
√Applicable □ Not Applicable
During the total reporting period, the Company's total shares were reduced by 3,308,543 shares due to
exercise of stock options and conversion of convertible bond, and cancellation of unused repurchased
shares, accounting for 0.15% of its total share capital after these changes, with little impact on financial
indicators such as earnings per share and net asset value per share.
4. Other contents that must be disclosed in the opinion of the Company or according to
requirements of the securities regulatory institution
□ Applicable √Not Applicable
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2022 Annual Report
(II) Changes in shares with trading restrictions
□ Applicable √Not Applicable
II. Issuance and listing of securities
(I) Issuance of securities at the reporting period
□ Applicable √Not Applicable
Particulars on issuance of securities at the reporting period (please provide separate particulars on the
bonds with different interest rates during their duration):
□ Applicable √Not Applicable
(II) Changes in the total number of shares and shareholder structure of the Company and changes
in the structure of assets and liabilities of the Company
√Applicable □ Not Applicable
1. Changes in the total number of shares
During the total reporting period, the Company's total shares were reduced by 3,308,543 shares due to
exercise of stock options and conversion of convertible bond, and cancellation of unused repurchased
shares.
2. Changes in shareholder structure
The controlling shareholder and actual controller of the Company remained unchanged. The controlling
shareholder of the Company was still USI Enterprise Limited, and its shareholding ratio was passively
increased from 76.18% to 76.30% due to the above changes in shares. Except for the controlling
shareholder, the Company had no other shareholders holding more than 5% of the shares. The actual
controllers of the Company were still Jason C.S. Chang and Richard H.P. Chang brothers.
3. Changes in the structure of assets and liabilities of the Company
At the beginning of the reporting period, the Company had total assets of RMB 35.86 billion and total
liabilities of RMB 22.77 billion, with the asset-liability ratio of 63.51%; at the end of the reporting
period, the Company had total assets of RMB 38.57 billion and total liabilities of RMB 22.83 billion,
with the asset-liability ratio of 59.17%. The Company's asset-liability ratio decreased YoY by 4.34
percentage points.
(III) Existing internal employee shares
□ Applicable √Not Applicable
III. Shareholders and actual controllers
(I) Total number of shareholders
Total number of shareholders of ordinary shares at the end of the reporting period 33,535
Total number of shareholders of ordinary shares at the end of last month prior to the
40,272
disclosure date of this annual report
Total number of preferred shareholders whose voting rights have been restored as of
0
the end of the reporting period
Total number of preferred shareholders at the end of the previous month prior to the
0
disclosure date of the annual report
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2022 Annual Report
(II) Table of shareholdings of the top ten shareholders and the top ten shareholders of shares in
circulation (or shareholders not subject to selling restrictions) at the end of the reporting period
Shareholdings of the top ten shareholders
Change Shares held Pledge, marking or
Name of shareholder during the by the end of Restricted freezing Nature of
%
(Full name) reporting the reporting shares held shareholder
Share status Number
period period
USI Enterprise Foreign legal
0 1,683,749,126 76.30 0 None 0
Limited person
Hong Kong
Foreign legal
Securities Clearing 152,919 63,274,743 2.87 0 Unknown
person
Company Ltd.
China Securities State-owned
-5,224,396 31,525,673 1.43 0 Unknown
Finance Co., Ltd. legal person
ASDI
Foreign legal
ASSISTANCE 0 25,939,972 1.18 25,939,972 Pledged 25,939,972
person
DIRECTION
Domestic
non-state-
ASE (Shanghai) Inc. 0 18,098,476 0.82 0 None 0
owned legal
person
Abu Dhabi
Foreign legal
Investment 5,420,833 5,770,633 0.26 0 Unknown
person
Authority
CSI 500 Exchange
Traded fund -
5,296,900 0.24 0 Unknown Others
Agricultural Bank of
China
Wanjia CSI 300
Index enhanced
securities investment 4,544,924 0.21 0 Unknown Others
fund - Bank of
Ningbo
All China Bond -
Ninety One Global
Strategy Fund - 4,326,785 0.20 0 Unknown Others
Ninety One UK Ltd.
- RQFII
ChinaAMC CSI 5G
Communication
452,700 4,251,769 0.19 0 Unknown Others
Theme ETF - Bank
of China Limited
Shareholding of top 10 shareholders subject to no selling restrictions
Number of tradable shares not Type and number of shares
Name of shareholder subject to selling restrictions
Species Number
held
RMB ordinary
USI Enterprise Limited 1,683,749,126 1,683,749,126
shares
Hong Kong Securities Clearing RMB ordinary
63,274,743 63,274,743
Company Ltd. shares
RMB ordinary
China Securities Finance Co., Ltd. 31,525,673 31,525,673
shares
RMB ordinary
ASE (Shanghai) Inc. 18,098,476 18,098,476
shares
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2022 Annual Report
RMB ordinary
Abu Dhabi Investment Authority 5,770,633 5,770,633
shares
CSI 500 Exchange Traded fund - RMB ordinary
5,296,900 5,296,900
Agricultural Bank of China shares
Wanjia CSI 300 Index enhanced
RMB ordinary
securities investment fund - Bank 4,544,924 4,544,924
shares
of Ningbo
All China Bond - Ninety One
RMB ordinary
Global Strategy Fund - Ninety 4,326,785 4,326,785
shares
One UK Ltd. - RQFII
ChinaAMC CSI 5G
RMB ordinary
Communication Theme ETF - 4,251,769 4,251,769
shares
Bank of China Limited
China Merchants Securities
RMB ordinary
Co.,Ltd. - CCB small-cap pioneer 3,980,000 3,980,000
shares
stock securities investment fund
At the end of the reporting period, there were 25,402,195 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, 2021, there were 25,313,205 tradable shares not
subject to selling restrictions in the Company's special buy-back
securities account;
Particulars on the special buy- 2. From February to June 2022, the Company's special buy-back
back securities account of the top securities account increased its holdings by 9,356,317 shares due to the
ten shareholders repurchase of shares in the secondary market;
3. On June 29, 2022, 29,300 shares held by the 2020 Employee Stock
Ownership Plan were transferred back to the special securities account
for buyback as a result of underperformance or resignation of some
participants;
4. On July 18, 2022, the Company cancelled 9,296,627 repurchased
shares on the account.
Particulars on the above-
mentioned shareholders'
entrusting voting rights, entrusted None
voting rights and abstention from
voting rights
The actual controllers of the Company are Mr. Jason C.S. Chang and Mr.
Richard H.P. Chang, who are brothers and ultimately control the
Related or concert parties among Company through indirect shareholding by controlling USI Enterprise
the shareholders above Limited and ASE (Shanghai) Inc., two of the Company’s shareholders.
The Company does not know whether there are related relationships and
concerted actions among other shareholders.
Particulars on the preference
shareholders with voting rights None
restored and their shareholdings
Number of shares held by the top ten shareholders subject to trading restrictions and trading restrictions
√Applicable □ Not Applicable
Name of shareholders subject to Number of Listing and trading of shares Selling
No.
selling restrictions shares held subject to selling restrictions restrictions
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2022 Annual Report
subject to Number of
selling new
restrictions Listing and trading shares that
time can be
listed and
traded
36 months
from the
1 ASDI ASSISTANCE DIRECTION 25,939,972 December 11, 2023 0
delivery date of
the new shares
Related or concert parties among the
None
shareholders above
(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 legal representative Chen-Yen Wei
Establishment date November 13, 2007
Investment consulting services and
Main businesses
warehouse management services
Equity of other domestic and overseas listed companies
None
controlled or invested during the reporting period
Particulars on other information None
2. Natural person
□ Applicable √Not Applicable
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. The Ownership Structure of USI and its Controlling Shareholder
√Applicable □ Not Applicable
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2022 Annual Report
(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
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 21.75% 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 2350, which was terminated
from listing on June 17, 2010.
Name Richard H.P. Chang
Nationality Hong Kong, China
Acquire right of residence in other Yes
countries or regions or not
Main job and title Since 2018, has been serving as vice chairman and general
manager of ASE Technology Holding Co., Ltd.
Shareholdings in other domestic or As a brother of Jason C.S. Chang, holds 2.84% 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.
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2022 Annual Report
3. Special particulars on the Company not having actual controllers
□ Applicable √Not Applicable
4. Particulars on changes in the Company's control during the reporting period
□ Applicable √Not Applicable
5. The Ownership Structure of USI and its Actual Controller
□ Applicable √Not Applicable
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
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2022 Annual Report
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
2021 Plan for Repurchasing Shares through
Name of the share repurchase plan
Centralized Bidding
Disclosure time of share repurchase plan August 26, 2021
Proportion (%) of proposed repurchase shares in
1.01
total share capital
Proposed repurchase amount RMB 200 million - RMB 400 million
Proposed repurchase period August 24, 2021 – February 23, 2022
Employee stock ownership plan, equity incentive
Repurchase purpose plan, conversion of convertible corporate bonds
issued by the listed company
Number of repurchased shares (share) 17,223,278
Proportion of repurchased shares in the target shares
Not applicable
involved in the equity incentive plan (if any)
Progress of reducing shares repurchased by the
Not applicable
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.
2022 Plan for Repurchasing Shares through
Name of the share repurchase plan
Centralized Bidding
Disclosure time of share repurchase plan 29 March 2022
Proportion (%) of proposed repurchase shares in
0.42
total share capital
Proposed repurchase amount RMB 100 million - RMB 150 million
Proposed repurchase period March 25, 2022 – March 24, 2023
Repurchase purpose Employee stock ownership plan
Number of repurchased shares (share) 8,175,317
Proportion of repurchased shares in the target shares
Not applicable
involved in the equity incentive plan (if any)
Progress of reducing shares repurchased by the
Not applicable
Company through centralized bidding
Note: The proposed repurchase amount is calculated based on the upper limit of the total repurchase
funds of RMB 150 million and the upper limit of the price of RMB 16 per share.
As of March 24, 2022, this share repurchase plan was completed, and the Company repurchased a total
of 8,175,317 shares of the Company, accounting for about 0.37% of the Company's current total share
capital.
The shares repurchased during the reporting period for the above-mentioned 2021 and 2022 repurchase
plan totaled 9,356,317 shares.
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2022 Annual Report
Section VIII Related Information of Preferred Stocks
□ Applicable √Not Applicable
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2022 Annual Report
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
Convertible corporate bonds
publicly issued by Universal
Name of convertible corporate bonds
Scientific Industrial (Shanghai)
Co., Ltd. in 2021
Number of convertible bond holders at the end of the period 8,593
Guarantor of the Company's convertible bonds None
Top ten convertible bond holders:
Amount (RMB) of
Holding
Name of holders of convertible corporate bonds bonds held at the
ratio (%)
end of the period
USI Enterprise Limited 1,444,608,000 41.87
Northwest Feilong Fund Limited - Northwest Investment
132,412,000 3.84
Management (Hong Kong) Limited
Aegon Convertible Bond Hybrid Securities Fund - Commercial
66,412,000 1.93
Bank Of China Limited
E Fund Stable Income Bond Securities Investment Fund - Bank
62,889,000 1.82
of China
Tianhong Yongli Convertible Bond Securities Investment Fund
58,924,000 1.71
- Industrial Bank Co.,Ltd.
UBS AG 55,786,000 1.62
CSC Financial Co., Ltd. 42,736,000 1.24
China Foreign Economy And Trade Trust Co.,Ltd. - FOTIC -
Wisdomshire Private Convertible Bond No. 1 Securities 40,575,000 1.18
Investment Aggregate Fund Trust
Penghua Double Bond Securities Investment Fund - Bank of
40,314,000 1.17
Beijing Co.,Ltd.
113/264
2022 Annual Report
Everbright Prudential Financial Credit Bond Securities
35,779,000 1.04
Investment Fund - China Minsheng Banking Corp.,Ltd.
(III) Changes in convertible bonds during the reporting period
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
Change
Name of convertible
Before the change Transferred After the change
corporate bonds Redeemed Put
into shares
Convertible corporate bonds
publicly issued by Universal
3,449,974,000 42,000 0 0 3,449,932,000
Scientific Industrial
(Shanghai) Co., Ltd. in 2021
Cumulative conversion of convertible bonds during the reporting period
√Applicable □ Not Applicable
Convertible corporate bonds publicly
Name of convertible corporate bonds issued by Universal Scientific
Industrial (Shanghai) Co., Ltd. in 2021
Conversion amount (RMB) during the reporting period 42,000
Number of shares converted during the reporting period 2,129
Cumulative number of converted shares 3,439
Proportion of cumulative number of converted shares to
the total number of issued shares of the Company before 0.0002
the conversion (%)
Unconverted amount (RMB) 3,449,932,000
Proportion of unconverted convertible bonds to the total
99.9980
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
bonds Scientific Industrial (Shanghai) Co., Ltd. in 2021
Particulars on
Adjusted
Conversion price conversion price
conversion Disclosure time Disclosure media
adjustment date adjustment
price
Note
June 3, 2021 19.75 June 1, 2021 2020 profit distribution
June 13, 2022 19.49 June 7, 2022 2021 profit distribution
Shanghai
Cancellation of
July 21, 2022 19.52 July 20, 2022 Securities News,
repurchased shares
China Securities
Journal, Securities The accumulative
Times, and exercise of stock
December 9, 2022 19.50 December 8, 2022 Securities Daily options reached the
degree of adjusting the
conversion price
The latest conversion price as of
19.50
the end of the reporting period
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2022 Annual Report
(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 35.86 billion and
total liabilities of RMB 22.77 billion, with the asset-liability ratio of 63.51%; at the end of the
reporting period, the Company had total assets of RMB 38.57 billion and total liabilities of RMB
22.83 billion, with the asset-liability ratio of 59.17%. The Company's asset-liability ratio
decreased YoY by 4.34 percentage points.
On May 24, 2022, 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 (2022): The Company's main credit rating remained 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
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2022 Annual Report
Section X Financial Statements
I. Auditor’s report
The Company's annual financial report has been audited and given a standard unqualified opinion
by Chinese Certified Public Accountant Yuan Shouqing and Hu Ke of Deloitte Touche Tohmatsu
Certified Public Accountants LLP.
II. Financial statements and notes
Please refer to the attached financial statements and notes for more details.
116/264
Universal Scientific Industrial (Shanghai) Co., Ltd.
Financial Statements and Auditor's Report
For the year ended 31 December 2022
117 /264
Universal Scientific Industrial (Shanghai) Co., Ltd.
Financial Statements and Auditor's Report
For the year ended 31 December 2022
Contents Page(s)
Auditor's report 119 - 123
Consolidated balance sheet 124 - 125
Balance sheet of the Company 126 - 127
Consolidated income statement 128
Income statement of the Company 129
Consolidated cash flow statement 130
Cash flow statement of the Company 131
Consolidated statement of changes in shareholders' equity 132 - 133
Statement of changes in shareholders' equity of the Company 134 - 135
Notes to the financial statements 136 - 264
118 /264
AUDITOR'S REPORT
De Shi Bao (Shen) Zi (23) No. P03041
(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 2022,
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 2022, 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.
119 / 264
AUDITOR'S REPORT - CONTINUED
De Shi Bao (Shen) Zi (23) No. P03041
(Page 2 of 5)
3. Key Audit Matters
Cut-off of Revenue Recognition
Matter Description
As set out in Notes (V), 46 to the financial statements, the Company's operating income in 2022 in
the consolidated financial statements is RMB 68,516,075,963.26, which is significant. The
Company’s sales mainly include revenue from sale of goods , and the revenue is recognized at the
time point when the customer obtains the control over the commodity. Under different terms of sales
contracts and trades, the time point of the transfer of commodity control is different. As revenue is
one of the key performance indicators of the Company, and the time point for the transfer of control
is different for various transaction modes in relation to revenue recognition, there is a risk that revenue
is not recognized in the appropriate accounting period. Therefore, we consider whether revenue is
recorded in the appropriate accounting period as a key audit matter.
Audit Response
Our procedures in relation to above key audit matter mainly included:
1. Understand the Company's key internal control related to the cut-off of revenue recognition,
evaluate the design and implementation of relevant internal control, and test the effectiveness of
its operation;
2. Check the Company's material sales contracts, identify the contract terms and trade conditions
related to the time point of 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.
120 / 264
AUDITOR'S REPORT - CONTINUED
De Shi Bao (Shen) Zi (23) No. P03041
(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 2022, 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.
121 / 264
AUDITOR'S REPORT - CONTINUED
De Shi Bao (Shen) Zi (23) No. P03041
(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.
122 / 264
AUDITOR'S REPORT - CONTINUED
De Shi Bao (Shen) Zi (23) No. P03041
(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
31 March 2023
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.
123 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
At 31 December 2022
Consolidated Balance Sheet
Unit: RMB
ITEM Notes 31/12/2022 31/12/2021
Current Assets:
Cash and bank balances (V)1 7,695,016,173.40 6,034,204,042.25
Held-for-trading financial assets (V)2 271,243,519.53 96,480,087.56
Notes receivable (V)3 45,627,553.57 78,960,907.84
Accounts receivable (V)4 11,119,120,760.11 12,459,388,852.15
Prepayments (V)5 73,390,129.45 51,467,608.39
Other receivables (V)6 137,008,284.72 129,254,194.21
Inventories (V)7 10,909,893,675.82 9,037,562,662.64
Non-current assets due within one year (V)8 322,815.55 991,195.08
Other current assets (V)9 599,581,332.72 606,392,327.15
Total Current Assets 30,851,204,244.87 28,494,701,877.27
Non-current Assets:
Long-term receivables (V)10 12,385,894.30 11,164,116.06
Long-term equity investments (V)11 611,007,676.15 542,549,818.63
Other equity instrument investments (V)12 38,420,782.40 75,957,194.28
Other non-current financial assets (V)13 170,126,278.86 236,978,820.68
Fixed assets (V)14 4,456,780,136.30 3,442,205,758.01
Construction in progress (V)15 303,432,536.69 798,015,703.22
Right-of-use assets (V)16 479,869,246.55 562,990,794.23
Intangible assets (V)17 415,104,934.14 453,460,831.12
Goodwill (V)18 576,729,182.74 559,021,157.88
Long-term prepaid expenses (V)19 175,835,331.45 227,576,284.98
Deferred tax assets (V)20 358,956,591.39 315,295,836.27
Other non-current assets (V)21 124,611,895.32 136,815,311.18
Total Non-current Assets 7,723,260,486.29 7,362,031,626.54
TOTAL ASSETS 38,574,464,731.16 35,856,733,503.81
124 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
At 31 December 2022
Consolidated Balance Sheet – continued
Unit: RMB
ITEM Notes 31/12/2022 31/12/2021
Current Liabilities:
Short-term borrowings (V)22 4,499,463,404.21 2,480,500,031.68
Derivative financial liabilities (V)23 3,118,891.32 976,413.16
Accounts payable (V)24 11,056,190,855.43 12,558,598,243.17
Contract liabilities (V)25 411,898,442.43 311,988,551.56
Employee benefits payable (V)26 1,161,885,093.89 831,186,986.48
Taxes payable (V)27 388,090,724.55 238,676,479.75
Other payables (V)28 716,932,703.77 423,509,465.51
Non-current liabilities due within one year (V)29 506,820,025.23 720,507,781.49
Other current liabilities (V)30 3,661,569.01 -
Total Current Liabilities 18,748,061,709.84 17,565,943,952.80
Non-current Liabilities:
Long-term borrowings (V)31 59,427,538.88 1,101,220,467.55
Bonds payable (V)32 3,243,085,241.27 3,115,505,143.28
Lease liabilities (V)33 381,725,722.17 475,125,597.24
Long-term payables (V)34 31,113,295.71 45,581,055.62
Long-term employee benefits payable (V)35 199,342,510.02 297,331,160.14
Provisions (V)36 7,350,296.14 10,046,914.77
Deferred income (V)37 63,195,209.30 59,791,942.70
Deferred tax liabilities (V)20 87,631,726.67 98,179,611.96
Other non-current liabilities (V)38 3,692,335.61 5,642,575.13
Total Non-current Liabilities 4,076,563,875.77 5,208,424,468.39
TOTAL LIABILITIES 22,824,625,585.61 22,774,368,421.19
SHAREHOLDERS' EQUITY:
Share capital (V)39 2,206,864,239.00 2,210,172,782.00
Other equity instruments (V)40 409,897,126.04 409,902,116.17
Capital reserve (V)41 2,234,529,885.62 2,242,456,606.22
Less: Treasury shares (V)42 351,392,965.86 341,236,339.88
Other comprehensive income (V)43 111,850,168.58 (83,600,398.95)
Surplus reserve (V)44 862,080,832.26 738,004,669.96
Retained profits (V)45 10,275,564,894.22 7,906,260,771.90
Total owners' equity attributable to
15,749,394,179.86 13,081,960,207.42
equity holders of the Company
Minority interests 444,965.69 404,875.20
TOTAL SHAREHOLDERS' EQUITY 15,749,839,145.55 13,082,365,082.62
TOTAL LIABILITIES AND
38,574,464,731.16 35,856,733,503.81
SHAREHOLDERS' EQUITY
The accompanying notes form an integral part of these financial statements.
The financial statements on pages 119 to 264 were signed by the following:
Jeffrey Chen Tan-Yang Liu Yuh-Huah Chern
Legal Representative Chief Financial Officer Head of Accounting Department
125 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
At 31 December 2022
Balance Sheet of the Company
Unit: RMB
ITEM Notes 31/12/2022 31/12/2021
Current Assets:
Cash and bank balances 2,382,458,769.33 2,490,051,993.72
Held-for-trading financial assets 16,418,892.46 8,624,935.00
Notes receivable (XIV)1 39,485,239.31 66,256,985.55
Accounts receivable (XIV)2 2,821,443,968.15 3,902,440,554.02
Prepayments 8,633,332.74 4,622,731.01
Other receivables (XIV)3 1,060,187,690.24 635,383,876.68
Inventories 2,397,469,138.27 1,922,768,039.29
Other current assets 71,354,221.23 133,024,889.75
Total Current Assets 8,797,451,251.73 9,163,174,005.02
Non-current Assets:
Long-term equity investments (XIV)4 6,211,289,445.49 5,227,065,594.74
Other non-current financial assets 36,593,525.36 21,000,000.00
Fixed assets 1,359,118,713.20 1,277,668,269.11
Construction in progress 40,679,185.87 289,944,861.14
Right-of-use assets 50,972,562.94 63,430,169.07
Intangible assets 10,560,811.31 10,937,758.57
Long-term prepaid expenses 56,986,536.23 67,180,541.49
Deferred tax assets 66,972,703.95 48,694,006.86
Other non-current assets 6,417,503.72 20,979,926.13
Total Non-current Assets 7,839,590,988.07 7,026,901,127.11
TOTAL ASSETS 16,637,042,239.80 16,190,075,132.13
126 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
At 31 December 2022
Balance Sheet of the Company – continued
Unit: RMB
ITEM Notes 31/12/2022 31/12/2021
Current Liabilities:
Short Loan 210,000,000.00 -
Derivative financial liabilities - 43,425.46
Accounts payable 3,338,643,535.03 4,298,264,852.06
Contract liabilities 72,651,784.47 51,371,004.77
Employee benefits payable 170,460,131.98 108,433,802.08
Taxes payable 40,877,633.86 65,202,444.73
Other payables 56,141,755.46 42,476,124.59
Non-current liabilities due within one year 364,938,654.98 14,159,853.97
Total Current Liabilities 4,253,713,495.78 4,579,951,507.66
Non-current Liabilities:
Bonds payable 3,243,085,241.27 3,115,505,143.28
Lease liabilities 43,636,944.67 56,699,264.24
Deferred income 32,434,642.39 26,066,087.94
Other non-current liabilities 576,266.50 1,035,426.50
Total Non-current Liabilities 3,319,733,094.83 3,199,305,921.96
TOTAL LIABILITIES 7,573,446,590.61 7,779,257,429.62
SHAREHOLDERS' EQUITY:
Share capital (V)39 2,206,864,239.00 2,210,172,782.00
Other equity instruments (V)40 409,897,126.04 409,902,116.17
Capital reserve 2,294,431,282.90 2,302,358,003.50
Less: Treasury shares (V)42 351,392,965.86 341,236,339.88
Surplus reserve (V)44 862,080,832.26 738,004,669.96
Retained profits 3,641,715,134.85 3,091,616,470.76
TOTAL SHAREHOLDERS' EQUITY 9,063,595,649.19 8,410,817,702.51
TOTAL LIABILITIES AND
16,637,042,239.80 16,190,075,132.13
SHAREHOLDERS' EQUITY
127 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2022
Consolidated Income Statement
Unit: RMB
Amount incurred in Amount incurred in the
ITEM Notes
the current year prior year
I. Operating income (V)46 68,516,075,963.26 55,299,654,770.21
Less: Operating costs (V)46 61,327,074,531.73 49,981,479,197.84
Taxes and levies (V)47 55,429,927.51 49,817,665.75
Selling expenses (V)48 323,833,862.87 311,480,902.10
Administrative expenses (V)49 1,421,848,997.88 1,169,173,384.77
Research and development expenses (V)50 2,034,461,775.71 1,641,398,512.61
Financial expenses (V)51 18,865,406.63 203,398,590.62
Including: Interest expenses 234,999,925.44 201,328,552.68
Interest income 87,996,958.46 67,779,611.82
Add: Other income (V)52 56,144,655.78 50,678,106.85
Investment income (V)53 138,630,023.72 111,678,979.96
Including: Income from investments in associates
73,531,247.72 22,116,497.85
and joint ventures
Gains (losses) from changes in fair values (V)54 31,839,197.50 44,588,222.60
Impairment gains (losses) of credit (V)55 (10,116,849.95) (1,706,888.48)
Impairment gains (losses) of assets (V)56 (98,869,591.53) (18,746,153.38)
Gains (losses) from disposal of assets (V)57 8,615,113.60 2,414,697.02
II. Operating profit 3,460,804,010.05 2,131,813,481.09
Add: Non-operating income (V)58 25,331,702.16 19,628,576.06
Less: Non-operating expenses (V)59 8,940,490.96 12,583,134.08
III. Total profit 3,477,195,221.25 2,138,858,923.07
Less: Income tax expenses (V)60 417,205,449.46 282,165,880.75
IV. Net profit 3,059,989,771.79 1,856,693,042.32
(I) Net profit classified by operating continuity:
1. Net profit from continuing operations 3,059,989,771.79 1,856,693,042.32
2. Net profit from discontinued operations - -
(II) Net profit classified by ownership ascription:
1. Net profit attributable to owners of the Company 3,059,967,081.20 1,857,968,074.82
2. Profit or loss (net losses) attributable to minority
22,690.59 (1,275,032.50)
interests
V. Other comprehensive income, net of tax (V)43 195,467,967.43 8,909,473.69
Other comprehensive income attributable to owners of the
195,450,567.53 7,615,578.06
Company, net of tax
(I) Other comprehensive income that cannot be
15,832,855.55 36,407,012.60
subsequently reclassified to profit or loss
1. Changes from re-measurement of defined benefit
51,762,656.96 1,971,353.84
plans
2. Changes in fair values of investments in other
(35,929,801.41) 34,435,658.76
equity instruments
(II) Other comprehensive income that will be reclassified
179,617,711.98 (28,791,434.54)
to profit or loss
1. Other comprehensive income that can be
(35,958,792.78) 7,230,128.54
reclassified to profit or loss under the equity method
2. Translation differences of financial statements
104,279,975.58 (206,339,508.32)
denominated in foreign currencies
3. Hedging reserves of net investment in foreign
111,296,529.18 170,317,945.24
operations
Other comprehensive income attributable to minority
17,399.90 1,293,895.63
interests, net of tax
VI. Total comprehensive income 3,255,457,739.22 1,865,602,516.01
Total comprehensive income attributable to owners of the
3,255,417,648.73 1,865,583,652.88
Company
Total comprehensive income attributable to minority
40,090.49 18,863.13
interests
VII. Earnings per share
(I) Basic earnings per share (XV)2 1.40 0.85
(II) Diluted earnings per share (XV)2 1.35 0.83
128 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2022
Income Statement of the Company
Unit: RMB
Amount incurred in the Amount incurred in
ITEM Notes
current year the prior year
I. Operating income (XIV)5 21,944,772,780.72 18,335,131,740.71
Less: Operating costs (XIV)5 19,816,085,335.43 16,637,188,631.60
Taxes and levies 13,964,679.96 11,586,536.18
Selling expenses 71,561,295.65 36,138,632.62
Administrative expenses 221,654,870.72 173,389,504.17
Research and development expenses 751,375,491.00 641,883,187.54
Financial expenses (13,892,465.55) 89,326,653.62
Including: Interest expenses 146,896,320.84 116,199,066.57
Interest income 59,559,776.94 41,448,876.53
Add: Other income 19,864,804.92 22,684,102.57
Investment income (XIV)6 183,568,627.78 1,216,843,686.33
Gains (losses) from changes in fair values 12,430,908.18 14,537,089.99
Impairment gains (losses) of credit (3,658,149.19) 149,203.74
Impairment gains (losses) of assets 5,135,027.84 (3,920,601.29)
Gains (losses) from disposal of assets 865,008.94 277,783.36
II. Operating profit 1,302,229,801.98 1,996,189,859.68
Add: Non-operating income 233,682.62 2,715,835.51
Less: Non-operating expenses 4,830,131.32 93,892.75
III. Total profit 1,297,633,353.28 1,998,811,802.44
Less: Income tax expenses 56,871,730.31 44,867,531.36
IV. Net profit 1,240,761,622.97 1,953,944,271.08
(I) Net profit from continuing operations 1,240,761,622.97 1,953,944,271.08
(II) Net profit from discontinued operations - -
V. Other comprehensive income, net of tax - -
VI. Total comprehensive income 1,240,761,622.97 1,953,944,271.08
129 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2022
Consolidated Cash Flow Statement
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
71,431,108,010.54 53,578,337,998.60
services
Receipts of tax refunds 529,679,759.52 558,689,618.99
Other cash receipts relating to operating activities (V)61(1) 514,112,449.77 172,788,684.87
Sub-total of cash inflows from operating activities 72,474,900,219.83 54,309,816,302.46
Cash payments for goods purchased and services received 63,752,163,109.99 50,505,722,379.91
Cash payments to and on behalf of employees 4,263,182,237.12 3,856,150,432.44
Payments of various types of taxes 880,937,730.02 419,132,561.12
Other cash payments relating to operating activities (V)61(2) 143,420,887.20 631,257,907.89
Sub-total of cash outflows from operating activities 69,039,703,964.33 55,412,263,281.36
Net Cash Flow from Operating Activities (V)62(1) 3,435,196,255.50 (1,102,446,978.90)
II. Cash Flows from Investing Activities:
Cash receipts from disposals and recovery of investments 5,049,784,248.93 6,647,452,170.32
Cash receipts from investment income 73,818,863.64 98,129,245.61
Net cash receipts from disposals of fixed assets, intangible
106,121,293.40 50,849,009.78
assets and other long-term assets
Sub-total of cash inflows from investing activities 5,229,724,405.97 6,796,430,425.71
Cash payments to acquire or construct fixed assets,
1,671,359,617.44 1,514,592,361.01
intangible assets and other long-term assets
Cash payments to acquire investments 5,055,991,050.00 6,723,070,803.21
Net cash payments for acquisitions of subsidiaries and
26,622,070.14 45,321,801.82
other business units
Sub-total of cash outflows from investing activities 6,753,972,737.58 8,282,984,966.04
Net Cash Flow from Investing Activities (1,524,248,331.61) (1,486,554,540.33)
III. Cash Flows from Financing Activities:
Cash receipts from capital contributions 76,706,975.16 11,406,983.00
Cash receipts from borrowings 19,947,391,301.87 13,985,813,402.73
Cash receipts from issuing bonds - 3,427,301,047.72
Other cash receipts relating to financing activities (V)61(3) 3,506,097.66 39,236,933.03
Sub-total of cash inflows from financing activities 20,027,604,374.69 17,463,758,366.48
Cash repayments of borrowings 19,611,483,701.31 13,530,805,981.18
Cash payments for distribution of dividends or profits or
644,400,298.70 1,172,715,392.19
settlement of interest expenses
Other cash payments relating to financing activities (V)61(4) 274,135,571.27 368,852,689.67
Sub-total of cash outflows from financing activities 20,530,019,571.28 15,072,374,063.04
Net Cash Flow from Financing Activities (502,415,196.59) 2,391,384,303.44
IV. Effect of Foreign Exchange Rate Changes on Cash and
251,318,260.11 (87,413,972.12)
Cash Equivalents
V. Net Increase (Decrease) in Cash and Cash Equivalents 1,659,850,987.41 (285,031,187.91)
Add: Opening Balance of Cash and Cash Equivalents (V)62(2) 6,018,193,116.59 6,303,224,304.50
VI. Closing Balance of Cash and Cash Equivalents (V)62(2) 7,678,044,104.00 6,018,193,116.59
130 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2022
Cash Flow Statement of the Company
Unit: RMB
Amount incurred Amount incurred in
ITEM Notes
in the current year the prior year
I. Cash Flows from Operating Activities:
Cash receipts from the sale of goods and the rendering of
services
23,200,305,707.29 17,991,191,683.40
Receipts of tax refunds 134,391,059.60 295,444,045.61
Other cash receipts relating to operating activities 92,137,795.26 84,581,382.97
Sub-total of cash inflows from operating activities 23,426,834,562.15 18,371,217,111.98
Cash payments for goods purchased and services received 20,930,029,096.53 16,905,058,714.58
Cash payments to and on behalf of employees 639,606,738.62 576,858,051.86
Payments of various types of taxes 194,108,063.48 106,103,694.13
Other cash payments relating to operating activities 130,355,417.36 189,144,854.22
Sub-total of cash outflows from operating activities 21,894,099,315.99 17,777,165,314.79
Net Cash Flow from Operating Activities (XIV)7 1,532,735,246.16 594,051,797.19
II. Cash Flows from Investing Activities:
Cash receipts from disposals and recovery of investments 3,677,246,400.00 3,927,400,000.00
Cash receipts from investment income 237,513,927.78 1,216,889,084.23
Net cash receipts from disposals of fixed assets, intangible
assets and other long-term assets
135,709,564.48 169,779,958.45
Sub-total of cash inflows from investing activities 4,050,469,892.26 5,314,069,042.68
Cash payments to acquire or construct fixed assets, intangible
assets and other long-term assets
584,130,199.88 635,551,425.24
Cash payments to acquire investments 3,985,803,000.00 4,694,086,300.00
Net cash payments for acquisitions of subsidiaries and other
business units
1,115,219,000.00 631,413,000.00
Sub-total of cash outflows from investing activities 5,685,152,199.88 5,961,050,725.24
Net Cash Flow from Investing Activities (1,634,682,307.62) (646,981,682.56)
III. Cash Flows from Financing Activities:
Cash receipts from capital contributions 76,706,975.16 11,406,983.00
Cash receipts from borrowings 2,828,328,085.47 1,989,243,101.73
Cash receipts from issuance of bonds - 3,427,301,047.72
Other cash receipts relating to financing activities - 22,515,886.36
Sub-total of cash inflows from financing activities 2,905,035,060.63 5,450,467,018.81
Cash repayments of borrowings 2,268,328,085.47 2,869,866,674.48
Cash payments for distribution of dividends or profits or
settlement of interest expenses
579,509,379.54 1,111,561,940.64
Other cash payments relating to financing activities 136,494,552.16 247,108,961.01
Sub-total of cash outflows from financing activities 2,984,332,017.17 4,228,537,576.13
Net Cash Flow from Financing Activities (79,296,956.54) 1,221,929,442.68
IV. Effect of Foreign Exchange Rate Changes on Cash and
Cash Equivalents
73,650,793.61 (26,849,295.64)
V. Net Increase (Decrease) in Cash and Cash Equivalents (107,593,224.39) 1,142,150,261.67
Add: Opening Balance of Cash and Cash Equivalents 2,490,051,993.72 1,347,901,732.05
VI. Closing Balance of Cash and Cash Equivalents 2,382,458,769.33 2,490,051,993.72
131 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2022
Consolidated Statement of Changes in Shareholders' Equity
Unit: RMB
2022
Attributable to owners of the Company
Total
Other Minority
Other equity Less: Treasury shareholders'
Share capital Capital reserve comprehensive Surplus reserve Retained profits interests
instruments shares equity
ITEM income
I. Opening balance of the current year 2,210,172,782.00 409,902,116.17 2,242,456,606.22 (341,236,339.88) (83,600,398.95) 738,004,669.96 7,906,260,771.90 404,875.20 13,082,365,082.62
II. Changes for the year
(I) Total other comprehensive income - - - - 195,450,567.53 - 3,059,967,081.20 40,090.49 3,255,457,739.22
(II) Owners’ contributions and reduction
in capital
1. Ordinary shares contributed by
5,985,955.00 - 70,721,020.16 - - - - - 76,706,975.16
shareholders (Notes V, 39)
2. Capital contribution by owners of
other equity instruments (Notes V, 2,129.00 (4,990.13) 41,144.76 - - - - - 38,283.63
40)
3. Share-based payment recognized
- - 22,177,000.00 - - - - - 22,177,000.00
in shareholders' equity (Notes V, 41)
4. Treasury stock cancellations
(9,296,627.00) - (101,214,178.80) 110,510,805.80 - - - - -
(Notes V, 42)
5. Transfer from treasury
- - 348,293.28 (348,766.28) - - - - (473.00)
shares (Notes V, 42)
6. Others (Notes V, 42) - - - (120,318,665.50) - - - - (120,318,665.50)
(III) Profit distribution
1. Transfer to surplus reserve - - - - - 124,076,162.30 (124,076,162.30) - -
2. Distributions to shareholders - - - - - - (566,586,796.58) - (566,586,796.58)
III. Closing balance of the current year 2,206,864,239.00 409,897,126.04 2,234,529,885.62 (351,392,965.86) 111,850,168.58 862,080,832.26 10,275,564,894.22 444,965.69 15,749,839,145.55
132 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2022
Consolidated Statement of Changes in Shareholders' Equity - continued
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. Opening 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
- - - - - - - 1,364,446.33 1,364,446.33
enterprises under common control
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 (Notes V, 39) 828,100.00 - 10,578,883.00 - - - - -
2. Capital contribution by owners of 409,928,459.19
other equity instruments (Notes V,
40) 1,310.00 409,902,116.17 25,033.02 - - - - -
3. Share-based payment recognized 52,875,000.00
in shareholders' equity (Notes V,
41) - - 52,875,000.00 - - - - -
4. Transfer from treasury
shares (Notes V, 42) - - (1,986,486.80) 24,502,373.16 - - - - 22,515,886.36
5. Others (Notes V, 42) - - - (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
133 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2022
Statement of Changes in Shareholders' Equity of the Company
Unit: RMB
2022
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 2,210,172,782.00 409,902,116.17 2,302,358,003.50 (341,236,339.88) 738,004,669.96 3,091,616,470.76 8,410,817,702.51
II. Changes for the year
(I) Total other comprehensive income - - - - - 1,240,761,622.97 1,240,761,622.97
(II) Owners’ contributions and reduction
in capital
1. Ordinary shares contributed by 5,985,955.00 - 70,721,020.16 - - - 76,706,975.16
shareholders
2. Capital contribution by owners of 2,129.00 (4,990.13) 41,144.76 - - - 38,283.63
other equity instruments
3. Share-based payment recognized in - - 22,177,000.00 - - - 22,177,000.00
shareholders' equity
4. Treasury stock cancellations (9,296,627.00) - (101,214,178.80) 110,510,805.80 - - -
5. Transfer from treasury shares - - 348,293.28 (348,766.28) - - (473.00)
6. Others - - - (120,318,665.50) - - (120,318,665.50)
(III) Profit distribution
1. Transfer to surplus reserve - - - - 124,076,162.30 (124,076,162.30) -
2. Distributions to shareholders - - - - - (566,586,796.58) (566,586,796.58)
III. Closing balance of the current year 2,206,864,239.00 409,897,126.04 2,294,431,282.90 (351,392,965.86) 862,080,832.26 3,641,715,134.85 9,063,595,649.19
134 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
For the year ended 31 December 2022
Statement of Changes in Owners’ Equity of the Company - continued
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
135 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 Area, Shanghai on 2 January 2003.
On 17 June 2008, the Limited Company was approved to be changed into a foreign-invested joint-stock company
and renamed as Universal Scientific Industrial (Shanghai) Co., Ltd. (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.
The Company's registered capital totals RMB 2,206,864,239.00 as at 31 December 2022.
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 (VI), 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 31 March 2023.
The details of scope of the consolidated financial statements for the year are set out in Note (VI) "Interests in
Other Entities". The scope of the consolidated financial statements for the year remains unchanged.
(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 2022 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.
136 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022, 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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
4. Functional currency
Renminbi (“RMB”) is the currency of the primary economic environment in which the Company and its domestic
subsidiaries operate. Therefore, the functional currency of the Company is RMB. The Company's domestic
subsidiaries choose RMB as their functional currency, except those adopt USD as their functional currency as
their sales of goods, purchase of raw materials and other expenses are settled in USD and their financing is made
in USD. The Company's foreign subsidiary chooses USD, JYP, TWD, PLN, EUR or TND as its functional
currency on the basis of the primary economic environment in which it operates. The Group adopts RMB to
prepare its financial statements.
5. 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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022
(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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10 Financial instruments – continued
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.
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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.1 Classification, recognition and measurement of financial assets - continued
A financial asset is classified as held-for-trading if one of the following conditions is satisfied:
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.
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.
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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.1 Classification, recognition and measurement of financial assets - continued
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
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.
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.
144 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
In assessing whether the credit risk has increased significantly since initial recognition, the Group compares the
risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring
on the financial instrument as at the date of initial recognition.
In particular, the following information is taken into account when assessing whether credit risk has increased
significantly:
(1) Significant changes in internal price indicators of credit risk as a result of a change in credit risk;
(2) Other changes in the rates or terms of an existing financial instrument that would be significantly different
if the instrument was newly originated or issued at the balance sheet date (such as more stringent covenants,
increased amounts of collateral or guarantees, or higher income coverage).
(3) 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.
(4) Significant changes in actual or expected external credit rating for the financial instruments;
(5) An actual or expected internal credit rating downgrade for the borrower
(6) 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;
(7) An actual or expected significant change in the operating results of the debtor;
(8) Significant adverse change in the regulatory, economic, or technological environment of the debtor;
(9) Significant changes in circumstances expected to reduce the debtor's economic incentive to make scheduled
contractual payments;
(10) Significant changes in the expected performance and behavior of the debtor;
(11) 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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
10.2 Impairment of financial instruments - continued
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).
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 accounts receivable and notes 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 and a lease receivable, a credit loss is the present value of the difference between
the contractual cash flows that are due to the Group under the contract and the cash flows that the Group
expects to receive;
For 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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10. Financial instruments - continued
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.
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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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022
(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 early redemption option
for convertible bonds, etc. Derivatives are initially measured at fair value at the date when the derivative contracts
are entered into and are subsequently re-measured at fair value.
Derivatives embedded in hybrid contracts that contain financial asset hosts are not separated. The entire hybrid
contract is classified and subsequently measured in its entirety as either amortized cost or fair value as appropriate.
If the host contract included in the hybrid contract is not a financial asset and meet all of the following criteria,
the embedded derivative shall be separated from the hybrid contract by the Group and treated as a stand-alone
derivative.
(1) The economic characteristics and risks of the embedded derivative are not highly related to the economic
characteristics and risks of the host contract;
(2) A separate instrument with the same terms as the embedded derivative would meet the definition of a
derivative; and
(3) The hybrid instrument is not designated as a financial asset or financial liability at 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
early redemption option are classified separately into respective items on initial recognition. Conversion option
that is settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the
Company's own equity instruments is an equity instrument. At the date of issue, the liability, resale option
derivatives and early redemption option derivatives are initially measured at fair value. The difference between
the gross proceeds of the issue of the convertible bonds and the fair value assigned to the liability, resale option
derivatives and early redemption option derivatives, representing the conversion option for the holder to convert
the bonds into equity instrument, is included in other equity instruments.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 early redemption option derivatives are measured at
fair value with changes in fair value recognized in profit or loss. The conversion option classified as equity
instruments remains in equity instruments. No gain or loss is recognized in profit or loss upon conversion or
expiration of the option.
Transaction costs incurred for the issue of the convertible bonds are allocated to the liability, equity instruments,
resale option derivative components and early redemption option derivative components in proportion to their
respective fair values. Transaction costs relating to the resale option derivative components and early redemption
option are charged to profit or loss. Transaction costs relating to the liability component are included in the
carrying amount of the liability component and amortized over the period of the convertible loan notes using the
effective interest method. Transaction costs relating to the equity instruments component are charged directly to
equity instruments.
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 2022
(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 2022
(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 - continued
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 2022
(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
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
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 2022
(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:
Category Depreciation period (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, 3-10 years - 10.00-33.33
fixtures and 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 2022
(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. An intangible asset with
an indefinite useful life is not amortized.
The amortization methods, useful lives, and estimated net residual value rates of each class of fixed assets are as
follows:
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 2022
(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, and intangible assets
with a finite useful life at each balance sheet date to determine whether there is any indication that they have
suffered an impairment loss. If an impairment indication exists, the recoverable amount is estimated. Intangible
assets 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.
Goodwill is tested for impairment at least at the end of each year. For the purpose of impairment testing, goodwill
is considered together with the related assets group(s), i.e., goodwill is reasonably allocated to the related assets
group(s) or each of assets group(s) expected to benefit from the synergies of the combination. An impairment loss
is recognized if the recoverable amount of the assets group or sets of assets groups (including goodwill) is less
than its carrying amount. The impairment loss is firstly allocated to reduce the carrying amount of any goodwill
allocated to such assets group or sets of assets groups, and then to the other assets of the group on the pro-rata
basis of the carrying amount of each asset (other than goodwill) in the group.
Once an impairment loss of assets above is recognized, it will not be reversed in any subsequent period.
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 2022
(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 2022
(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 2022
(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, cloud 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).
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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), 37 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), 52 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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
2022, the balance of the Group's provision for credit losses of accounts receivable was RMB 20,564,388.62 (31
December 2021: RMB 9,974,696.34).
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022, the balance of the
Group's provision for the decline in the value of inventories was RMB159,032,019.03 (31 December 2021: RMB
107,428,347.47).
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 2022, the Group had recognized the deferred tax assets
of RMB 367,993,139.04 (31 December 2021: RMB 324,056,763.90).
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation
of the present value of the future expected cash flows from the asset groups or set of asset groups to which
the goodwill is allocated. Estimating the present value requires the Group to make an estimate of the expected
future cash flows from the asset groups or set of asset groups and also choose a suitable discount rate in
order to calculate the present value of those cash flows. When considering future cash flow and discount rate,
changes in key assumptions such as the discount rate and long-term growth rate adopted by the Group may
have significantly impacts on the present value of the future cash flow used in impairment testing.
Useful life and estimated net residual value of fixed assets
As disclosed in Note (III) 14, the Group reviews the useful life and estimated net residual value of a fixed asset
at least once at each financial year-end. Both scientific and technological innovation and intense competition
within the industry significantly impact the estimation of useful life. The Group's management did not find
anything that might shorten or extend the useful life of fixed assets of the Group or require changing the estimated
net residual value.
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Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 No. 15 of the Accounting Standards for Business Enterprises
The Interpretation No. 15 of the Accounting Standards for Business Enterprises (the "Interpretation No. 15") was
issued by the Ministry of Finance on 30 December 2021, which stipulated the accounting treatment of external
sale of products or by-products produced by an enterprise before the fixed assets are ready for intended use or in
the process of research and development, as well as the judgment on onerous contract.
Accounting treatment of external sale of products or by-products produced by an enterprise before the fixed assets
are ready for intended use or in the process of research and development.
In accordance with the Interpretation No. 15, if an enterprise sells products or by-products produced before the
fixed assets are ready for intended use or in the process of research and development, it shall, in accordance with
the provisions of Accounting Standards for Business Enterprises No. 14 - Revenue and Accounting Standards for
Business Enterprises No. 1 - Inventory, respectively conduct accounting treatment of income and costs related to
the trial sale, and include them in profit or loss for the period, but the balance of the related income from trial sale
less cost shall not be used to offset against the cost of fixed assets or research and development expenses.
Concurrently, an enterprise shall separately disclose in the notes the information including the amount of related
income from and cost of trial sale, the specific presenting items, and the significant accounting estimates applied
in determining the cost of trial sale. The Interpretation became effective on 1 January 2022, and retroactive
adjustments should be made for trial sale that occurred between the beginning of the earliest presentation period
of the financial statements and 1 January 2022.
Upon assessment, the Group considers that the adoption of this Interpretation has no significant impact on the
financial statements of the Group.
Judgment on onerous contracts
The Interpretation No. 15 clarifies that the "cost to perform the contract" considered by an enterprise in
determining whether a contract is an onerous contract shall include the incremental cost to perform the contract
and the apportioned amount of other costs directly related to the performance of the contract. The Interpretation
became effective on 1 January 2022, and an enterprise shall implement this Interpretation on contracts to which
the obligations have not been completely fulfilled by 1 January 2022. The accumulative effect is adjusted for the
opening balance of retained earnings for the year when the Interpretation is implemented and other related items
to the financial statements, but not adjusted for the comparative data of prior periods.
Upon assessment, the Group considers that the adoption of this Interpretation has no significant impact on the
financial statements of the Group.
169 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
31. Changes in important accounting policies and accounting estimates - continued
31.1 Changes in important accounting policies - continued
Interpretation No. 16 of the Accounting Standards for Business Enterprises
The Interpretation No. 16 of the Accounting Standards for Business Enterprises (the "Interpretation No. 16") was
issued by the Ministry of Finance on 30 November 2022, which stipulated the accounting treatment concerning 1)
the income tax effect of dividends on a financial instrument classified as an equity instrument by the issuer, and
2) the change of cash-settled share-based payment to equity-settled share-based payment by an enterprise.
Accounting treatment concerning the income tax effect of dividends on a financial instrument classified as an
equity instrument by the issuer
In accordance with the Interpretation No. 16, for a financial instrument classified as an equity instrument by an
enterprise in accordance with the Accounting Standards for Business Enterprises No. 37 - Presentation of
Financial Instruments and other applicable provisions, if the relevant dividend payments are deductible before
enterprise income tax in accordance with the relevant tax provisions, the enterprise, on recognition of dividends
payable, shall include the tax effect of dividends in profit or loss or owners' equity using the same accounting
treatment for previous transactions or events that generated distributable profits. The Interpretation became
effective on 30 November 2022. Where the recognition of dividends payable by a financial instrument classified
as an equity instrument occurs during the period from 1 January 2022 to the effective date of this Interpretation,
the enterprise shall adjust the tax effect if such effect exists but is not treated according to the provisions
hereinabove. Where the said recognition occurs before 1 January 2022 but the relevant financial instrument has
not been derecognized as at 1 January 2022, the enterprise shall adjust the tax effect retrospectively if such effect
exists but is not treated according to the provisions hereinabove.
The Group considers that the adoption of this Interpretation has no significant impact on the financial statements
of the Group.
Accounting treatment concerning the change of cash-settled share-based payment to equity-settled share-based
payment by an enterprise
In accordance with the Interpretation No. 16, where an enterprise changes the terms and conditions of a cash-
settled share-based payment agreement to those of an equity-settled share-based payment agreement, the enterprise
shall, on the date of change, measure the equity-settled share-based payment at the fair value of the granted equity
instrument on the current day, include the services received in capital reserve, and at the same time, derecognize
the liability that has been recognized for cash-settled share-based payment on the date of change, with the resulted
difference included in profit or loss for the period. The Interpretation became effective on 30 November 2022. For
the aforesaid transactions that are added during the period from 1 January 2022 to the effective date of this
Interpretation, the enterprise shall make adjustments in accordance with the provisions of this Interpretation. If
any transaction occurred before 1 January 2022 is not treated in accordance with the aforesaid provisions, the
enterprise shall adjust the retained earnings as of 1 January 2022 and other related items to the financial statements
based on the accumulative effect, without adjusting the information of the comparable period.
The Group considers that the adoption of this Interpretation has no significant impact on the financial statements
of the Group.
170 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(IV) TAXES
1. Major Categories of Taxes and Tax Rates
Category of tax Basis of tax computation Tax rate
VAT payable is the balance of output tax less
deductible input tax of taxable income such
as product sales income, service income, 13%, 9%, 6%, 5%
interest income and lease income. The and 3%
Value-added tax-Chinese (Note 1)
Company and its domestic subsidiaries are
general VAT taxpayers
Non-resident enterprises obtain commission
6%
income within China
VAT payable is the balance of output tax less
Value-added tax-French deductible input tax of taxable income such 20%
as product sales income, service income
VAT payable is the balance of output tax less
Value-added tax-German deductible input tax of taxable income such 19%
as product sales income, service income
VAT payable is the balance of output tax less
Value-added-Tunisian deductible input tax of taxable income such 19%
as product sales income, service income
Taxable income Note 2
Non-resident enterprises obtain investment
Enterprise income tax
income and property transfer income from 10%
within China
Residual value after deducting 30% from the
1.2%
Property tax original value of the property at one time
Rental income 12%
City maintenance and construction tax Turnover tax actually paid 7% and 5%
Education surcharge Turnover tax actually paid 3%
Local education surcharge Turnover tax actually paid 2%
Note 1: The Company and its subsidiaries in China shall apply the measures for the administration of VAT
exemption, credit and tax refund for the export of self-produced goods. The export tax refund rate is
different according to the scope of export goods.
171 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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. 15%(Note 5)
Universal Global Technology Co., Limited 16.5% (Note 6)
Universal Global Industrial Co., Ltd. 16.5% (Note 6)
Universal Global Electronics Co., Ltd. 16.5% (Note 6)
Universal Global Scientific Industrial Co., Ltd. Note 7
Universal Scientific Industrial Co., Ltd. Note 7
USI Japan Co., Ltd. 30% (Note 8)
USI America.Inc. 21% (Note 9)
Universal Scientific Industrial De México S.A. De C.V. 30% (Note 10)
Universal Scientific Industrial Poland Sp. z o.o. 19% (Note 11)
Universal Scientific Industrial (France) 25% (Note 12)
Universal Scientific Industrial Vietnam Company Limited 20% (Note 13)
Asteelflash Suzhou Co., Ltd. 25%
FINANCIRE AFG S.A.S. (FAFG) 25% (Note 14)
USI Science and Technology (Shenzhen) Co., Ltd. 20% (Note 15)
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 GR202031004605), 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.
172 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
2022, and obtained the High-tech Enterprise Certificate (Certificate No.: GR202232008811), which was
valid for 3 years. Universal Global Technology (Kunshan) Co., Ltd. applies the enterprise income tax
rate of 15% from 2022 to 2024.
Note 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 2022, and obtained the High-tech Enterprise Certificate (Certificate No.: GR202231007023),
which was valid for 3 years. Universal Global Technology (Shanghai) Co., Ltd. applies the enterprise
income tax rate of 15% from 2022 to 2024.
Note 5 Universal Global Technology(Huizhou) Co., Ltd. was approved as a high-tech enterprise by Department
of Science and Technology of Guangdong Province, Department of Finance of Guangdong Province,
Guangdong Provincial Tax Service, State Taxation Administration in 2022, and obtained the High-tech
Enterprise Certificate (Certificate No.: GR202244008509), which is valid for 3 years. Universal Global
Technology(Huizhou) Co., Ltd. applies the enterprise income tax rate of 15% from 2022 to 2024.
Note 6 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 7 Universal Global Scientific Industrial Co., Ltd. (“UGSI”) and the Universal Scientific Industrial Co., Ltd.
(“USI”) are registered and established in Taiwan, China. According to the income tax regulations in
China's Taiwan region, (1) the enterprises with profit taxable income less than TWD 120,000 is exempt
from profit tax; (2) the enterprises with the annual taxable income more than TWD 120,000 shall be
levied at 20% of its total taxable income. But its taxable amount shall not exceed half of the taxable
income of a profit-making enterprise exceeding TWD 120,000. At the same time, the income tax law in
Taiwan stipulates that an additional 10% income tax shall be levied on the undistributed surplus of the
current year, which shall be listed as the income tax expense of the year decided by the board of directors.
Note 8 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 9 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 10 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 11 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
173 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
of temporarily exempting enterprise income tax within 40% of the initial investment in 2026 and previous
years.
(VI) TAXES - continued
1. Major Categories of Taxes and Tax Rates - continued
Note 12 Universal Scientific Industrial (France) ("USI France") is established and registered in France, and the
applicable enterprise income tax rate is 25% (2021:26.5%).
Note 13 Universal Scientific Industrial Vietnam Company Limited is established and registered in Vietnam, and
the applicable enterprise income tax rate is 20%.
Note 14 FINANCIRE AFG S.A.S. (“FAFG”) is established and registered in France, and the applicable enterprise
income tax rate is 25% (2021:26.5%). The corporate income tax rate applicable to German subsidiary is
30% (2021:30%). The enterprise income tax rate applicable to the Tunisian subsidiary is 15% (2021:10%).
The corporate income tax rate applicable to its U.S. subsidiaries is 21% (2021:21%).
Note 15 USI Science and Technology (Shenzhen) 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 (CS [2019] No. 13), the enterprise income tax shall be reduced by half.
174 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank balances
Unit: RMB
31/12/2022 31/12/2021
Exchange Exchange
Item Foreign currency RMB Foreign currency RMB
rate rate
Cash:
RMB 2,003.85 33,087.14
USD 11,928.76 6.9646 83,079.04 1,780.99 6.3757 11,355.06
EUR 10,605.37 7.4284 78,780.93 6,615.80 7.2211 47,773.35
HKD 3,449.00 0.8933 3,080.99 3,449.00 0.8176 2,819.90
GBP 137.31 8.3941 1,152.59 88.69 8.6064 763.30
MXN 200,703.05 0.3597 72,192.89 58,724.73 0.3097 18,187.05
TWD - 0.2268 - - 0.2303 -
PLN 4,477.49 1.5878 7,109.36 872.35 1.5717 1,371.07
TND 8,696.94 2.2430 19,507.24 3,575.10 2.2027 7,874.87
CZK 15,684.00 0.3080 4,830.67 11,354.00 0.2905 3,298.34
Bank balances:
RMB 3,718,260,388.65 3,223,904,450.96
USD 446,239,359.35 6.9646 3,107,878,642.13 354,462,759.18 6.3757 2,259,948,213.70
EUR 31,555,392.28 7.4284 234,406,076.01 31,246,531.53 7.2211 225,634,328.83
HKD 2,281,680.22 0.8933 2,038,224.94 1,620,167.96 0.8176 1,324,649.32
JPY 317,627,468.00 0.0524 16,643,679.32 156,717,025.00 0.0554 8,682,123.19
GBP 869,074.26 8.3941 7,295,096.25 2,048,505.76 8.6064 17,630,259.97
MXN 34,274,075.98 0.3597 12,328,385.13 24,473,638.08 0.3097 7,579,485.71
TWD 2,093,161,717.00 0.2268 474,729,077.42 789,726,120.00 0.2303 181,873,925.44
SGD 15,173.92 5.1831 78,647.94 10,662.56 4.7179 50,304.89
TND 4,123,497.82 2.2430 9,249,005.61 2,197,327.05 2.2027 4,840,052.29
CZK 1,501,264.14 0.3080 462,389.36 - 0.2905 -
PLN 49,092,880.80 1.5878 77,949,676.13 28,624,457.86 1.5717 44,989,060.42
VND 54,843,591,825.00 0.0003 16,453,077.55 138,699,105,966.00 0.0003 41,609,731.79
Other currency funds:
RMB 4,500,000.00 6,000,000.00
TWD 45,000,000.00 0.2268 10,205,374.50 28,000,000.00 0.2303 6,449,408.00
PLN 1,394,584.30 1.5878 2,214,334.90 - 1.5717 -
JPY 1,000,000.00 0.0524 52,360.00 1,000,000.00 0.0554 55,420.00
USD - 6.9646 - 549,915.72 6.3757 3,506,097.66
Total 7,695,016,173.40 6,034,204,042.25
Including: Total amounts
2,136,105,405.28 1,534,415,183.17
kept in a foreign country
175 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
1. Cash and bank balances – continued
As at 31 December 2022, the Group's restricted cash and bank balances included in other cash and bank balances
amounted to RMB 16,972,069.40 (31 December 2021: RMB 16,010,925.66), of which RMB 14,757,734.50 (31
December 2021: RMB 12,504,828.00) was the customs deposit and RMB 2,214,334.90 (31 December 2021: nil)
was the foreign exchange margin. The interest reserve for long-term borrowings was nil for the year (31 December
2021: RMB 3,506,097.66). The restricted other cash and bank balances aforementioned are not included in cash
and cash equivalents in the preparation of the cash flow statements.
2. Held-for-trading financial assets
Unit: RMB
Item 31/12/2022 31/12/2021
Financial assets at fair value through profit or loss 271,243,519.53 96,480,087.56
Including: Accounts receivable factoring (Note 1) 135,812,841.71 87,238,983.18
Convertible corporate bonds(Note 2) - 8,624,935.00
Contingent consideration(Note 3) 99,372,192.22 -
Derivative financial assets(Note 4) 36,058,485.60 616,169.38
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, 32 for details of Convertible corporate bonds
Note 3: On 12 December 2019, the Company established USI France through its wholly-owned subsidiary
Universal Global Technology Co., Limited and entered a Share Purchase Agreement with shareholders of FAFG
SPFH Holding Korlatolt Felelossegu Tarsasag, ASDI and Arkéa Capital Investissement S.A., for the purpose of
acquisition of 100% of its equity interest. As agreed by both parties, in accordance with FAFG's audited
accumulated financial results from 1 January 2021 to 31 December 2022, adjustments will be made on the basis
of considerations of the existing transactions, which is to be paid on 30 June 2023. Refer to Note (VIII), 4 for
details.
Note 4: The derivative financial assets held by the group are foreign exchange forward contract
3. Notes receivable
(1) Categories of notes receivable
Unit: RMB
Category 31/12/2022 31/12/2021
Bank acceptances 45,627,553.57 78,960,907.84
(2) As of 31 December 2022, the Group had no notes receivable that have been pledged as security.
(3) As of 31 December 2022, 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 2022, the Group had no notes that were converted to accounts receivable due to the
default of the issuer.
(5) As of 31 December 2022, 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.
176 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(6) In 2022, the Group had no notes receivable that have been actually written off.
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Accounts receivable
(1) Categories of accounts receivable
Unit: RMB
Category 31/12/2022 31/12/2021
Accounts receivable arising from contracts with customers 11,139,685,148.73 12,469,363,548.49
Less: Bad debt provision 20,564,388.62 9,974,696.34
Total 11,119,120,760.11 12,459,388,852.15
(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 2022, the credit risk and expected credit losses on accounts receivable were as follows:
Unit: RMB
31/12/2022
Aging
Expected average loss rate (%) Book value Bad debt provision Carrying amount
Within the credit
0.02 10,263,555,132.43 2,226,378.22 10,261,328,754.21
term
1-30 days overdue 0.31 713,540,293.51 2,236,844.84 711,303,448.67
31-60 days overdue 3.75 103,786,907.81 3,891,754.82 99,895,152.99
61-90 days overdue 12.66 36,934,282.12 4,674,454.00 32,259,828.12
90-180 days overdue 15.47 16,957,415.00 2,623,838.88 14,333,576.12
More than 180 days
100.00 4,911,117.86 4,911,117.86 -
overdue
Total 0.18 11,139,685,148.73 20,564,388.62 11,119,120,760.11
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
90-180 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
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 2022, the Group's valuation method remains
unchanged.
177 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
Category 31/12/2021 Exchange differences arising on 31/12/2022
Provision Write-off or
translation of financial statements
(Reversal) elimination
denominated in foreign currencies
Provision for expected
credit loss by aging 9,974,696.34 10,116,849.95 - 472,842.33 20,564,388.62
matrix
Changes in bad debt provisions for accounts receivable:
Unit: RMB
Provision for credit loss Lifetime ECL
Balance at 1 January 2022 9,974,696.34
ECL accrued (reversed) 10,116,849.95
Effect of changes in exchange rate 472,842.33
Balance at 31 December 2022 20,564,388.62
(4) There are no accounts receivable that have been actually written off in the year.
(5) Top five accounts receivable at 31 December 2022 categorized by debtor
Unit: RMB
Relationship Bad debt Percentage of the total
Company name with the Book value provision at 31 accounts receivable at
Company December 2022 31 December 2022(%)
Company A Third party 3,112,174,593.60 675,095.29 27.94
Company B Third party 1,095,142,367.51 237,559.12 9.83
Company C Third party 730,322,499.75 158,422.11 6.56
Company D Third party 691,926,318.00 150,093.19 6.21
Company E Third party 349,740,105.88 75,865.89 3.14
Total 5,979,305,884.74 1,297,035.60 53.68
(6) As of 31 December 2022, there are no accounts receivable that have been terminated for recognition due to
the transfer of financial assets
(7) As of 31 December 2022, there is no amount of assets and liabilities arising from transfer of accounts
receivable and continuing involvement.
178 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
5. Prepayments
(1) Aging analysis of prepayments is as follows:
Unit: RMB
31/12/2022 31/12/2021
Aging
Amount Proportion (%) Amount Proportion (%)
Within 1 year 62,954,404.18 85.78 51,467,608.39 100.00
1-2 years 10,435,725.27 14.22 - -
Total 73,390,129.45 100.00 51,467,608.39 100.00
(2) Top five balances of prepayments categorized by receivers
Unit: RMB
Proportion of the total prepayments at
Company name Relationship with the Company Book value
31 December 2022(%)
Company F Third party 9,555,538.35 13.02
Company G Third party 4,487,866.17 6.12
Company H Third party 4,028,669.75 5.49
Company I Third party 2,947,313.77 4.02
Company J Third party 2,924,180.41 3.98
Total 23,943,568.45 32.63
6. Other receivables
(1) Summary of other receivables
Category 31/12/2022 31/12/2021
Dividends receivable 27,195,000.00 -
Other receivables 109,813,284.72 129,254,194.21
合计 137,008,284.72 129,254,194.21
(2) Dividends receivable
Category 31/12/2022 31/12/2021
SUMA-USI Electronics Co., Ltd. 27,195,000.00 -
(3) Disclosure of other receivables by aging
Unit: RMB
31/12/2022
Aging
Amount Provision for credit loss Proportion of provision (%)
Within 1 year 109,813,284.72 - -
(3) Classification by the nature of other receivables
Unit: RMB
Book value at 31 December Book value at 31 December
Nature of other receivables
2022 2021
Advances for third parties 44,945,200.51 78,923,587.52
Service and purchase rebates receivable 39,076,544.54 23,606,656.50
Advance payments for employees 6,849,785.04 5,160,900.36
Performance bond - 87,000.03
Others 18,941,754.63 21,476,049.80
Total 109,813,284.72 129,254,194.21
179 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables - continued
(4) No allowance for expected credit losses has been made and no allowance for expected credit losses has been
rolled back or collected due to the low probability that the Company's other receivables will not be collected.
(5) Top five other receivables at 31 December 2022 categorized by debtor
Unit: RMB
Proportion of the total Bad debt
Nature of the
Company name Closing balance Aging other receivables at 31 provision at 31
amount
December 2022(%) December 2022
Company K Advances 8,403,699.41 Within one year 7.65 -
Company E Advances 5,719,022.68 Within one year 5.21 -
Company L Advances 3,062,840.82 Within one year 2.79 -
Company M Advances 1,891,966.79 Within one year 1.72 -
Company N Advances 1,388,419.20 Within one year 1.26 -
Total 20,465,948.90 18.63 -
As of 31 December 2022, there were no other receivables related to government grants.
As of 31 December 2022, there were no other receivables derecognized due to the transfer of financial assets.
As of 31 December 2022, 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
31/12/2022 31/12/2021
Provision for Provision for
Item
Book value decline in value Carrying amount Book value decline in value Carrying amount
of inventories of inventories
Raw
6,591,417,312.15 94,633,307.33 6,496,784,004.82 5,795,831,890.76 65,100,181.38 5,730,731,709.38
materials
Work-in-
1,731,962,683.33 - 1,731,962,683.33 1,506,240,181.84 - 1,506,240,181.84
progress
Finished
2,649,029,354.35 64,398,711.70 2,584,630,642.65 1,761,692,388.59 42,328,166.09 1,719,364,222.50
goods
Reusable
96,516,345.02 - 96,516,345.02 81,226,548.92 - 81,226,548.92
materials
Total 11,068,925,694.85 159,032,019.03 10,909,893,675.82 9,144,991,010.11 107,428,347.47 9,037,562,662.64
(2) Provision for decline in value of inventories
Unit: RMB
Decrease in the Exchange
year differences arising
Item 31/12/2021 Provision 31/12/2022
on translation of
Reversal Write-off
foreign currencies
Raw materials 65,100,181.38 147,509,999.21 120,100,227.53 5,158,587.29 7,281,941.56 94,633,307.33
Finished goods 42,328,166.09 96,712,435.17 75,104,958.89 149,266.85 612,336.18 64,398,711.70
Total 107,428,347.47 244,222,434.38 195,205,186.42 5,307,854.14 7,894,277.74 159,032,019.03
180 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
7. Inventories - continued
(2) Provision for decline in value of inventories - continued
Reasons for reversal/ provision for
Item Specific determination basis of net realizable value
decline in value of inventories
Value of estimated selling price less estimated costs of completion and estimated
Raw materials Sold or net realizable value recovered
costs necessary to make the sale as well as related taxes
Value of estimated selling price less estimated costs of completion and estimated
Work-in-progress Sold or net realizable value recovered
costs necessary to make the sale as well as related taxes
Value of estimated selling price less estimated costs necessary to make the sale and
Finished goods Sold or net realizable value recovered
related taxes
8. Non-current assets due within one year
Unit: RMB
Item 31/12/2022 31/12/2021
Lease receivables 322,815.55 991,195.08
9. Other current assets
Unit: RMB
Item 31/12/2022 31/12/2021
Input taxes to be deducted 282,278,855.44 131,285,700.65
FPC expenses to be amortized 129,461,256.93 150,053,586.17
Tax refunds receivable 125,929,179.23 153,785,608.36
Mold costs to be amortized 28,488,417.12 68,803,773.16
Prepaid income tax 24,922,506.88 94,493,879.13
Others 8,501,117.12 7,969,779.68
Total 599,581,332.72 606,392,327.15
10. Long-term receivables
(1) Long-term receivables
Unit: RMB
Item 31/12/2022 31/12/2021
Lease receivables 193,997.66 920,486.03
Employee borrowings for house purchasing 12,191,896.64 10,243,630.03
Total 12,385,894.30 11,164,116.06
(2) As of 31 December 2022, 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 2022, there were no long-term receivables derecognized due to transfer of financial assets.
(4) As of 31 December 2022, there was no amount of assets and liabilities arising from transfer of long-term
receivables and continuing involvement.
181 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Long-term equity investments
Unit: RMB
Changes for the year
Exchange
differences
arising on Impairment
Investment Other
Reduction Other translation of provision at
Investee 1/1/2022 Additional profit or loss comprehensive Cash dividends Impairment 31/12/2022
in equity financial 31/12/2022
investment recognized under income or profit declared provision
investment changes statements
equity method adjustments
denominated
in foreign
currencies
I. Joint ventures
SUMA-USI Electronics Co., Ltd. (Note 1) 114,230,434.68 - - 23,808,598.30 - - (27,195,000.00) - - 110,844,032.98 -
MUtek Electronics Co., Ltd. (Note 2) - 6,622,070.14 - (634,474.79) - - - - 42,830.45 6,030,425.80 -
II. Associates
M-Universe Investments Pte. Ltd. (Note 3) 428,319,383.95 - - 50,357,124.21 (35,958,792.78) - (8,720,087.64) - 40,135,589.63 474,133,217.37 -
Questyle Audio Technology Co., Ltd. (Note 4) - 20,000,000.00 - - - - - - 20,000,000.00 -
Total 542,549,818.63 26,622,070.14 - 73,531,247.72 (35,958,792.78) - (35,915,087.64) - 40,178,420.08 611,007,676.15 -
Note 1: In April 2019, Universal Global Technology (Kunshan) Co., Ltd., the Company's wholly-owned subsidiary, established a joint venture, SUMA-USI Electronics Co.,
Ltd. ("SUMA-USI") with Cancon Information Industry Co., Ltd. ("Cancon"). According to the Shareholder Agreement, Universal Global Technology (Kunshan) Co., Ltd.
intends to contribute RMB 107,800,000, with a capital contribution of 49%. As at 31 December 2019, according to the articles of association of SUMA-USI, the board of
directors is composed of 5 directors, 2 of whom are appointed by Universal Global Technology (Kunshan) Co., Ltd., and ordinary resolutions need to be approved by more
than half of the directors attending the board meeting while special matters need to obtain the unanimous consent of all directors. Special matters include: deciding the
Company's business plan and investment scheme, formulating the Company's annual financial budget plan and final accounting plan, formulating the Company's profit
distribution plan and loss recovery plan, etc. In shareholders' meeting, approval for ordinary resolutions require assent by shareholders representing over voting rights,
while approval for special resolutions require assent by shareholders representing over voting rights. Therefore, SUMA-USI is a joint venture of Universal Global
Technology (Kunshan) Co., Ltd., and the Group accounts for it under the equity method. As at 31 December 2022, the dividends declared by SUMA-USI total RMB
27,195,000.00.
182 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Long-term equity investments - continued
Note 2: In April 2022, Universal Global Scientific Industrial Co., Ltd., the Company's wholly-owned subsidiary, established a joint venture, 美鸿电子股份有限公司 ("美
鸿电子") with 美律实业股份有限公司 ("美律实业"). Under Joint-Venture Agreement, Universal Global Scientific Industrial Co., Ltd. intends to contribute TWD
191,100,000.00 (RMB 43,338,816.67), with a capital contribution of 49%. As at 31 December 2022, the accumulated capital contribution paid up by Universal Global
Scientific Industrial Co., Ltd. totals TWD 29,400,000.00 (RMB 6,622,070.14) , with a capital contribution of 49%. It is stipulated in the Joint-Venture Agreement that the
financial and operating plans of 美鸿电子 shall be submitted to the Board of Directors of the Company for approval only when a joint resolution by Universal Global
Scientific Industrial Co., Ltd. and 美律实业 is achieved. According to the articles of association of 美鸿电子, the board of directors is composed of 4 directors, 2 of
whom are appointed by Universal Global Scientific Industrial Co., Ltd.. Therefore, 美鸿电子 is a joint venture of Universal Global Scientific Industrial Co., Ltd., and the
Group accounts for it under the equity method.
Note 3: In July 2019, Universal Global Technology Co., Limited, the Company's wholly-owned subsidiary, made an additional contribution of SGD 79,862,500 to M-
Universe Investments Pte. Ltd. ("M-Universe"), a sub-subsidiary of it established in Singapore, to publicly acquire the ordinary shares of Memtech International Ltd.
("Memtech"), a company listed in Singapore. Pursuant to the Equity Acquisition Agreement, M-Universe acquired 42.23% of Memtech's equity interest at the market price
of 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 it is converted to an associate accounted for under the equity method.
Note 4: In November 2022, the Company made an additional contribution of RMB 20,000,000.00 to 深圳旷世科技有限公司 ("旷世科技"), to acquire 6.6667% of equity
interests of 旷世科技 upon the capital contribution according to the Capital Increase Agreement. As at 29 November 2022, the additional capital contribution has been
paid up. According to the Shareholder Agreement of 旷世科技, the board of directors is composed of 3 directors, 1 of which is appointed by the Company, being
responsible to develop its annual budget. And resolutions in relation to substantial modifications of corporate accounting policy or fiscal year need to be approved by the
majority of the directors attending the board meeting. The meeting of shareholders is allowed to be held when attended by shareholders representing more than a half of
the voting rights, involving investors of previous and current rounds. Ordinary resolution requires the approval of shareholders representing more than a half of the voting
rights, which mainly includes the approvals of corporate's management principle and investment plan, annual financial budget plan and final accounts plan and plans of
profit distribution and losses recovery. Therefore, the Company has significant influence on 旷世科技, which is a joint venture of the Company, and the Group accounts
for it under the equity method. The profit or loss for the year is insignificant.
183 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Other equity instrument investments
(1) Other equity instrument investments
Unit: RMB
Item 31/12/2022 31/12/2021
TriKnight Capital Corporation 38,420,782.40 75,957,194.28
(2) Non-trading equity instrument investments
Unit: RMB
Reasons for designation as at
Dividend income
Item Accumulated gains fair value through other
recognized in the year
comprehensive income
Non-trading equity
TriKnight Capital investments that the Group
17,034,226.73 (25,235,027.29)
Corporation (Note) does not expect to dispose of
in the foreseeable future
Note: The Group invested in TriKnight Capital Corporation in 2016, accounting for 5% of the equity interests in the
investee.
13. Other non-current financial assets
Unit: RMB
Item 31/12/2022 31/12/2021
PHI FUND, L.P. (Note VIII, 4 and Note XI, 1(1)) 100,510,388.15 93,130,696.47
Contingent consideration - 90,969,658.89
GaN System Inc. (Note VIII, 4) 33,022,365.35 31,878,465.32
Senscomm Semiconductor Co., Ltd. (Note VIII, 4) 24,752,828.36 20,000,000.00
Suzhou Yaotu Equity Investment Partnership (Note VIII, 4
11,840,697.00 1,000,000.00
and Note XI, 1(1))
Total 170,126,278.86 236,978,820.68
184 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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. 31/12/2021 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
2. Increase in the year 43,028,081.58 391,269,290.80 1,157,509,504.47 938,931.03 109,778,322.20 153,573,415.94 1,856,097,546.02
(1) Purchase 43,028,081.58 - 31,049,477.49 178,542.83 7,358,278.05 - 81,614,379.95
(2) Transfer from construction
- 391,269,290.80 1,126,460,026.98 760,388.20 102,420,044.15 153,573,415.94 1,774,483,166.07
in progress
3. Decrease in the year 4,069,554.84 1,742,271.52 404,310,143.91 1,622,365.57 25,616,439.61 - 437,360,775.45
(1) Disposal or retirement 4,069,554.84 1,742,271.52 404,310,143.91 1,622,365.57 25,616,439.61 - 437,360,775.45
4. Exchange differences arising
on translation of foreign 1,084,287.95 45,474,998.22 58,125,843.91 111,572.39 12,484,145.90 10,016,050.68 127,296,899.05
currencies
5. 31/12/2022 241,526,211.47 1,700,238,721.86 6,708,980,966.33 16,182,833.60 538,537,517.86 286,027,543.69 9,491,493,794.81
II. Accumulated depreciation
1. 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
2. Increase in the year - 47,967,610.52 642,169,525.85 1,421,266.29 63,976,747.18 23,683,591.40 779,218,741.24
(1) Provision - 47,967,610.52 642,169,525.85 1,421,266.29 63,976,747.18 23,683,591.40 779,218,741.24
3. Decrease in the year - 1,617,785.85 321,943,766.89 1,570,153.27 15,213,334.06 - 340,345,040.07
(1) Disposal or retirement - 1,617,785.85 321,943,766.89 1,570,153.27 15,213,334.06 - 340,345,040.07
4. Exchange differences arising
on translation of foreign - 5,326,423.30 31,722,488.66 61,946.75 4,577,685.30 1,057,081.42 42,745,625.43
currencies
5. 31/12/2022 - 491,421,104.81 4,016,829,552.15 11,851,363.29 328,314,155.16 136,457,518.37 4,984,873,693.78
III. Provision for impairment loss
1. 31/12/2021 - - - - - - -
2. Increase in the year - 49,852,343.57 - - - - 49,852,343.57
(1) Provision (Note) - 49,852,343.57 - - - - 49,852,343.57
3. Decrease in the year - - - - - - -
(1) Disposal or retirement - - - - - - -
4. Exchange differences arising
on translation of foreign - (12,378.84) - - - - (12,378.84)
currencies
5. 31/12/2022 - 49,839,964.73 - - - - 49,839,964.73
IV. Carrying amount
1. 31/12/2022 241,526,211.47 1,158,977,652.32 2,692,151,414.18 4,331,470.31 210,223,362.70 149,570,025.32 4,456,780,136.30
2. 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
185 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Fixed assets - continued
Note: USI Science and Technology (Shenzhen) Co., Ltd. a subsidiary of the Group, has been notified by
Nanshan District Government of Shenzhen City that its existing plant and land are included in the "2019
Shenzhen Nanshan District Urban Renewal Unit Plan Fourth Batch Plan" and need to be demolished and rebuilt.
Therefore, the Group has set aside RMB 44,090,553.55 for impairment of fixed assets of houses and buildings.
(2) As of 31 December 2022, the Group had no significant temporarily idle fixed asset.
(3) As of 31 December 2022, the Group had no fixed assets of which certificates of title have not been obtained
(4) As of 31 December 2022, the Group had no fixed assets that have been pledged.
15. Construction in progress
(1) Construction in progress
Unit: RMB
31/12/2022 31/12/2021
Provision for Provision for
Item
Book value impairment Carrying amount Book value impairment Carrying amount
losses losses
Shengxia factory-
Chip module 6,507,916.38 - 6,507,916.38 179,188,077.68 - 179,188,077.68
production project
Veitnam factory-
Wearable device 394,121.84 - 394,121.84 6,601,158.52 - 6,601,158.52
production project
Huizhou factory-
Electronic product 24,302,863.46 - 24,302,863.46 310,085,666.90 - 310,085,666.90
production project
Other construction,
decoration and 272,227,635.01 - 272,227,635.01 302,140,800.12 - 302,140,800.12
equipment funds
Total 303,432,536.69 - 303,432,536.69 798,015,703.22 - 798,015,703.22
(2) Changes in construction in progress
Unit: RMB
Amou
nt
inject
Exchange ed as Interest
Amount
differences arising a Including: capitali
Transferred to of
on translation of propo capitalize zation
Budget Transfer to long-term accumulat
Item name 31/12/2021 Increase in the year financial 31/12/2022 rtion d interest rate for Source of funds
fixed assets prepaid expenses ed
statements of for the the
in the year capitalize
denominated in budge year year
d interest
foreign currencies t (%)
amou
nt
(%)
-
Shengxia
factory-Chip -
Self-owned funds /
module 910,000,000.00 179,188,077.68 119,887,679.57 (290,031,840.87) (2,536,000.00) - 6,507,916.38 73% - - Raised funds -
production
project
-
Veitnam
factory-
Wearable Self-owned funds /
device
1,400,000,000.00 6,601,158.52 121,621,164.22 (128,199,300.85) - 371,099.95 394,121.84 45% - - - Raised funds
production
project
Huizhou
factory-
Electronic Self-owned funds /
product
1,350,000,000.00 310,085,666.90 310,702,531.60 (596,485,335.04) - - 24,302,863.46 49% - - - Raised funds
production
project
Other
construction,
decoration
and
N/A 302,140,800.12 736,593,025.63 (759,766,689.31) (16,712,141.61) 9,972,640.18 272,227,635.01 N/A - - - Self-owned funds
equipment
funds
Total 798,015,703.22 1,288,804,401.02 (1,774,483,166.07) (19,248,141.61) 10,343,740.13 303,432,536.69
186 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(3) As of 31 December 2022, the Group had no construction in progress that requires provision for impairment
losses.
(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. 31/12/2021 794,529,335.00 1,048,385.04 5,757,618.00 2,348,832.42 803,684,170.46
2. Increase in the
46,051,093.47 28,031.21 5,115,230.10 325,694.36 51,520,049.14
year
(1) Increase 46,051,093.47 28,031.21 5,115,230.10 325,694.36 51,520,049.14
3. Decrease in the
10,811,836.68 87,308.52 794,651.64 268,934.90 11,962,731.74
year
(1) Disposal or
10,811,836.68 87,308.52 794,651.64 268,934.90 11,962,731.74
retirement
4. Exchange
differences arising
4,251,566.66 59,392.00 281,707.77 (26,580.11) 4,566,086.32
on translation of
foreign currencies
5. 31/12/2022 834,020,158.45 1,048,499.73 10,359,904.23 2,379,011.77 847,807,574.18
II. Accumulated
depreciation
1. 31/12/2021 236,975,438.90 666,161.25 2,142,197.52 909,578.56 240,693,376.23
2. Increase in the
126,479,640.26 240,073.90 2,453,393.58 552,872.68 129,725,980.42
year
(1) Provision 126,479,640.26 240,073.90 2,453,393.58 552,872.68 129,725,980.42
3. Decrease in the
4,781,117.11 87,308.52 583,152.68 161,938.39 5,613,516.70
year
(1) Disposal or
4,781,117.11 87,308.52 583,152.68 161,938.39 5,613,516.70
retirement
4. Exchange
differences arising
2,964,400.63 46,077.74 133,491.38 (11,482.07) 3,132,487.68
on translation of
foreign currencies
5. 31/12/2022 361,638,362.68 865,004.37 4,145,929.80 1,289,030.78 367,938,327.63
III. Provision for
impairment loss
31/12/2021 &
- - - - -
31/12/2022
IV. Carrying amount
1. 31/12/2022 472,381,795.77 183,495.36 6,213,974.43 1,089,980.99 479,869,246.55
2. 31/12/2021 557,553,896.10 382,223.79 3,615,420.48 1,439,253.86 562,990,794.23
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 2022, the short-term lease expenses included in the profit or loss for the current period and treated under a
simplified method is RMB 18,867,022.49 (2021: RMB9,020,463.27), and the cash outflows related to leases are
RMB 172,129,856.01 (2021: RMB 145,961,156.97).
The assets leased in shall not be used as collateral for borrowings.
As at 31 December 2022, the Group's short-term lease portfolio was similar to the short and medium-term lease
portfolio corresponding to 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 2022, the Group had no leases committed but not yet commenced.
187 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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. 31/12/2021 413,772,854.86 1,911,151.30 413,641.61 126,538,890.11 162,295,674.98 704,932,212.86
2. Increase in the year 35,299,595.37 - - - - 35,299,595.37
(1) Purchase 35,299,595.37 - - - - 35,299,595.37
3. Decrease in the
year 70,556.73 - - 31,412.95 - 101,969.68
(1) Disposal or
70,556.73 - - 31,412.95 - 101,969.68
retirement
4. Exchange
differences arising on
8,905,913.32 169,667.36 (3,503.77) 4,291,309.47 4,659,660.83 18,023,047.21
translation of foreign
currencies
5. 31/12/2022 457,907,806.82 2,080,818.66 410,137.84 130,798,786.63 166,955,335.81 758,152,885.76
II. Accumulated
amortization
1. 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
2. Increase in the year 72,132,522.57 - - 3,113,767.60 9,961,485.75 85,207,775.92
(1) Provision 72,132,522.57 - - 3,113,767.60 9,961,485.75 85,207,775.92
3. Decrease in the
70,556.73 - - - - 70,556.73
year
(1) Disposal or
70,556.73 - - - - 70,556.73
retirement
4. Exchange
differences arising on
translation of foreign 5,162,828.52 169,667.36 (3,503.77) 314,911.08 795,447.50 6,439,350.69
currencies
5. 31/12/2022 303,188,607.33 2,080,818.66 410,137.84 15,790,008.76 21,578,379.03 343,047,951.62
III. Provision for
impairment loss
31/12/2021 &
- - - - - -
31/12/2022
IV. Carrying amount
1. 31/12/2022 154,719,199.49 - - 115,008,777.87 145,376,956.78 415,104,934.14
2. 31/12/2021 187,809,041.89 - - 114,177,560.03 151,474,229.20 453,460,831.12
(2) As at 31 December 2022, the Group had no land use right of which the certificate of title was still in progress.
188 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Goodwill
(1) Original book value of goodwill
Unit: RMB
Changes for the year
Name of investee 31/12/2021 Arising from business Exchange differences arising on 31/12/2022
combination translation of financial statements
denominated in foreign currencies
USI Poland 26,047,156.12 - 2,405,880.17 28,453,036.29
FAFG 532,974,001.76 - 15,302,144.69 548,276,146.45
Total 559,021,157.88 - 17,708,024.86 576,729,182.74
(2) Impairment provision of goodwill
As of 31 December 2022, there is no impairment provision of goodwill.
(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 four asset groups. As at 31 December 2022, the carrying amount of the goodwill allocated to the four
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 28,453,036.29 - 28,453,036.29
European region—FAFG Europe 183,725,000.17 - 183,725,000.17
China mainland—FAFG China 364,551,146.28 - 364,551,146.28
Total 576,729,182.74 - 576,729,182.74
As at 31 December 2022, 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 7.45%,
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.
189 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 2022, 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 12.96%,
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 2022, 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 13.40%,
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.
19. Long-term prepaid expenses
Unit: RMB
Transfer from Translation of financial
Amortization for the
Item 31/12/2021 Increase in the year construction in statements denominated 31/12/2022
year
progress in foreign currencies
Leased-in plant
decoration 227,576,284.98 4,480,193.16 19,248,141.61 75,146,058.96 (323,229.34) 175,835,331.45
works
190 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
31/12/2022 31/12/2021
Deductible
Deductible temporary
Deferred tax assets temporary Deferred tax assets
differences
Item differences
Provision for impairment
208,062,389.07 31,887,923.33 193,821,682.25 42,612,195.77
losses of assets
Provision for credit loss 15,676,029.63 3,497,503.49 13,223,761.97 3,596,532.84
Deferred income 60,443,410.66 9,066,511.61 57,000,065.25 8,550,009.79
Employee benefits payable 351,822,136.42 52,882,512.01 199,308,548.75 30,589,364.52
Defined benefit plans 124,981,766.96 29,645,702.88 223,818,884.41 52,394,385.80
Depreciation differences 3,782,236.82 567,335.52 10,242,956.06 1,536,443.41
Provisions 622,851.27 93,427.69 1,293,497.27 194,024.59
Unrealized profit from
70,059,384.65 13,081,751.13 63,019,597.45 11,638,477.17
intragroup transactions
Deductible losses 414,036,219.02 84,693,112.30 270,300,755.99 73,237,594.45
Sales discount 471,651,001.33 84,235,913.19 394,837,081.32 67,996,678.40
Others 248,405,951.20 58,341,445.89 143,546,039.53 31,711,057.16
Total 1,969,543,377.03 367,993,139.04 1,570,412,870.25 324,056,763.90
(2) Deferred tax liabilities that are not offset
Unit: RMB
31/12/2022 31/12/2021
Taxable temporary Taxable temporary
Deferred tax liabilities Deferred tax liabilities
Item differences differences
Depreciation
differences in research
and development
33,801,264.60 5,070,189.69 - -
equipment tax credits
Depreciation
differences
- - 15,127,571.63 4,538,271.49
Fair value adjustment
for business
combination involving 345,346,062.78 87,631,726.67 372,779,957.00 98,179,611.96
enterprise not under
common control
Others 13,221,193.18 3,966,357.96 14,075,520.47 4,222,656.14
Total 392,368,520.56 96,668,274.32 401,983,049.10 106,940,539.59
(3) Deferred tax assets and deferred tax liabilities that are presented at the net amount after offset
Unit: RMB
31/12/2022 31/12/2021
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 (9,036,547.65) 358,956,591.39 (8,760,927.63) 315,295,836.27
Deferred tax liabilities 9,036,547.65 87,631,726.67 8,760,927.63 98,179,611.96
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.
191 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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 31/12/2022 31/12/2021
Deductible temporary differences 8,449,752.28 8,989,736.44
Deductible losses 167,659,979.97 178,137,952.50
Total 176,109,732.25 187,127,688.94
(5) Deductible losses, for which no deferred tax assets are recognized, will expire in the following years
Unit: RMB
Year 31/12/2022 31/12/2021
2026 - 30,775,200.93
No time limit 167,659,979.97 147,362,751.57
Total 167,659,979.97 178,137,952.50
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 31/12/2022 31/12/2021
Prepayment for equipment 113,538,490.61 91,927,638.00
Guarantee and deposit 10,487,765.93 11,240,266.61
Prepayment for enterprise income tax 155,287.50 33,173,383.08
Others 430,351.28 474,023.49
Total 124,611,895.32 136,815,311.18
22. Short-term borrowings
(1) Categories of short-term borrowings:
Unit: RMB
Item 31/12/2022 31/12/2021
Credit loans 4,499,463,404.21 2,480,500,031.68
As at 31 December 2022, the Group's short-term borrowings are all composed of credit loans with no pledged,
mortgaged or guaranteed borrowings.
(2) As at 31 December 2022, the Group has no short-term borrowings overdue but not yet repaid.
23. Derivative financial liabilities
Unit: RMB
Item 31/12/2022 31/12/2021
Financial liabilities at FVTPL 3,118,891.32 976,413.16
Including: Derivative financial assets(Note) 3,118,891.32 976,413.16
Note: The derivative financial liabilities held by the group are foreign exchange forward contract.
192 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
24. Accounts payable
(1) Accounts payable
Unit: RMB
Item 31/12/2022 31/12/2021
Payable for materials 10,295,963,612.28 11,527,517,322.76
Payable for assets 352,221,507.19 577,303,942.61
Expenses payable 408,005,735.96 453,776,977.80
Total 11,056,190,855.43 12,558,598,243.17
(2) As at 31 December 2022, the Group has no significant accounts payable aged more than one year.
25. Contract liabilities
(1) Contract liabilities
Unit: RMB
Item 31/12/2022 31/12/2021
Receipts in advance 411,898,442.43 311,988,551.56
The Group's revenue from sales of goods is recognized when the control over related goods is transferred to the
customer. A contract liability is recognized at the time of the transaction for goods paid for in advance by the
customer until the goods are shipped to or delivered to the customer, i.e. when control is transferred to the
customer
The carrying amount of contract liabilities of RMB 311,988,551.56 at the beginning of the year has been
recognized as revenue in the current year, while that of RMB 411,898,442.43 at the end of the year is expected to
be recognized as revenue in 2023.
26. Employee benefits payable
(1) Employee benefits payable
Unit: RMB
Exchange differences arising
Increase in the Decrease in the on translation of financial
Item 31/12/2021 31/12/2022
year year statements denominated in
foreign currencies
1.Short-term
793,373,097.61 4,102,711,499.11 3,794,392,373.26 4,578,728.21 1,106,270,951.67
benefits
2.Post-
employment
27,115,429.38 233,367,449.19 234,424,620.61 564,280.92 26,622,538.88
benefits-defined
contribution plan
3.Long-term
employee benefits
10,698,459.49 43,238,547.57 38,194,655.22 (164,264.50) 15,578,087.34
payable due within
one year
4.Dismission
- 62,807,680.50 49,394,164.50 - 13,413,516.00
welfare
Total 831,186,986.48 4,442,125,176.37 4,116,405,813.59 4,978,744.63 1,161,885,093.89
193 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
Increase in the Decrease in the translation of financial
Item 31/12/2021 31/12/2022
year year statements denominated in
foreign currencies
1. Wages or
salaries, bonuses,
730,565,054.01 3,464,475,929.23 3,162,341,461.53 3,709,217.98 1,036,408,739.69
allowances and
subsidies
2. Staff welfare 16,935,164.14 300,053,478.89 297,338,206.41 600,648.18 20,251,084.80
3. Social security
41,105,012.84 254,807,198.92 253,645,384.63 135,301.67 42,402,128.80
contributions
Including:
32,613,859.25 182,773,300.17 180,980,958.43 162,596.30 34,568,797.29
Medical insurance
Work injury
7,153,950.96 48,076,549.06 47,876,174.65 (79,639.49) 7,274,685.88
insurance
Maternity
32,173.12 1,814,567.53 1,814,189.68 2,985.07 35,536.04
insurance
Overseas
comprehensive
1,305,029.51 22,142,782.16 22,974,061.87 49,359.79 523,109.59
insurance
expenses
4. Housing funds 3,342,240.90 73,259,430.66 70,559,276.78 122,917.32 6,165,312.10
5. Union running
costs and
1,425,625.72 10,115,461.41 10,508,043.91 10,643.06 1,043,686.28
employee
education cost
Total 793,373,097.61 4,102,711,499.11 3,794,392,373.26 4,578,728.21 1,106,270,951.67
(3) Defined contribution plan (Note)
Unit: RMB
Exchange differences
arising on translation of
Increase in the Decrease in the
Item 31/12/2021 financial statements 31/12/2022
year year
denominated in foreign
currencies
1. Basic pensions 26,317,315.39 220,035,658.76 220,714,779.13 565,562.35 26,203,757.37
2. Unemployment
798,113.99 13,331,790.43 13,709,841.48 (1,281.43) 418,781.51
insurance
Total 27,115,429.38 233,367,449.19 234,424,620.61 564,280.92 26,622,538.88
Note: The Group participates, as required, in the pension insurance and unemployment plan established by
Chinese government authorities, Mexican authorities and French authorities. According to such plans, the Group
contributes monthly to such plans based on corresponding percentages of contribution base. Except for above
monthly contributions, the Group does not assume further payment obligations. The related expenditures are
either included in cost of related assets or charged to profit or loss in the period when they are incurred.
In this year, the Group should contribute pension insurance and unemployment plans amounting to RMB
220,035,658.76 and RMB 13,331,790.43 (2021: RMB192,429,296.31 and RMB 11,525,557.07). As at 31
December 2022, 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 26,203,757.37 and RMB 418,781.51
(31 December 2021: RMB 26,317,315.39 and RMB 798,113.99 ). The outstanding contributions have been
paid after the reporting period.
194 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
27. Taxes payable
Unit: RMB
Item 31/12/2022 31/12/2021
Enterprise income tax 239,183,763.40 162,797,690.95
Withholding of income tax 71,203,696.31 6,774,673.16
VAT 45,323,905.31 42,307,371.96
Surcharges 17,025,179.34 12,844,623.85
Individual income tax 7,935,318.38 5,288,608.50
Stamp duties 7,123,546.41 5,657,760.52
Withholding of VAT and levies - 499,635.84
Others 295,315.40 2,506,114.97
Total 388,090,724.55 238,676,479.75
28. Other payables
(1) Other payables
Unit: RMB
Item 31/12/2022 31/12/2021
Interest payable 20,270,005.36 9,995,478.63
Other payables 696,662,698.41 413,513,986.88
Total 716,932,703.77 423,509,465.51
(2) Interest payable
Unit: RMB
Item 31/12/2022 31/12/2021
Interest payables of short-term borrowings 14,059,324.30 4,242,576.34
Interest payables of long-term borrowings 482,848.75 2,888,951.29
Interest payables of bonds 5,727,832.31 2,863,951.00
Total 20,270,005.36 9,995,478.63
As at 31 December 2022, the Group has no significant interest payables due.
(3) Other payables by nature
Unit: RMB
Item 31/12/2022 31/12/2021
Collection on behalf of third parties 327,342,648.15 209,375,088.52
Customer deposit 200,960,766.77 -
Professional services fee 45,785,605.37 76,878,779.18
Accrued expenses 53,493,020.82 65,543,584.98
Utilities, storage and transportation costs 25,010,517.18 18,201,801.15
Miscellaneous fees 9,900,940.43 15,962,956.95
Procurement of non-raw materials 1,858,465.18 7,554,988.90
Others 32,310,734.51 19,996,787.20
Total 696,662,698.41 413,513,986.88
As at 31 December 2022, the Group has no significant other payables aged more than one year.
195 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
29. Non-current liabilities due within one year
Unit: RMB
Item 31/12/2022 31/12/2021
Long-term borrowings due within one year (Note (V). 31) 364,856,884.72 589,495,046.10
Lease liabilities due within one year (Note (V). 33) 141,963,140.51 131,012,735.39
Total 506,820,025.23 720,507,781.49
30. Other current liabilitiy
Item 31/12/2022 31/12/2021
Relocation expense of SZ 3,661,569.01 -
31. Long-term borrowings
Details of long-term borrowings
Unit: RMB
Item 31/12/2022 31/12/2021
Credit loans (Note ) 424,284,423.60 1,690,715,513.65
Less: Long-term borrowings included in non-current liabilities due
364,856,884.72 589,495,046.10
within one year (Note (V). 29)
Total 59,427,538.88 1,101,220,467.55
Note : In October 2022, Universal Scientific Industrial (Shanghai) Co., Ltd., acquired a new bank loan principal
of RMB 350,000,000.00. The repayment date is November 2023, and the interest rate is fixed at 2.25%. As at
December 31, 2022, the above borrowings were fully included in non-current liabilities due within one year.
In November 2022, FAFG, a subsidiary of the Group, borrowed EUR 10,000,000.00 from the bank, equivalent to
RMB 74,284,423.60. The repayment method is EUR 500,000.00 per quarter starting from February 2023, and the
final repayment date is November 2027, with the interest rate of 3.9% fixed. As of December 31, 2022, the balance
of the above borrowings of EUR 2,000,000.00, equivalent to RMB 14,856,884.72, is included in the non-current
liabilities due within one year.
As at 31 December 2022, the Group had no long-term borrowings that were due but not yet repaid.
32. Bonds payable
(1) Bonds payable
Unit: RMB
Item 31/12/2022 31/12/2021
Convertible corporate bonds 3,243,085,241.27 3,115,505,143.28
196 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
32. Bonds payable - continued
(2) Movements in bonds payable
Unit: RMB
Interest
Nomi Issued accrued as Amortization
Name of Date of Swap to
nal Term Amount 31/12/2021 in this per of premiums 31/12/2021
bonds issue equity
value period nominal or discounts
value
Universa
l Global
Converti
6
ble 100 2021/3/4 3,450,000,000.00 3,115,505,143.28 - 6,313,846.31 133,932,428.47 38,484.17 3,243,085,241.27
years
Bonds
(SH:113
045)
(3) Description on issuing, conversion condition and conversion time of convertible corporate bonds
As approved by CSRC with "Zheng Jian Xu Ke [2021] No. 167", the Company issued 34,500,000 convertible
bonds at nominal value of RMB 100, with annual coupon rate of 0.1%, 0.2%, 0.6%, 1.3%, 1.8% and 2.0%,
respectively for the 1st year, 2nd year, 3rd year, 4th year, 5th year and 6th year, and the annual interest is payable at
the date of each full year from the first date of issue of the convertible bonds in this issue. If such day is a legal
holiday or a rest day, it will be postponed to the next trading day, bearing no interest during the postponed period.
The convertible bonds in this issue is allowed to swap to equity from the first trading date in the 10th month
subsequent to the closing date of this issue (namely 10 March 2021) to the expiry date of convertible bonds.
Within five trading days after the expiration of the convertible bonds issued, the company will redeem the
convertible bonds not converted into shares at the price of 108.00% (including the last interest) of the face value
of the bonds.
During the conversion period of this issuance of convertible bonds, if the closing price of the company's shares
on at least 20 trading days in any 30 consecutive trading days is not less than 130% (including 130%) of the
current conversion price, with the approval of relevant regulatory authorities (if necessary), the company has the
right to redeem all or part of the convertible bonds that have not been converted according to the face value of the
bonds plus the accrued interest in the current period. If the company's share conversion price is adjusted due to ex
rights and ex dividend on the above trading days, it shall be calculated according to the share conversion price
and closing price before the adjustment on the trading day before the adjustment, and according to the adjusted
share conversion price and closing price on the trading day after the adjustment. In addition, when the total face
value of the convertible bonds not converted into shares issued is less than 30 million yuan, 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.
197 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
32. 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 20.25 yuan / share. According to the
resolution of the general meeting of shareholders on April 23, 2021, the company distributed cash dividends to
all shareholders, with a cash dividend of RMB 5.00 per 10 shares. Therefore, as of December 31, 2021, the
conversion price was adjusted to RMB 19.75/share. In accordance with the resolution of the General Meeting of
Shareholders on April 19, 2022, the Company will pay a cash dividend of RMB 2.6 per 10 shares to all
shareholders. Therefore, the conversion price is adjusted to RMB 19.49 per share. At the same time, according
to the resolution of the General Meeting of shareholders on April 19, 2022, the Company cancellations the
9,296,627 shares purchased in 2019 that have not been used, so the conversion price is adjusted to RMB 19.52
per share. According to the prospectus for the Public Offering of Convertible Bonds of Universal Scientific
Industrial (Shanghai) Co., Ltd. the price of convertible bonds to equity should be adjusted due to changes in the
total share capital caused by the exercise of stock options of the company. Therefore, as of December 31, 2022,
the price of convertible bonds to equity is adjusted to RMB 19.50 yuan 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 133,932,428.47 withdrawn according to the effective interest rate method in the current
period.
As of December 31, 2022, the company has accumulated assets with face value of RMB 68,000 (book value of
RMB 61,930.55) Convertible bonds are converted into A-share ordinary shares, and the number of shares
converted is 3,439 shares. Among them, in 2022, convertible bonds with A face value of RMB 42,000 (book value
of RMB 38,484.17) were converted into A-share ordinary shares, and the number of shares converted was 2,129
shares.
198 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
33. Lease liabilities
(1) Details of lease liabilities
Unit: RMB
Item 31/12/2022 31/12/2021
Lease liabilities 523,688,862.68 606,138,332.63
Less: Lease liabilities included in non-current liabilities due within
141,963,140.51 131,012,735.39
one year (Note (V). 29)
Total 381,725,722.17 475,125,597.24
34. Long-term payables
Unit: RMB
Item 31/12/2022 31/12/2021
Software licensing fee (Note) 44,878,564.09 59,328,067.47
Less: Long-term payables due within one year 13,765,268.38 13,747,011.85
Total 31,113,295.71 45,581,055.62
Note: It refers to software licensing fee payable by the Group.
35. Long-term employee benefits payable
(1) Details of long-term employee benefits payable
Unit: RMB
Item 31/12/2022 31/12/2021
1. Post-employment benefits- net liability of defined benefit plans 195,627,020.11 296,461,708.74
2. Termination benefits 3,715,489.91 869,451.40
Total 199,342,510.02 297,331,160.14
(2) Changes in defined benefit plans
Net liability of defined benefit plans
Unit: RMB
Item 2022 2021
I. 31/12/2021 307,160,168.23 347,901,541.73
II. Defined benefits costs recognized in profit or loss for the year 8,415,658.22 2,233,934.44
III. Defined benefits costs recognized in other comprehensive
(67,885,313.64) (4,677,068.45)
income
IV. Amount contributed and paid during the year (38,194,655.22) (16,526,112.29)
V. Exchange differences arising on translation of foreign
1,709,249.86 (21,772,127.20)
currencies
VI. 31/12/2022 211,205,107.45 307,160,168.23
Less: Long-term employee benefits payable due within one
15,578,087.34 10,698,459.49
year
Long-term employee benefits payable paid after one year 195,627,020.11 296,461,708.74
Contents of defined benefit plans and related risks, and its impact over the Group's future cash flows, timing and
uncertainty:
199 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
35. Long-term employee benefits payable - continued
(2) Changes in defined benefit plans - continued
UGSI and USI, the Group's subsidiaries, provide retirement benefit plan for full-time regular employees hired
before 1 July 2005. The Group acquired FAFG in 2020. FAFG provides retirement benefit plan for its employees,
which provides a pension for some employees who have worked for more than 10 years according to the working
years and certain rate of their salaries in recent 10 years, and a pension for some employees who have worked for
more than 2 years according to the working years and certain rate of their salaries in recent 12 months.
The defined benefit plans expose the Group to actuarial risks such as discount rate, future salary growth rate, etc.
The Group hired Towers Watson Business Management Consulting Co., Ltd. to estimate the present value of
retirement benefit plan of UGSI and USI by actuary in accordance with the projected unit credit method. Future
salary growth rate and mortality rate are used to estimate the future cash outflows to recognize the present value
of the plan at a discounted rate which is determined in accordance with the market interest rate of high-quality
corporate bonds at the balance sheet date. In countries where there is no market for such bonds, the market interest
rate for government bonds (at the balance sheet date) shall be used. Since the Group's post-employment benefit
obligations remain effective for 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 UGSI and USI in determining the present
value of the defined benefit plan obligations:
31/12/2022 31/12/2021
Discount rate 1.80% 0.75%
Future salary growth
2.25% 2.25%
rate
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 UGSI
and USI will be decreased by RMB 8,114,633.44 (increased by RMB 8,708,813.03) and RMB472,168.66
(increased by RMB503,011.57 ), respectively.
When the future salary growth rate is up (down) 0.5%, the present value of defined benefit plan
obligations of UGSI and USI will be increased by RMB 8,627,623.60 (decreased by RMB 8,119,849.52)
and RMB 498,249.06 (decreased by RMB 472,622.23), respectively.
200 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
35. 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:
31/12/2022 31/12/2021
Discount rate 3.75% 0.85%~0.93%
Future salary growth
1.5%-2.25 % 1%-2%
rate
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 7,364,505.76 (increased by RMB 8,000,046.14 ).
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 2,291,681.90 (decreased by RMB 2,168,280.61).
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.
36. Provisions
Unit: RMB
Item 31/12/2022 31/12/2021
Products quality warranty 7,350,296.14 10,046,914.77
201 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
37. Deferred income
Unit: RMB
Exchange differences
arising on translation of
Increase in the Decrease in the
Item 31/12/2021 financial statements 31/12/2022 Reason
year year
denominated in foreign
currencies
Government grants 57,989,093.15 22,899,800.00 19,946,114.55 (29,276.95) 60,913,501.65 Note 1
Subsidies for
purchase of fixed 1,802,849.55 1,020,039.14 597,806.91 56,625.87 2,281,707.65
assets
Total 59,791,942.70 23,919,839.14 20,543,921.46 27,348.92 63,195,209.30
Note 1: Items involving government grants:
Unit: RMB
Exchange
Amount differences arising
recognized in on translation of Asset-related /
Item 31/12/2021 Increase in the year 31/12/2022
other income of financial statements Income-related
the year denominated in
foreign currencies
Technology reform item
for ultra-thin
communication module 24,660,672.84 5,000,000.00 6,235,457.60 - 23,425,215.24 Asset-related
deep intelligent production
line
Government grants for the
sixth batch of high quality
special projects 13,669,564.91 - 3,036,864.04 - 10,632,700.87 Asset-related
(technological
transformation)
Government grant income
from matching funds for
key transformation projects
11,044,125.00 - 2,445,750.00 - 8,598,375.00 Asset-related
for the automation of the
production of smart
wearable products
Industrialization
technology upgrading 4,677,324.40 - 4,553,588.05 - 123,736.35 Asset-related
project
Upgrading subsidies for
2,548,517.50 - 1,087,466.87 (29,276.95) 1,431,773.68 Asset-related
Poland technology
Manufacturing technology
reform item for high
transmission, high density 1,388,888.50 - 1,388,888.50 - - Asset-related
and miniaturized wireless
communication module
Display and touch chip
module technology
research and development - 9,156,800.00 153,194.37 - 9,003,605.63 Asset-related
and industrialization
projects
Huizhou Daya Bay
Economic and
Technological
Development Zone - 2,233,000.00 390,351.72 - 1,842,648.28 Asset-related
Industry and Trade
Development Bureau
subsidy income
2022 Provincial Special
project fund for Intelligent
- 5,510,000.00 598,280.63 - 4,911,719.37 Asset-related
Manufacturing
Demonstration Plant
Kunshan Bureau of
Industry and Information
Technology Suzhou Smart - 1,000,000.00 56,272.77 - 943,727.23 Asset-related
Factory government
subsidy
202 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Total 57,989,093.15 22,899,800.00 19,946,114.55 (29,276.95) 60,913,501.65
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
38. Other non-current liabilities
Other non-current liabilities refer to guarantee deposits and margins received from suppliers.
39. Share capital
Unit: RMB
Changes for the year
Convertible bond Cancellation of
31/12/2021 New issue of 31/12/2022
to equity swap Treasury stock
shares (Note)
(Note 2) (Note 3)
Total shares 2,210,172,782.00 5,985,955.00 2,129.00 (9,296,627.00) 2,206,864,239.00
Note 1: In November 2015, the Company implemented the Stock Option Incentive Plan of Universal Scientific
Industrial (Shanghai) Co., Ltd. granting qualified employees a certain number of stock options to subscribe for
the Company's ordinary shares. In 2022, 755,700 common shares were vested at a price of RMB15.54 per share.
In November 2019, the Company implemented the 2019 Stock Option Incentive Plan of Universal Scientific
Industrial (Shanghai) Co., Ltd. to grant eligible employees a certain number of stock options to subscribe for
shares of the Company's common stock. In 2022, 214,900 and 5,015,355 ordinary shares granted by the Company
were exercised at RMB12.67 and RMB12.41 respectively and registered with the Shanghai Branch of China
Securities Depositories and Clearing Co., LTD. The total increase in capital stock is RMB 5,985,955.00 and
capital reserve is RMB 70,721,020.16.
Note 2: See Note V, 32 for convertible bond to equity swap
Note 3: In accordance with the resolution of the General Meeting of Shareholders on April 19, 2022, the
Company cancelled in 2022 the 9,296,627 Treasury shares repurchased in 2019 that have not yet been used.
40. Other equity instruments
Unit: RMB
Outstanding Opening balance Increase Decrease Closing balance
financial Qty. Book value Qty. Book value Qty. Book value Qty. Book value
instruments
Equity portion of
convertible 34,499,740 409,902,116.17 - - 420 4,990.13 34,499,320 409,897,126.04
corporate bonds
Note: Other equity instruments are formed by the equity part of convertible corporate bonds. For the details, see
Note (V), 32.
203 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
41. Capital reserve
Unit: RMB
Increase in the Decrease in the
Item 31/12/2021 31/12/2022
year year
Share premium 2,059,308,514.03 117,338,100.71 101,214,178.80 2,075,432,435.94
Including: Share capital invested
by investors (Note V. 3,090,405,580.17 70,721,020.16 - 3,161,126,600.33
(39))
Purchase of minority
interests
(4,405,590.07) - - (4,405,590.07)
Differences resulting from
combination involving
enterprise under
(5,621,108.53) - - (5,621,108.53)
common control
Transfer of capital reserve
to share capital
(1,087,961,790.00) - - (1,087,961,790.00)
Share-based payment
exercise included in 72,264,921.91 46,227,642.51 - 118,492,564.42
owners' equity
Treasury shares transferred
out (Note (V). 42)
(5,398,532.47) 348,293.28 101,214,178.80 (106,264,417.99)
Exercise of convertible
bonds (Note (V). 32)
25,033.02 41,144.76 - 66,177.78
Other capital reserve (Note (V).
49)
183,148,092.19 22,177,000.00 46,227,642.51 159,097,449.68
Total 2,242,456,606.22 139,515,100.71 147,441,821.31 2,234,529,885.62
42. Treasury shares
Unit: RMB
Item 31/12/2021 Increase in the Decrease in the 31/12/2022
year year
Employee stock ownership
341,236,339.88 120,667,431.78 110,510,805.80 351,392,965.86
plan
Note 1: According to the Proposal on the Plan to Repurchase the Company's Shares in the Form of Centralized
Competitive Bidding at the 15th Meeting of the Fifth Session of the Board of Directors held on 25 March 2022
and other proposals, from 1 February 2022 to 31 December 2021, the Company repurchased a total of 9,356,317
shares of the Company in the form of centralized competitive bidding, totaling RMB 120,318,665.50. In 2022,
29,300 Treasury shares will be returned to the Group in accordance with the 2020 Employee Stock Ownership
Plan (Draft) of Universal Scientific Industrial (Shanghai) Co., Ltd. among which RMB 348,293.28 will be
included in the capital reserve, and related taxes and commissions of RMB 473.00 will be paid.
Note 2: In accordance with the resolution of the General Meeting of Shareholders on April 19, 2022, the Company
will cancel in 2022 the 9,296,627 Treasury shares purchased in 2019 that have not been used, totaling RMB
110,510,805.80. Of which, RMB 9,296,627.00 is included in capital stock and RMB 101,214,178.80 is included
in capital reserve.
204 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
43. 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 31/12/2021 other comprehensive Less: Income tax owners of the minority 31/12/2022
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 (42,832,458.04) 31,955,512.23 - 16,119,248.57 15,832,855.55 3,408.11 (26,999,602.49)
reclassified to profit
or loss
Including: Recalculation of
the changes in defined (53,527,232.16) 67,885,313.64 - 16,119,248.57 51,762,656.96 3,408.11 (1,764,575.20)
benefit plans
Fair value changes
in other equity
10,694,774.12 (35,929,801.41) - - (35,929,801.41) - (25,235,027.29)
instruments
investment
II. Other comprehensive
income that will be
(40,767,940.91) 179,631,703.77 - - 179,617,711.98 13,991.79 138,849,771.07
reclassified to profit
or loss
Including: Other
comprehensive
income that can be
21,487,505.10 (35,958,792.78) - - (35,958,792.78) - (14,471,287.68)
reclassified to profit
or loss under equity
method
Exchange
differences arising
on translation of
(100,878,500.20) 104,293,967.37 - - 104,279,975.58 13,991.79 3,401,475.38
financial statements
denominated in
foreign currencies
Net investment
hedging for 38,623,054.19 111,296,529.18 - - 111,296,529.18 - 149,919,583.37
overseas operations
Total other
(83,600,398.95) 211,587,216.00 - 16,119,248.57 195,450,567.53 17,399.90 111,850,168.58
comprehensive income
44. Surplus reserve
Unit: RMB
Increase in the Decrease in
Item 31/12/2021 31/12/2022
year the year
Statutory surplus reserve
738,004,669.96 124,076,162.30 - 862,080,832.26
(Note)
Note: According to the Articles of Association, Universal Scientific Industrial (Shanghai) Co., Ltd. is required
to transfer 10% of its net profit in 2022 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.
45. Retained profits
Unit: RMB
Item 2022 2021
Retained profits at the end of prior year 7,906,260,771.90 7,342,825,571.69
Add: Net profit attributable to owners of the Company
3,059,967,081.20 1,857,968,074.82
for the year
Less: Appropriation to statutory surplus reserve
124,076,162.30 195,394,427.11
(Note 1)
Dividends on ordinary shares payable (Note 2) 566,586,796.58 1,099,138,447.50
Retained profits at the end of the year (Note 3) 10,275,564,894.22 7,906,260,771.90
(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.
205 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
45. Retained profits - continued
(2) Profit distribution approved in shareholders' meeting during the year
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, and approved by the Annual General Meeting on 19 April 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.
(3) Profit distribution decided after the balance sheet date
As proposed by the resolution of the Twenty-second Meeting of the Fifth Session of the Board of Directors of
the Company held on 31 March 2023, a cash dividend of RMB 4.30 (including tax) per 10 shares will be
distributed on the basis of the total share capital at the equity registration date less the number of the shares
repurchased by the Company from special accounts, with no bonus issue and no increase in share capital. The
above proposal regarding dividends distribution is yet to be approved in a shareholders' meeting.
(4) Appropriation to surplus reserve by subsidiaries
As at 31 December 2022, the balance of the Group's retained profits include appropriation to surplus reserve
by subsidiaries amounting to RMB 1,296,513,372.15 (31 December 2021: RMB 1,192,741,399.36).
46. Operating income and operating costs
(1) Details of operating income and operating costs
Unit: RMB
Amount incurred in the current year Amount incurred in the prior year
Item
Income Cost Income Cost
Principal operating
activities
68,470,093,860.59 61,323,766,793.99 55,253,601,963.75 49,978,169,386.77
Other operating
activities
45,982,102.67 3,307,737.74 46,052,806.46 3,309,811.07
Total 68,516,075,963.26 61,327,074,531.73 55,299,654,770.21 49,981,479,197.84
(2) Analysis of principal operating income and principal operating costs by product categories:
Unit: RMB
Amount incurred in the current year Amount incurred in the prior year
Item Principal operating Principal operating Principal operating
Principal operating costs
income income costs
Communication products 25,520,857,428.25 23,213,641,775.47 20,972,520,125.02 19,565,256,104.60
Consumer electronic
products
21,898,114,544.44 19,960,343,272.38 18,513,334,853.39 16,841,688,212.59
Industrial products 8,767,396,642.14 7,350,004,279.64 7,465,088,227.60 6,248,834,131.05
Cloud and storage products 6,989,468,417.07 5,919,995,989.47 4,954,420,787.41 4,230,005,891.17
Automotive electronic
products
4,551,947,156.28 4,167,640,175.20 2,642,770,457.32 2,444,720,709.07
Medical products 137,139,250.98 120,908,484.94 190,280,087.36 178,187,735.51
Others 605,170,421.43 591,232,816.89 515,187,425.65 469,476,602.78
Total 68,470,093,860.59 61,323,766,793.99 55,253,601,963.75 49,978,169,386.77
206 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
46. Operating income and operating costs - continued
(3) Other business income and other business costs:
Unit: RMB
Item Amount incurred in the current year Amount incurred in the prior year
Other business income Other business costs Other business income Other business costs
Scrap income 39,603,898.97 - 39,880,978.46 -
Others 6,378,203.70 3,307,737.74 6,171,828.00 3,309,811.07
Total 45,982,102.67 3,307,737.74 46,052,806.46 3,309,811.07
(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, cloud and storage products,
industrial products, automotive electronic products, medical products and other products.
The Group recognizes revenue at the time when the customer obtains control of the goods. The Group recognizes
sales revenue from domestic sales at the time when the goods are delivered to the warehouse designated by the
customer and the customer signs for them on the receipt, while that from export sales is recognized when the
goods leave the factory, when the goods are delivered to the carrier, when the goods are delivered to the port,
when the goods are loaded onto an aircraft or ship, or when the goods are delivered to the customer or to a location
designated by the customer, respectively, according to the specific trading terms agreed in the contract.
47. Taxes and levies
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Stamp duties 23,111,161.47 19,880,734.34
City construction and maintenance tax 13,786,022.43 11,208,526.66
Education surcharges 10,030,738.56 8,532,615.47
Property tax 2,609,568.22 2,937,961.06
Urban land use tax 781,817.57 900,287.63
Others 5,110,619.26 6,357,540.59
Total 55,429,927.51 49,817,665.75
48. Selling expenses
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Staff costs 255,654,011.92 211,759,131.73
Depreciation and amortization 14,990,838.78 16,027,092.26
Labor costs 9,845,031.41 10,077,652.76
Traveling expenses 6,943,197.17 3,876,257.29
After-sales service fee 6,423,251.42 6,394,645.51
Utilities 2,109,667.22 2,030,392.60
Entertainment expenses 2,010,997.40 1,665,596.94
Commission 727,094.30 1,640,768.47
Royalty fees 36,434.00 31,098,633.03
Others 25,093,339.25 26,910,731.51
Total 323,833,862.87 311,480,902.10
207 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
49. Administrative expenses
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Staff costs 995,101,343.39 726,688,773.52
Labor costs and professional services fee 140,189,347.74 132,225,618.10
Depreciation and amortization 106,547,071.59 110,545,311.91
Renovation costs 26,776,629.63 27,748,073.54
Software costs 24,156,832.67 13,172,412.70
Share-based payments 22,177,000.00 52,875,000.00
Utilities 18,997,396.45 12,473,730.18
Material consumption 14,877,018.63 9,656,422.95
Traveling expenses 12,558,944.40 17,718,452.02
Insurance 8,115,188.86 10,571,950.20
Others 52,352,224.52 55,497,639.65
Total 1,421,848,997.88 1,169,173,384.77
50. Research and development expenses
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Staff costs 911,057,638.21 761,184,062.01
Material and sample costs 834,966,158.21 601,560,258.30
Depreciation and amortization 113,851,353.98 99,178,889.07
Mold costs 33,643,778.88 44,165,226.63
Utilities 27,167,208.87 21,466,113.30
Labor costs 19,904,668.08 11,803,055.92
Software 17,122,097.78 16,600,013.19
Renovation costs 15,076,582.91 16,097,717.66
Consumables and miscellaneous 13,395,678.45 10,880,322.68
Traveling expenses 3,691,357.13 2,914,798.18
Others 44,585,253.21 55,548,055.67
Total 2,034,461,775.71 1,641,398,512.61
51. Financial expenses
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Interest expenses 234,999,925.44 201,328,552.68
Including: Interest expenses on lease liabilities 19,293,314.43 21,624,108.86
Interest expenses on issue of convertible bonds 133,932,428.47 107,851,300.34
Less: Interest income 87,996,958.46 67,779,611.82
Exchange differences (136,338,140.35) 62,658,120.37
Others 8,200,580.00 7,191,529.39
Total 18,865,406.63 203,398,590.62
208 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
52. 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 56,144,655.78 50,678,106.85 56,144,655.78
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 5,766,250.00 6,519,680.00 Income-related
2021 Economic grants by Shanghai Head Office 4,180,000.00 4,970,000.00 Income-related
Kunshan City Bureau of Commerce provincial processing trade Income-related
3,991,200.00 -
subsidies
Epidemic prevention subsidy 3,133,500.00 - Income-related
2022 Pudong financial support and subsidies for safety, business Income-related
2,686,600.00 -
and education of the "14th Five-Year Plan" period
French government grants for science and technology research 2,448,279.86 4,751,654.62 Income-related
Nanshan Bureau of Industry and Information Technology 2021 Income-related
2,142,500.00 -
subsidies for stable industrial growth
One-off training allowance for workers 1,986,505.00 - Income-related
Job stabilization subsidy 1,258,945.51 - Income-related
Social security subsidy 1,235,541.62 - Income-related
Green energy saving renovation project subsidized by Kunshan Income-related
980,000.00 -
Industry and Information Technology Bureau
Foreign trade support subsidy of Shenzhen Municipal Bureau of Income-related
960,700.00 -
Commerce
Special subsidies for industrial energy conservation and contract Income-related
729,500.00 -
energy management
Individual tax service fee refund 668,806.79 664,628.80 Income-related
Skill recognition subsidy 656,950.00 - Income-related
Subsidy for named class of Kunshan Human Resource Income-related
520,000.00 1,562,500.00
Management Service Center
Kunshan Bureau of Industry and Information Technology Income-related
500,000.00 -
Cultivating benchmarking demonstration project subsidy
Social Security Bureau stabilization subsidy transferred to Income-related
308,799.04 150,811.51
income
Shenzhen government subsidies for commercial and industrial Income-related
303,708.89 961,114.00
electricity consumption
VAT deduction for enterprises employing poor people with Income-related
123,750.86 559,180.13
established cards
R&D Funding for Shenzhen Science and Technology Innovation Income-related
2,388,000.00
Enterprise
2021 Integrated subsidy project for Technical Transformation of Income-related
1,350,000.00
Industrial Enterprises in Kunshan
Subsidy for staying in Kunshan in the Spring Festival by Income-related
1,002,800.00
Qiandeng Township Merchants Office Service Center
Nurturing grants for High-tech Enterprises by Nanshan Science Income-related
1,000,000.00
and Technology Innovation Bureau
Vocational training awards and subsidies by Kunshan Social Income-related
791,300.00
Insurance Fund Management Center
Award for outstanding contribution to high quality development Income-related
500,000.00
in the 30th Anniversary of Kun-Tai Integrated Development
Intellectual property fund of Shanghai Zhangjiang Science City Income-related
410,800.00
Construction and Management Office
Others 1,617,003.66 5,115,366.46 Income-related
Sub-total 36,198,541.23 32,697,835.52
Amortization of asset-related government grants (Note (V). 36) 19,946,114.55 17,980,271.33 Asset-related
209 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Total 56,144,655.78 50,678,106.85
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
53. 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
73,531,247.72 22,116,497.85
method
Investment income from other equity instruments during the
17,034,226.73 14,910,026.14
hold period
Investment income of held-for-trading financial assets during
5,020,325.97 1,208,019.49
the hold period
Investment income on disposal of held-for-trading financial
43,044,223.30 73,489,834.38
assets
Other - (45,397.90)
Total 138,630,023.72 111,678,979.96
54. 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 23,949,712.86 15,525,000.00
Including: Gains (losses) from changes in fair values arising
23,949,712.86 15,525,000.00
from derivative financial assets
Derivative financial liabilities (2,317,400.67) 14,031,052.68
Other non-current financial assets 10,206,885.31 15,032,169.92
Total 31,839,197.50 44,588,222.60
55. 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 (10,116,849.95) (4,542,957.48)
Gains (losses) from bad debts of other receivables - 2,836,069.00
Total (10,116,849.95) (1,706,888.48)
56. 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 (49,017,247.96) (18,746,153.38)
Impairment loss on fixed assets (49,852,343.57) -
Total (98,869,591.53) (18,746,153.38)
210 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
57. 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
14,057,238.37 5,290,613.92 14,057,238.37
assets
Less: Losses from disposal of non-current
5,442,124.77 2,875,916.90 5,442,124.77
assets
Total 8,615,113.60 2,414,697.02 8,615,113.60
58. 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 25,331,702.16 19,628,576.06 25,331,702.16
59. 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
5,890,183.57 11,530,686.66 5,890,183.57
assets
Others 3,050,307.39 1,052,447.42 3,050,307.39
Total 8,940,490.96 12,583,134.08 8,940,490.96
211 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
60. 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 500,693,610.57 367,358,199.12
Settlement differences in income tax (21,961,470.70) (21,432,389.61)
Deferred income taxes (61,526,690.41) (63,759,928.76)
Total 417,205,449.46 282,165,880.75
(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 3,477,195,221.25 2,138,858,923.07
Applicable tax rate 15% 15%
Income tax expenses calculated based on applicable tax rate 521,579,283.19 320,828,838.43
Effect of non-deductible cost, expense and loss 1,535,699.03 33,989,887.10
Effect of deemed sales on income taxes 2,481,730.54 3,153,974.75
Effect of non-taxable income (11,614,249.60) (615,775.56)
Tax effect of additional deductible expenses (144,195,037.69) (109,649,252.29)
Effect of deductible temporary difference or deductible loss
3,384,353.42 8,850,428.82
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 (5,037,046.92) (7,142.67)
period
Equity incentive (1,623,227.59) 6,239,839.26
Settlement differences in income tax (21,961,470.70) (21,432,389.61)
Effect of different tax rates applied by subsidiaries 68,733,454.00 30,384,135.90
Effect of changes in income tax rates of subsidiaries on the
4,488,031.20 6,004,696.00
opening balance of deferred tax assets
Others (566,069.42) 4,418,640.62
Income tax expenses 417,205,449.46 282,165,880.75
212 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
61. 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
Customer deposit 200,960,766.77 -
Advanced payment 151,945,946.64 -
Interest income 94,342,090.81 72,145,391.15
Subsidy income 60,118,380.37 78,607,835.52
Others (Note) 6,745,265.18 22,035,458.20
Total 514,112,449.77 172,788,684.87
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
Other expenses paid 137,350,952.30 472,254,238.69
Payment of customs deposit 6,069,934.90 2,974,159.20
Freight paid - 156,029,510.00
Total 143,420,887.20 631,257,907.89
(3) Other cash receipts relating to financing activities
Unit: RMB
Amount incurred in Amount incurred in
Item
the current year the prior year
Long-term loan deposit 3,506,097.66 16,721,046.67
Shareholding plan exercise payment - 22,515,886.36
Total 3,506,097.66 39,236,933.03
(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 120,319,138.50 231,031,506.46
Payment of lease principal and interest 153,262,833.52 136,940,693.70
Others 553,599.25 880,489.51
Total 274,135,571.27 368,852,689.67
213 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
62. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
Unit: RMB
Supplementary information 2022 2021
1. Reconciliation of net profit to cash flow from operating
activities:
Net profit 3,059,989,771.79 1,856,693,042.32
Add: Losses (gains) on impairment of assets 98,869,591.53 18,746,153.38
Gains on impairment of credit 10,116,849.95 1,706,888.48
Depreciation of fixed assets 779,218,741.24 743,998,618.03
Depreciation of right-of-use assets 129,725,980.42 126,034,558.52
Amortization of intangible assets 85,207,775.92 102,807,442.51
Amortization of long-term prepaid expenses 75,146,058.96 94,475,344.98
Amortization of deferred income (20,543,921.46) (18,737,804.93)
Gains on disposal of fixed assets, intangible assets and
(8,615,113.60) (2,414,697.02)
other long-term assets
Losses on retirement of fixed assets 5,890,183.57 11,530,686.66
Losses (gains) on changes in fair values (31,839,197.50) (44,588,222.60)
Financial expenses (income) 158,347,264.83 263,986,673.05
Gains arising from investments (138,630,023.72) (111,678,979.96)
Share-based payments settled by equity 22,177,000.00 52,875,000.00
Decrease (increase) in deferred tax assets (53,431,234.36) (18,286,336.11)
Increase in deferred tax liabilities (8,095,456.05) (34,306,686.56)
Decrease (increase) in inventories (1,929,242,538.88) (2,203,751,438.05)
Decrease (increase) in receivables from operating
1,634,270,188.99 (2,319,617,462.56)
activities
Increase (decrease) in payables from operating activities (433,365,666.13) 378,080,240.96
Net cash flow from operating activities 3,435,196,255.50 (1,102,446,978.90)
2. Significant investing and financing activities that do not
involve cash receipts and payments:
Acquisition of long-term assets with debt 403,741,556.33 601,020,573.06
3. Net changes in cash and cash equivalents:
Closing balance of cash 7,678,044,104.00 6,018,193,116.59
Less: Opening balance of cash 6,018,193,116.59 6,303,224,304.50
Add: Closing balance of cash equivalents - -
Less: Opening balance of cash equivalents - -
Net increase (decrease) in cash and cash equivalents 1,659,850,987.41 (285,031,187.91)
214 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
62. Supplementary information to the cash flow statement - continued
(2) Composition of cash and cash equivalents
Unit: RMB
Item 31/12/2022 31/12/2021
I. Cash 7,678,044,104.00 6,018,193,116.59
Including: Cash on hand 271,737.56 126,530.08
Bank deposits that can be readily withdrawn on
7,677,772,366.44 6,018,066,586.51
demand
II. Cash equivalents - -
III. Closing balance of cash and cash equivalents 7,678,044,104.00 6,018,193,116.59
63. Assets with limited ownership or use right
Unit: RMB
Item Closing balance of carrying amount Reasons for the restrictions
Other cash and bank balances 14,757,734.50 Customs deposit
Other cash and bank balances 2,214,334.90 Foreign exchange deposit
Total 16,972,069.40
215 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
64. 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 35,089,612.85 1.0000 35,089,612.85
USD 263,251,215.38 6.9646 1,833,439,414.64
EUR 3,812,691.68 7.4284 28,322,198.88
HKD 2,285,129.22 0.8933 2,041,305.93
JPY 188,886,526.00 0.0524 9,897,653.96
GBP 69,667.64 8.3941 584,797.14
MXN 34,474,779.03 0.3597 12,400,578.02
SGD 15,173.92 5.1831 78,647.94
CZK 1,516,948.14 0.3080 467,220.03
TND 4,132,194.76 2.2430 9,268,512.85
VND 54,843,591,825.00 0.0003 16,453,077.55
Accounts receivable
Including: USD 1,118,495,267.00 6.9646 7,789,872,136.55
EUR 5,569,253.10 7.4284 41,370,639.73
Other receivables
Including: USD 1,315,667.15 6.9646 9,163,095.43
EUR 152,943.03 7.4284 1,136,122.00
MXN 16,261,435.24 0.3597 5,849,238.26
VND 2,319,723,905.00 0.0003 695,917.17
Short-term borrowings
Including: USD 94,007,492.35 6.9646 654,724,581.22
EUR 373,500,000.00 7.4284 2,774,507,400.00
Accounts payable
Including: USD 963,925,070.00 6.9646 6,713,352,542.51
EUR 3,952,630.24 7.4284 29,361,718.47
HKD 1,012,802.40 0.8933 904,736.38
JPY 8,218,624,603.27 0.0524 430,655,929.21
MXN 140,956,739.28 0.3597 50,702,139.12
VND 18,860,394,636.00 0.0003 5,658,118.39
Other payables
Including: USD 43,184,792.84 6.9646 300,764,808.21
EUR 1,279,489.34 7.4284 9,504,558.61
HKD 162,721.00 0.8933 145,358.67
MXN 17,228,837.73 0.3597 6,197,212.93
VND 2,697,926,390.00 0.0003 809,377.92
216 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
64. Foreign currency monetary items - continued
(2) Description of overseas operating entities
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 Major currencies used in operating
Hong Kong USD
("UGI") activities
Universal Global Electronics Co., Limited Major currencies used in operating
Hong Kong USD
("UGE") activities
Universal Global Scientific Industrial Co., Ltd. Taiwan TWD Currency in major economic environment
Universal Scientific Industrial Co., Ltd Taiwan TWD Currency in major economic environment
USI America Inc. USA USD Currency in major economic environment
USI Japan Co., Ltd. Japan JPY Currency in major economic environment
Universal Scientific Industrial De México S.A. Major currencies used in operating and
Mexico USD
De C.V. financing activities
Universal Scientific Industrial Poland Sp. z o.o. Poland PLN Currency in major economic environment
Universal Scientific Industrial (France) France EUR Currency in major economic environment
Universal Scientific Industrial Vietnam Major currencies used in operating
Vietnam USD
Company Limited activities
ASTEELFLASH (BEDFORD) LIMITED England GBP Currency in major economic environment
ASTEELFLASH FRANCE French EUR Currency in major economic environment
ASTEELFLASH TUNISIE S.A. Tunicia EUR Currency in major economic environment
Major currencies used in operating and
ASTEELFLASH MEXICO S.A. de C.V. Mexico USD
financing activities
ASTEELFLASH GERMANY GmbH Germany EUR Currency in major economic environment
Czech
ASTEELFLASH PLZEN S.R.O. Republic
EUR Currency in major economic environment
ASTEELFLASH TECHNOLOGIE French EUR Currency in major economic environment
ASTEELFLASH BRETAGNE French EUR Currency in major economic environment
ASTEELFLASH HERSFELD GmbH Germany EUR Currency in major economic environment
ASTEELFLASH EBERBACH GmbH Germany EUR Currency in major economic environment
ASTEELFLASH BONN GmbH Germany EUR Currency in major economic environment
ASTEELFLASH DESIGN SOLUTIONS
Germany EUR Currency in major economic environment
HAMBOURG GmbH
ASTEELFLASH USA CORP. USA USD Currency in major economic environment
65. 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 borrowings) and the hedged item (the Group's net investment in foreign operations
of FAFG). The Group designates the overall foreign exchange risk component of short-term as the hedging
instrument and designates a portion of the Group's net investment in foreign operations of FAFG as the hedged
item, which are equal in quantity. The Group uses hedges for net investment in foreign operations.
217 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
65. Hedge - continued
Hedging instrument
A summary of hedging instrument:
Unit: EUR
31/12/2022
Hedging instrument Within 6 months 6 to 12 months After 12 months
Hedges for net investment in foreign operations (Note (V). 22 and 31)
Foreign exchange risk -
Nominal
Short-term borrowings 272,500,000.00 - -
amount
in EUR
Unit: RMB
31/12/2022 31/12/2022 2022
Items presented for
Carrying amount of the hedging Changes in fair
assets and liabilities
Nominal amount of the instrument value of the
that include hedging
hedging instrument invalid part of
Assets Liabilities instruments
hedge
Hedges for net investment in
foreign operations
Foreign exchange risk -Short- Short-term
2,024,250,543.10 - 2,024,250,543.10 -
term borrowings in EUR borrowings
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
31/12/2022 that include hedged foreign
of hedged
instruments operations at
items in
31/12/2022
2022
Assets Liabilities
Hedges for net investment in foreign operations
The Group's net
Foreign exchange risk
investment in
- Long-term equity 2,024,250,543.10 - - 149,919,583.37
FAFG's foreign
investment
operations
218 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
65. Hedge - continued
Hedge effect
Unit: RMB
2022 2022 Items listed in
Amount reclassified Items listed in
Changes in hedge reserves for net The invalid part of the income
from hedge reserves for the income
Hedges for net investment in foreign operations hedge included in statement
net investment in statement
investment in of hedging instruments included profit or loss for the including
foreign operations to including
foreign operations in other comprehensive income current period invalid part of
profit or loss for the reclassification
hedge
current period in 2022 adjustment
recognized
Foreign exchange
risk -Short-term 111,296,529.18 - N/A N/A N/A
borrowings in EUR
(VI) 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
Production and
Universal Global sales, product Acquisition
No.501 Long Gui Road, China
Electronics (Shanghai) Shanghai design and 100 - through
(Shanghai) Pilot Free Trade Zone
Co., Ltd. research establishment
development
Universal Global No.497 Huangpu Road, Qiandeng Acquisition
Production and
Technology (Kunshan) Kunshan Town, Kunshan City, Jiangsu 100 - through
sales
Co., Ltd. Province establishment
Production and Acquisition
Universal Global No. 141, Lane 351, Sec. 1, Taiping sales, product through
Scientific Industrial Taiwan Road, Caotun Town, Nantou design and - 100 establishment
Co., Ltd County, Taiwan research
development
Acquisition
through business
No. 141, Lane 351, Sec. 1, Taiping Production and
Universal Scientific combinations
Taiwan Road, Caotun Town, Nantou sales, product - 100
Industrial Co., Ltd involving
County, Taiwan maintenance
enterprises under
common control
Room A, 7th Floor, Yuen Long Hi- Acquisition
Universal Global
Hong Tech Centre, No. 11Wang Yip Trade and through
Technology Co., 100 -
Kong Street West, Yuen Long, New investment establishment
Limited
Territories, Hong Kong
Room 2702-3, 27th Floor, Bank of Acquisition
Universal Global Hong East Asia Harbour Centre, No. 56 Trade and through
- 100
Industrial Co., Limited Kong 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
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 No. 656 Jardines de Santa combinations
Industrial De Mexico product - 100
Isabel CP44300, Guadalajara, involving
México S.A. De C.V. maintenance and
Jalisco, México enterprises under
related services
common control
219 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
Universal Global Production and Acquisition
No.369 Xinhe Avenue, Daya Wan,
Technology (Huizhou) Huizhou sales 100 - through
Huizhou
Co., Ltd. establishment
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 Science and Gaoxin North District,
development, establishment
Technology Shenzhen Songpingshan North Ring Road, - 100
Real estate
(Shenzhen) 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
Acquisition
through business
8 Gutang Road, Wujiang Economic
Asteelflash Suzhou Production and combinations not
Suzhou and Technological Development 100
Co., Ltd. sales involving
Zone
enterprises under
common control
(2) The Group has no significant non-wholly subsidiaries.
220 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(VII) EQUITY IN OTHER ENTITIES - continued
2. Equity in joint ventures or associates
(1) Significant associates or joint ventures
Shareholding proportion (%) Accounting
Principal
Name of associate or treatments for
operating Registered place Business nature
joint venture Direct Indirect investments in joint
place
ventures or associates
I. Joint venture
Room 8, No. Production and
232, Yuanfeng sales, product
SUMA-USI Kunshan Road, Yushan design and - 49.00 Equity method
Town, Kunshan research
City development
15th Floor, No.
205-1, Section 3,
Fuxing Li Beixin Production and
MUtek Electronics Taiwan - 49.00 Equity method
Road, Xindian sales
District, New
Taipei City
II. Associate
Singapore 1 Marina
Production and
M-Universe Boulevard #28- - 42.23 Equity method
sales
00, Singapore
13A, Tairan
Yunsong
Building,
Northwest Production and
junction of sales, product
Questyle Audio
Shenzhen Binhe Avenue design and - 6.67 Equity method
Technology Co., Ltd.
and Tairan Ninth research
Road, Shatou development
Street, Futian
District,
Shenzhen
221 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
31/12/2022/Amount incurred in the current year 31/12/2021/Amount incurred in the prior year
Current assets 790,548,093.30 639,944,748.59
Including: Cash and cash
equivalent
86,025,210.97 96,396,102.06
Non-current assets 14,105,184.52 14,238,749.45
Total assets 804,653,277.82 654,183,498.04
Current liabilities 578,360,965.62 421,010,161.96
Non-current liabilities 80,000.00 50,000.00
Total liabilities 578,440,965.62 421,060,161.96
Total shareholders' equity 226,212,312.20 233,123,336.08
Share of net assets
calculated based on 110,844,032.98 114,230,434.68
shareholding proportion
Carrying amount of equity
investments in joint 110,844,032.98 114,230,434.68
ventures
Fair value of equity
investments in joint
ventures where there is
N/A N/A
quoted price
Operating income 809,858,753.74 424,530,768.25
Income tax expenses 3,599,412.04 3,758,368.69
Net profit 48,588,976.14 12,699,586.09
Total comprehensive
income
48,588,976.14 12,699,586.09
Dividends declared from
joint ventures in the current 27,195,000.00 -
period (Note (V). 11)
222 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
31/12/2022/Amount incurred in the current 31/12/2021/Amount incurred in the prior
year year
Current assets 1,125,514,183.00 986,288,911.50
Including: Cash and cash equivalent 183,419,705.60 148,547,434.30
Non-current assets 505,757,960.45 484,452,265.86
Total assets 1,631,272,143.45 1,470,741,177.36
Current liabilities 455,094,822.40 401,547,961.70
Non-current liabilities 51,897,871.25 52,746,166.10
Total liabilities 506,992,693.65 454,294,127.80
Minority interests 1,539,176.60 2,193,240.80
Equity attributable to shareholders of
the Company
1,122,740,273.20 1,014,253,808.76
Share of net assets calculated based on
shareholding proportion
474,133,217.37 428,319,383.95
Carrying amount of equity investments
in associates
474,133,217.37 428,319,383.95
Fair value of equity investments in
associates where there is quoted price
N/A N/A
Operating income 1,414,915,124.78 1,341,385,113.60
Net profit attributable to owners of the
Company
119,244,906.96 37,636,042.32
Other comprehensive income
attributable to owners of the Company, (85,149,876.34) 17,120,834.81
net of tax
Total comprehensive income
attributable to owners of the Company
34,095,030.62 54,756,877.13
Dividends declared from associates in
the current period (Note (V). 11)
8,720,087.64 8,521,365.60
223 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(VII) EQUITY IN OTHER ENTITIES - continued
2. Equity in joint ventures or associates - continued
(4) Summary financial information of insignificant joint ventures and associates
Unit: RMB
31/12/2022/Amount
Joint ventures：MUtek Electronics incurred in the current
year
Total book value of investment 6,030,425.80
The sum of the following items in proportion to their shareholding (1,294,846.51)
Net profit (1,294,846.51)
Other comprehensive income -
Total comprehensive income (1,294,846.51)
Associates：Questyle Audio Technology Co., Ltd.
Total book value of investment 20,000,000.00
The sum of the following items in proportion to their shareholding -
Net profit -
Other comprehensive income -
Total comprehensive income -
(5) There is no significant limitations over the ability of joint ventures or associates to transfer funds to the Group.
(6) According to the Joint Investment Contract signed by UGSI and Meilu Industry, UGSI intends to contribute
TWD 191,100,000.00, but actually contributes TWD 29,400,000.00, which the contribution not yet paid in full
is TWD 161,700,000.00, equivalent to RMB 36,671,306.41 (Note (XI). 1).
(7) The Group has no contingent liabilities relating to investments in joint ventures and associates.
(VII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS
The Group's major financial instruments include cash and bank balances, held-for-trading financial assets, notes
receivable, accounts receivable, other receivables, other current assets, non-current assets due within one year,
long-term receivables, other equity instrument investment, other non-current financial assets, other non-current
assets, derivative financial liabilities, borrowings, accounts payable, other payables, non-current liabilities due
within one year, long-term payables and other non-current liabilities, etc. Details of these financial instruments
are disclosed in Note (V). Risks associated with these financial instruments and the policies on how to mitigate
these risks are set out below. Management manages and monitors these exposures to ensure the risks are monitored
at a certain level.
224 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(VII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
Unit: RMB
31/12/2022 31/12/2021
Financial assets
At FVTPL
Held-for-trading financial assets 271,243,519.53 96,480,087.56
Other non-current financial assets 170,126,278.86 236,978,820.68
Subtotal 441,369,798.39 333,458,908.24
At FVTOCI
Other equity instrument investment 38,420,782.40 75,957,194.28
Subtotal 38,420,782.40 75,957,194.28
Measured at amortized cost
Cash and bank balances 7,695,016,173.40 6,034,204,042.25
Notes receivable 45,627,553.57 78,960,907.84
Accounts receivable 11,119,120,760.11 12,459,388,852.15
Other receivables 137,008,284.72 124,093,293.85
Non-current assets due within one year 322,815.55 991,195.08
Long-term receivables 12,385,894.30 11,164,116.06
Other non-current assets 10,487,765.93 11,240,266.61
Subtotal 19,019,969,247.58 18,873,828,282.20
Total financial assets 19,499,759,828.37 19,283,244,384.72
Financial liabilities
At FVTPL
Derivative financial liabilities 3,118,891.32 976,413.16
Measured at amortized cost
Short-term borrowings 4,499,463,404.21 2,480,500,031.68
Accounts payable 11,056,190,855.43 12,558,598,243.17
Other payables 624,898,695.64 397,047,553.23
Non-current liabilities due within one year 364,856,884.72 720,507,781.49
Long-term borrowings 59,427,538.88 1,101,220,467.55
Bonds payable 3,243,085,241.27 3,115,505,143.28
Long-term payables 31,113,295.71 45,581,055.62
Other non-current liabilities 3,692,335.61 5,642,575.13
Subtotal 19,882,728,251.47 20,899,728,448.39
Total financial liabilities 19,885,847,142.79 20,900,704,861.55
The Group adopts sensitivity analysis technique to analyze how the profit and loss for the period and shareholders'
equity would have been affected by reasonably possible changes in the relevant risk variables. As it is unlikely
that risk variables will change in an isolated manner, and the interdependence among risk variables will have
significant effect on the amount ultimately influenced by the changes in a single risk variable, the following are
based on the assumption that the change in each risk variable is on a stand-alone basis.
225 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(VII) 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 2022 and 31 December 2021, 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 31/12/2022 31/12/2021
USD
Cash and bank balances 1,833,439 1,251,361
Accounts receivable 7,789,872 9,795,263
Other receivables 9,163 13,493
Short-term borrowings (654,725) (474,445)
Accounts payable (6,713,353) (8,804,017)
Other payables (300,765) (163,013)
Subtotal 1,963,631 1,618,642
226 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(VII) 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 31/12/2022 31/12/2021
EUR
Cash and bank balances 28,322 7,953
Accounts receivable 41,371 16,464
Other receivables 1,136 367
Short-term borrowings (2,774,507) (1,249,250)
Accounts payable (29,362) (29,462)
Other payables (9,505) (37)
Long-term borrowings - (1,101,220)
Subtotal (2,742,545) (2,355,185)
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
2022 2021
Effect on Effect on
Item Change in exchange rate
Effect on profit shareholders' Effect on profit shareholders'
equity equity
USD 5% appreciation against RMB 23,540 23,540 (13,736) (13,736)
USD 5% depreciation against RMB (23,540) (23,540) 13,736 13,736
USD 5% appreciation against TWD 71,810 71,810 122,196 122,196
USD 5% depreciation against TWD (71,810) (71,810) (122,196) (122,196)
USD 5% appreciation against EUR 938 938 (21,539) (21,539)
USD 5% depreciation against EUR (938) (938) 21,539 21,539
USD 5% appreciation against PLN 1,366 1,366 (380) (23)
USD 5% depreciation against PLN (1,366) (1,366) 380 23
EUR 5% appreciation against RMB (276) (276) (23) (117,802)
EUR 5% depreciation against RMB 276 276 23 117,802
EUR 5% appreciation against TWD (37,935) (37,935) (117,802) 284
EUR 5% depreciation against TWD 37,935 37,935 117,802 (284)
EUR 5% appreciation against USD 865 865 284 (13,736)
EUR 5% depreciation against USD (865) (865) (284) 13,736
EUR 5% appreciation against PLN 23,540 23,540 (13,736) (13,736)
EUR 5% depreciation against PLN (23,540) (23,540) 13,736 13,736
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 & 31 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.
227 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(VII) 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
2022 2021
Change in interest
Item Effect on Effect on
rate Effect on profit shareholders' Effect on profit shareholders'
equity equity
Financial
instruments at 1% appreciation (16,908) (16,908) (13,465) (13,465)
floating interest rate
Financial
instruments at 1% depreciation 16,908 16,908 13,465 13,465
floating interest rate
1.1.3. Other price risk
The price risk of the group mainly arises from trading equity instrument investment and other equity instrument
investment. The group reduces the price risk of equity instrument investment by holding a variety of equity
securities portfolio.
30.2 Credit risk
As at 31 December 2022, the Group's maximum exposure to credit risk which will cause a financial loss to the
Group due to failure to discharge an obligation by the counterparties is arising from: cash and bank balances (Note
(V). 1), held-for-trading financial assets (Note (V). 2), notes receivable (Note (V). 3), accounts receivable (Note
(V). 4), other receivables (Note (V). 6), non-current assets due within one year (Note (V). 8), other current assets
(Note (V). 9), long-term receivables (Note (V). 10), other non-current assets (Note (V). 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 December 31, 2022, the balance of bank acceptance bills held by the group was RMB45,627,553.57, 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 2022, the balance of accounts receivable of the Group's top 5 customers was
RMB 5,979,305,884.74 (31 December 2021: RMB 7,045,433,457.45), accounting for 53.68% (31 December
2021: 56.50%) 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.
228 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(VII) 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.
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 4,531,745,774.28 - - 4,531,745,774.28
Accounts payable 11,056,190,855.43 - - 11,056,190,855.43
Other payables 624,898,695.64 - - 624,898,695.64
Long-term borrowings 374,924,442.37 70,822,769.46 - 445,747,211.83
Long-term payables 14,378,531.00 25,764,075.16 6,441,018.79 46,583,624.95
Bonds payable 6,899,864.00 3,784,575,404.00 - 3,791,475,268.00
Lease liabilities 146,788,462.63 339,833,985.72 67,277,656.29 553,900,104.64
Other current liabilities 3,661,569.01 - - 3,661,569.01
Other non-current liabilities - 3,692,335.61 - 3,692,335.61
Derivative financial
3,118,891.32 - - 3,118,891.32
liabilities
(VIII) 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 - 36,058,485.60 - 36,058,485.60
2. Fund investment - - 112,351,085.15 112,351,085.15
3. Accounts receivable factoring - - 135,812,841.71 135,812,841.71
4. Equity instrument investment - - 57,775,193.71 57,775,193.71
5. Contingent consideration - - 99,372,192.22 99,372,192.22
(II) Financial assets at FVTOCI
1. Equity instrument investments - - 38,420,782.40 38,420,782.40
Total assets continuously measured at fair value - 36,058,485.60 443,732,095.19 479,790,580.79
(III) Derivative financial liabilities
1. Financial liabilities at FVTPL - 3,118,891.32 - 3,118,891.32
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.
229 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(VIII) 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 2022 Valuation technique Inputs
Derivative financial
assets 36,058,485.60 Method of discounted cash flow analysis Forward exchange rate
(Note (V). 2)
Derivative financial
liabilities 3,118,891.32 Method of discounted cash flow analysis Forward exchange rate
(Note (V). 23)
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
2022
Accounts receivable
Method of discounted Discount rate reflecting credit risk of
factoring 135,812,841.71 cash flow analysis counterparties
(Note (V). 2)
Contingent
Monte-Carlo analogy
consideration 99,372,192.22 method
Net interest rate
(Note (V). 2)
Fund investment
(Note (V). 13)
112,351,085.15 Market approach Liquidity discount
Equity instrument
investments 96,195,976.11 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
Translation of Changes in
Recognized financial unrealized gains
Recognized
1 January in other statements Purchase 31 December or losses for
Item in profit or Settlement
2022 comprehensi denominated in /Increase 2022 assets held at
loss
ve income foreign the end of the
currencies reporting period
(I) Financial assets at
FVTPL
1. Financial
products - 28,337,773.05 - - 5,035,000,000.00 5,063,337,773.05 - -
2. Accounts
receivable 87,238,983.18 - - 4,642,559.87 983,897,925.66 939,966,627.00 135,812,841.71 -
factoring
3. Fund
investment 94,130,696.47 7,331,210.21 - 9,702,703.37 37,169,261.04 35,982,785.94 112,351,085.15 2,310,884.24
4. Equity
instrument 51,878,465.32 2,963,517.43 - 2,933,210.96 - - 57,775,193.71 2,963,517.43
investment
5. Contingent
consideration 90,969,658.89 4,932,483.64 - 3,470,049.69 - - 99,372,192.22 4,932,483.64
6.Convertible
bond option 8,624,935.00 (8,624,935.00) - - - - - (8,624,935.00)
(II) Financial assets
at FVTOCI
Other equity
instrument 75,957,194.28 17,034,226.73 (35,929,801.41) (1,606,610.47) - 17,034,226.73 38,420,782.40 -
6. There are no changes in valuation techniques in the year.
230 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(VIII) 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.
(IX) 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 76.30 77.18
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 (VI). 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 (VI). 2.
231 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(IX) 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
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 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.
ASE Advanced Semiconductor (Shanghai) Limited (Note) 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
Taitech Precision Electronic (Kunshan) Co., Ltd. Subsidiary of an associate
Memtech Development (H.K.) Co., Limited Subsidiary of an associate
Dongguan Memtech Electronics Co., Ltd. Subsidiary of an associate
Nantong Memtech Technologies Co., Ltd. Subsidiary of an associate
Jian Memtech Precision Electronic Co., Ltd. Subsidiary of an associate
Note: In 2021, ASE Investment Holdings Co., LTD., the Company's ultimate holding company, sold all of its
shares in ASE Advanced Semiconductor (Shanghai) Limited and ASE (KunShan) Inc. to an independent third
party.
232 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(IX) 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
ASE Electronics Inc. Purchase of materials 97,972,675.19 35,395,020.12
Memtech Development (H.K.) Co., Limited Purchase of materials 47,620,077.85 33,805,960.04
Taitech Precision Electronic (Kunshan) Co.,
Purchase of materials 43,581,619.52 44,964,569.02
Ltd.
Dongguan Memtech Electronics Co., Ltd. Purchase of materials 32,882,673.95 21,142,669.59
Nantong Memtech Technologies Co., Ltd. Purchase of materials 1,508,030.70 1,244,612.87
DECELECT SAINT VIT Purchase of materials 962,465.31 1,419,113.28
SUMA-USI Electronics Co., Ltd. , Purchase of materials 631,478.90 329,035.08
Jian Memtech Precision Electronic Co., Ltd. Purchase of materials 284,858.86 -
ASE Inc. Purchase of materials 191,922.60 887,380.86
Siliconware Precision Industries Co., Ltd Purchase of materials 182,526.08 2,396,432.75
ASE Advanced Semiconductor (Shanghai)
Purchase of materials - 567,548.09
Limited
ASE KOREA, Inc. Purchase of materials - 185,560.55
DECELECT SOISSONS Purchase of materials - 162,939.14
Total 225,818,328.96 142,500,841.39
ASE Inc. Receipt of services 1,378,101,275.00 1,485,559,571.92
ASE (Shanghai) Inc. Receipt of services 37,378,276.83 38,163,009.12
Siliconware Precision Industries Co., Ltd. Receipt of services 19,736,988.58 -
USI Inc. Receipt of services 14,893,753.64 15,146,692.07
USI Enterprise Limited Receipt of services 4,077,439.51 3,450,020.58
SHANGHAI DINGXU PROPERTY
Receipt of services 1,899,206.09 1,953,179.19
MANAGEMENT CO., LTD
ASE Marketing & Service Japan Co., Ltd. Receipt of services 738,817.20 846,602.40
Taitech Precision Electronic (Kunshan) Co.,
Receipt of services 70,877.96 17,500.00
Ltd.
SUMA-USI Electronics Co., Ltd. , Receipt of services 45,928.00 61,627.40
Dongguan Memtech Electronics Co., Ltd. Receipt of services 33,300.00 13,613.15
ASE (US) Inc. Receipt of services 18,654.08 106,965.60
ASE (KunShan) Inc. Receipt of services - 36,299,124.27
ASDI Assistance Direction Receipt of services - 1,976,673.00
ASE KOREA, Inc. Receipt of services - 1,133,819.86
Memtech Development (H.K.) Co., Limited Receipt of services - 23,377.92
Total 1,456,994,516.89 1,584,751,776.48
The above transactions are executed at the prices agreed on by both parties.
233 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(IX) 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 5,032,944.09 6,524,003.25
SUMA-USI Electronics Co., Ltd. , Sales of goods 801,777.06 107,841.18
DECELECT SOISSONS Sales of goods 746,217.18 25,590.38
Total 6,580,938.33 6,657,434.81
ASE Inc. Provision of services 1,976,377.18 4,186,289.70
ISE labs, China. Ltd. Provision of services 1,048,388.07 611,327.88
SUMA-USI Electronics Co., Ltd. , Provision of services 365,458.00 603,545.70
Taitech Precision Electronic (Kunshan) Co.,
Provision of services - 276,588.89
Ltd.
ASE Advanced Semiconductor (Shanghai)
Provision of services - 4,500.00
Limited
Total 3,390,223.25 5,682,252.17
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 3,537,429.24 3,597,504.88
ISE Labs, Inc. Leasing of business premises 938,891.46 -
Wuxi Tongzhi Microelectronics Co.,Ltd. Machinery and equipment 33,186.96 -
ISE labs, China. Ltd. Machinery and equipment - 200,510.00
ASE Advanced Semiconductor (Shanghai)
Machinery and equipment - 105,000.00
Limited
Total 4,509,507.66 3,903,014.88
The above transactions are executed at the prices agreed on by both parties.
234 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(IX) 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
- 3,080,155.98 -
Limited business premises
Advanced Semiconductor Engineering Leasing of
- 1,360,700.68 36,487.02
(China) Ltd. business premises
Leasing of
USI Inc. - 2,490,668.71 -
business premises
ISE Labs, Inc. Leasing of
- 10,052.26 15.32
business premises
Total - 6,941,577.63 36,502.34
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 -
3,668,609.46 -
Limited business premises
Leasing of -
ASE (KunShan) Inc. 4,517,463.39 29,894.40
business premises
Advanced Semiconductor Engineering Leasing of -
1,908,208.31 36,050.71
(China) Ltd. business premises
Leasing of -
USI Inc. 3,127,879.21 -
business premises
Leasing of -
ISE Labs, Inc. 20,231.02 14.84
business premises
Total - 13,242,391.39 65,959.95
Unit: RMB
Lease income Lease income
Name of lessor Type of leased assets recognized in the recognized in the prior
current year year
Leasing of business
ASE (US) Inc.
premises
- 458,432.15
SUMA-USI Electronics Co., Ltd. , Machinery and equipment - 32,312.09
ASE (KunShan) Inc. Machinery and equipment - 24,162.60
Total - 514,906.84
The related party rent paid by the Group for the current period is RMB 63,934,778.55. The above transactions
are executed at the prices agreed on by both parties.
235 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(IX) 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
ISE labs, China. Ltd. Sales of fixed assets 46,507,299.26 10,071,875.88
ASE Test Inc. Sales of fixed assets - 12,545,380.16
ASE Inc. Sales of fixed assets - 3,478,999.00
ASE Advanced Semiconductor -
Sales of fixed assets 21,740.65
(Shanghai) Limited
Total 46,507,299.26 26,117,995.69
Taitech Precision Electronic (Kunshan) Purchase of fixed
2,225,983.40 -
Co., Ltd. assets
Advanced Semiconductor Engineering Purchase of fixed
697,841.37 -
(China) Ltd. assets
Dongguan Memtech Electronic Product Purchase of fixed
275,840.20 -
Co., Ltd. assets
Shanghai Youhong Electronic
Purchase of fixed
Engineering Technology Consulting Co., - 505,387.14
assets
Ltd.
Total 3,199,664.97 26,623,382.83
The above transactions are executed at the prices agreed on by both parties.
(4) Interest expenses with related parties
Unit: RMB
Details of related party Amount incurred in Amount incurred in
Related party
transaction the current year the prior year
Interest expenses on
USI Enterprise Limited
convertible bonds
89,992,084.14 80,914,020.40
Interest expenses on
ASE (Shanghai) Inc.
convertible bonds
807,565.60 869,753.10
Total 90,799,649.74 81,783,773.50
(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 33,842,802.87 30,519,010.96
6. Amounts due from / to related parties
(1) Amounts due from related parties
Unit: RMB
31/12/2022 31/12/2021
Item Related party Bad debt Bad debt
Book value Book value
provision provision
Accounts receivable ASE Inc. 1,105,963.97 - 1,158,180.69 -
Accounts receivable DECELECT SOISSONS 256,983.70 - - -
Accounts receivable ISE Labs, Inc. 156,203.13 - - -
Accounts receivable SUMA-USI Electronics Co., Ltd. , 65,915.83 - 160,167.11 -
Total 1,585,066.63 - 1,318,347.80 -
236 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(IX) RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
6. Amounts due from / to related parties - continued
(1) Amounts due from related parties - continued
Unit: RMB
31/12/2022 31/12/2021
Item Related party Bad debt Bad debt
Book value Book value
provision provision
Other receivables ASE Inc. 467,694.55 - 1,144,700.73 -
Other receivables ISE labs, China. Ltd. 217,389.11 - 192,606.48 -
Other receivables USI Inc. 26,583.86 - 55,570.86 -
Total 711,667.52 - 1,392,878.07 -
Unit: RMB
31/12/2022 31/12/2021
Item Related party Bad debt Bad debt
Book value Book value
provision provision
Advanced Semiconductor
Other non-current assets 1,412,962.98 - 1,412,962.98 -
Engineering (China) Ltd.
Other non-current assets ISE Labs, Inc. 23,643.98 - 21,644.74 -
Total 1,436,606.96 - 1,434,607.72 -
(2) Amounts due to related parties
Unit: RMB
Item Related party 31/12/2022 31/12/2021
Accounts payable ASE Inc. 378,720,024.57 340,399,410.06
Accounts payable Taitech Precision Electronic (Kunshan) Co., Ltd. 24,064,742.13 27,560,169.90
Accounts payable Memtech Development (H.K.) Co., Limited 17,830,266.60 15,169,729.44
Accounts payable USI Inc. 11,535,713.72 11,616,822.99
Accounts payable Dongguan Memtech Electronic Product Co., Ltd. 11,371,236.29 9,476,508.78
Accounts payable ASE Electronics Inc. 9,680,346.48 10,591,402.08
Accounts payable Siliconware Precision Industries Co., Ltd. 4,126,324.34 6,694.49
Accounts payable Nantong Memtech Technologies Co., Ltd. 578,807.02 164,619.78
Accounts payable USI Enterprise Limited 343,925.43 288,607.33
Accounts payable DECELECT SAINT VIT 190,493.86 59,874.12
Accounts payable SUMA-USI Electronics Co., Ltd. , 48,683.68 320,185.81
Accounts payable Jian Memtech Precision Electronic Co., Ltd. 43,875.68 -
Accounts payable ASE (US) Inc. 18,728.45 -
Accounts payable DECELECT SOISSONS 9,582.69 56,411.81
Accounts payable ASDI Assistance Direction - 86,739.49
Total 458,562,750.94 415,797,176.08
237 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(IX) 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 31/12/2022 31/12/2021
Other payables ASE (Shanghai) Inc. 5,154,066.18 3,898,185.67
Other payables USI Enterprise Limited 2,398,445.06 2,193,057.52
Other payables ASE Inc. 372,620.33 2,682,192.50
SHANGHAI DINGXU PROPERTY
Other payables 160,708.88 240,956.60
MANAGEMENT CO., LTD
Other payables USI Inc. 6,712.87 7,370.75
Other payables Memtech Development (H.K.) Co., Limited - 667,119.11
Other payables Siliconware Precision Industries Co., Ltd - 234,039.09
Total 8,092,553.32 9,922,921.24
Unit: RMB
Item Related party 31/12/2022 31/12/2021
Long-term
USI Inc. 31,113,295.71 37,610,084.54
payables
Unit: RMB
Item Related party 31/12/2022 31/12/2021
Bonds payable USI Enterprise Limited 1,364,243,289.23 2,399,279,839.68
Bonds payable ASE (Shanghai) Inc. - 25,790,104.50
Total 1,364,243,289.23 2,425,069,944.18
Unit: RMB
Item Related party 31/12/2022 31/12/2021
Lease liabilities USI Inc. 114,059,901.22 145,924,337.73
Lease liabilities ASE Assembly & Test (Shanghai) Limited 57,933,008.48 70,337,306.54
Advanced Semiconductor Engineering (China)
Lease liabilities
Ltd. 28,698,975.12 46,106,208.08
Total 200,691,884.82 262,367,852.35
7. Related party commitments
As at 31 December 2022, there are no related party commitments.
238 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(X) 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
2022 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 12,919,130 15,576,600 2,881,350 990,000 402,600 281,200
the beginning of the year
Total number of the Company's
equity instruments granted during - - - - - -
the year
Total number of the Company's
equity instruments vested during 755,700 5,230,255 - - 395,400 -
the period
Total number of the Company's
equity instruments lapsed during 188,900 2,668,645 1,166,100 396,000 7,200 12,300
the period
Total number of the Company's
equity instruments outstanding at 11,974,530 7,677,700 1,715,250 594,000 - 268,900
the end of the year
Total number of equity
instruments exercisable at the end 11,974,530 3,246,400 1,715,250 297,000 - -
of the year
Range of exercise Exercise prices
prices and remaining of stock RMB15.54 RMB12.41 RMB12.41 RMB20.89 N/A RMB0
contractual life of the options
Company's stock
options outstanding at Remaining About 3 years About 2 years About 1.5 years About 2 years N/A About 1 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 N/A 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.
239 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(X) 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 2019 Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. (Draft) of
huanxu Electronics Co., Ltd. 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 17th meeting of the 5th board of
directors held on May 23, 2022 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 RMB12.67 per share to RMB 12.41 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%
240 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(X) 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 2022, the transfer price of the Company's core employee share ownership plan was
adjusted from RMB 12.67 per share to RMB 12.41 per share as a result of distribution of profits in 2021.
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%
241 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(X) 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.
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 2022, the transfer price of the Company's core employee share ownership plan was
adjusted from RMB 21.15 per share to RMB 20.89 per share as a result of distribution of profits in 2019.
Plan No. Granted by Grant date Vesting period Exercise period
Stock Option Incentive
Universal Scientific
Plan of Universal 9 September 2020 to 8 9 November 2021 to 8
Industrial 9 September 2020
Scientific Industrial November 2023 November 2024
(Shanghai) Co., 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.
242 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(X) 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 25
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.
243 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(X) 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.
244 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(X) SHARE-BASED PAYMENTS - continued
2. Equity-settled share-based payments
Unit: RMB
Stock Option
Stock Option Incentive Core Employee Share Stock Option Incentive Core Employee Share Core Employee Share
Incentive Plan of
Plan of Universal Ownership Plan of Plan of Universal Ownership Plan of Ownership Plan of
Universal 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., Ltd.
2019 Co., Ltd. in 2019 2020 Co., Ltd. in 2020 Co., Ltd. in 2021
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 When the optionee
reaches the exercise reaches the exercise When the optionee
When the optionee When the optionee When the optionee
period in the stock period in the stock reaches the exercise
reaches the exercise reaches the exercise reaches the exercise
options plan and options plan and period in the stock
The basis of period in the stock period in the stock period in the stock
meets the meets the options plan and meets
determining the options plan and meets options plan and meets options plan and meets
performance performance the performance
number of equity the performance the performance the performance
assessment in the assessment in the assessment in the
instruments assessment in the assessment in the assessment in the
company and company and company and individual
expected to be company level, and the individual level, and the individual level, and the
individual level, and individual level, and level, and the
vested corresponding equity corresponding equity corresponding equity
the corresponding the corresponding corresponding equity
instrument is that instrument is that instrument is that
equity instrument is equity instrument is instrument is that
expected to be vested expected to be vested expected to be vested
that expected to be that expected to be expected to be vested
vested 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 98,558,000.00 743,000.00 7,087,000.00 7,401,000.00 3,061,000.00
payments
accumulated in
capital reserve
Total expenses
recognized
arising from
equity-settled
- 17,163,000.00 180,000.00 1,908,000.00 553,000.00 2,373,000.00
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
RMB 15.54 RMB 13.34 RMB 13.34 RMB 21.65 RMB 0 RMB 0
share price
Weighted average
RMB 15.54 RMB 13.34 RMB 13.34 RMB 21.65 RMB 0 RMB 0
exercise price
Expected volatility 40.33%~45.00% 45.07%~51.8% 47.77% 48.14%~53.57% 57.21% 47.15%
1.5 years ~ 3.5 2.17 years ~ 4.17
Expected life 6 years ~ 7.5 years 3 years ~ 5 years 1.33 years 1.33 years
years 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
0.87% 0.00% 0.00% 0.00% 0.00% 0.00%
yield
Expected volatility is calculated based on the volatility of the share prices of similar companies during the past
certain years. Expected life used in the model is based on the best estimate of management after the adjustments
of the effects of inconvertibility, exercise restriction and exercise pattern.
3. In this year, the Group has no cash-settled share-based payments.
4. In this year, the Group has no modification to or termination of share-based payments.
245 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XI) 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 874,884 224,350
- External investment commitment (Note) 98,171 92,757
Total 973,055 317,107
Note: For the commitment of foreign investment, according to the partnership agreement concluded between UGE
and the PHI FUND, L.P., UGE needs to pay a total subscription amount of USD 25,000,000.00, in which the
amount of USD 3,754,206.00, equivalent to RMB 26,169,261.04 has been paid this period. As at 31 December
2022, the Group has paid USD 18,754,206.00, equivalent to RMB 130,615,543.11 in total; but remains a
subscription amount of USD 6,245,794.00, equivalent to RMB 43,499,456.89 unpaid.
For the commitment of foreign investment, according to the partnership agreement concluded between the
Company and Yaotu Fund, the Company needs to pay a total subscription amount of RMB 30,000,000.00, in
which the amount of RMB 11,000,000.00 has been paid this period. As at 31 December 2022, the Group has paid
RMB 12,000,000.00 in total; but remains a subscription amount of RMB 18,000,000.00 unpaid.
For the commitment of foreign investment, according to the partnership agreement concluded between the UGSI
and Meilu Industry, UGSI needs to pay a total subscription amount of TWD 191,100,000.00, in which the amount
of TWD 29,400,000.00, equivalent to RMB 6,622,070.14 has been paid this period. As at 31 December 2022, the
Group has paid TWD 29,400,000.00, equivalent to RMB 6,622,070.14 in total; but remains a subscription amount
of TWD 161,700,000.00, equivalent to RMB 161,700,000.00 unpaid.
2. Contingencies
The Group has no significant contingencies to be disclosed.
(XII) EVENTS AFTER THE BALANCE SHEET DATE
1. Disposal of joint venture Company by wholly-owned subsidiary
Universal Global Technology (Kunshan) Co., Ltd., a wholly-owned subsidiary of the Company, signed the
equity transfer agreement of SUMA-USI Electronics Co., Ltd on January 19, 2023 with an independent third
party, Zhongke Controllable Information Industry Co., LTD.. Universal Global Technology (Kunshan) Co.,
Ltd., intends to transfer 49% of its equity in SUMA to Zhongke at a price of RMB 111 million. This equity
transfer has been considered by the board of directors of Universal Global Technology (Kunshan) Co., Ltd., and
approved by the shareholders' decision. It does not need to be submitted to the board of directors of the
Company or the general meeting of shareholders for deliberation.
SUMA has completed the registration procedures for industrial and commercial change of the above equity
transfer matters, and obtained the business license issued by Kunshan Administrative Examination and
Approval Bureau. Universal Global Technology (Kunshan) Co., Ltd. has received all the controllable payment
of the equity transfer from Zhongke. The equity transfer has been completed, and Universal Global Technology
(Kunshan) Co., Ltd. no longer holds the equity of SUMA.
246 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XII) EVENTS AFTER THE BALANCE SHEET DATE - continued
2. Proposed acquisition
Universal Global Technology Co., Limited (“UGT”), a wholly owned subsidiary of Universal Scientific
Industrial (Shanghai) Co., Ltd., together with Ample Trading, Co., Ltd (“Ample Trading"), has announced the
establishment of a SPV with a registered capital of US$53 million. UGT will own 75.1% of the SPV shares and
Ample Trading owns the remaining 24.9%. The SPV will acquire the automotive wireless business unit (“Target
Business”) from TE Connectivity Ltd. with the enterprise value of US$48 Million. The purchasing price will be
subject to adjustment based on net debt and net working capital of the Target Business on the closure date and
will be settled in cash. The transaction has been approved by the Board of Director from Universal Scientific
Industrial (Shanghai) Co., Ltd on March 17, 2023. The closure of the transaction is pending on applicable
regulatory approvals from respective countries where the Target Business operates.
3. Profit appropriation
As proposed by the resolution of the Twenty-second Meeting of the Fifth Session of the Board of Directors of the
Company held on 31 March 2023, a cash dividend of RMB 4.30 (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.
247 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XIII) OTHER SIGNIFICANT EVENTS
1. Segment reporting
(1) Determination basis and accounting policies of reporting segments
Based on the Group's internal organization structure, management requirements and internal reporting system, the operations of the Group are classified into 4 reporting segments
according to the manufacturing location, which are Chinese mainland, APAC (Exclude China mainland), Europe and other countries/regions. At the same time, the products are
divided into communication products, consumer electronics products, cloud and storage products, industrial products, automotive electronics products and other products according
to categories in each region. These report segments are recognized on the basis of manufacturing location and product category. The Group's management periodically evaluates the
operating results of these reporting segments to make decisions about resources to be allocated to the segments and assess their performance.
Segment information is disclosed in accordance with the accounting policies and measurement criteria adopted by each segment when reporting to management. The measurement
criteria are consistent with the accounting and measurement criteria in the preparation of the financial statements. Due to the changes in the Group's internal organizational
structure in 2022, which resulted in changes in the composition of reporting segments, the Group restated the previous data.
(2) Financial information of reporting segments
2022
Unit: RMB’000
Chinese mainland APAC Europe Other countries/regions Inter-segment offsetting Total
Operating Operating Segment Operating Operating Segment Operating Operating Segment Operating Operating Segment Operating Operating Segment Operating Operating Segment
income costs amount income costs amount income costs amount income costs amount income costs amount income costs amount
Communication products 16,378,602 14,694,376 1,684,226 9,237,926 8,730,276 507,650 139,768 141,232 (1,464) 15,214 15,447 (233) (250,653) (367,689) 117,036 25,520,857 23,213,642 2,307,215
Consumer electronics products 18,660,706 17,020,810 1,639,896 4,332,081 4,017,618 314,463 267,061 255,684 11,377 62,970 67,775 (4,805) (1,424,703) (1,401,544) (23,159) 21,898,115 19,960,343 1,937,772
Cloud and storage products 4,760,525 4,107,830 652,695 4,153,783 3,774,252 379,531 231,058 221,886 9,172 136,574 118,894 17,680 (2,292,472) (2,302,866) 10,394 6,989,468 5,919,996 1,069,472
Industrial products 3,899,800 3,431,389 468,411 4,303,194 3,711,265 591,929 2,068,750 1,816,800 251,950 1,579,930 1,431,205 148,725 (3,084,277) (3,040,655) (43,622) 8,767,397 7,350,004 1,417,393
Automotive electronics products 1,231,639 1,060,654 170,985 362,728 287,954 74,774 745,870 675,172 70,698 2,220,442 2,163,991 56,451 (8,732) (20,131) 11,399 4,551,947 4,167,640 384,307
Medical products 15,652 8,460 7,192 - - - 120,642 111,608 9,034 845 840 5 - - - 137,139 120,908 16,231
Others 311,777 300,918 10,859 521,226 222,848 298,378 112,834 94,627 18,207 186,567 148,907 37,660 (527,233) (176,066) (351,167) 605,171 591,234 13,937
Principal operating income/cost
45,258,701 40,624,437 4,634,264 22,910,938 20,744,213 2,166,725 3,685,983 3,317,009 368,974 4,202,542 3,947,059 255,483 (7,588,070) (7,308,951) (279,119) 68,470,094 61,323,767 7,146,327
of segment
Other operating income/cost of
40,927 438 40,489 7,045 3,036 4,009 18,651 - 18,651 1,454 - 1,454 (22,095) (166) (21,929) 45,982 3,308 42,674
segment
Total operating income/cost of
45,299,628 40,624,875 4,674,753 22,917,983 20,747,249 2,170,734 3,704,634 3,317,009 387,625 4,203,996 3,947,059 256,937 (7,610,165) (7,309,117) (301,048) 68,516,076 61,327,075 7,189,001
segment
Less: Taxes and levies 54,963 1,392 (1,946) 1,021 - 55,430
Selling expenses 165,324 116,802 35,545 45,684 (39,521) 323,834
Administrative expenses 581,932 653,258 165,523 123,364 (102,228) 1,421,849
R&D expenses 1,586,715 557,384 996 18,609 (129,242) 2,034,462
Financial expenses (120,183) 67,602 32,606 39,574 (735) 18,864
Including: Interest expenses 166,294 - 33,280 5 35,421 235,000
Interest income 93,928 - 7,798 - (13,729) 87,997
Add: Other income 50,968 200 4,977 - - 56,145
Investment income 21,633 113,200 3,797 - - 138,630
Including: Investment
income from associates 23,809 49,722 - - - 73,531
and joint ventures
Gains (losses) from changes
11,621 (795) 21,013 - - 31,839
in fair value
Gains (losses) from credit
(6,354) (3,476) (1) (286) - (10,117)
impairment
Gains (losses) from assets
(52,532) (40,317) 13,510 (19,531) - (98,870)
impairment
Gains (losses) from disposal
6,348 725 1,431 111 - 8,615
of assets
248 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Operating income 2,437,686 843,833 199,628 8,979 (29,322) 3,460,804
Net profit 2,222,971 691,676 176,142 190 (30,989) 3,059,990
(XIII) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Financial information of reporting segments - continued
2021(Restated):
Unit: RMB’000
Chinese mainland APAC Europe Other countries/regions Inter-segment offsetting Total
Operating Operating Segment Operating Operating Segment Operating Operating Segment Operating Operating Segment Operating Operating Segment Operating Operating Segment
income costs amount income costs amount income costs amount income costs amount income costs amount income costs amount
Communication products 12,743,055 11,600,159 1,142,896 8,230,772 8,017,506 213,266 134,312 134,848 (536) 1,003 2,252 (1,249) (136,622) (189,509) 52,887 20,972,520 19,565,256 1,407,264
Consumer electronics products 17,456,916 15,933,736 1,523,180 2,235,054 2,087,473 147,581 225,057 232,589 (7,532) 88,141 79,314 8,827 (1,491,833) (1,491,425) (408) 18,513,335 16,841,687 1,671,648
Cloud and storage products 3,393,072 2,827,357 565,715 2,522,317 2,345,820 176,497 246,115 234,836 11,279 21,839 40,185 (18,346) (1,228,922) (1,218,191) (10,731) 4,954,421 4,230,007 724,414
Industrial products 3,461,571 3,077,203 384,368 4,072,604 3,442,420 630,184 1,455,330 1,310,102 145,228 1,170,153 1,106,946 63,207 (2,694,570) (2,687,837) (6,733) 7,465,088 6,248,834 1,216,254
Automotive electronics products 980,758 852,615 128,143 123,458 109,548 13,910 408,633 318,359 90,274 1,161,091 1,206,991 (45,900) (31,169) (42,792) 11,623 2,642,771 2,444,721 198,050
Medical products 29,779 30,094 (315) - - - 159,361 147,074 12,287 1,139 1,019 120 - - - 190,279 178,187 12,092
Others 234,398 177,183 57,215 384,218 161,022 223,196 174,408 164,662 9,746 99,921 49,515 50,406 (377,758) (82,905) (294,853) 515,187 469,477 45,710
Principal operating income/cost
38,299,549 34,498,347 3,801,202 17,568,423 16,163,789 1,404,634 2,803,216 2,542,470 260,746 2,543,287 2,486,222 57,065 (5,960,874) (5,712,659) (248,215) 55,253,601 49,978,169 5,275,432
of segment
Other operating income/cost of
24,048 330 23,718 6,430 3,239 3,191 94 - 94 22,660 12,888 9,772 (7,179) (13,147) 5,968 46,053 3,310 42,743
segment
Total operating income/cost of
38,323,597 34,498,677 3,824,920 17,574,853 16,167,028 1,407,825 2,803,310 2,542,470 260,840 2,565,947 2,499,110 66,837 (5,968,053) (5,725,806) (242,247) 55,299,654 49,981,479 5,318,175
segment
Less: Taxes and levies 42,271 1,263 6,088 196 - 49,818
Selling expenses 186,704 100,057 30,754 31,044 (37,078) 311,481
Administrative expenses 474,417 538,330 147,812 66,930 (58,316) 1,169,173
R&D expenses 1,226,244 503,732 1,305 12,677 (102,559) 1,641,399
Financial expenses 78,559 40,816 62,470 22,311 (757) 203,399
Including: Interest expenses 120,745 7,212 34,371 48,331 (9,330) 201,329
Interest income 77,163 47,006 2,407 (39,666) (19,130) 67,780
Add: Other income 42,837 238 7,603 - - 50,678
Investment income 79,307 34,669 (2,297) - - 111,679
Including: Investment
income from associates 6,223 - - 15,894 - 22,117
and joint ventures
Gains (losses) from changes
13,686 2,056 28,845 1 - 44,588
in fair value
Gains (losses) from credit
4,098 843 (1,378) (5,270) - (1,707)
impairment
Gains (losses) from assets
5,473 (11,853) (830) (11,536) - (18,746)
impairment
Gains (losses) from disposal
764 93 (18) 1,576 - 2,415
of assets
Operating income 1,962,890 249,673 44,336 (81,550) (43,537) 2,131,812
Net profit 1,777,455 163,810 38,666 (102,355) (20,883) 1,856,693
249 / 264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XIII) OTHER SIGNIFICANT EVENTS - continued
1. Segment reporting - continued
(2) Financial information of reporting segments - continued
Closing balance
Unit: RMB’000
Chinese Other Inter-segment
APAC Europe Total
mainland countries/regions offsetting
Total assets of
24,068,401 13,851,252 4,028,528 2,876,723 (6,830,329) 37,994,575
segment
Total liabilities
13,507,297 11,683,792 2,526,013 2,232,858 (7,125,334) 22,824,626
of segment
Opening balance (Restated)
Unit: RMB’000
Chinese Other Inter-segment
APAC Europe Total
mainland countries/regions offsetting
Total assets of
22,846,979 12,948,072 3,389,443 2,278,839 (6,245,995) 35,217,338
segment
Total liabilities
13,528,439 11,926,330 2,309,205 1,737,747 (6,727,353) 22,774,368
of segment
External revenue by geographical area of source and non-current assets by geographical location of assets
Unit: RMB
Item 2022 2021
External revenue from Chinese mainland 1,733,001,923.45 1,849,642,217.15
External revenue outside Chinese mainland 66,783,074,039.81 53,450,012,553.06
Total 68,516,075,963.26 55,299,654,770.21
Unit: RMB
Item (Note) Closing balance Opening balance
Non-current assets located in Chinese mainland 4,130,752,349.05 3,670,766,522.73
Non-current assets located in Taiwan, China 879,674,910.08 716,969,088.71
Non-current assets located in France 783,616,987.49 861,843,609.68
Non-current assets located in Mexico 597,971,635.46 466,431,691.41
Non-current assets located in the Vietnam 477,280,704.05 367,247,653.39
Non-current assets located in Poland 127,510,885.44 134,049,045.77
Non-current assets located in Hong Kong 111,106,156.13 428,342,492.16
Non-current assets located in the United States 35,275,209.48 76,599,618.11
Non-current assets located in Japan 182,102.16 385,937.29
Total 7,143,370,939.34 6,722,635,659.25
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
2022 2021
Customer name Proportion in total
Total operating Total operating Proportion in total
operating income
income income operating income (%)
(%)
Entity A 17,352,642,463.15 25.33 18,036,500,419.83 32.62
Entity B 9,003,192,184.06 13.14 8,388,844,842.56 15.17
Total 26,355,834,647.21 38.47 26,425,345,262.39 47.79
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.
250 /264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XIV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL STATEMENTS
1. Notes receivable
(1) Categories of notes receivable
Unit: RMB
Category 31/12/2022 31/12/2021
Bank acceptances 39,485,239.31 66,256,985.55
(2) As of 31 December 2022, the Company had no notes receivable that have been pledged as security.
(3) As of 31 December 2022, 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 2022, the Company had no notes that were converted to accounts receivable due to
the default of the issuer.
(5) As of 31 December 2022, 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) In 2022, the Company had no notes receivable that have been actually written off.
2. Accounts receivable
(1) Categories of accounts receivable
Unit: RMB
Category 31/12/2022 31/12/2021
Accounts receivable arising from contracts with customers 2,825,168,124.93 3,902,506,561.61
Less: Bad debt provision 3,724,156.78 66,007.59
Total 2,821,443,968.15 3,902,440,554.02
(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 2022, the credit risk and expected credit losses on accounts receivable were as follows:
Unit: RMB
31/12/2022
Aging
Expected average loss rate (%) Book value Bad debt provision Carrying amount
Within the credit term 0.02 2,707,985,122.08 620,333.97 2,707,364,788.11
1-30 days overdue 0.44 107,499,766.35 470,944.46 107,028,821.89
31-60 days overdue 10.41 6,262,253.85 651,595.61 5,610,658.24
60-90 days overdue 40.89 2,435,808.79 996,108.88 1,439,699.91
90-180 days overdue 100.00 170,800.05 170,800.05 -
Over 180 days overdue 100.00 814,373.81 814,373.81 -
Total 0.13 2,825,168,124.93 3,724,156.78 2,821,443,968.15
251 /264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XIV) 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 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
60-90 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
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 2022, the Group's valuation
method and significant assumptions remain unchanged.
(3) Changes in bad debt provisions
Unit: RMB
Changes for the year
Category 31/12/2021 31/12/2022
Provision (Reversal) Write-off or elimination
Bad debt provisions by ageing matrix 66,007.59 3,658,149.19 - 3,724,156.78
(4) There are no accounts receivable that have been actually written off in the year.
(5) Top five accounts receivable at 31 December 2022 categorized by debtor
Unit: RMB
Proportion of the
Relationship with Bad debt provision at 31 total accounts
Company name Book value
the Company December 2022 receivable at 31
December 2022(%)
Company B Third party 999,824,000.06 229,035.52 35.39
Company A Third party 527,705,880.79 120,884.67 18.68
Company E Third party 304,045,231.90 69,649.42 10.76
Company P Third party 288,926,674.76 66,186.12 10.23
Company Q Third party 103,223,783.85 23,646.08 3.65
Total 2,223,725,571.36 509,401.81 78.71
(6) As at 31 December 2022, there is no accounts receivable derecognized due to the transfer of financial assets.
(7) As at 31 December 2022, there is no amount of assets and liabilities arising from transfer of accounts
receivable and continuing involvement.
252 /264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XIV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL STATEMENTS -
continued
3. Other receivables
(1) Disclosure of other receivables by aging
Unit: RMB
31/12/2022
Aging
Amount Bad debt provision Proportion of provision (%)
Within 1 year 1,060,187,690.24 - -
(2) Classification by the nature of other receivables
Unit: RMB
Nature of other receivables Book value at 31/12/2022 Book value at 31/12/2021
Cash pooling receivables from related-
1,022,345,000.00 624,818,600.00
party
Amounts due from related parties 24,416,766.00 2,370,349.91
Advances for third parties 9,316,988.52 5,333,890.23
Advance payments for employees 1,638,532.17 1,487,451.18
Others 2,470,403.55 1,373,585.36
Total 1,060,187,690.24 635,383,876.68
(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 2022, there were no other receivables related to government grants.
(6) As of 31 December 2022, there were no other receivables derecognized due to the transfer of financial
assets.
(7) As of 31 December 2022, there was no amount of assets and liabilities arising from transfer of other
receivables and continuing involvement.
253 /264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XIV) 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 Explanation of the
Proportion
Proportion inconsistency
of the
Accountin of the between the
ownership
g Increase from voting proportions of the Cash dividends for
Investee 1/1/2022 Decrease in the 31/12/2022 interest
methodolo Increase in the year stock option power held ownership interest this year
yea held in
gy grants (Note) in investee and the voting
investee
(%) power in the
(%)
investee
Universal Global
Cost
Technology Co., 2,189,945,957.00 1,057,857,700.00 451,171,800.00 - 2,796,631,857.00 100 100 N/A -
method
Limited
The remaining
50% equity
interest is held by
USI Electronics Universal Global
Cost
(Shenzhen) Co., 392,321,150.63 - - 3,310,410.53 395,631,561.16 50 100 Technology Co., -
method
Ltd. Limited, the
Company's
wholly-owned
subsidiary.
Universal Global
Technology Cost
267,069,941.80 - - 2,760,067.08 269,830,008.88 100 100 N/A -
(Kunshan) Co., method
Ltd.
Universal Global
Technology Cost
1,347,919,209.40 - - 2,319,863.92 1,350,239,073.32 100 100 N/A 200,000,000.00
(Shanghai) Co., method
Ltd.
Universal Global
Electronics Cost
50,000,000.00 - - - 50,000,000.00 100 100 N/A -
(Shanghai) Co., method
Ltd.
The 100% equity
interest is held by
Universal Global Universal Global
Scientific Technology Co.,
N/A 130,546,923.27 - - 9,147,609.22 139,694,532.49 N/A N/A -
Industrial Co., Limited, the
Ltd. Company's
wholly-owned
subsidiary.
Universal Global
Technology Cost
455,920,090.82 340,000,000.00 - - 795,920,090.82 100 100 N/A -
(Huizhou) Co., method
Ltd.
The remaining
89.58% equity
interest is held by
Universal Global
Cost
FAFG 393,342,321.82 - - - 393,342,321.82 10.42 100 Technology Co., -
method
Limited, the
Company's
wholly-owned
subsidiary.
The company
holds 1/3 voting
Questyle Audio
Equity rights on the
Technology Co., - 20,000,000.00 - - 20,000,000.00 6.67 33.33 -
method board of directors
Ltd.
of Kuangshi
Technology
Total 5,227,065,594.74 1,417,857,700.00 451,171,800.00 17,537,950.75 6,211,289,445.49 200,000,000.00
Note: The amount refers to the cumulative amount related to share-based payments settled under equity arising
from the stock option incentive plan offered by the Company to relevant personnel of USI Electronics
(Shenzhen) Co., Ltd., Universal Global Technology (Kunshan) Co., Ltd., Universal Global Technology
(Shanghai) Co., Ltd. and UGSI.
As at 31 December 2022, the ability of the investee, in which the Company holds long-term equity investments,
to transfer funds to the Company is not restricted.
5. Operating income and operating costs
(1) Operating income and operating costs
Unit: RMB
Amount incurred in the current year Amount incurred in the prior year
Item
Income Cost Income Cost
Principal operating
activities
21,940,574,129.19 19,815,647,848.13 18,331,017,029.05 16,637,068,444.96
Other operating
activities
4,198,651.53 437,487.30 4,114,711.66 120,186.64
Total 21,944,772,780.72 19,816,085,335.43 18,335,131,740.71 16,637,188,631.60
254 /264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XIV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL STATEMENTS -
continued
5. Operating income and operating costs - continued
(2) Analysis of principal operating income and principal operating costs by product categories:
Unit: RMB
Amount incurred in the current year Amount incurred in the prior year
Item Principal operating Principal operating Principal operating Principal operating
income costs income costs
Communication
15,191,008,208.22 13,667,867,543.85 12,086,981,745.92 11,027,496,344.34
products
Consumer
5,717,448,527.15 5,359,883,891.18 5,315,414,614.15 4,926,749,381.37
electronic products
Automotive
516,433,717.74 449,999,555.30 407,360,175.63 351,751,177.93
electronic products
Cloud and storage
476,467,425.39 319,730,739.42 494,840,322.98 318,826,137.31
products
Others 39,216,250.69 18,166,118.38 26,420,170.37 12,245,404.01
Total 21,940,574,129.19 19,815,647,848.13 18,331,017,029.05 16,637,068,444.96
(3) Other business income and other business costs:
Unit: RMB
Item Amount incurred in the current year Amount incurred in the prior year
Other business Other business costs Other business Other business
income income costs
Scrap income 3,529,375.67 - 3,598,507.79 -
Others 669,275.86 437,487.30 516,203.87 120,186.64
Total 4,198,651.53 437,487.30 4,114,711.66 120,186.64
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 200,000,000.00 1,175,000,000.00
Investment income (loss) on disposal of held-for-trading
(16,431,372.22) 41,843,686.33
financial assets
Total 183,568,627.78 1,216,843,686.33
255 /264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XIV) NOTES TO MAJOR ITEMS IN THE PARENT COMPANY'S FINANCIAL STATEMENTS -
continued
7. Supplementary information to the cash flow statement
Unit: RMB
Supplementary information 2022 2021
1. Reconciliation of net profit to cash flow from operating
activities:
Net profit 1,240,761,622.97 1,953,944,271.08
Add: Provision for impairment losses of assets (5,135,027.84) 3,920,601.29
Provision for impairment of credit 3,658,149.19 (149,203.74)
Depreciation of fixed assets 325,404,686.37 270,000,465.98
Depreciation of right-of-use assets 13,245,317.94 13,036,830.13
Amortization of intangible assets 1,671,457.54 1,419,871.53
Amortization of long-term prepaid expenses 15,118,605.25 21,476,416.14
Amortization of deferred income (7,777,540.47) (14,487,455.41)
Losses (gains) on disposal of fixed assets, intangible assets
3,869,844.98 (277,783.36)
and other long-term assets
Losses (gains) on changes in fair values (12,430,908.18) (14,537,089.99)
Financial expenses (income) 88,163,427.23 149,695,634.97
Losses (gains) arising from investments (183,568,627.78) (1,216,843,686.33)
Share-based payments settled by equity 4,639,049.25 11,276,158.19
Decrease (increase) in deferred tax assets (18,278,697.09) (23,331,326.08)
Decrease (increase) in inventories (469,566,071.14) (274,392,854.67)
Decrease (increase) in receivables from operating activities 1,136,828,855.87 (364,746,551.48)
Increase (decrease) in payables from operating activities (603,868,897.93) 78,047,498.94
Net cash flow from operating activities 1,532,735,246.16 594,051,797.19
2. Significant investing and financing activities that do not
involve cash receipts and payments:
Acquisition of long-term assets with debt 80,278,018.89 352,812,380.40
3. Net changes in cash and cash equivalents:
Closing balance of cash 2,382,458,769.33 2,490,051,993.72
Less: Opening balance of cash 2,490,051,993.72 1,347,901,732.05
Add: Closing balance of cash equivalents - -
Less: Opening balance of cash equivalents - -
Net increase in cash and cash equivalents (107,593,224.39) 1,142,150,261.67
256 /264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XIV) 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 (VI). 1. The details of the associates and
joint ventures of the Company are set out in Note (VI). 2. The details of other related parties are set out in Note
(IX). 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 prior
Related party transaction current year year
Universal Global Technology Co.,
Limited
Purchase of materials 564,271,324.02 568,153,489.57
ASE Electronics Inc. Purchase of materials 6,991,678.67 5,994,201.48
Universal Scientific Industrial De México
Purchase of materials 2,219,919.09 653,887.18
S.A. De C.V.
Universal Global Technology (Kunshan)
Purchase of materials 756,062.09 2,040,667.28
Co., Ltd.
Universal Global Technology (Shanghai)
Purchase of materials 691,999.45 254,978.42
Co., Ltd.
Universal Global Industrial Co., Ltd. Purchase of materials 283,743.20 3,575,706.92
USI Electronics (Shenzhen) Co., Ltd. Purchase of materials 25,235.86 21,271.35
Taitech Precision Electronic (Kunshan)
Purchase of materials 18,750.00 5,548.00
Co., Ltd.
Universal Global Technology (Huizhou)
Purchase of materials 857.24 -
Co., Ltd
Universal Scientific Industrial
Purchase of materials 24.75 -
Vietnam Company Limited
ASE Advanced Semiconductor
Purchase of materials - 567,548.09
(Shanghai) Limited (Note)
ASE Inc. Purchase of materials - 254,237.55
Total 575,259,594.37 581,521,535.84
Universal Global Scientific Industrial Co.,
Test service fee 39,094,987.33 60,434,620.49
Ltd.
Universal Global Scientific Industrial Co.,
Commissions 34,805,569.75 8,497,870.63
Ltd.
ASE (Shanghai) Inc. Receipt of services 25,186,628.73 25,363,860.80
Universal Global Technology (Shanghai)
Receipt of services 17,945,841.10 -
Co., Ltd
Universal Global Technology Co.,
Receipt of services 16,119,880.00 11,577,370.00
Limited
USI Science and Technology (Shenzhen)
Receipt of services 3,867,924.58 3,981,132.13
Co., Ltd.
SHANGHAI DINGXU PROPERTY
Receipt of services 1,899,206.09 1,953,179.19
MANAGEMENT CO., LTD
Asteelflash Suzhou Co., Ltd. Receipt of services 173,673.77 -
USI Japan Co.,Ltd. Receipt of services 85,853.67 -
ASE Inc. Receipt of services 990.42 -
Total 139,180,555.44 111,808,033.24
The above transactions are executed at the prices agreed on by both parties.
257 /264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XIV) 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 the Amount incurred in the prior
Related party party transaction current year year
Universal Global Industrial Co., Ltd. Sales of goods 652,865,047.32 327,749,153.96
Universal Global Technology (Shanghai)
Sales of goods 117,936,343.91 96,252,005.06
Co., Ltd.
Universal Global Technology (Kunshan)
Sales of goods 1,195,481.14 1,496,435.78
Co., Ltd
Universal Global Technology Co., Limited Sales of goods 486,427.96 77,760,751.81
Universal Scientific Industrial De México
Sales of goods 385,896.66 5,663,804.25
S.A. De C.V.
USI Electronics (Shenzhen) Co., Ltd. Sales of goods 96,137.78 23,291.50
Universal Global Technology (Huizhou)
Sales of goods 61,130.81 -
Co., Ltd
Universal Scientific Industrial Poland Sp. z
Sales of goods - 13,879.96
o.o.
FINANCIRE AFG S.A.S. Sales of goods - 1,715.83
Total 773,026,465.58 508,961,038.15
Universal Global Technology (Kunshan)
Provision of services 10,188,814.82 10,092,815.02
Co., Ltd.
FINANCIERE AFG Provision of services 3,304,239.50 -
ISE labs, China. Ltd. Provision of services 1,048,388.07 611,327.88
Universal Global Technology (Shanghai)
Provision of services 431,331.00 -
Co., Ltd
Universal Scientific Industrial De México
Provision of services 14,381.27 -
S.A. De C.V.
Asteelflash Suzhou Co., Ltd. Provision of services 10,645.96 -
Universal Global Scientific Industrial Co.,
Provision of services 10,631.75 3,206.33
Ltd.
ASE Inc. Provision of services - 12,374.95
ASE Advanced Semiconductor (Shanghai)
Provision of services - 4,500.00
Limited (Note)
Total 15,008,432.37 10,724,224.18
The above transactions are executed at the prices agreed on by both parties.
258 /264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XIV) 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
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
Universal Global Technology (Shanghai) Co., Ltd. Machinery and equipment 165,236.06 49,285.70
Wuxi Tongzhi Microelectronics Co.,Ltd. Machinery and equipment 33,186.96 -
ISE labs, China. Ltd. Office - 200,510.00
ASE Advanced Semiconductor (Shanghai) Limited
Machinery and equipment - 105,000.00
(Note)
Total 198,423.02 354,795.70
The above transactions are executed at the prices agreed on by both parties.
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 - 3,080,155.98
premises
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 - 3,668,609.46
premises
The above transactions are executed at the prices agreed on by both parties.
Unit: RMB
Type of leased Short-term lease Short-term lease payments for
Name of lessor assets payments for the year prior year
Universal Global Technology (Shanghai) Co., Machinery and
- 210,232.57
Ltd. equipment
The above transactions are executed at the prices agreed on by both parties.
259 /264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XIV) 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
Unit: RMB
Annual interest Amount incurred in the current year Amount at the end of the year
Related party
rate Amount lent Amount collected Amount
Lent to - Cash pool trading (Note 1)
Universal Scientific
One month Libor
Industrial Vietnam 406,815,000.00 526,955,600.00 313,407,000.00
+40 basis points
Company Limited
Universal Scientific
One month Libor
Industrial De México 208,404,000.00 190,737,000.00 208,938,000.00
+40 basis points
S.A. De C.V.
Universal Global
Technology 2.40% 500,000,000.00 - 500,000,000.00
(Huizhou) Co., Ltd
Unit: RMB
Annual interest Amount incurred in the current year Amount at the end of the year
Related party
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.
The interest income for 2022 is RMB 15,133,142.87 (2021: RMB 762,855.43), and the interest not received at the end of the
year is RMB 2,224,305.55 (December 31, 2021: none).
Unit: RMB
Amount at the end of the
Annual Amount incurred in the prior year
Related party prior year
interest rate
Amount borrowed Amount repaid Amount
Borrowed from - Cash pool trading (Note )
USI Electronics
(Shenzhen) Co., Ltd.
1.75% - 782,697,200.00 -
Universal Global
Technology (Shanghai) 0.60% - 97,873,500.00 -
Co., Ltd.
There are no interest paid in this year (2021: RMB 2,620,456.27), and the outstanding interest at the end of
the year was RMB 0 (31 December 2021: None).
Note : The Company entered into a cash pool entrustment loan agreement with the bank for entrusted loans in
which the Company is the leading party and Universal Global Technology (Shanghai) Co., Ltd., USI
Electronics (Shenzhen) Co., Ltd., Universal Global Technology Co., Limited, Universal Global
Technology (Kunshan) Co., Ltd, Universal Global Technology (Huizhou) Co., Ltd, Universal Scientific
Industrial Vietnam Company Limited and Universal Scientific Industrial De México S.A. De C.V. are
participants,
260 /264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XIV) 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 the Amount incurred in the prior
Related party
transaction current year year
Universal Global Technology (Shanghai)
Purchase of fixed assets 1,260,282.87 13,231,008.93
Co., Ltd.
Universal Global Technology (Kunshan)
Purchase of fixed assets 18,762.80 21,201.96
Co., Ltd.
Total 1,279,045.67 13,252,210.89
ISE labs, China. Ltd. Sales of fixed assets 46,507,299.26 10,071,875.88
Universal Global Technology (Shanghai)
Sales of fixed assets 34,547,905.39 35,820,700.83
Co., Ltd.
Universal Global Scientific Industrial Co.,
Sales of fixed assets 18,160,515.88 29,304.00
Ltd. (Note)
Universal Scientific Industrial Vietnam
Sales of fixed assets 8,243,515.42 25,213,949.19
Company Limited
ASE Test Inc. Sales of fixed assets - 12,545,380.16
ASE Inc. Sales of fixed assets - 3,478,999.00
Universal Global Technology (Kunshan)
Sales of fixed assets - 187,724.78
Co., Ltd.
ASE Advanced Semiconductor
Sales of fixed assets - 21,740.65
(Shanghai) Limited (Note)
Total 107,459,235.95 87,369,674.49
Universal Global Technology
Sales of intangible assets - 984,479.74
(Shanghai) Co., Ltd.
USI Electronics (Shenzhen) Co., Ltd. Sales of intangible assets - 232,446.60
Universal Global Technology
Sales of intangible assets - 150,406.63
(Kunshan) Co., Ltd.
Total - 1,215,545.31
Universal Global Technology (Shanghai)
Sales of molds - 1,945,670.63
Co., Ltd.
Note: Purchase fixed assets on behalf of Universal Global Industrial Co., Limited.
The above transactions are executed at the prices agreed on by both parties.
(2.5) Interest expenses with related parties
Unit: RMB
Details of related party Amount incurred in the Amount incurred in the
Related party
transaction current year prior year
Interest expenses on
USI Enterprise Limited 89,992,084.14 80,914,020.40
convertible bonds
Interest expenses on
ASE (Shanghai) Inc. 807,565.60 869,753.10
convertible bonds
Total 90,799,649.74 81,783,773.50
261 /264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XIV) 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 incurred in the Amount incurred
Item
current year in the prior year
Compensation for key management personnel 33,842,802.87 30,519,010.96
(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 UGSI. See Note (XIV) 4 for details.
(3). Amounts due from / to related parties
(3.1) Amounts due from related parties
Unit: RMB
31/12/2022 31/12/2021
Item Related party
Book value Book value
Accounts receivable Universal Global Industrial Co., Ltd. 218,657,223.78 196,438,433.79
Accounts receivable Universal Global Scientific Industrial Co., Ltd 56,152,778.81 -
Accounts receivable Universal Global Technology (Shanghai) Co., Ltd. 39,773,753.37 34,233,779.97
Accounts receivable Universal Global Technology (Kunshan) Co., Ltd. 559,780.66 353,769.09
Accounts receivable Universal Global Technology Co., Limited 484,931.23 132,622.23
Accounts receivable Universal Scientific Industrial De México S.A. De C.V. 244,884.82 462,683.64
Accounts receivable Universal Global Technology (Huizhou) Co., Ltd 19,324.78 -
Accounts receivable Asteelflash Suzhou Co., Ltd. 12,029.93 1,938.89
Accounts receivable USI Electronics (Shenzhen) Co., Ltd. - 1,436.31
Total 315,904,707.38 231,624,663.92
Unit: RMB
31/12/2022 31/12/2021
Item Related party
Book value Book value
Other receivables Universal Global Technology (Huizhou) Co., Ltd(Note) 502,224,305.55 -
Universal Scientific Industrial Vietnam Company
Other receivables 313,407,000.00 433,547,600.00
Limited (Note)
Universal Scientific Industrial De México S.A. De C.V.
Other receivables 208,938,000.00 191,271,000.00
(Note)
Other receivables Universal Global Scientific Industrial Co., Ltd 18,261,039.14 -
Other receivables Universal Global Technology (Shanghai) Co., Ltd 2,749,908.77 -
Other receivables FINANCIERE AFG 964,123.43 -
Other receivables ISE labs, China. Ltd. 217,389.11 192,606.48
Other receivables Universal Global Technology (Kunshan) Co., Ltd. - 2,177,743.43
Total 1,046,761,766.00 627,188,949.91
Note : The Company entered into a cash pool entrustment loan agreement with the bank for entrusted loans in
which the Company is the leading party and Universal Global Technology (Shanghai) Co., Ltd., USI
Electronics (Shenzhen) Co., Ltd., Universal Global Technology Co., Limited, Universal Global
Technology (Kunshan) Co., Ltd, Universal Global Technology (Huizhou) Co., Ltd, Universal Scientific
Industrial Vietnam Company Limited and Universal Scientific Industrial De México S.A. De C.V. are
participants.
262 /264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XIV) 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 31/12/2022 31/12/2021
Accounts payable Universal Global Technology Co., Limited 159,659,364.67 187,121,413.66
Accounts payable Universal Global Technology (Shanghai) Co., Ltd. 4,714,248.90 7,576,389.56
Accounts payable USI Science and Technology (Shenzhen) Co., Ltd. 2,210,000.00 1,170,000.00
Accounts payable ASE Electronics Inc. 1,015,416.04 472,446.13
Accounts payable Universal Global Industrial Co., Ltd. 193,507.72 797,128.16
Accounts payable Universal Global Scientific Industrial Co., Ltd. 192,671.97 -
Accounts payable FINANCIERE AFG 184,094.20 -
Accounts payable Universal Global Technology (Kunshan) Co., Ltd. 183,493.39 534,179.42
Accounts payable Universal Scientific Industrial De México S.A. De C.V. 26,900.92 327,441.04
Accounts payable Universal Global Technology (Huizhou) Co., Ltd 310.34 -
Accounts payable USI Electronics (Shenzhen) Co., Ltd. 61.46 4,186.46
Total 168,380,069.61 198,003,184.43
Unit: RMB
Item Related party 31/12/2022 31/12/2021
Other payables ASE (Shanghai) Inc. 3,363,353.48 2,035,944.03
Other payables USI Enterprise Limited 2,398,445.06 2,193,057.52
SHANGHAI DINGXU PROPERTY MANAGEMENT CO.,
Other payables 160,708.88 240,956.60
LTD
Other payables ASE Inc. 987.37 -
Total 5,923,494.79 4,469,958.15
Unit: RMB
Item Related party 31/12/2022 31/12/2021
Lease liabilities ASE Assembly & Test (Shanghai) Limited 57,933,008.48 70,337,306.54
Unit: RMB
Item Related party 31/12/2022 31/12/2021
Bonds payable USI Enterprise Limited 1,364,243,289.23 2,399,279,839.68
Bonds payable ASE (Shanghai) Inc. - 25,790,104.50
Total 1,364,243,289.23 2,425,069,944.18
263 /264
Universal Scientific Industrial (Shanghai) Co., Ltd.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(XV) SUPPLEMENTARY INFORMATION
1. Breakdown of non-recurring profit or loss for the current period
Unit: RMB
Item Amount Description
Profit or loss on disposal of non-current assets 2,724,930.03 See Notes (V), 57 and 59 for 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 56,144,655.78 See Notes (V), 52 for details
methods in accordance with the national standard)
Enterprise restructuring expenses, such as employee placement expenses, integration costs,
etc
(65,435,485.39)
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
assets, held-for-trading financial liabilities and available-for-sale financial assets, other than
96,937,973.50 See Notes (V), 53 and 54 for details
those used in the effective hedging activities relating to normal operating business
The impact of one-time adjustment of current profit and loss in accordance with tax,
accounting and other laws and regulations
(49,852,343.57) See Notes (V), 14 for details
Other non-operating income or expenses other than the above 22,281,394.77 See Notes (V), 58 and 59 for details
Tax effects (13,033,613.18)
Effects attributable to minority interests (After tax) (919.62)
Total 49,766,592.32
2. Return on net assets and earnings per share ("EPS")
The return on net assets and EPS have been prepared by Universal Scientific Industrial (Shanghai) Co., Ltd. in accordance
with Information Disclosure and Presentation Rules for Companies Making Public Offering of Securities No. 9 – Calculation
and Disclosure of Return on Net Assets and Earnings per Share (Revised 2010) issued by China Securities Regulatory
Commission.
Unit: RMB
Weighted average EPS
Profit for the reporting year return on net assets
Basic EPS Diluted EPS
(%)
Net profit attributable to ordinary shareholders of the Company 21.43% 1.40 1.35
Net profit after deduction of non-recurring profits or losses
attributable to ordinary shareholders of the Company
21.08% 1.38 1.32
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