2024 Annual Report
Stock Code: 601231 Abbreviated Name: USIConvertible Bond Code:113045 Abbreviated Name: USI Convertible Bond
Universal Scientific Industrial (Shanghai) Co., Ltd.
2024 Annual Report
Note: This Report has been prepared in both Chinese and English. Should there be any discrepancies ormisunderstandings between the two versions, the Chinese version shall prevail.
2024 Annual Report
Important NoticeI. The Board of Directors, the Board of Supervisors, directors, supervisors and seniormanagement of the Company hereby assure that the content set out in the annual report istruthful, accurate and complete, and contains no misrepresentations, misleading statements ormaterial omissions, and are individually and collectively responsible for the content set outtherein.
II. Absent directors
| Position of absent director | Name of absent director | Reason for absence | Name of trustee |
| Independent Director | Jiangdong Huang | Important Work Schedule Conflict | Yongtao Cang |
III. Deloitte Touche Tohmatsu Certified Public Accountants LLP has issued a standard unqualifiedaudit report for the Company.
IV. Jeffrey Chen, person in charge of the Company, Xinyu Wu, person in charge of accounting, andYuh-Huah Chern, person in charge of the accounting firm (accountant in charge) declare thatthe financial report in the annual report is truthful, accurate and complete.
V. The proposal of profit distribution for the reporting period deliberated and approved by the
Board of DirectorsUSI intends to distribute a dividend of RMB 2.3 yuan (tax included) for every 10 shares on the basis ofthe total share capital on the registration date of equity distribution minus the number of shares in itsspecial repurchase account, without giving bonus shares or capitalizing capital reserves, and all theremaining undistributed profits will be carried forward for distribution in the following years.?The Company's Profit Distribution Plan for 2024 was deliberated and approved at the Seventeenth Meetingof the Sixth Session of the Board of Directors of the Company, and it still needs to be deliberated at theCompany's 2024 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 materialcommitment 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?NoVIII. Is there any external guarantee in violation of the prescribed decision-making process?No
2024 Annual Report
IX. Are more than half of the directors unable to guarantee the truthfulness, accuracy andcompleteness of the annual report disclosed by the Company?No
X. Major risk disclosureThe major risks facing the Company are described in “Possible Risks” of “Discussion and Analysis ofCorporate Development in the Future” in this report.
XI. Others
□Applicable√ Not Applicable
2024 Annual Report
Contents
Section I Definitions ...... 5
Section II Company Profile and Key Financial Indicators ...... 7
Section III Management Discussion and Analysis ...... 12
Section IV Corporate Governance ...... 52
Section V Environmental and Social Responsibility ...... 82
Section VI Major Events ...... 92
Section VII Changes in Shares and Information of Shareholders ...... 110
Section VIII Information on Preferred Shares ...... 118
Section IX Information on Bonds ...... 119
Section X Financial Statements ...... 123
| Catalog of files for reference | 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 |
| Original audit report sealed by the accounting firm and signed and sealed by certified public accountants | |
| Original copies of all documents and announcements of the Company publicly disclosed in newspapers designated by CSRC during the reporting period |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Section I Definitions
I. DefinitionsIn this report, the following terms shall have the following meanings unless the context otherwiserequires:
| The Company, the Group, USI, or the listed company | Universal Scientific Industrial (Shanghai) Co., Ltd. |
| SSE | Shanghai Stock Exchange |
| USIE | USI Enterprise Limited, the controlling shareholder of the Company, registered in Hong Kong |
| Universal Scientific Industrial Co., Ltd. | Universal Scientific Industrial Co., Ltd., a company listed on the Taiwan Stock Exchange with the stock code 2350, which terminated its listing on June 17, 2010 |
| ASE Technology Holding | ASE Technology Holding Co., Ltd., a company listed on the Taiwan Stock Exchange with the stock code 3711 |
| ASE Inc. | Advanced Semiconductor Engineering, Inc., formerly listed on the Taiwan Stock Exchange with the stock code 2311 and delisted in 2018. |
| ASE Shanghai | ASE (Shanghai) Inc., a subsidiary of ASE Inc. in which it holds 100% shares |
| UGT | Universal Global Technology Co., Limited, a subsidiary of the Company in which the Company holds 100% shares, registered in Hong Kong |
| UGT Shanghai, Jinqiao Subsidiary, Jinqiao Factory | Universal Global Technology (Shanghai) Co., Ltd., a subsidiary of the Company in which the Company holds 100% shares |
| USI Shenzhen, Shenzhen Subsidiary, Shenzhen Factory | USI Electronics (Shenzhen) Co., Ltd., a subsidiary of the Company in which the Company holds 100% shares |
| UGT Kunshan, Kunshan Subsidiary, Kunshan Factory | Universal Global Technology (Kunshan) Co., Ltd., a wholly-owned subsidiary of the Company |
| UGE | Universal Global Electronics Co., Ltd., a subsidiary of the Company in which the Company holds 100% shares |
| UGT Huizhou, Huizhou Subsidiary, Huizhou Factory | Universal Global Technology (Huizhou) Co., Ltd., a subsidiary of the Company in which the Company holds 100% shares |
| UGSI | Universal Global Scientific Industrial Co., Ltd., registered in Taiwan, a subsidiary of the Company in which the Company holds 100% shares |
| USI Vietnam, Vietnam Subsidiary, Vietnam Factory | Universal Scientific Industrial Vietnam Company Limited, a subsidiary of the Company in which the Company holds 100% shares |
| FAFG | Financière AFG, a simplified joint stock company established and validly existing under the laws of France and a subsidiary of the Company in which the Company holds 100% shares |
| AFG | Asteelflash Group, a simplified joint stock company established and validly existing under the Laws of France. It is a subsidiary of FAFG in which FAFG holds 100% shares. Since January 1, 2022, it has been merged into its parent company FAFG. |
| FAFG Suzhou, Suzhou Factory | Asteelflash (Suzhou) Co., Ltd., a subsidiary of FAFG in which FAFG holds 100% shares |
| USI Poland, Poland Factory | Formerly known as Chung Hong Electronics Poland SP.Z. O.O; the Company completed the acquisition of 100% of its equity on June 22, 2020, and it was renamed Universal Scientific Industrial Poland Sp.z o.o. |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Memtech | Memtech International Ltd., which was listed on the Singapore Stock Exchange in 2004, and was delisted on August 22, 2019. The Company indirectly holds 42.23% of its equity. |
| Hirschmann | Hirschmann Car Communication Holding S.a.r.l., a limited liability company established in Luxembourg, is headquartered in Germany and has production sites in Germany, Hungary and China. USI and Ample Trading completed the acquisition of 100% of its shares in October 2023. |
| EMEA | Abbreviation for Europe, the Middle East, and Africa |
| APAC | Abbreviation for the Asia-Pacific region |
| Americas | North and South America |
| EMS | Electronic Manufacturing Services, the services provided by manufacturers for electronic brand owners, such as manufacturing, procurement, partial design and logistics |
| ODM | Original Design and Manufacturer |
| DMS | Design and Manufacturing Services |
| D(MS)2 | An acronym for DMS combined with Miniaturization and Solution |
| SMT | Surface Mount Technology, a new generation of electronic assembly technology, which compresses traditional electronic components into components that mare tens of times smaller than their original volume and realizes high-density, highly reliable, miniaturized and low-cost assembly of electronic products, as well as automated production. The process for assembling components onto printed (or other) substrates is called SMT process, and the associated assembly equipment is called SMT equipment. |
| PCB | Printed Circuit Board, known as the “cornerstone” of electronic products. A large number of electronic parts used in electronic products are embedded on PCBs of different sizes. In addition to fixing parts, the main function of PCBs is to provide circuit connections between various parts. |
| SiP | System in Package; multiple functional wafers, including processors and memory wafers, are integrated into a package according to the application scenarios, the number of package substrate layers and other factors, so as to achieve a basic package scheme with complete functions |
| CAGR | Compound Annual Growth Rate |
| YoY | Year Over Year |
| The reporting period or current period | January 1, 2024 to December 31, 2024 |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Section II Company Profile and Key Financial IndicatorsI. 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 | Chao Feng |
| Address | F/5, Building B, 169 Shengxia Road, Pudong New Area, Shanghai | F/5, Building B, 169 Shengxia Road, Pudong New Area, Shanghai |
| Tel. | 021-58968418 | 021-58968418 |
| Fax | 021-58968415 | 021-58968415 |
| Public@usiglobal.com | Public@usiglobal.com |
III. Basic information
| Registered address | 1558 Zhangdong Road, Integrated Circuit Industrial Zone, Zhangjiang Hi-tech Park, Shanghai |
| Change record of registered address | None |
| Office address | F/5, Building B, 169 Shengxia Road, Pudong New Area, Shanghai |
| Zip code of office address | 201203 |
| Website | www.usiglobal.com |
| Public@usiglobal.com |
IV. Information disclosure and place at which the report is available
| Names and websites of press media on which the Company discloses its annual report | Shanghai Securities News, China Securities Journal, and Securities Times |
| Website of the stock exchange on which the Company discloses its annual report | www.sse.com.cn |
| Annual report available at | Securities Department of the Company |
V. The Company's stocks
| The Company's Stocks | ||||
| Stock class | Listed on | Abbreviated Name | Stock Code | Former Abbreviated Name |
| A-share | Shanghai Stock Exchange | USI | 601231 | None |
| Corporate bonds convertible into the Company’s A shares | Shanghai Stock Exchange | USI Convertible Bond | 113045 | None |
VI. Other related information
| Domestic accounting firm hired by the Company | Name | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
| Office address | F/30, 222 East Yan’an Road, Shanghai | |
| Names of accountants who give their signatures | Yuan Shouqing, and Hu Ke |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Sponsor organization that performs the duty of continuous supervision during the reporting period | Name | Haitong Securities Co., Ltd. |
| Office address | 888 South Zhongshan Road, Shanghai | |
| Names of sponsor representatives who give their signatures | Zhang Zihui, and Chen Hengrui | |
| Period of continuous supervision | April 2, 2021 to December 31, 2022 |
Note: As the Company has not used up the raised funds or completed the conversion of the convertiblebonds, the sponsor will continue to perform its responsibility of continuous supervision over the use ofthe 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 | 2024 | 2023 | YoY (%) | 2022 | |
| Before Adjustment | After Adjustment | ||||
| Revenue | 60,690,651,098.10 | 60,791,909,537.87 | 60,791,909,537.87 | -0.17 | 68,516,075,963.26 |
| Net profits attributable to shareholders of the listed company | 1,652,482,815.41 | 1,947,846,866.12 | 1,947,846,866.12 | -15.16 | 3,059,967,081.20 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses | 1,450,740,530.12 | 1,779,078,630.35 | 1,779,078,630.35 | -18.46 | 3,010,200,488.88 |
| Net cash flows from operating activities | 4,210,266,611.54 | 6,823,435,492.62 | 6,823,435,492.62 | -38.30 | 3,435,196,255.50 |
| End of 2024 | End of 2023 | YoY (%) | End of 2022 | ||
| Before Adjustment | After Adjustment | ||||
| Net assets attributable to shareholders of the listed company | 17,934,523,876.88 | 16,993,068,434.84 | 16,990,407,623.67 | 5.54 | 15,749,394,179.86 |
| Total assets | 39,998,030,835.37 | 39,404,295,828.93 | 39,306,382,898.66 | 1.51 | 38,574,464,731.16 |
(II) Key financial indicators
| Key financial indicators | 2024 | 2023 | YoY (%) | 2022 | |
| Before Adjustment | After Adjustment | ||||
| Basic EPS (yuan/share) | 0.76 | 0.89 | 0.89 | -14.61 | 1.40 |
| Diluted EPS (yuan/share) | 0.75 | 0.87 | 0.87 | -13.79 | 1.35 |
| Basic EPS net of non-recurring gains/losses (yuan/share) | 0.66 | 0.81 | 0.81 | -18.52 | 1.38 |
| Weighted average ROE (%) | 9.52 | 12.02 | 12.02 | Down 2.50 pct. | 21.43 |
| Weighted average ROE net of non-recurring gains/losses (%) | 8.36 | 10.98 | 10.98 | Down 2.62 pct. | 21.08 |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Explanation of the Company’s key accounting data and financial indicators in the past three years at theend of the reporting period
□Applicable √Not Applicable
None
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 accountingstandards
□Applicable √Not Applicable
(II) Differences in net profits and net assets attributable to shareholders of the listed company in the
financial report disclosed under overseas accounting standards and Chinese accountingstandards
□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 2024
Unit: yuan Currency: RMB
| Q1 (Jan – Mar) | Q2 (Apr – Jun) | Q3 (Jul – Sep) | Q4 (Oct – Dec) | |
| Revenue | 13,491,928,720.52 | 13,893,681,673.09 | 16,621,097,158.49 | 16,683,943,546.00 |
| Net profits attributable to shareholders of the listed company | 334,683,660.30 | 449,720,127.00 | 512,525,041.64 | 355,553,986.47 |
| Net profits attributable to shareholders of the listed company net of non-recurring gains/losses | 286,600,179.96 | 315,218,801.67 | 452,580,701.73 | 396,340,846.76 |
| Net cash flows from operating activities | 1,146,121,777.94 | 351,742,514.06 | 500,647,286.74 | 2,211,755,032.80 |
Explanation for differences between the quarterly data and formerly disclosed data in periodic reports
□Applicable √Not Applicable
X. Non-recurring profit or loss
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
| Items of non-recurring gains/losses | 2024 | Notes (if applicable) | 2023 | 2022 |
| Gains and losses on disposal of non-current assets, including the write-off of asset impairment provisions | 5,101,711.12 | See Note (VII) 68, 73, 75 | 5,463,221.02 | 2,724,930.03 |
| Government grants recognized in profit or loss (other than grants which are closely related to the | 39,593,697.06 | See Note (XI) 3 | 71,813,784.39 | 56,144,655.78 |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Company's business, have a lasting impact on the Company's profits and losses and are either in fixed amounts or determined under quantitative methods in accordance with the national standard) | ||||
| Profit or loss on changes in the fair value of financial assets and financial liabilities and investment income on disposal of financial assets and financial liabilities held by non-financial companies, other than those used in the effective hedging activities relating to normal operating business | 177,139,794.65 | See Note (VII) 68, 70 | 106,839,747.09 | 96,937,973.50 |
| Write-back of provisions for receivables impairment subject to separate impairment tests | 6,111,269.30 | 0.00 | 0.00 | |
| One-time costs incurred by enterprises due to the fact that the relevant business activities are no longer sustainable, such as expenses for relocating employees | -708,810.03 | -3,701,028.03 | -65,435,485.39 | |
| The impact of one-time adjustment of current profit and loss in accordance with tax, accounting and other laws and regulations | 0.00 | 0.00 | -49,852,343.57 | |
| Other non-operating income or expenses other than the above | -16,235,503.49 | See Note (VII) 74, 75 | 12,916,711.91 | 22,281,394.77 |
| Less: tax effects | 9,611,574.91 | 24,950,729.58 | 13,033,613.18 | |
| Effects attributable to minority interests (After tax) | -351,701.59 | -386,528.97 | 919.62 | |
| Total | 201,742,285.29 | 168,768,235.77 | 49,766,592.32 |
Explanations for significant amount of extraordinary gain or loss items identified by the Company but notlisted in the “Explanatory Announcement No.1 for Public Company Information Disclosures –Extraordinary Gains or Losses”, and recurring gain or loss items identified by the Company which arelisted as extraordinary gain or loss items in the “Explanatory Announcement No.1 for Public CompanyInformation Disclosures – Extraordinary Gains or Losses”.
□Applicable √Not Applicable
XI. Items measured at fair value
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
| Item | Opening amount | Closing balance | Change in the current period | Impact on profit of the current period |
| Financial assets held for trading | 245,558,007.22 | 42,291,303.91 | -203,266,703.31 | 188,169,883.71 |
| Other equity instruments | 38,935,237.58 | 22,769,795.62 | -16,165,441.96 | 0.00 |
| Other non-current | 193,994,862.05 | 201,093,233.84 | 7,098,371.79 | -13,975,107.74 |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| financial assets | ||||
| Derivative financial liabilities | -173,872.64 | -4,775,306.67 | -4,601,434.03 | 2,945,018.68 |
| Total | 478,314,234.21 | 261,379,026.70 | -216,935,207.51 | 177,139,794.65 |
XII. Others
□Applicable √Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Section III Management Discussion and AnalysisI. Discussion and Analysis of Corporate OperationsUSI is a global leader in electronic design and manufacturing services as well as a leader in the field ofSiP (System-in-Package) technology. The Company has 30 production and service locations across fourcontinents of Asia, Europe, Americas, and Africa, and offers customer diversified electronic products withD(MS)
product services: Design, Manufacturing, Miniaturization, Industrial Software and HardwareSolutions, and Material Procurement, Logistics and Maintenance Services.(I) An overview of the Company's performance in 2024In 2024, AI technology and computing power investment continued to be the focus of global scientificand technological development. The intelligent upgrade of consumer electronic products had a relativelymild driving effect on market demand. The demand for industrial products gradually picked up. TheEuropean and American automotive industries were facing a complex business environment in transition.Factors such as US dollar interest rates, geopolitics, and supply chain restructuring deeply affected theglobal and regional supply and demand conditions, and the economic boom required a longer recoveryperiod.The Company's revenue in 2024 decreased by 0.17% year-on-year, essentially unchanged. In response tothe global supply chain restructuring and customers' demands for localized manufacturing, the Companycompleted the construction of new plants in Mexico and Poland as scheduled, served the expansion ofoverseas production capacity, merger with Hirschmann and responded to the pressure of customer supplychain price reduction, etc., which also caused the increase of the Company's operating costs. The Companyachieved operating profit of RMB 1.87 billion in 2024, a decrease of 14.01% YoY, resulting in acorresponding decrease in total profit and net profit attributable to shareholders of the listed company.(II) Changes in revenueThe Company realized total revenue of RMB 60.69 billion in 2024, down 0.17% from the previous year.Revenue from automotive electronics products increased by 16.24% YoY, while cloud and storageproducts saw a 13.35% increase. Conversely, revenue from communication products decreased by 3.36%,consumer electronics products by 0.27%, industrial products by 12.82%, and medical electronics productsby 11.21%.Changes in revenue by product category reflect changes in the global economy and end-market demand.The revenue of communication products and consumer electronics products decreased slightly YoY dueto the sales volume of important customers; the revenue of industrial products decreased YoY due tocustomer destocking and gradual recovery in demand; automotive electronics products mainly achievedYoY growth due to the Company's merger with Hirschman in 2024; the revenue growth of cloud andstorage products benefited from the significant growth in demand for server products driven by AI.(III) Changes in expenses and profitsAffected by the increase in material cost rate and the decrease in exchange-related gains, the Company'sgross profit margin in 2024 was 9.49%, a decrease of 0.09 percentage points YoY, and the operating profitmargin was 3.09%, a decrease of 0.50 percentage points YoY, and the Company achieved an operatingprofit of RMB 1.87 billion in 2024, a decrease of 14.01% YoY.In 2024, the total amount of the Company's selling expenses, administrative expenses, research anddevelopment expenses, and financial expenses was RMB 4.00 billion, showing a YoY increase of RMB424 million, with a growth rate of 11.86%. Among them: administrative expenses increased by RMB 155million YoY, with a growth rate of 12.76%. Research and development expenses increased by RMB 100million YoY, with a growth rate of 5.55%. Selling expenses increased by RMB 68 million YoY, with agrowth rate of 19.94%. Financial expenses increased by RMB 101 million YoY, showing a relatively largeincrease, mainly due to the increase in the net foreign exchange losses in 2024. The selling expenses,administrative expenses, and research and development expenses of the Company all showed varyingdegrees of growth. The main reason is that the financial data of Hirschmann was consolidated into theCompany's financial statements throughout 2024.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Affected by the YoY decline in operating profit, the Company achieved a total profit of RMB 1.85 billionin 2024, showing a decrease of 15.34%; the net profit attributable to the shareholders of the company wasRMB 1.65 billion, showing a decrease of 15.16%.(IV) Key results of work in 2024
1. Continuous investment in overseas production capacity
The Company's global manufacturing footprint continued to expand in 2024 with new plants in Polandand Mexico, which were put into operation in 2024. In November 2024, the Company announced apartnership with Tech Mahindra, a leading global technology consulting and digital solutions provider, toestablish the Company's first Engineering Offshore Development Center (ODC) in Bangalore, India,dedicated to providing scalable solutions, reducing time to market and driving technological innovationto meet customers' evolving needs.In order to promote the optimization of the global operation management process, integrate the globaloperation capabilities, and match the process of the Company's global layout, on the basis of establishingthe Digital Transformation Center, the Company will continue to recruit talents with different professionalbackgrounds within the Company in 2024, aiming at the pain points of the operation process, combiningwith external experts, evaluating and adopting suitable digital tools to optimize the workflow, and buildinga cross-departmental communication platform to improve work efficiency.
2. Strengthen the supply chain serving global manufacturing
The Company has developed local suppliers in each region to increase the proportion of localized supply,reduce transportation time and costs, and enhance supply flexibility and response speed; proactivelycultivated domestic suppliers with competitive advantages in raw materials, as well as equipment suppliersfor production, testing, and automation; leveraged scale and efficiency advantages to serve clients withsizable demand; and additionally, continuously improved global supply chain operations, inventorymanagement, process and system optimization, and sustainability management.
3. Advance smart manufacturing capabilities
The Company’s global manufacturing facilities increased their smart manufacturing rating by 0.34 starsto reach 3.07 stars. Over the year, automation initiatives reduced costs by millions of dollars, with thedevelopment of 6 new universal automation platforms and the completion of 54 digital automationmodules (including 6 AI modules). Moving forward, the Company’s automation enhancements will focuson new projects for key clients, aiming to lower automation equipment costs and deployment timelinesthrough centralized procurement and improved internal assembly capabilities.
4. Accelerate digital transformation
By addressing digital needs in R&D and management, the Company leveraged technologies such as AIapplications to continuously refine workflows and employee performance. For instance, the DigitalTransformation Center (DTC) brings together talent from diverse professional backgrounds within theCompany. Focusing on critical operational pain points identified through internal assessments, the DTCcollaborates with internal and external experts to evaluate and deploy tailored digital tools. Partnering withthe corporate IT department, it optimizes workflows and establishes cross-departmental communicationplatforms via dedicated projects, driving measurable efficiency gains.
5. Prudent inventory control and sound operation
The Company actively controlled inventory, which was reduced from RMB 8.32 billion at the end of 2023to 7.75 billion at the end of 2024, and the amount of working capital occupied has been significantlyreduced.
6. Launch of the SiP Dual-Engine Technology Platform
The Company has continued to invest in miniaturization solutions. The Miniaturization Innovation R&DCenter (MCC) has introduced the groundbreaking SiP Dual-Engine Technology Platform, which leveragestransfer molding based high density integration to meet demands for large-scale, highly integrated, andultra-compact modules. By adopting the Vacuum Printing Encapsulation (VPE) process, the platformachieves encapsulation without requiring custom molds, significantly shortening development cycles.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Beyond the SiP Dual-Engine Technology Platform, MCC’s capabilities extend to integratingheterogeneous components into complex modules. Equipped with comprehensive design services anddedicated production facilities, the company’s development team provides end-to-end support fromproduct conceptualization to mass production, ensuring the successful implementation of advanced systemintegration.
7. ESG performance hits another milestone
For a long time, the Company has been adhering to the concept of sustainable management, practicing thefour strategic axes of "low-carbon mission, recycling, social integration, and value co-creation", andintegrating the concept of sustainable development into the Company's strategy.The company has been recognized as a Sustainability Yearbook Member by S&P Global for fourconsecutive years, achieving a top 5% ranking in the Electronic Equipment, Instruments & Componentsindustry category. The Company has been awarded the honors of "Top 1% of Chinese Enterprises in S&PGlobal ESG Scoring" and "Best Progress Enterprise in the Industry".II. Industry of the Company during the Reporting PeriodDuring the reporting period, the Company's industry was the electronics manufacturing service industry,and its products were mainly used in consumer electronics, cloud storage, industrial, automotiveelectronics, and medical industries. The Company's service products, business layout, and operations arecharacterized by modularization, diversification, and globalization.(I) Basic situation of the industryThe EMS industry mainly provides overall electronic products and devices solutions such as design,engineering development, raw material procurement, manufacturing, logistics, testing and after-salesservice for various electronic products and equipment.Electronic manufacturing services mainly include 3C (Computer, Communication, Consumer Electronics)products, industrial, automobile, medical, transportation, energy, aerospace and other fields, among whichconsumer electronics occupies an important position. The growing demand for smart phones, smartwearable devices, AR/VR devices, computers and cloud, smart home and other products has driven therapid development and continuous upgrading of chips, storage, electronic components, modules and smartmanufacturing.China has the largest market share and the most competitive supply chain in the global electronicsmanufacturing services industry. The rapidly increasing demand for nearshoring and friendly shoring inthe global supply chain has significantly stimulated investment and capacity expansion in Mexico, SouthEast Asia, India, Eastern Europe and other regions, and has also affected the transfer of capacity in theupstream supply chain, thus forming a new capacity scale and industrial chain cluster in the future. Inaddition, the impact of the US tariffs on China and Mexico will prompt the supply chain to invest in newproduction capacity in regions with geographical advantages, policy advantages, and cost advantages,reducing the business risks caused by the imposition of tariffs in specific regions. It will also promptenterprises to increase investment in research and development, promote technological innovation, andincrease the added value of products, reduce dependence on low-value-added manufacturing links, andenhance their competitiveness in a high-tariff environment.(II) Industry characteristics and development trends
1. The industry has a large overall scale, with high industry concentration
In 2024, the industrial scale of the global EMS industry exceeded USD 633.2 billion, with high industryconcentration. 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.In 2024, electronic products were still in the stage of supply chain destocking, and inventory levels aregradually returning to a reasonable range. Inflation levels in major economies around the world showed amoderate trend in 2024 as a whole. Monetary policy has shifted, and the world has entered an interest ratecut cycle. The pace of US dollar interest rate hikes has stopped and the interest rate cut channel has beenopened, which has had a certain positive impact on industry demand and is expected to drive a recoveryin demand for electronic products in 2025.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
2. The business and competitive environment is becoming increasingly complex, and electronicmanufacturing service providers are facing transformationThe trend of geopolitics and global economic and trade regionalization affects the reconstruction of theglobal supply chain. In order to achieve the risk management needs of supply chain diversification, someoffshore outsourcing is turned to near-shore or friendly outsourcing, and demand and order adjustmentschange rapidly. At present, the US’s imposition of tariffs on China, Mexico, Canada, and others increasesthe cost of the electronic manufacturing service industry, and the operating environment and competitiveenvironment becomes more complex. Electronic manufacturing service providers are also activelytransforming and upgrading, striving to play a more important role in the supply chain.
(1) Deepened cooperation and integration between downstream customers and upstream electronicsmanufacturing service providersEnd consumer electronics brand owners, cloud service provider and other brand manufacturers no longersolely place their orders, but become more deeply involved in the production process of electronicmanufacturing service providers, including technology research and development, production planning,quality control and other stages. Similarly, electronic manufacturing service providers are no longer justpassively following orders, but actively participate in the brand's product planning and design, providingprofessional technical and process advice, thus forming a closer partnership between the two parties.
(2) Transformation to comprehensive service provider
Technological progress continues to promote the upgrading and iteration of electronic products andequipment, and the large-scale application of AI will promote the continuous development of electronicproducts towards intelligence, miniaturization, and high performance. This makes enterprises in theindustry under greater operating pressure for a long time, and needs to continuously invest in R&D tolaunch new products that meet market demand; in terms of quality improvement, improve product yieldand quality; in terms of cost reduction and efficiency, by introducing intelligent and automated capacityto reduce production costs and improve production efficiency. Enterprises in the industry need to activelyexpand new products and customer incremental demand, improve process, intelligent manufacturing andnew product R&D so as to increase product added value.Upstream electronics manufacturing service providers will shift from simple product manufacturing toproviding comprehensive services. In addition to manufacturing hardware products, they will also providefull life cycle services including product design, testing, maintenance, and after-sales services to stand outin the fierce market competition.
(3) Data-driven collaborative decision-making
With the application of big data, AI, and other technologies, brand manufacturers and electronicmanufacturing service providers increasingly rely on data to make decisions. By sharing data onproduction, sales, marketing, and other aspects, both parties can more accurately predict market demand,optimize inventory management, develop production plans, and achieve intensive supply chainmanagement.
(4) Global layout and advantages in localized services
In order to reduce risk and improve the flexibility of the supply chain, brand manufacturers tend tocooperate with electronic manufacturing service enterprises with global layout capabilities to form adiverse supplier system. Electronic manufacturing service providers will also actively expand into theglobal market, establish cooperative relationships with customers in different countries and regions, andachieve the optimal allocation of resources and the integration of global supply chains.
(5) Sustainable development and green transformation
In the context of the growing global emphasis on environmental protection and sustainable development,electronic manufacturing service providers will also take responsibilities. From product design, rawmaterial procurement, energy consumption and waste disposal in the production process, to productrecycling and reuse, promote the green transformation of products to reduce the negative impact of productlifecycle on the environment.
3. AI landing side promotes the intelligent upgrade of consumer electronics
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
At present, AI has been widely considered to be another groundbreaking milestone of scientific andtechnological progress after steam engines, internal combustion engines, electricity, semiconductors andinformation technology, and it has become a consensus that AI can empower all walks of life. ThroughAI empowerment or AI+, consumer electronics products are expected to achieve new breakthroughs ininteraction patterns, convenient operation, enhanced original functions, intelligent services, and ecologicalinnovation. In addition, driven by the need for data security and cost reduction, the deployment of AImodels has also begun to move from the cloud to mobile end points and edge end points.Well-known consumer electronics brands and some new brand owners have launched AI+ consumerelectronics products, such as Apple Intelligence technology on the mobile phone to show a rich andpowerful intelligent application, the use of locally running generative AI model, to provide users withintelligent imaging and creation, health monitoring, call translation, meeting notes, itinerary and otherfunctions, with a smoother interactive dialogue to complete the previous complex tools and operations tocomplete the task. At the same time, Apple Intelligence handles sensitive data on the device, such as voicecommands, photo analysis, etc., to avoid the privacy risks posed by data uploading to the cloud and ensurethe security of user data. The launch of AI Glass, AI PC, AI smart home and other products on the markethas also attracted widespread attention from consumers.In the future, people will use AI-empowered core end point devices, such as mobile phones, computers,edge servers, etc. in life scenarios such as home, work, and travel. With the help of high-bandwidth, low-latency, and easy-to-access new generation communication technologies, such as WiFi 7, UWB, mmWave,etc., to achieve seamless connection and data interoperability with smart wearable devices (such as SmartWatch, TWS headphones, XR devices, etc.) and smart Internet of Things devices such as home appliances,office equipment, etc. Based on the AI Internet of Things (AIoT) and large-scale AI models, AI isintegrated with various electronic devices through active perception, intelligent analysis, and real-timeinteraction to provide users with intelligent, efficient, and convenient services.
4. AI computing power and data exchange demand have surged
Since ChatGPT spurred the AI boom, the iteration of generative large AI models was accelerated in 2024.There are increasingly higher demand for large AI model training and reasoning, GPU and AI servers arein short supply, and the demand for data transmission and exchange related hardware products are alsogreatly driven. DeepSeek has significantly lowered the threshold for the application of AI technology byproviding a low-cost, high-performance AI model, which will enable more enterprises and developers toenter the AI field in the future and empower AI technology in all walks of life.AI computing power investment not only increases the demand for hardware such as GPUs, ASICs,switches, and storage, but also drives the growth of demand for edge servers and AI acceleration cards.AI large model requires higher efficiency, lower latency data transmission and exchange, and promotesthe upgrade of network infrastructure. The demand for hardware products such as high-speed opticalnetworks, high-speed optical transceivers, HBM, high-speed network interface cards and switches, heatdissipation and server cooling systems is growing rapidly.The rapid development of AI has also led to a significant increase in the demand for electricity, and thepower supply of servers built on different chips is also being upgraded. As the infrastructure of high-performance computing and data centers, the demand for power supplies has also grown rapidly. At thesame time, in the context of a significant increase in power consumption, the importance of high-efficiencyserver power supply has increased, on the one hand to reduce losses during the conversion process, andon the other hand, the upgrade of GPUs also requires higher power density power supply support.
5. Global economic soft landing, providing support for industrial products demandIn 2024, the global economy still faced challenges such as weak economic growth momentum, inflation,geopolitical conflicts, and frequent international trade frictions. According to the projections of theinternational monetary fund (IMF), the World Bank and the Organization for Economic Cooperation andDevelopment (OECD), the global economy is expected to maintain moderate growth in 2025, but thegrowth rate may be lower than the pre-COVID average.The moderate growth of the global economy will provide some support for demand for industrial products,but demand growth may be slow and regionally differentiated. The demand for industrial products in themanufacturing, infrastructure, and new energy sectors is expected to continue to grow, while the demand
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
in the traditional manufacturing and consumer goods sectors may be affected by economic restructuringand the policy environment.
6. European and American automakers are actively responding to competition, and the popularityof electric vehicles continues to expandThe growth rate of the global automobile market has slowed down significantly, while new energy vehiclesstill maintain a high growth rate. In the field of new energy vehicles, Chinese automakers have graduallygained an important share in the global market by virtue of their cost-effectiveness, advanced batterytechnology and rapidly developing intelligent networking capabilities. However, European and Americanautomakers, with their advantages in branding, technology, market, and policy, still hold an importantposition in the global automotive market. In the future, they will accelerate technological innovation,optimize market layout, strengthen supply chain management, strengthen branding, and use environmentalprotection regulations, subsidy policies, and trade protection measures to compete with Chineseautomakers in all aspects.In the European and American automotive markets, carbon emission regulations and subsidy policies willcontinue to promote the popularity of electric vehicles. The market share of battery electric vehicles (BEVs)and hybrid electric vehicles (HEVs) will further expand, autonomous driving functions and intelligentconnected services will go mainstream, and the competition between traditional automakers and Chineseautomakers and new power automakers will become more intense. European automakers will continue todiversify their supply chains and reduce their reliance on a single supplier, especially for battery and chipsupplies. The US government will continue to promote the return of auto parts production to NorthAmerica and reduce their reliance on China's supply chain.
7. Potential business opportunities for the development of robotics and embodied intelligenceThe application of industrial robots and Industry 4.0 technologies in the electronics manufacturingindustry has become very common, helping to achieve production efficiency improvement, quality controloptimization, intelligent logistics management, human-machine collaboration, equipment maintenance,and safety risk management. The development of service robots such as household cleaning robots andlogistics distribution robots is also on the rise. The release and continuous update iterations of Optimushave led the rapid development of the entire robotics industry. Humanoid Robots and EmbodiedIntelligence have become the cutting-edge fields of artificial intelligence and robotics, with very broaddevelopment potential and far-reaching impact.Robots need to integrate and use a wide variety of electronic devices, ranging from microcontrollers,sensors, motor drivers, power management modules, communication modules to machine vision, artificialintelligence and machine learning accelerators. Together, these components form the core system of therobot, enabling it to perform complex motion control, environmental awareness, data processing, andhuman-machine interaction functions. The development of robotics is inseparable from the foundationsupport of high-performance, low-power, and intelligent electronic devices, which will also create a hugeincrease in demand in the future.(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, andthe electronic products industry is closely related to the macroeconomic situation. The demand forelectronic products is influenced by factors such as the macroeconomic environment, economic cycles,consumer preferences, and technological innovation. When the economy is booming, the market demandfor electronic products is large and the growth rate is high, which drives the production and sales of theEMS industry; when the economy is in a downturn, the purchasing power of consumers and enterprisesdeclines, 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 Southeast Asia,Taiwan and Chinese mainland. At present, China, Southeast Asia, India, Mexico, Eastern Europe havebecome the regional centers of low-cost manufacturing in the EMS industry. The current trend of"economic and trade regionalization" and "localization" manufacturing is conducive to the development
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
of low-cost manufacturing centers in the region, but the Asia-Pacific supply chain represented by theChinese mainland still has the advantages of "industrial clusters" and "low cost".
3. Seasonal characteristics of industry operation
Affected by traditional consumption patterns, orders from consumer electronics brand customers tend toconcentrate in the second half of the year, resulting in certain degree of seasonality in the shipment andrevenue of the EMS industry. The first and second quarters of each year are the traditional off-season, andthe second half of the year begins to enter the peak sales season. After climbing to the peak of shipmentsmonth by month, it normally declines.(IV) Competitive position of the Company in the industryThe Company is a world-renowned manufacturer in the EMS industry. In 2023, USI ranked 12th amongglobal EMS providers, with top-ranking annual revenue growth rate and net operating margin in theindustry. The Company is an industry leader in SiP miniaturization technology, leading the industry inmany business segments.
III. Core Business during the Reporting Period(I) Key Products and SolutionsAs a world-leading electronic DMS manufacturer, by providing brand customers with more value-addeddesign, manufacturing and related services, the Company participates more in developing industry-wideapplication solutions, and enhances the manufacturing value added of products and overall services. In thefuture, following the core concept of creating value for customers, the Company will attach moreimportance to Solutions, Design, and Services, strive to expand the base of high-quality customers andstrengthen partnership with them, gradually transform the Company from a manufacturing serviceprovider to a total solution provider and comprehensive service provider.
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-classwireless interconnection products and highly competitive wireless module products by collaborating withthe world's leading wireless communication chip companies. From product concept, prototype design,testing and verification to mass production, the company’s R&D team and management system, offerscustomers with a suitable R&D schedule and reliable quality assurance to meet customer needs, achieverapid product launches, and enhance customers' competitive advantages.Wireless communication products mainly include wireless communication System-in-Package (SiP)modules, system-level Internet of Things (IoT) modules, wireless routers, etc.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
2. Consumer electronics
The Company is the industry's leading manufacturer of smart wearable SiP modules. As smart wearablestend to be "light, thin, short and small", the system in package (SiP) technology has become the key toproviding highly integrated and miniaturized designs. Since 2013, the Company has been committed tothe miniaturization and highly integrated development of SiP modules related to wearables, including newadvanced packaging technologies such as partition shielding, selective plastic packaging, film plasticpackaging, selective sputtering, shape cutting, dry ice cleaning and SMT 3D screen printing. At present,smart wearable SiP modules include smart watch SiP module, true wireless earbuds (TWS) module, andoptical heart rate module. On smart headsets such as XR (VR/AR/MR) and smart glasses, the Company'sproducts include WiFi modules, multi-function integrated or function-specific SiP modules.
In addition to smart wearable SiP modules, consumer electronics products also involve SiPlet modules,video devices, connection devices, mainly including X-Y bar control board, miniLED display control,timing control board, smart stylus, smart tablet, electromagnetic sensing board, etc.
3. Industrial products
With sophisticated professionals in product R&D and design, project management, manufacturing andlogistics support, the Company is committed to the industrial product market such as Point of Sale(POS),
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Smart Handheld Device(SHD), smart fleet dash cam, factory automation control module, etc. TheCompany provides customers with the most cost-effective, optimized design and a full package ofsolutions with a strict quality control process, meeting their needs from mass production, diversifiedproduction, to customized production. With the development of global carbon neutrality, the Companyhas increased its green energy products serving energy storage and photovoltaics.
4. Cloud and storage products
The Company’s motherboard products include motherboards for servers and workstations, AI Card, andCPU modules for laptops, etc. The Company’s computer peripheral products are mainly devices thatconnect laptops to peripherals, such as docking station and dongle. The server related productsmanufactured by the Company are widely used in cloud computing, data centers, edge computing andother fields. The Company continues to introduce new generation technologies such as DDR5 and PCIe-G5 with the service model of Join Design Manufacture (JDM) in producing Standard Rackmount Serverand Edge Server.Storage and interconnection products include solid-state drives (SSD) and high-speed switches andnetwork adapters. The Company has industry-leading R&D capabilities for new technologies, such asfibre channel, SAS, SATA, 10G ethernet, Rapid I/O and wireless broadband, etc. The Company is aleading SSD design and manufacturing partner, providing customers with services in manufacturing,hardware design, product verification and customized design of test platform. The Company currentlyprovides motherboard and complete machine manufacturing services of high-speed switch to customers.
5. Automotive electronics
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
With over four decades of experience in the automotive industry, the Company is a leading DMS providerin automotive electronics.The Company’s automotive electronic products mainly include power modules, traction inverter, BatteryManagement System (BMS), On-Board Charger(OBC), electronic pumps, intelligent cabin, ADAS relatedcontrollers, domain controllers, vehicle NAD modules, car antenna, LED lights, and other body controllers.
Following the development trend of "electrification, intelligentization, and internetization" in automotiveelectronics, the Company focuses on "electrification" and invests heavily in research and development ofpower modules, traction inverter, BMS, OBC and other automotive power products to serve power chipmanufacturers, Tier 1 suppliers and OEMs; at the same time, the Company takes into account"intelligentization" and "internetization", and expands new products and businesses in the fields ofintelligent cabin, ADAS, and vehicle communications. The acquisition of Hirschmann has strengthenedthe Company's R&D and design capabilities in the field of automotive antennas and automotivecommunications.
6. Medical electronics
Medical electronic products are mainly home care and hospital analytical equipment, including vitamin Kantagonist therapy equipment, medical wireless glucometer, continuous positive airway pressure device,hematology analyzer, and glucose metering device.
(II) Miniaturization design and productsUSI has a leading position in SiP miniaturization technology. SiP module is based on heterogeneousintegration technology, which integrates chips and passive components into one module, effectively
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
reducing the area of functional modules, improving the efficiency of circuit system, and ensuring theeffectiveness of electromagnetic interference shielding. Through miniaturization technology, mostelectronic systems, especially for mobile devices, AIoT devices, and wearables, can be reduced in size tomeet market demands.As AI moves towards new stages such as augmented work, real-time automated decision-making, andeven inference-based work, as well as the significant growth of the spatial computing market related tothe innovation of the meta-universe industry, smart wearable devices have ushered in new developmentopportunities. Not only smart watches, bracelets, TWS headphones and other traditional categoriescontinue to iterate and upgrade, but emerging categories such as AI glasses, XR devices, and smart ringshave become the new favorite of the market with their unique interaction patterns and convenience. Thedemand for thin, short, and highly integrated SiP modules will also be more urgent. In the future, theintegrated functions of these devices will be more powerful, deeply integrating various functions such ashealth monitoring, voice interaction, motion tracking, spatial computing interaction, and AI intelligentassistance, and the pursuit of "light, thin, short, and small" will also reach new heights.In the complex system of robots, electronic control units and communication modules are the keys toachieving precise control and efficient data transmission, but their miniaturization process faces manychallenges, such as heat dissipation and lightweight issues. The Company’s miniaturization technologycan effectively meet these challenges. Through highly integrated design, it can not only reduce the size ofthe module, but also improve its reliability and stability, meeting the stringent functional requirements ofrobots in different application scenarios.The Company insists on deepening the research and development field of SiP modules to maintain industryleadership. At the end of 2020, the Company set up a Miniaturization Competence Center (MCC),advancing the application and adoption of miniaturization technology and SiP Modules and serving theneeds of domestic and foreign customers for miniaturized and modular products, and providing "one-stopservice" from design to manufacturing.
The Company continuously breaks through technical challenges in all aspects of the SiP process to meetthe requirements of high stability and high integration.
(1) Horizontally,, the minimum device should be 0.25mm * 0.125mm, the minimum part spacing
design center value should be 20 microns, and the distance from the plate edge should be 45microns, which requires higher requirements for parts, production equipment, and processcontrol.
(2) Vertically, to achieve a design value of 40 microns for the top clearance of the molding and 40
microns for the bottom clearance of the plastic seal, there are also extremely high requirementsfor the selection of plastic sealing materials, process parameters and process control.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(3) Selective plastic sealing, plug-in interconnection, film-assisted molding to directly leak solder
balls, and the use of copper columns instead of BGA balls to achieve high-density connectioninterfaces provide diverse support for SiP interconnection and subsequent processes.
The design and manufacturing ability of miniaturized products is one of the core competitiveness of theCompany, and the Company will strive to expand the application and market of miniaturized modules. Interms of single-sided plastic sealing, it can currently be fully plastic-sealed or selectively plastic-sealed,and can also be selectively stepped plastic-sealed. In the future, sandwich biscuit-type multi-boardstacking packaging and chip-embedded substrate combination gold wire/wafer bonding packaging will bedeveloped. In terms of double-sided plastic sealing, plug-in interconnection has been introduced, and 3Dstructure and soft and hard board combination will be developed in the future to further reduce productsize. The Company will introduce the front-end process of wafer manufacturing, including wafer thinning,scribing and tape packaging. In combination with the current SiP process, Wafer-In-Module-Out can berealized. It has also successfully developed its own double-sided moldingg module for wafer combinationgold wire bonding.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
The MCC Miniaturization Innovation R&D Center has launched a ground-breaking SiP dual-enginetechnology platform, which meets the needs of large-scale, highly integrated and ultra-miniaturizedmodules through high-density integration technology based on Transfer Molding. At the same time, thehighly elastic technology centered on Vacuum Printing Encapsulation provides an innovative method formodule packaging. Through liquid sealing printing in a vacuum chamber without the need for custommolds, the development cycle can be greatly shortened. Therefore, this innovative solution can be quicklymodular designed for different market applications.The SiP dual-engine technology platform can provide highly flexible system packaging solutions such assmall sample and large quantity or large sample and small quantity. The platform can provide the mostsuitable solutions based on customer needs to improve product quality.The capabilities of the MCC Miniaturization Innovation R&D Center are not limited to the SiP dual-engine technology platform, but also cover the integration of various heterogeneous components intocomplex modules. The Company's development team has a full range of design services and dedicatedproduction equipment, which can provide customers with seamless services from product concept to massproduction, ensuring mass production in complex system integration Items, and providing a solidguarantee for the final performance and reliability of the product.
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 hasthe following core competitive advantages:
(I) Prominent position in the industry and standardized corporate governanceThe Company is a world-renowned manufacturer in the EMS industry. In the global ranking of EMSproviders, the Company ranked 12th in revenue scale in 2023, with its annual revenue growth rate and netoperating margin of main business ranking top in the industry. The Company is a leading manufacturer inmany business segments and an industry leader in SiP miniaturization technology, with a prominentposition in the industry.The Company attaches great importance to internal control and corporate governance, strictly abides bythe requirements of laws and regulations, and follows the relevant regulatory requirements of the ShanghaiStock Exchange as well as the Taiwan Stock Exchange and the New York Stock Exchange where its parentcompany ASE Technology Holding Co., Ltd is listed. The Company has been awarded the A-level ratingon information disclosure by the Shanghai Stock Exchange for six consecutive years, and has won a seriesof honors in the field of business operation and corporate governance.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(II) Global layout and advantages in localized servicesThe trend of global economic and trade regionalization affects the reconstruction of the global supplychain. In order to achieve the risk management needs of supply chain diversification, some offshoreoutsourcing turns to near-shore or friendly outsourcing. Facing the trend of the industrial supply chain, theCompany has launched a glocalization strategic landscape: in 2018, USI acquired the Polish facility; in2020, the Company acquired FAFG, the second largest EMS company in Europe, and has ever sincecontinued to integrate; in 2021, the Vietnam Facility started mass production; by 2022, the Company'ssecond factory in Nangang started production, by 2024 the Company's second factory in Guadalajara,Mexico, and the second building of the Poland factory were successively put into production. In recentyears, the proportion of the Company's overseas factories' revenue to the total revenue has beencontinuously increasing. By adopting a new operating model of "global platform, localized service", theCompany 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 internationalcompany. At present, the Company has 30 manufacturing sites in 12 countries or regions includingChinese mainland, Taiwan, Vietnam, the United States, Mexico, France, Germany, the United Kingdom,the Czech Republic, Poland, Tunisia, and Hungary . To meet customers' differentiated needs, the Companyprovides global customers with diversified manufacturing service solutions based on localized operatingsystems in North America, Europe, Asia Pacific and North Africa, and forms a competitive advantage inglobal operations and differentiated services.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(III) Diversified business areas and rich product portfolioThe Company not only has the comprehensive strength of professional design and manufacture ofelectronic products (covering electronic components, spare parts and complete machines) and systemassembly, but also has the advantages of strategic selection of sub-sectors and integration of products. TheCompany has a diversified and balanced product portfolio covering five major fields of communicationelectronics, consumption electronics, cloud and storage products, industrial and medical electronics, andautomotive electronics. The Company attaches great importance to studying and judging industrydevelopment trends, and is able to respond quickly to changes in market demand and adjust its productportfolio more flexibly according to changes in customer demand.(IV) Focus on automation and intelligent manufacturingAs a global leader in electronic design and manufacturing, the Company has been taking "intelligentmanufacturing" as one of its important business strategies. The Company uses Industry 4.0 automationtechnology to realize the intelligent manufacturing roadmap. At present, technologies that have beenintroduced 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; AItechnology has been applied to the management of key production equipment, production systems andproduct inspection systems. The Company will continue to comprehensively enhance the intelligentmanufacturing capacity and automation level of its regional manufacturing sites in Asia, Europe, andNorth America. It plans to upgrade all factories that have been introduced into Industry 4.0 by an averageof 0.34 star by 2025, and to have five off-light factories by 2028 to achieve fully automated production.(V) Product innovation driven by R&DThe Company always attaches great importance to technology research and development, and continuesto increase investment in research and development. From 2022 to 2024, the Company's R&D investmentwas RMB 2.03 billion, 1.81 billion, and 1.91 billion respectively. As of the end of 2024, the Company hadan R&D team of 2,930 employees, and obtained 754 patents and 240 potential patents under application.The Company is a global leader in SiP technology. It has integrated a number of advanced technologieswith the miniaturized and multifunctional SiP, such as high-density SMT part design (40um pitch), 150umpitch WLCSP packaging and filling technology, double layer stacking technology of passive components,more complex double-sided packaging technology with more connectors, double-sided special-shapedselective electromagnetic shielding, etc. In addition, in response to the high-performance computing needsof AI computing, the Company has in-depth cooperation with international IC manufacturers to develophigh-efficiency Power SiP with 3D structure to meet the energy-saving and carbon-reducing needs of AIapplications in the context of huge energy consumption.(VI) Long-term adherence to sustainable managementIn face of a complex and ever-changing business environment, corporate resilience has increasinglybecome a part of the core competitiveness for a company to achieve sustainable operations. Highlyresilient 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
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
pays attention to forging resilience in corporate strategy, organizational system, operating system, culturaldevelopment, and technological innovation.
The Company always takes "be the most reliable provider for electronic design and manufacturing service"as its vision, and according to the United Nations Sustainable Development Goals (SDGs), it focuses onthe 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 promoteeconomic growth and enhance productivity through sustainable development.The Company has been constantly improving the career planning, performance appraisal and incentivemechanism of employees, providing a platform for the development of talents, a channel for moreoutstanding talents to join and a powerful talent guarantee for the Company to achieve its developmentgoals. The Company has established a long-term and effective employee incentive mechanism to improvethe cohesion of employees and enterprise competitiveness, and ensure its long-term and stabledevelopment. Since 2019, the Company has launched employee stock ownership plans and stock optionincentive plans according to operational needs. As of the end of March 2024, the Company has launchedthree stock option incentive plans, granting a total of 59.45 million stock options with 21,327,708 sharesexercised by employees, and six employee stock ownership plans, transferring a total of 11,576,197 sharesfrom treasury shares to the plans.While operating steadily, the Company takes the mission of "creating value for shareholders and sharinggrowth with shareholders". In order to fully protect the interests of shareholders and enhance investorconfidence, the Company has continuously launched share repurchase plans, repurchasing 13,037,477,16,042,278, 9,356,317 and 6,740,400 shares in 2019, 2021, 2022 and 2024 respectively. As of the end of2024, the Company has achieved a cumulative net profit of RMB 17.41 billion, and a cumulative cashdividend (including the 2024 dividend plan) of RMB 5.89 billion since its listing, with an average cashpayout ratio of 33.81%.
V. Main business operations during the reporting periodIn 2024, the company achieved operating revenue of RMB 60.69 billion, representing a year-on-yeardecrease of 0.17% compared to RMB 60.79 billion in 2023. Specifically, revenue from cloud and storageproducts increased by 13.35% YoY, while automotive electronics saw a 16.24% YoY growth. However,revenue from medical electronics declined by 11.21% YoY, communication products decreased by 3.36%
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
YoY, consumer electronics fell by 0.27% YoY, and industrial products dropped by 12.82% YoY. Theprimary reasons for these revenue changes were: (1) the growth in cloud and storage products was drivenby recovering industry demand and the development of new technologies; (2) the increase in automotiveelectronics revenue was primarily due to the consolidation of Hirschmann Automotive Communication'sfinancial statements; and (3) the decline in industrial products was attributed to weaker downstreamdemand.The total sales, administrative, R&D and financial expenses of the Company in 2024 were RMB 4.00billion, an increase of RMB 424 million or 11.86% over RMB 3.58 billion in 2023.Regarding profitability, the company achieved an operating profit of RMB 1.87 billion, a 14.01% YoYdecrease from RMB 2.18 billion in 2023. Total profit stood at RMB 1.85 billion, down 15.34% YoY fromRMB 2.19 billion in 2023. Meanwhile, net profit attributable to shareholders was RMB 1.65 billion,reflecting a 15.16% YoY decline compared to RMB 1.95 billion in 2023.(I) Main business analysis
1. Analysis of changes in related items in income statement and cash flow statement
Unit: yuan Currency: RMB
| Item | 2024 | 2023 | Change (%) |
| Revenue | 60,690,651,098.10 | 60,791,909,537.87 | -0.17 |
| Operating costs | 54,929,613,226.02 | 54,965,846,694.81 | -0.07 |
| Sales expenses | 409,346,671.29 | 341,284,448.91 | 19.94 |
| Administrative expenses | 1,370,514,447.54 | 1,215,427,939.02 | 12.76 |
| Financial expenses | 312,651,073.77 | 212,029,208.10 | 47.46 |
| R&D expenses | 1,907,549,706.46 | 1,807,204,128.27 | 5.55 |
| Net cash flows from operating activities | 4,210,266,611.54 | 6,823,435,492.62 | -38.30 |
| Net cash flow from investment activities | -1,195,865,276.84 | -1,428,897,187.20 | N/A |
| Net cash flow from financing activities | -1,762,974,531.62 | -1,836,253,228.36 | N/A |
Reasons for changes in financial expenses: Mainly due to the decrease in net foreign currency exchangegains in the current period.Reasons for changes in net cash flows from operating activities: the second half of 2022 marked a peakin revenue, resulting in a larger amount of receivables collected during the same period last year. In thecurrent period, the collection of receivables has proceeded normally, and the Company has continued tostrengthen inventory management, ensuring stable inflows from operating activities.
Detailed explanation of the major changes in the business type, profit composition or profit source of theCompany in the current period
□Applicable √Not Applicable
2. Revenue and cost analysis
√Applicable □ Not Applicable
In the current period, the Company's revenue from its main businesses decreased by 0.19% over the sameperiod last year, and costs incurred by its main business decreased by 0.06% over the same period lastyear. The specific analysis is as follows:
(1). Main business by sector, product, region and by sales mode
Unit: yuan Currency: RMB
| Main business by product | ||||||
| Product | Revenue | Operating costs | Gross profit margin (%) | Revenue YoY (%) | Operating cost YoY (%) | Gross profit margin YoY (%) |
| Communication electronics | 21,066,324,772.56 | 19,461,280,894.30 | 7.62 | -3.36 | -3.19 | Down 0.16 pct. |
| Consumer electronics | 19,202,788,679.81 | 17,619,172,017.93 | 8.25 | -0.27 | -0.62 | Up 0.32 pct. |
| Industrial products | 7,118,040,087.74 | 6,286,188,145.15 | 11.69 | -12.82 | -10.22 | Down 2.56 pct. |
| Cloud and storage | 6,096,580,972.15 | 5,012,146,620.93 | 17.79 | 13.35 | 10.92 | Up 1.80 pct. |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| products | ||||||
| Automotive electronics | 5,971,513,470.61 | 5,496,881,090.19 | 7.95 | 16.24 | 16.40 | Down 0.13 pct. |
| Medical electronics | 333,877,608.87 | 318,805,428.38 | 4.51 | -11.21 | -9.13 | Down 2.18 pct. |
| Others | 825,549,686.98 | 733,478,629.02 | 11.15 | 33.22 | 36.64 | Down 2.22 pct. |
| Total | 60,614,675,278.72 | 54,927,952,825.90 | 9.38 | -0.19 | -0.06 | Down 0.12 pct. |
| Main business by region | ||||||
| Region | Revenue | Operating costs | Gross profit margin (%) | Revenue YoY (%) | Operating cost YoY (%) | Gross profit margin YoY (%) |
| Chinese Mainland | 37,492,004,411.17 | 33,890,679,627.82 | 9.61 | 0.07 | -0.12 | Up 0.18 pct. |
| Other regions in APAC | 18,790,824,079.76 | 17,102,093,097.28 | 8.99 | -3.47 | -4.10 | Up 0.60 pct. |
| Europe | 5,209,224,311.89 | 4,592,624,471.53 | 11.84 | 4.45 | 4.55 | Down 0.09 pct. |
| Others | 5,113,405,075.70 | 5,014,856,020.15 | 1.93 | 14.19 | 19.48 | Down 4.34 pct. |
| Inter-segment offsetting | -5,990,782,599.80 | -5,672,300,390.88 | 5.32 | 5.72 | 5.15 | Up 0.51 pct. |
| Total | 60,614,675,278.72 | 54,927,952,825.90 | 9.38 | -0.19 | -0.06 | Down 0.12 pct. |
Explanation of the main business by sector, product, region and sales modeNone
(2). Analysis of production and sales volume
√Applicable □ Not Applicable
| Main products | Production volume | Sales volume | Inventory | Production YoY(%) | Sales volume YoY (%) | Inventory YoY (%) |
| Communication electronics | 494,349,638.00 | 494,330,915.00 | 25,271,373.00 | -3.89 | -4.82 | 0.07 |
| Consumer electronics | 445,860,953.00 | 443,180,616.00 | 9,566,165.00 | 48.74 | 47.19 | 38.93 |
| Industrial products | 20,254,930.00 | 20,296,037.00 | 564,723.00 | -17.87 | -18.56 | -6.79 |
| Cloud and storage products | 15,374,820.00 | 15,402,295.00 | 880,245.00 | -1.47 | -1.35 | -3.03 |
| Automotive electronics | 95,371,066.00 | 94,910,453.00 | 8,064,877.00 | -1.31 | 2.91 | 6.06 |
| Medical electronics | 892,874.00 | 903,678.00 | 15,476.00 | -2.11 | -0.82 | -41.11 |
| Others | 8,039,238.00 | 8,042,543.00 | 91,617.00 | 23.52 | 24.32 | -3.48 |
| Total | 1,080,143,519.00 | 1,077,066,537.00 | 44,454,476.00 | 12.70 | 12.12 | 7.44 |
Explanation of production and sales volumeThe revenue from consumer electronic products reduced by 0.27% YoY in 2024, and the number of lowunit price products sold increased significantly YoY.
(3). Performance of major procurement contracts and major sales contracts
□Applicable √Not Applicable
(4). Cost analysis
Unit: yuan Currency: RMB
| Cost analysis by product | |||||||
| Product | Cost item | 2024 | Percentage in total cost (%) | Amount in the same period last year | Percentage in total cost (%) | YoY (%) | Note |
| Communication electronics | Raw materials | 17,964,667,546.66 | 92.31 | 18,574,689,443.39 | 92.40 | -3.28 | |
| Labor and others | 1,496,613,347.64 | 7.69 | 1,528,635,944.73 | 7.60 | -2.09 | ||
| Consumer electronics | Raw materials | 16,411,791,453.95 | 93.15 | 16,449,923,460.54 | 92.79 | -0.23 | |
| Labor and | 1,207,380,563.98 | 6.85 | 1,278,524,049.76 | 7.21 | -5.56 | ||
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| others | |||||||
| Cloud and storage products | Raw materials | 4,310,088,572.15 | 85.99 | 3,892,924,586.58 | 86.15 | 10.72 | |
| Labor and others | 702,058,048.78 | 14.01 | 625,887,283.82 | 13.85 | 12.17 | ||
| Industrial products | Raw materials | 4,964,292,613.31 | 78.97 | 5,754,547,710.27 | 82.19 | -13.73 | |
| Labor and others | 1,321,895,531.84 | 21.03 | 1,247,148,340.34 | 17.81 | 5.99 | ||
| Automotive electronics | Raw materials | 4,174,217,256.15 | 75.94 | 3,730,517,985.44 | 78.99 | 11.89 | |
| Labor and others | 1,322,663,834.04 | 24.06 | 992,037,939.26 | 21.01 | 33.33 | ||
| Medical electronics | Raw materials | 230,364,256.39 | 72.26 | 248,859,541.67 | 70.93 | -7.43 | |
| Labor and others | 88,441,171.99 | 27.74 | 101,986,951.41 | 29.07 | -13.28 | ||
| Others | Raw materials | 541,613,669.73 | 73.84 | 340,650,856.57 | 63.46 | 58.99 | |
| Labor and others | 191,864,959.29 | 26.16 | 196,136,120.68 | 36.54 | -2.18 | ||
| Total | Raw materials | 48,597,035,368.34 | 88.47 | 48,992,113,584.46 | 89.19 | -0.81 | |
| Labor and others | 6,330,917,457.56 | 11.53 | 5,970,356,630.00 | 10.86 | 6.04 |
Explanation of other aspects of cost analysisNone
(5). Changes in the consolidation scope due to equity changes of major subsidiaries during thereporting period
□ Applicable √Not Applicable
(6). Major changes or adjustments in the business, products or services of the Company duringthe 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 32.12 billion, accounting for 52.93% of the totalannual sales; among the top five customers, the sales to related parties amounted to 0 RMB, accountingfor 0% of the total annual sales.
During the reporting period, the proportion of sales to a single customer exceeded 50% of the total, andthere were new customers among the top 5 customers or heavy dependence on a few customers.
□Applicable √Not Applicable
B. Main suppliers of the Company
√Applicable □ Not Applicable
The purchase amount from the top five suppliers was RMB 26.07 billion, accounting for 51.22% of thetotal purchase amount; among the top five suppliers, the purchase amount from related parties was 0yuan, accounting for 0% of the total purchase amount.
During the reporting period, the proportion of purchases from a single supplier exceeded 50% of thetotal, and there were new suppliers among the top 5 suppliers or heavy dependence on a few suppliers.
□Applicable √Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Other explanationsThe sales to the Company's top five customers are as follows:
Unit: 10,000 yuan Currency: RMB
| No. | Customer name | 2024 | Proportion (%) |
| 1 | Customer A | 1,943,358.38 | 32.02 |
| 2 | Customer B | 590,801.55 | 9.73 |
| 3 | Customer C | 257,584.97 | 4.24 |
| 4 | Customer D | 234,905.80 | 3.87 |
| 5 | Customer E | 185,715.65 | 3.07 |
| Total | 3,212,366.35 | 52.93 | |
The purchase amount of the Company's top five suppliers is as follows:
Unit: 10,000 yuan Currency: RMB
| No. | Supplier name | 2024 | Proportion (%) |
| 1 | Supplier A | 1,206,303.61 | 23.70 |
| 2 | Supplier B | 1,185,881.82 | 23.30 |
| 3 | Supplier C | 83,031.48 | 1.63 |
| 4 | Supplier D | 77,160.83 | 1.52 |
| 5 | Supplier E | 54,318.45 | 1.07 |
| Total | 2,606,696.18 | 51.22 | |
3. Expenses
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
| Name of project | 2024 | 2023 | Change | YoY | Remark |
| Sales expenses | 409,346,671.29 | 341,284,448.91 | 68,062,222.38 | 19.94 | |
| Administrative expenses | 1,370,514,447.54 | 1,215,427,939.02 | 155,086,508.52 | 12.76 | |
| R&D expenses | 1,907,549,706.46 | 1,807,204,128.27 | 100,345,578.19 | 5.55 | |
| Financial expenses | 312,651,073.77 | 212,029,208.10 | 100,621,865.67 | 47.46 | Mainly due to the decrease in net foreign currency exchange gains in the current period. |
| Total | 4,000,061,899.06 | 3,575,945,724.30 | 424,116,174.76 | 11.86 |
4. R&D investment
(1). Particulars of R&D investment
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
| Expensed R&D investment in the current period | 1,907,549,706.46 |
| Capitalized R&D investment in the current period | 0 |
| Total R&D investment | 1,907,549,706.46 |
| Proportion of total R&D investment to revenue (%) | 3.14 |
| Proportion of capitalized R&D investment (%) | 0 |
(2). Table of R&D personnel
√Applicable □ Not Applicable
| Number of R&D personnel in the Company | 2,930 |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Proportion of R&D personnel in the total number of employees of the Company (%) | 13.19 |
| Breakdown by educational background | |
| Educational background | Number of personnel |
| Doctor’s degree | 13 |
| Master’s degree | 1,013 |
| Bachelor’s degree | 1,587 |
| Junior college | 304 |
| Senior high school and below | 13 |
| Breakdown by age | |
| Age | Number of personnel |
| Under 30 years old (excluding 30 years old) | 369 |
| 30-40 years old (including 30 years old and excluding 40 years old) | 1,130 |
| 40-50 years old (including 40 years old and excluding 50 years old) | 1,061 |
| 50-60 years old (including 50 years old and excluding 60 years old) | 358 |
| 60 years old and above | 12 |
(3).Remark
□Applicable √Not Applicable
(4).Reasons for major changes in the composition of R&D personnel and its impact on the futuredevelopment of the Company
□Applicable √Not Applicable
5. Cash flow
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
| Items | 2024 | 2023 | Reasons for changes |
| Net cash flows from operating activities | 4,210,266,611.54 | 6,823,435,492.62 | The latter half of 2022 marked a peak in revenue, which led to a substantial amount of collections from receivables in the same period last year. In the current period, the collection of receivables has been normal, and there has been a continuous strengthening of inventory management, ensuring that operating activities maintain a stable inflow. |
| Net cash flow from investment activities | -1,195,865,276.84 | -1,428,897,187.20 | Mainly due to prudent investments in fixed assets. |
| Net cash flow from financing activities | -1,762,974,531.62 | -1,836,253,228.36 | Mainly due to the payment of high cash dividends, repayment of borrowings, and repurchase of treasury shares during the period. |
(II) Explanation of significant changes in profit caused by non-essential business
□Applicable √Not Applicable
(III) Analysis of assets and liabilities
√Applicable □ Not Applicable
1. Assets and Liabilities
Unit: yuan Currency: RMB
| Items | December 31, 2024 | Proportion to total | December 31, 2023 | Proportion to total | YoY | Remark |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| assets (%) | assets (%) | |||||
| Trading Financial Assets | 42,291,303.91 | 0.11 | 245,558,007.22 | 0.62 | -82.78 | Mainly due to the change in the accounts receivable factoring business pattern of overseas subsidiaries during this period. |
| Other receivables | 134,298,737.44 | 0.34 | 275,674,265.31 | 0.70 | -51.28 | Mainly due to the recovery of a significant amount of other receivables at the beginning of the period during the current period |
| Investments in Other Equity Instruments | 22,769,795.62 | 0.06 | 38,935,237.58 | 0.10 | -41.52 | Mainly due to changes in the fair value of investments in industrial funds during the current period. |
| Construction in progress | 364,667,733.73 | 0.91 | 641,030,985.98 | 1.63 | -43.11 | Mainly due to the gradual acceptance and transfer of factory buildings into fixed assets. |
| Other non-current assets | 184,987,639.10 | 0.46 | 68,274,790.92 | 0.17 | 170.95 | Mainly due to the expansion of overseas subsidiaries during the period, leading to an increase in prepaid project payments. |
| Derivative financial liabilities | 4,775,306.67 | 0.01 | 173,872.64 | 0.00 | 2,646.44 | Mainly due to changes in the fair value of derivative financial products during the current period. |
| Contractual Liabilities | 542,457,418.46 | 1.36 | 348,380,131.33 | 0.88 | 55.71 | Mainly due to an increase in advance payments received from customers during the period. |
| Non-current liabilities due within one year | 193,691,444.57 | 0.48 | 3,564,025,750.56 | 9.04 | -94.57 | Mainly due to the transfer of convertible bonds into non-current liabilities. |
| Other non-current liabilities | 11,106,077.85 | 0.03 | 3,944,775.07 | 0.01 | 181.54 | Mainly due to the accrual of product quality assurance expenses. |
| Long-term Borrowings | 29,872,115.04 | 0.07 | 47,385,951.10 | 0.12 | -36.96 | Mainly due to the repayment of long-term loans by subsidiaries. |
| Bond payable | 3,467,944,609.76 | 8.67 | 0.00 | 0.00 | 100.00 | Mainly due to the transfer of convertible bonds from current liabilities. |
| Estimated Liabilities | 74,187,068.91 | 0.19 | 48,279,064.03 | 0.12 | 53.66 | Mainly due to subsidiaries accruing product quality assurance expenses. |
| Treasury Stock | 100,052,846.15 | 0.25 | 321,730,995.54 | 0.82 | -68.90 | Mainly due to the cancellation of shares repurchased in |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| previous years. | ||||||
| Other comprehensive income | 176,365,826.20 | 0.44 | 264,387,466.62 | 0.67 | -33.29 | Mainly due to foreign exchange translation losses arising from exchange rate fluctuations during the period. |
Other explanationsNone
2. Overseas assets
√Applicable □ Not Applicable
(1) Asset size
Including: overseas assets 19,407,328,890.79 (unit: yuan; currency: RMB), accounting for 48.52% of thetotal assets.
(2) Relevant explanations on the relatively high proportion of overseas assets
√Applicable □ Not Applicable
Unit: RMB 10,000 yuan
| Overseas assets | Causes | Operating model | 2024 Revenue | 2024 Net profit |
| Universal Global Scientific Industrial Co., Ltd. | Establishment | Independent operation | 1,187,453 | 31,530 |
| Universal Global Technology Co., Limited | Establishment | Independent operation | 2,212 | -15,220 |
| Universal Global Industrial Co., Limited | Establishment | Independent operation | 738 | 637 |
| UNIVERSAL SCIENTIFIC INDUSTRIAL VIETNAM COMPANY LIMITED | Establishment | Independent operation | 359,687 | 14,207 |
| Universal Scientific Industrial (France) | Establishment | Independent operation | 44 | -2,958 |
| Universal Scientific Industrial De México S.A. De C.V. | Business combination under common control | Independent operation | 433,686 | -23,551 |
| Universal Scientific Industrial Co., Ltd. | Business combination under common control | Independent operation | 329,073 | 5,286 |
3. Restrictions on major assets as at the end of the reporting period
□Applicable √Not Applicable
4. Other explanations
□Applicable √Not Applicable
(IV) Analysis of industry business information
√Applicable □ Not Applicable
1. In terms of communication products, Apple smart phones accounted for 19% of the global smartphone market in 2024, with sales reaching 232 million units, an decrease of 1% over that of 2023.
WW Smart Phone Estimated Market Share
| 2023 | 2024 | 23'24 | |||
| Shipments | Market | Shipments | Market | YoY | |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| (M units) | Share% | (M units) | Share% | Growth% | |
| Worldwide Total | 1,167 | 1,239 | 6.2% | ||
| Apple | 235 | 20% | 232 | 19% | -1% |
| Samsung | 227 | 19% | 223 | 18% | -1% |
| Xiaomi | 146 | 13% | 169 | 14% | 15% |
| Transsion | 95 | 8% | 107 | 9% | 13% |
| OPPO | 103 | 9% | 105 | 8% | 2% |
| Others | 359 | 31% | 403 | 33% | 12% |
Source: USI, Feb. 2025
2. In terms of consumer electronics products, in 2024 the wearable product shipments grew by 6.1%overall, 5.6% for earphones, 9% for watches, and augmented reality/virtual reality (AR/VR) representedby Glasses, AR HMD, VR HMD is expected to have a high CAGR in the future.
WW Wearable Market Forecast
| 2023 | 2024 | 2025 | 2026 | 2027 | 23’24 Growth | 24-27 CAGR | |
| Total Shipment (M Units) | 549 | 590 | 620 | 645 | 670 | 6.1% | 3.2% |
| Earwear | 338 | 357 | 371 | 382 | 389 | 5.6% | 2.2% |
| Smartwatch | 165 | 180 | 190 | 199 | 206 | 9.0% | 3.5% |
| Wrist Band | 34 | 36 | 37 | 35 | 39 | 7.1% | 1.7% |
| Glasses | 1.1 | 1.8 | 1.8 | 2.0 | 2.1 | 64% | 3.9% |
| AR HMD | 0.5 | 0.8 | 1.6 | 3.7 | 6.8 | 60% | 71% |
| VR HMD | 9.2 | 12.7 | 17.0 | 21.1 | 25.5 | 38% | 19% |
| Others | 1.3 | 1.6 | 1.7 | 1.8 | 2.0 | 23.1% | 5.7% |
Source: USI, Feb. 2025
3. In terms of cloud and storage products, the market demand for server mainboards and switches hasmaintained stable growth, in which AI server is expected to realize a significantly higher CAGR thanthe server industry average as the global demand for computing power continues to explode. Bystrengthening cooperation with major customers, the Company is striving for more market shares andorders.
3.1 WW Server Shipment Forecast
| Server | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 23-28 CAGR |
| Shipments (K Units) | 14,431 | 14,691 | 15,264 | 15,602 | 16,696 | 17,439 | 3.9% |
| YoY% | -18.3% | 1.8% | 3.9% | 2.2% | 7.0% | 4.5% |
Source: USI, Feb. 2025
3.2 AI Server Shipment Forecast
| AI Server | 2023 | 2024 | 2025 | 2026 | 2027 | 23-27 CAGR |
| Shipments (K Units) | 1,300 | 1,672 | 1,970 | 2,133 | 2,213 | 14.2% |
Source: USI, Feb. 2025
3.3 The scale of global switch market continued to grow, among which the demand for high-speedswitches was stronger. The Company currently provides complete switch manufacturing services to corecustomers.
| Switch | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 23-28 CAGR |
| Revenue ($ Billion) | 33.6 | 35.8 | 38.1 | 40.7 | 43.3 | 45.5 | 6.4% |
| YoY% | 7.5% | 6.6% | 6.6% | 6.6% | 6.6% | 5.0% |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Source: USI, Feb. 2025
3.4 In terms of storage products, SSD is the important product of the Company. The growth of SSDapplications in laptops and data centers maintained, and the market grew by 17.6% in 2024. The CAGRof the SSD market from 2024 to 2026 is expected to be around 17.6%.
| 2023 | 2024 | 2025 | 2026 | 2027 | 23’24 | 24-27 | |
| YoY | CAGR | ||||||
| Total SSD Revenue ($ Billion) | 55.7 | 65.5 | 77.0 | 90.5 | 90.5 | 17.6% | 17.6% |
Source: USI, Feb. 2025
4. In terms of industrial products, the market of smart handheld devices and POS grew by 5% in 2024due to the recovery of logistics and warehousing demand and the recovery of retail industry.
| 2023 | 2024 | 2025 | 2026 | 2027 | 23'24 | 24-27 | |
| YoY | CAGR | ||||||
| Total POS Revenue ($ Billion) | 85 | 94 | 103 | 112 | 123 | 5% | 4% |
Source: USI, Feb. 2025
5. In terms of the automotive products, 2024 automotive electronics market grew by 7.0%, and theCAGR from 2024 to 2027 is expected to be 7.1%. Meanwhile, the electric vehicle market showed highgrowth in 2023 with sales growth of 37%.
5.1 Global Automotive Electronics Market Forecast
| 2023 | 2024 | 2025 | 2026 | 2027 | 23'24 | 24-27 | |
| YoY | CAGR | ||||||
| Total AE Revenue ($ Billion) | 313 | 335 | 359 | 384 | 412 | 7.2% | 7.1% |
Source: USI, Feb. 2025
5.2 The global sales of new energy vehicles have been growing at a fast pace, and the trend ofelectrification contributes to a continuous increase in their penetration rate in the automobile market.However, with the expected retreat of global governments' subsidy policies in the pure electric vehiclesector, as well as the weak improvement of pure electric vehicle profit margins, the pure electrictransformation of major traditional vehicle manufacturers in the world is slowing down, and the marketfor hybrid electric vehicles (HEVs) is expected to grow at a higher CAGR than that of pure electricvehicles by 2027.
| 2023 | 2024 | 2025 | 2026 | 2027 | 23'24 | 24-27 | |
| YoY | CAGR | ||||||
| Total (K units) | 21,080 | 26,000 | 30,708 | 36,572 | 44,746 | 23% | 20% |
| HEV | 7,000 | 9,100 | 11,921 | 15,378 | 19,530 | 30% | 29% |
| BEV | 10,000 | 12,000 | 13,667 | 14,667 | 18,444 | 20% | 15% |
| PHEV | 4,000 | 4,800 | 5,000 | 6,333 | 6,528 | 20% | 11 |
| FCY | 80 | 100 | 120 | 194 | 244 | 25% | 35% |
Source: USI, Feb. 2025
5.3 Total Auto Power Module
| 2023 | 2024 | 2025 | 2026 | 2027 | 23'24 | 24-27 | |
| YoY | CAGR | ||||||
| Total Auto Power Module ($ Million) | 3,154 | 3,473 | 4,010 | 4,438 | 4,885 | 10% | 12% |
| IGBT Power Module | 2,610 | 2,871 | 3,272 | 3,574 | 3,900 | 10% | 11% |
| MOSFET Power Module | 426 | 431 | 459 | 507 | 558 | 1% | 9% |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Wide Bandgap Power Module | 118 | 171 | 279 | 357 | 427 | 45% | 36% |
Source: USI, Feb. 2025
5.4 Automotive Advanced Driver Assistance Systems (ADAS) Market Forecast
| 2023 | 2024 | 2025 | 2026 | 2027 | 23'24 | 24-27 | |
| YoY | CAGR | ||||||
| Total ADAS Revenue ($ Billion) | 34 | 50 | 57 | 67 | 79 | 47.5% | 16.7% |
Source: USI, Feb. 2025
5.5 Automotive Communication Products Market Forecast
| 2023 | 2024 | 2025 | 2026 | 2027 | 23'24 | 24-27 | |
| YoY | CAGR | ||||||
| Total Automotive Communication Revenue ($ Billion) | 8.8 | 9.8 | 11.0 | 12.2 | 13.5 | 11.3% | 11.4% |
Source: USI, Feb. 2025
6. In terms of medical electronic products, the market demand for outsourced electronic manufacturingservices has been growing steadily.
| Medical Product Assembly Value ($ Million) | 2023 | 2024 | 2025 | 2026 | 2027 | 23'24 | 24-27 |
| YoY | CAGR | ||||||
| Total | 57,406 | 60,458 | 64,217 | 68,171 | 72,488 | 5.3% | 6.2% |
| Medical Diagnostics | 23,144 | 24,162 | 25,708 | 27,328 | 29,077 | 4.4% | 6.4% |
| Therapeutic | 13,007 | 13,722 | 14,490 | 15,287 | 16,220 | 5.5% | 5.7% |
| Monitoring & Surgical | 21,255 | 22,572 | 24,017 | 25,554 | 27,190 | 6.2% | 6.4% |
Source: USI, Feb. 2025
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(V) Analysis of investmentOverall analysis of foreign equity investment
√Applicable □ Not Applicable
As of the end of this reporting period, the Company's long-term equity investment was RMB 516 million, an increase of RMB 180 million or 3.66% from the beginningof the year. The primary reason is the recognition of investment gains or losses under the equity method during the current period. For further details, please refer toNote VII, 17 "Long-term Equity Investments" in the financial statements.
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
| Category of assets | Opening balance | Gain or loss from change in fair value in the current period | Cumulative changes in fair value included in equity | Impairment provision in the current period | Purchase amount in the current period | Sales/redemption amount in the current period | Other changes | Ending balance |
| Stocks | 62,419,018.11 | -5,645,212.53 | 6,597,018.45 | 0.00 | 44,224,800.00 | -21,316,140.40 | -1,294,320.01 | 84,985,163.62 |
| Private equity funds | 170,511,081.52 | -11,940,767.83 | 0.00 | 0.00 | 9,000,000.00 | -33,644,918.85 | 4,952,471.00 | 138,877,865.84 |
| Derivatives | 21,982,564.36 | 15,125,360.16 | 0.00 | 0.00 | 0.00 | -116,996,585.51 | 117,404,658.23 | 37,515,997.24 |
| Others: Wealth management products | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -58,584,884.00 | 58,584,884.00 | 0.00 |
| Others: Accounts receivable factoring | 223,401,570.22 | 0.00 | 0.00 | 0.00 | 264,623,385.41 | -484,556,581.57 | -3,468,374.06 | 0.00 |
| Total | 478,314,234.21 | -2,460,620.20 | 6,597,018.45 | 0.00 | 317,848,185.41 | -715,099,110.33 | 176,179,319.16 | 261,379,026.70 |
Note:
1. Stocks: equity investment in TriKnight Capital Corporation, GaN System Inc, Senscomm Semiconductor Co., Ltd., NeuroBlade Ltd
2. Private-equity fund: PHI FUND, L.P. and Suzhou Glory Ventures Equity Investment Partnership
3. Derivatives: foreign exchange forward contract
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
4. Other changes include realized income and foreign currency translation in the current period
Investment in securities
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
| Type of security | Stock code | Stock abbreviation | Initial cost of investment | Source of fund | Beginning book value | Gain or loss from change in fair value in the current period | Cumulative changes in fair value included in equity | Purchase amount in the current period | Sales amount in the current period | Gains and losses on investments in the current period | Ending book value | Accounting items |
| Stocks | TriKnight Capital Corporation | 64,209,941.74 | Self-owned funds | 38,935,237.58 | 6,597,018.45 | - | -20,829,586.70 | -1,932,873.71 | 22,769,795.62 | Investments in other equity instruments | ||
| Stocks | GaN System Inc. | 34,822,962.11 | Self-owned funds | - | - | - | - | -486,553.70 | 486,553.70 | - | Other non-current financial assets | |
| Stocks | Senscomm Semiconductor Co., Ltd. | 20,000,000.00 | Self-owned funds | 23,483,780.53 | -5,645,212.53 | - | - | - | - | 17,838,568.00 | Other non-current financial assets | |
| Stocks | PI Semiconductor | 30,000,000.00 | Self-owned funds | - | - | - | 30,000,000.00 | - | - | 30,000,000.00 | Other non-current financial assets | |
| Stocks | NeuroBlade Ltd | 14,224,800.00 | Self-owned funds | - | - | - | 14,224,800.00 | - | 152,000.00 | 14,376,800.00 | Other non-current financial assets | |
| Total | / | / | 163,257,703.85 | / | 62,419,018.11 | -5,645,212.53 | 6,597,018.45 | 44,224,800.00 | -21,316,140.40 | -1,294,320.01 | 84,985,163.62 | / |
Investment in securities
□Applicable√ Not Applicable
Investment in private equity funds
√Applicable □ Not Applicable
1. Glory Ventures
The Company signed the Suzhou Glory Ventures Equity Investment Partnership (Limited Partnership) Agreement with Shanghai Glory Ventures InvestmentManagement Co.,LTD and 21 other limited partners (LP). USI invested in Suzhou Glory Ventures Equity Investment Partnership (Limited Partnership) as an LP. Thetotal subscription amount to be paid is RMB 30,000,000.00, of which RMB 9,000,000.00 was paid during the current period. As of December 31, 2024, the Companyhas cumulatively paid RMB 30,000,000.00; there is no outstanding subscription amount. (Full payment has been made.)
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Investment in derivatives
√Applicable □ Not Applicable
(1). Derivative investments for hedging purposes during the reporting period
□Applicable √Not Applicable
(2). Derivative investments for speculative purposes during the reporting period
□Applicable √Not Applicable
Other explanationsThe Tenth Meeting of the Sixth Session of the Board of Directors of the Company considered and approved the Proposal on the Estimated Amount of FinancialDerivatives Transactions, agreeing that the Company shall carry out financial derivatives transactions business, and that it is expected that the total amount offoreign exchange hedging transactions from April 1, 2024, to March 31, 2025, will be limited to USD 1 billion (or the equivalent of other currencies) and that suchamount can be utilized on a recurring basis within the quota. The cumulative transaction amount for 2024 was USD 6.04 billion, of which USD 5.47 billion hadbeen settled by December 31, 2024, and USD 566 million remained unsettled. The realized profits amounted to RMB 117,404,658.23, and the unrealized profitswere RMB 15,125,360.16.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
4. Specific progress of material asset restructuring and integration during the reporting period
□Applicable √Not Applicable
(VI) Sale of material assets and equity
□Applicable √ Not Applicable
(VII) Analysis of major holding and joint stock companies
√Applicable □ Not Applicable
1. Holding subsidiaries
Unit: RMB 10,000 yuan
| Company Name | Main business | Currency of registered capital | Registered capital (RMB) | Total assets | Net assets | Net profit |
| Universal Global Scientific Industrial Co., Ltd. | Production and sales, product design and R&D | NTD | 1,980,000,000 | 581,895 | 280,877 | 31,530 |
| UNIVERSAL GLOBAL TECHNOLOGY(KUNSHAN)CO., LTD. | Production and sales | RMB | 550,000,000 | 398,369 | 248,883 | 32,829 |
| Universal Global Technology Co., Limited | Trade and Investment | USD | 524,803,000 | 841,480 | 471,121 | -15,220 |
| Universal Global Technology (Shanghai) Co., Ltd. | Production and sales, product design and R&D | RMB | 1,330,000,000 | 354,688 | 241,377 | 14,459 |
| Universal Global Technology (Huizhou) Co., Ltd | Production and sales | RMB | 800,000,000 | 241,331 | 129,391 | 26,676 |
| Universal Global Industrial Co., Limited | Trade and Investment | USD | 51,000,000 | 216,520 | 41,600 | 637 |
| Universal Scientific Industrial De México S.A. De C.V. | Contract manufacturing, product repair and related services | Mexico MXN | 2,293,299,926 | 394,539 | 72,423 | -23,551 |
| UNIVERSAL SCIENTIFIC INDUSTRIAL VIETNAM COMPANY LIMITED | Production and sales, product design and R&D | USD | 115,000,000 | 203,543 | 108,409 | 14,207 |
| Universal Scientific Industrial (France) | Investment | EUR | 321,374,822 | 269,604 | 244,514 | -2,958 |
| Universal Scientific Industrial Co., Ltd. | Production and sales, product maintenance | NTD | 1,399,727,400 | 137,939 | 74,894 | 5,286 |
| Asteelflash (Suzhou) Co.,Ltd. | Production and sales | USD | 18,000,000 | 121,638 | 81,044 | 11,132 |
Note 1: the registered capital includes the amount of re-investment to other subsidiaries, and the amountof total assets, net assets and net profit is from standalone financial statements, not including subsidiaries.Note 2: the above are subsidiaries within the scope of the consolidated statements that meet the conditionsthat one of the indicators of total assets, operating income, and net profit accounts for more than 5% of thecorresponding amount in the consolidated statements.
2. Affiliates
Unit: RMB 10,000 yuan
| Company Name | % | Currency of registered capital | Registered capital (RMB) | Total assets | Net assets | Net profit |
| M-Universe Investments PTE.LTD. | 42.23 | USD | 138,969,126 | 174,411 | 120,739 | 8,999 |
Note: the above are affiliates that meet the conditions that one of their indicators of net assets and netprofit 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
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Unit: RMB 10,000 yuan
| Company Name | Revenue | Operating profit | Net profit | Contribution to consolidated net profit |
| Universal Global Scientific Industrial Co., Ltd. | 1,187,453 | 37,291 | 31,530 | 19.18% |
| UNIVERSAL GLOBAL TECHNOLOGY(KUNSHAN)CO., LTD. | 499,825 | 37,815 | 32,829 | 19.97% |
| Universal Global Technology (Huizhou) Co., Ltd | 375,535 | 31,744 | 26,676 | 16.22% |
(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 globalelectronic manufacturing service (EMS) revenue exceeded USD 633.2 billion in 2024, and is expected toreach USD 800 billion in 2027, growing at an average CAGR of 4.6% from 2023 to 2028. The overallmarket shows a steady growth trend, and the Asia-Pacific region will maintain a leading growth rate.
Source: USI, Feb. 2025
The Worldwide CM, EMS and ODM Market by Region, 2023-2028 (unit: USD 100 million)
| The Worldwide CM, EMS and ODM Market by Region, 2023-2028 | |||||||
| 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | CAGR | |
| CM Revenue | |||||||
| Americas | 120,963 | 125,902 | 131,161 | 137,026 | 143,176 | 149,631 | 4.3% |
| EMEA | 94,532 | 98,494 | 102,524 | 106,617 | 110,770 | 114,980 | 4.0% |
| APAC | 422,733 | 408,847 | 437,829 | 466,755 | 499,272 | 534,404 | 4.8% |
| Total | 638,228 | 633,243 | 671,514 | 710,398 | 753,218 | 799,015 | 4.6% |
| EMS Revenue | |||||||
| Americas | 117,468 | 122,284 | 127,420 | 133,154 | 139,146 | 145,408 | 4.4% |
| EMEA | 90,628 | 94,434 | 98,306 | 102,238 | 106,225 | 110,262 | 4.0% |
-4.0%-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
202320242025202620272027
EMSODMEMS YoYODM YoY
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| APAC | 306,933 | 295,840 | 316,180 | 338,048 | 362,429 | 389,278 | 4.9% |
| Total | 515,029 | 512,558 | 541,905 | 573,440 | 607,801 | 644,947 | 4.6% |
| ODM Revenue | |||||||
| Americas | 3,495 | 3,618 | 3,741 | 3,872 | 4,030 | 4,224 | 3.9% |
| EMEA | 3,904 | 4,060 | 4,218 | 4,379 | 4,545 | 4,718 | 3.9% |
| APAC | 115,800 | 113,007 | 121,649 | 128,707 | 136,842 | 145,126 | 4.6% |
| Total | 123,199 | 120,685 | 129,608 | 136,958 | 145,417 | 154,068 | 4.6% |
Source: USI, Feb. 2025
2. Global competitive landscape and industry ranking
According to the latest ranking of global EMS providers (2023), USI ranked 12th.
Unit: USD 100 million
| Rank | Name of manufacturer | Revenue | Revenue | Annual growth rate | Net operating margin |
| Year | 2022 | 2023 | 22'23 | 2023 | |
| 1 | Honghai | 2,228 | 1,978 | -11.2% | 2.2% |
| 2 | BYD | 623 | 848 | 36.1% | 5.1% |
| 3 | PEGATRON | 444 | 404 | -9.1% | 3.9% |
| 4 | Quanta | 432 | 349 | -19.2% | 3.6% |
| 5 | COMPAL | 363 | 345 | -4.9% | 3.6% |
| 6 | Jabil | 345 | 335 | -3.2% | 3.6% |
| 7 | Wistron | 329 | 304 | -7.4% | 2.6% |
| 8 | Lixun | 316 | 294 | -7.1% | 2.0% |
| 9 | Flextronics | 297 | 280 | -5.8% | 2.0% |
| 10 | INVENTEC | 181 | 166 | -8.2% | 1.8% |
| 11 | Delta | 129 | 129 | -0.3% | 2.3% |
| 12 | USI | 101 | 86 | -15.1% | 3.2% |
| Whole Industry | 6,944 | 6,382 | -8.1% | 2.6% |
Source: USI, Feb. 2025
3. Industry trend of profit level and analysis of net profit margin
The Company's net profit margin in 2023 was 3.2%, higher than the average of the world's top tenelectronics manufacturing service providers. In 2024, the Company's net profit margin was 2.7%, adecrease of 0.5 percentage points compared to 2023. This was mainly due to the continuous increase inoperating costs for overseas investments and the losses incurred from newly acquired businesses.Overall, driven by technological innovation and market demand, the profit margin levels in the globalelectronics manufacturing service industry are expected to remain stable or increase slightly. However,rising costs and uncertainties in the macroeconomic environment may still impose certain constraints onprofit margins. Areas with relatively rapid demand growth include 5G communication, artificialintelligence, and electric vehicles. Nevertheless, factors such as rising raw material costs, a tight labormarket, and increasing logistics costs are putting pressure on profit margins. At the same time, enterprisesare striving to improve operational efficiency and profit margins by accelerating the application ofautomation and intelligent manufacturing technologies and optimizing the layout of the supply chain. Thecontinuous occurrence of industry integration and mergers and acquisitions activities has also brought
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
economies of scale and synergies to some enterprises, which helps to increase the net profit margin.However, the uncertainties in the global economy, fluctuations in interest rates and exchange rates, andincreasingly stringent environmental regulations are also bringing additional costs and risks to enterprises.
4. Industry landscape
(I) Basic situation of the industrySince 2023, generative AI and large models have attracted much attention, and major Cloud-as-a-Servicemanufacturers have continued to ramp up AI related investment, driving the continuous expansion andupgrading of server, optical communication, power supply and related hardware industries. Consumerdemand for alternative consumer products has not yet been fully released, but as AI technology empowersand accelerates the application of major end point brands, it is expected to break the lack of innovation inconsumer electronics products. AI Phone, AI PC and other "AI +" consumer electronics products willcontinue to attract more attention, and products with better demand for hardware performance will alsopromote the demand for electronic manufacturing services. In addition to consumer electronics, theapplication of AI technology will also drive innovation in areas such as intelligent driving and humanoidrobots, and create new market demand.
(2) Production capacity supply
Global trade protectionism and geopolitical factors continue to escalate. In order to reduce the uncertaintyand risks of the supply chain, European and American companies have paid more attention tostrengthening the supply chain in the region, resulting in the transfer of the electronic manufacturingservice industry to Southeast Asia, India, Mexico, and Eastern Europe. The impact of tariffs on the supplychain may further exacerbate the process of industrial transfer, which requires comprehensiveconsideration of potential tariffs, transportation costs, localized supply chain resources, and technicaltalent resources. Enterprises need to make capacity layout and resource allocation between differentregions to cope with the uncertainty of trade policy. In order to improve production efficiency and quality,the electronic manufacturing service industry will increase investment in automation and intelligentmanufacturing, reduce the use of direct labor, and improve the flexibility and responsiveness of productioncapacity.
(3) Supply chain trends
Under the pressure of customers to reduce costs, electronic manufacturing service enterprises areaccelerating the optimization of the supply chain and improving the manufacturing sites' localized supplychain. Clients are also more concerned about the resilience of the supply chain, preferring to cooperatewith supply chain partners or increase the outsourcing of some production links to achieve resourcesharing and risk sharing.
(4) Technological development
With the continuous development of integrated circuit technology, the electronic manufacturing serviceindustry will develop towards high integration and miniaturization, and the miniaturization of componentswill place better demands on process technology, manufacturing process innovation, processingequipment, and testing equipment. In order to better meet the diverse needs of the market, the electronicmanufacturing service industry will place greater emphasis on the development of flexible manufacturingtechnologies in the future, enabling high-mix low-volume manufacturing production patterns. Artificialintelligence, big data, and the Internet of Things will be more widely used in the production process toachieve intelligent production scheduling, quality control, and equipment maintenance. Artificialintelligence will enable the production system to have self-awareness, self-decision-making, and self-evolution capabilities, and promote manufacturing activities from experience-driven to data-driven. Theindustry will also strengthen the digital management of the supply chain, improve the transparency andefficiency of the supply chain through blockchain, cloud computing and other technologies, and realizethe visualization and collaborative management of the supply chain. With the improvement ofenvironmental protection and carbon reduction, electronics manufacturing enterprises will place greateremphasis on the development and application of green manufacturing technologies, reducing energyconsumption and environmental pollution.
(5) Changes in Client Server Requirements
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
In order to reduce supply chain risk, well-known brand manufacturers tend to cooperate with electronicmanufacturing service enterprises with global layout capabilities, requiring manufacturing serviceenterprises to have the ability to respond quickly to changes in market demand. In order to maintain costcompetitiveness, customers expect manufacturing service companies to provide more technologicalinnovation solutions, including hardware design and software design, and to establish closer R&Dpartnerships with customers. In addition, due to consumers' growing awareness of environmentalprotection and sustainable development, manufacturing service companies are also paying increasingattention to energy conservation and carbon reduction issues and sustainable development.
5. Industrial barriers
(1) Barriers of R&D and manufacturing capacity
The technological innovation of electronic products is changing with each passing day, and the productupgrade cycle is shortened, requiring manufacturing service providers to continuously enhance theirproduct design and process research and development capabilities. The manufacturing service industry istransforming and upgrading to intelligent manufacturing, through automated production and Industry 4.0technology, to improve product quality, process stability, and on-time delivery. There is a very highthreshold for manufacturing service providers to have high-level product R&D and intelligentmanufacturing capabilities, capacity economies of scale, and quality control systems.
(2) Barriers to entering brand owners' supply chain
The electronic manufacturing services industry is highly competitive. To establish partnerships with majorbrand manufacturers and integrate into their global supply chains, companies must undergo rigorousquality management system audits and obtain product performance certifications. Therefore, strict vendorqualifications are the barrier for new entrants.Due to the rapid development of technological innovation, the product market has undergone rapidchanges and industry competition has intensified, compounded by trade protection factors such asgeopolitics and tariffs. In order to cope with cost increases and enhance supply chain competitiveness,leading brand manufacturers expect to choose suitable electronic manufacturing service providers, deepenbusiness and investment cooperation in manufacturing services, cooperative research and development,product planning and design, and supply chain strategies, and develop closer long-term partnerships.
(3) 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. which requires high initial investment, and subsequent investments intechnologies and equipment renewal along with constant product upgrades; on the other hand, massproduction needs large-scale, complete procurement system, for which a large amount of working capitalis required.
(4) Barriers of global business footprint
Large brand manufacturers hope that long-term cooperative electronic manufacturing service providerscan provide a package of solutions from R&D, design, manufacturing, after-sales, etc., with intelligentmanufacturing and global manufacturing service capabilities, and can provide customers with globallocalized manufacturing services and delivery solutions to meet the needs of customer supply chaindiversification and risk management. In addition, the increasing demand for nearshoring and friendlyshoring is conducive to large brand manufacturers facing risks such as trade policy changes andgeopolitical conflicts, reducing the degree of impact on the supply chain, ensuring stable production anddelivery of products, and having a global business layout is essential for top-tier clients in the serviceindustry.
(II) Corporate Development Strategy
√Applicable □ Not Applicable
1. Challenges ahead
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(1) Downstream demand is gradually recovering, and the Company's overall equipment efficiency is nothigh, which affects the profitability of the Company's manufacturing service business.
(2) The continued impact of factors such as geopolitics, tariff increases, and trade protection has causedthe Company to increase the cost of serving customers and face more uncertainties in its daily operations.
(3) Customers have put forward more service requirements for supply chain cost reduction, intelligentmanufacturing, cooperative R&D, and selection of manufacturing service bases. The Company needs toadapt to new trends and accelerate transformation and development.
(4) The comprehensive cost of the Company's new investment capacity is relatively high, and the profitmargin is low. Therefore, it is necessary to optimize costs, improve efficiency, and improve profitabilityin operations.
(5) The Company has become a global operating enterprise, facing a multi-cultural, multi-lingual, multi-ethnic, and multi-time zone operating environment. It needs to establish a more complete system in termsof strategy implementation, operation management, internal collaboration, team building, and incentivemechanisms.
2. Corresponding strategies
(1) Leveraging the Company's technological strengths, capital advantages, and resource integrationcapabilities, the Company will deepen cooperation with existing customers and secure new productapplication opportunities with more leading clients in the modular product sector to expand businessgrowth points.
(2) Aligning with the "global demand, localized service" trend, the Company will strategically allocateglobal production capacity. Through advanced manufacturing processes, flexible production capabilities,and localized services, we will deliver additional value by introducing new technologies, developinginnovative products, and shortening the timeline from conceptual design to mass production for customers.
(3) Optimizing production capacity and business layout, the Company will accelerate capacity investmentin Southeast Asia to meet customer demands, improve operational efficiency and profitability of theMexico plant, and prioritize overall capacity utilization across global manufacturing facilities.
(4) Enhancing supply chain resilience and flexibility, the Company will develop regional local suppliers,continuously upgrade smart manufacturing capabilities worldwide, and actively cultivate competitivedomestic suppliers for raw materials, production equipment, testing instruments, and automation systems.The Company’s scale and efficiency advantages will better serve clients with substantial demand.
(5) Combining the industrial strengths of the Company and its controlling shareholders to strengthensynergy in product R&D and customer development. This collaboration will enable the Company toprovide innovative product solutions and achieve forward-looking strategic positioning.
(6) Increasing R&D investment in critical technologies and application fields, the Company will enhancedesign capabilities and JDM/ODM services. Through resource integration across the group, technologysharing, and independent innovation, The Company will strengthen vertical integration and industrialcollaboration across the supply chain to boost competitiveness.
(7) Supporting corporate development strategy, the Company will establish more competitivecompensation and incentive systems, intensify employee skills training, improve internal talentdevelopment mechanisms, as well as cultivate and recruit global operation professionals.
(8) Maintaining a robust financial structure to meet capital requirements for global operations and M&Ainvestments while ensuring financial stability.(III) Business plan
√Applicable □ Not Applicable
1. Overall plan
The Company will adhere to the development strategy of "modularization, diversification, andglobalization", enhance vertical integration and intelligent manufacturing capabilities, improve the global
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
production and operation system, and promote endogenous growth. At the same time, the Company willcontinue to invest in M&A activities and actively seek external growth opportunities.The Company will more prudently arrange human resources and capital expenditure, balance the annualfinancial goals and long-term investment plans, and expand digital management according to the needs ofbusiness development and global operations to contribute to the intelligent and automatic production.The Company's growth plan mainly includes:
(1) Strive to maintain market share in core clients’ SiP module business, strengthen the promotion ofminiaturization technology and SiP module applications, accelerate new product R&D and clientexpansion, continue expanding module business revenue scale, and intensify efforts in developing newproducts and applications such as smart wearables and smart home devices.
(2) Explore new business opportunities by addressing customer bottleneck issues to enhance satisfaction,aiming to secure incremental orders.
(3) Expand production capacity in Southeast Asia, optimize operational efficiency of local manufacturingservices around the world, and actively develop local suppliers to improve supply chain resilience andflexibility.
(4) Enhance software design and solution capabilities, continuously develop AI-driven softwareapplication services, and seek new collaboration opportunities through hardware-software integration withexisting clients and new markets.
(5) Prudently control workforce expansion, expense budgets, and capital expenditures by evaluating theratio between budget allocations and processing fee income to strictly manage cost outflows.
(6) Strengthen digital transformation initiatives, advance smart manufacturing across all facilities, upgradeoperations using AI&IT technology platforms, focus on re-optimizing operational processes, and drivecontinuous digital optimization of internal workflows to improve operational performance andcompetitiveness.
2. Supply chain plan
The global electronics manufacturing industry is currently facing multiple risks and challenges, includinggeopolitics, tariff wars, and trade restrictions. Large enterprises are increasingly emphasizing supply chaindiversification and risk management, hoping to enhance supply chain risk management capabilities andenhance supply chain resilience. The Company's supply chain department meets the needs of theCompany's global operations and actively builds a more resilient supply chain to provide flexible, stable,and efficient services to meet customer needs. In addition, it also needs to achieve the short, medium, andlong-term goals of a sustainable supply chain. The main strategies of the Company's supply chain are asfollows:
(1) Enhance supply chain resilience: increase the proportion of local supply and develop local suppliers invarious regions to reduce transportation time and costs, while improving supply elasticity and responsespeed. From the product design stage, the Company evaluates material supply risks during massproduction and adjust order allocation and stocking strategies in real time according to market conditions.Maintain supply chain flexibility so that customers can quickly adjust their supply chain configurations inresponse to geopolitical or possible tariff changes.
(2) Strengthen the overall competitiveness of the supply chain: continuously invest in the training ofsupply chain talents and the improvement of professional technology, establish long-term partnershipswith major suppliers, and obtain the best support in terms of price, product quality, technology, deliverytime and service; actively develop domestic competitive raw material suppliers and equipment suppliersfor production, testing, automation, etc., and use the advantages of scale and efficiency to serve customerswith certain scale needs to further strengthen the overall competitiveness.
(3) Global operations management: in response to the globalization of manufacturing sites and geopoliticalinfluences resulting in the adjustment of production bases, reducing transportation costs and time, whileimproving logistics tracking and real-time management capabilities.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(4) Inventory management: actively manage inventory turnover days, take active measures against riskinventory, increase the proportion of local supply, and cooperate with global operation management toreduce inventory in transit.
(5) Ensure regulatory compliance: ensure compliance with the latest local government regulations on trade,tariffs, imports and exports, and develop response strategies in advance for possible scenarios.
(6) Optimize processes and systems: optimize end-to-end processes and systems in the supply chain, sharebest practices across manufacturing sites, and use digital technologies to improve decision-making quality.
(7) Promote sustainable supply chain management: standardize the supply chain, conduct riskinvestigations, audit assessments, and provide guidance for improvement, and promote the improvementof upstream suppliers in conflict mineral management, carbon management, supplier evaluation, andsupply chain information security, so as to gradually achieve sustainable management goals.
3. Global manufacturing site plan
So far, the Company has 30 manufacturing sites in 12 countries (including regions) around the world, andoverseas factory revenue accounts for about 38% of total revenue.In 2024, the Company's new plant in Poland and the second plant in Mexico was completed and put intooperation, and the newly added capacity will be used to serve customers in the automotive electronics andindustrial fields. In early 2025, the Company's second-phase plant in Vietnam was completed and put intooperation, and the newly added capacity will be used to serve customers in the consumer electronics andindustrial fields.
4. Human resources plan
According to the glocalization development strategy, the Company formulates a global human resourceplan, which is a prediction and plan for its future manpower demand, talent recruitment and employeetraining in order to deal with challenges brought by various cultural backgrounds, languages, ethnicitiesand time zones of the multinational operations. The Company will continue to improve the people-orientedcorporate culture, create growth opportunities for employees, establish a career development, performanceevaluation and incentive mechanism for employees, and reduce employee turnover so as to provide astrong talent foundation for the Company to achieve its development goals.
5. R&D plan
Currently, the Company has been devoted to producing lighter, thinner, shorter, smaller products withlow-power consumption, strong interconnectivity, and AI capability. In 2025, the Company will continueto research the functional integration of SiP system modules and communication antennas, and expand theapplication functions of SiP modules by introducing more process technologies to SiP module design;develop new double-sided plastic seal pin interconnection technology, new materials and more diversecomponent applications to further reduce the size and cost of SiP modules; develop new laser cutting post-washing technology to overcome the current damage to sensitive components in dry ice cleaning. Inaddition, the importance of environmental protection and sustainability issues has increased year by year,and the plastic shell of electronic products has begun to use recycled plastics (PCR, Post-ConsumerPlastics) in large quantities, and the carbon footprint is taken into account when selecting materials.Therefore, the Company will focus on the following R&D directions:
(1) The Company’s development of the design capability of wireless communication modules and 5G newradio frequency identification products continues to focus on the development of Qualcomm’s latest 5GIoT platform, upgrade product specifications B5G(Beyond 5 Generation) in line with the mainstream trendof the market, and take into account the product life cycle.
(2) The automotive electronics division continues to invest in the R&D and production of power modulesfor electric vehicle inverters. To meet the demand for silicon carbide chips, a technology for Window-Frame Exposed Copper Plastic Encapsulation Technology is developed to satisfy the requirements of thepower module market for high-temperature resistance and low-cost packaging. In the Powertrain field, toenhance design and manufacturing service capabilities, a strategic cooperation is launched with E-tronicin the field of automotive electrical system solutions, providing electric vehicle drive inverter solutionsfor customers.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(3) Continuously expand the application areas of miniaturized products. In addition to existing products,it also extends to the applications of Internet of Things (IoT) products, and continuous processimprovements are carried out.
(4) Collaborate with leading technology companies in the industry to develop module products with higherintegration levels and performance, and expand application areas such as smart devices and IoT.
(5) Conduct research on technologies related to cloud computing research, development, storage, andhigh-speed interconnection. Collaborate with major storage companies to launch highly efficient solid-state drives and conduct product research and development based on the Compute Express Link (CXL)interconnection standard.
(6) Develop an intelligent optical recognition system, which is applied in fields such as automatedinspection, intelligent manufacturing, and industrial AI vision to improve production efficiency andquality control capabilities. Optimize image processing technology in combination with AI deep learningto enhance the accuracy of industrial automation systems, and apply it in scenarios such as automatedproduction lines, robot navigation, and intelligent inspection.
(7) Focus on miniaturization and automation, and develop automated design tools. Use a combination ofgrinding and laser grooving to reduce the thickness of double-sided molded modules. Develop anautomatic material feeding robot to replace manual material feeding and material change. Continuouslyimprove production automation to increase production efficiency and reduce labor costs.
(8) In response to the development of AI and the demand characteristics of customers for software andhardware, especially considering the wide application of edge AI image recognition technology in variousindustries, the Company collaborates with major customers in product performance, energy efficiencyratio, heat dissipation design, and application scenario optimization.
(9) Continuously develop Green Design products to reduce the consumption of materials and energy.
6. Sustainable business plan
The Company integrates the corporate core values of "Unity of Knowledge and Action, CollectiveWisdom and Strength" into the Company's business strategy and management, pursues sustainabledevelopment in environment(E), society(S) and governance(G): in terms of the Environment(E), theCompany works to reduce environmental impacts, promote resource recycling, and actively seek solutionsto climate change governance; In terms of Social(S), the Company continues to care for employees andpromote social participation activities to fulfill corporate responsibility, realizing global partnerships; Interms of Governance(G), the Company protects the rights and interests of investors, strengthen operationalrisk management, and ensure information security to achieve a sound corporate governance structure.The Company established the group sustainability committee in 2020 to jointly promote and achieve thespecific implementation of various sustainable development goals and actions through five sustainabilitytask forces: "Corporate Governance, Green Products and Innovation, Value Chain Management,Employee and Society, Environmental Protection and Workplace Safety". In March 2022, the board ofdirectors of the Company reviewed and approved the "ESG Code of Practice", which clearly implementsrelevant requirements such as corporate governance, developing a sustainable environment, safeguardingsocial welfare, and strengthening information disclosure on corporate sustainable development.USI continues to strengthen its resilience in the face of climate change, and carries out climate-relatedfinancial disclosure (TCFD) with the "low-carbon mission" as the main axis. Construct climate changemanagement based on the four core elements of TCFD "Governance, Strategy, Risk Management,Indicators and Objectives", evaluate the risks and opportunities posed by climate change, disclose theCompany's strategies and measures to face the risks and opportunities posed by climate change, andallocate capital more rationally and effectively in order to achieve the low-carbon economic transition andthe goal of net zero carbon emissions by 2040.
(IV) Possible risks
√Applicable □ Not Applicable
1. The risk of weak macroeconomic recovery and insufficient demand
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
The EMS industry chain has shifted from supply chain-driven to demand-driven, and has a strongcorrelation with the macroeconomic environment. The Russian-Ukrainian war, geopolitics, inflation, thehigh interest rate environment and many other unfavorable factors affect global economic growth and endpoint demand. The continued development of AI technology is expected to drive further growth in demandin consumer electronics, computing power, data exchange, and other industries. The Company willcontinue to pay attention to the trend of the industrial chain structure, maintain close interaction withcustomers to grasp customer needs, and strengthen the collection and analysis of market information toreduce the impact of changes in product demand on the Company.
2. Industry competition risks
EMS industry is a fully competitive industry with numerous global manufacturers, but its overallconcentration is on the rise. Under the trend of supply chain reconstruction and economic and traderegionalization in the international market, the electronic manufacturing service industry and upstreamsupply chain in mainland China are facing more severe competitive pressure. The Company's new businessmodel of "global platform, localized service" combines its own advantages to compete with peers, but ifthe Company cannot maintain cost competitiveness and product technology advantages, market share andprofit margins will be squeezed.
3. Risk of high customer concentration
During the reporting period, the Company’s revenue from its top five customers accounted for 52.93% ofthe total revenue, showing high customer concentration. Such customers are internationally-renownedelectronic brands, and have established a long-term and stable cooperative relationship with USI to ensuresufficient business order. In spite of this, if the customer demand declines, or the Company fails to timelymeet the customer requirements in product R&D and design, product quality control, qualified suppliercertification, delivery date, etc., it may cause certain fluctuations in customer orders, thus adverselyaffecting the Company's business scale and operating performance. Therefore, the Company faces the riskof high customer concentration to a certain extent.
4. New product development and R&D investment risk
Technological progress continues to promote the upgrading and iteration of electronic products andequipment, and enterprises in the electronic manufacturing service industry have been under greatoperating pressure for a long time, such as product innovation, quality improvement, cost reduction,continuous investment, etc. Only by insisting on R&D investment and technological innovation canenterprises cope with the rapid changes in the market and competitive pressure. In the context of therestructuring of the supply chain, customers are also demanding higher standards for hardware R&D,software development, intelligent manufacturing, and low-carbon environmental protection. The companymust accelerate its R&D capabilities and strengthen their shortcomings in order to explore new businessopportunities. The Company faces the risk of insufficient R&D and innovation.
5. Transnational operation risk
To better serve major customers, the Company has arranged production, sales and logistics worldwide toquickly respond to the product delivery needs of major customers. As a result, the Company has 30production bases in 10 countries and regions. Overseas companies need to abide by the laws andregulations of the country and region where they are located when conducting business or establishinginstitutions abroad. If the laws, regulations, industrial policies or political and economic environment ofthe countries and regions where overseas business is located have undergone major changes, or there areunpredictable factors such as international tensions, wars, trade sanctions or other force majeure, it mayhave potential adverse effects on the normal business operation and sustainable development of overseascompanies. In addition, there are differences between operating sites located in various countries orregions 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 riskssuch as a lack of synergy from mergers and acquisitions or newly established companies, loss of corepersonnel, and decline in financial performance.
6. Exchange rate risk
The Company is a global electronic design and manufacturing service provider, most production facilitiesare located overseas as well as the main clients and suppliers are all overseas companies. The purchase of
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
materials, sales and shipments are mainly settled in foreign currencies (mainly USD). Companies usuallyuse foreign exchange hedging operations to deal with exchange rate fluctuations, but in the case ofsustained large fluctuations in exchange rates, large amounts of exchange gains and losses will still begenerated. In the face of the complex political and economic landscape and business environment acrossthe world, the Company will pay close attention to the changes in the foreign exchange market accordingto its own operational needs, adequately carry out foreign exchange hedging, and minimize exchange raterisks.
7. Emerging risks
The Company has a group risk management committee to identify internal and external risk factors thatmay affect the achievement of the Company's sustainable business objectives, evaluate the effectivenessof each risk level and related control activities, and implement appropriate measures and responses basedon the results of threat and risk assessment to ensure that risks can be effectively monitored.
(1) Geopolitical and regional conflict risks
The current global economy is still facing multiple challenges, with profound adjustments in the worldlandscape. Geopolitical and regional conflicts have brought more uncertainties to the macroeconomy andsupply chain, such as tariff increases, technological blockades, export controls, investment restrictions,technical barriers, and discriminatory subsidy policies. There are various restrictive policy measures thatmay lead to supply chain decoupling. The Company will conform to the development trend of "globaldemand, localized service", rationally layout global production capacity, and provide customers withdiverse manufacturing solutions with a global operation service system; at the same time, throughcontinuous strengthening of digital transformation, promoting the process of intelligent manufacturing inthe Company's global manufacturing service base, increasing R&D investment in key technologies andapplication fields, integrating internal resources of the group, technology mutual sharing and other waysto enhance product competitiveness and cost competitiveness, in manufacturing services, cooperativeresearch and development, product planning and design, supply chain strategy and other aspects ofdeepening business and investment cooperation, and developing closer long-term partnerships withcustomers.
(2) Policy risks
The current global economic situation and trade pattern are facing many uncertainties, and changes inregulations and policies in the places where companies operate may lead to increased business decision-making risks faced by enterprises. The Company will strengthen the monitoring of local regulations, taxpolicies, labor policies, and other laws and regulations, objectively judge their impact on the Company'soperations, formulate response strategies and take timely action plans, taking into account cost efficiencyand local policies and regulations, and strive to achieve the Company's business goals.
(IX) 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 andtrade secrets
□Applicable √Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Section IV Corporate GovernanceI. Particulars on corporate governance
√Applicable □ Not Applicable
During the reporting period, the Company, in strict accordance with the relevant requirements of theCompany Law the Securities Law and the Code of Corporate Governance for Listed Companies, ChinaSecurities Regulatory Commission, and Shanghai Stock Exchange, strengthened information disclosureefforts, continuously optimized the corporate legal person governance structure, established the soundinternal control system, and standardized the business operation, to effectively guarantee the interests ofthe 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 andmembers of the senior management were diligent and responsible. Directors and supervisors activelyparticipated in the Company's general meetings of shareholders, meetings of the Board of Directors, andmeetings of the Board of Supervisors, and earnestly performed their responsibilities. Related directorsvoluntarily abstained from voting on relevant related transactions to ensure the safe, stable, healthy andsustainable development of the Company.(I) Shareholders and general meetings of shareholders: The Company convened and held general meetingsof 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 shareholderscomplied with the relevant provisions in aspects of preparations, proposals, procedures, voting andresolutions, resolution execution and information disclosure, and ensured that all shareholders, especiallyminority shareholders, fully exercised their voting rights and maintained equal status. and ensured that allshareholders, especially minority shareholders, fully exercised their voting rights and maintained equalstatus. The Company also invited lawyers to attend the general meetings of shareholders to confirm andwitness the convening procedures, deliberation matters, and identities of attendees, and issue legalopinions 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 itscontrolling shareholder were independent of each other. The Company's board of directors, board ofsupervisors and internal institutions could operate independently. The Company established a long-termmechanism to prevent the controlling shareholder and its affiliated companies from occupying the listedcompany's funds and infringing on the listed company's interests, and no major shareholders occupied thelisted company's funds and assets.(III) Directors and the Board of Directors: The Company elected directors in strict accordance with theselection and appointment procedures stipulated in the Company Law and the Articles of Association. TheCompany's Board of Directors met the requirements of laws and rules in terms of number and compositionof members. The Company's directors could seriously attend the meetings of the Board of Directors inaccordance with the Procedure Rules of the Board of Directors and other regulations. The Board ofDirectors set up four special committees, namely the Audit Committee, the Strategy and SustainabilityCommittee, the Nomination Committee, and the Remuneration Committee, of which the membership isreasonable. Since their establishment, the special committees have been operating in strict accordancewith the corresponding work regulations, and fully playing its professional role in the Company's operationand management. The independent directors of the Company, in strict compliance with the Guidelines onthe Performance of Duties by Independent Directors, performed their responsibilities in a conscientiousand responsible, diligent and honest manner, and put forward valuable opinions and suggestions in theprocess of reviewing related transactions and internal control norms.(IV) Supervisors and the Board of Supervisors: The Company's Board of Supervisors strictly compliedwith the relevant provisions of the Company Law and the Articles of Association, met the requirementsof laws and rules in terms of number and composition of members, and could, according to the Rules ofProcedure 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, directorsand members of the senior management in performing their responsibilities and expressed relevantopinions.(V) Performance evaluation and incentive and restraint mechanisms: The Company established fair andtransparent performance evaluation standards and incentive and restraint mechanism for members of the
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
senior management; the members of the senior management of the Company were appointed in an openand transparent manner and in compliance with the provisions of relevant laws and regulations.(VI) Information disclosure and transparency: The Company truthfully, accurately, completely and timelydisclosed relevant information through Shanghai Securities News, China Securities Journal, SecuritiesTimes, and the website of Shanghai Stock Exchange, in strict accordance with relevant laws andregulations and the requirements of the Information Disclosure Management Regulations formulated bythe Company, and did a good job in confidentiality before information disclosure, and earnestly fulfilledthe obligation of information disclosure as a listed company, to ensure the openness, fairness andimpartiality of information disclosure by the Company and actively safeguard the legitimate rights andinterests 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 disclosureviolations.(VII) Investor relations and related stakeholders: The Company, in accordance with the relevantrequirements of the Self-disciplinary Rules Listed Companies No. 3 - Cash Dividends of ListedCompanies by China Securities Regulatory Commission and the Guidelines for the Self-supervision ofListed Companies No. 1 - Standardized Operation of Shanghai Stock Exchange, firmly established theawareness 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 dividendinformation disclosure. The Company actively received all kinds of investors, and set up an investorrelations section on the Company's website, which further strengthened investors' understanding andrecognition of the Company, promoted the benign interaction between the Company and investors, andwas conducive to effectively protecting the interests of investors. The Company could fully respect andsafeguard the legitimate rights and interests of its employees, suppliers, customers, banks and otherstakeholders, and achieved mutual benefits in economic exchanges to promote the sustainable and healthydevelopment of the Company.(VIII) Establishment and improvement of the internal control system: The Company continuouslyimproved the internal control system and strengthened the execution and implementation of internalcontrol norms in strict accordance with the regulatory requirements, and performed the self-inspection andself-evaluation over the effectiveness of internal control of the Company's key business processes and keycontrol links on the basis of strengthening daily supervision and special inspections.(IX) Registration and management of insiders: The Company strictly implemented the AdministrativeRegulations for Registration of Information Insiders in accordance with the requirements of regulatoryagencies.
Whether there are significant differences between the Company’s corporate governance and laws,administrative regulations and the requirements of China Securities Regulatory Commission on corporategovernance 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 theCompany's independence
√Applicable □ Not Applicable
For details, see the "Commitment to Guarantee the Independence of the Listed Company" in "Section VIMajor Events".
Situation that the Company's controlling shareholder, actual controller, and other units under theircontrol are engaged in the same or similar business as or with the Company, impact of horizontalcompetition or major changes in horizontal competition on the Company, settlement measures taken,settlement progress and subsequent settlement plans
□Applicable √Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
III. Brief Introduction to general meetings of shareholders
| Meeting Session | Date | Query index of the designated website on which the resolution is published | Disclosure date when the resolution is published | Resolution |
| 2023 Annual General Meeting of Shareholders | April 23, 2024 | www.sse.com.cn (Announcement No.: 2024-043) | April 24, 2024 | 1. Proposal on 2023 Work Report of the Board of Directors 2. Proposal on 2023 Work Report of the Board of Supervisors 3. Proposal on 2023 Financial Final Report 4. Proposal on the 2023 Annual Report and its Summary 5. Proposal on Profit Distribution Plan for 2023 6. Proposal on Actual Regular Related Party Transactions in 2023 and Predicted Regular Related Party Transactions in 2024 7. Proposal on Bank Credit Lines in 2024 8. Proposal on the Amount of Financial Derivative Transactions 9. Proposal on Guarantee Between Holding Subsidiaries 10. Proposal on the Amendment of the "Articles of Association" 11. Proposal on the Amendment of the "Rules of Procedure for the Board of Directors" 12. Proposal on the Amendment of the "Work Procedures for Independent Directors" 13. Proposal on the Amendment of the "Related Party Transactions Decision-Making System" 14. Proposal on the Amendment of the "External Guarantee Management System" 15. Proposal on the Amendment of the "Financial Assistance Management Measures" 16. Proposal on the Formulation of the "Audit Firm Selection and Appointment System" 17. Proposal on Renewing the Contract with the Financial Audit Institution 18. Proposal on Renewing the Contract with the Internal Control Audit Institution 19. Proposal on Election of Non-independent Directors 20. Proposal on Election of Independent Directors 21. Proposal on the Remuneration of the Chairman of the Sixth Session of the Board of Directors |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| 22. Proposal on Purchasing Liability Insurance for Directors, Supervisors and Senior Executives | ||||
| The First Extraordinary General Meeting of Shareholders in 2024 | September 13, 2024 | www.sse.com.cn (Announcement No.: 2024-081) | September 14, 2024 | 1. Proposal on the Cancellation of Shares Repurchased in 2022 and Prior Years |
Convening of an extraordinary general meeting of shareholder requested by the preferred shareholderswhose voting rights have been restored
□Applicable √Not Applicable
Particulars on general meetings of shareholders
□Applicable √Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
IV. Directors, supervisors and members of the senior management(I) Changes in shareholding and remuneration of current directors, supervisors, and senior management and those who left the position during the reportingperiod
√Applicable □ Not Applicable
Unit: Share
| Name | Position | Gender | Age | Start of tenure | End of tenure | Number of shares held at the beginning of the year | Number of shares held at the end of the year | Change in shareholding during the year | Reasons for change | Total pre-tax remuneration from the Company during the reporting period (RMB 10,000) | Whether received remuneration from related parties of the Company |
| Jeffrey Chen | Chairman of the Board of Directors | Male | 61 | 2018-06-28 | 2026-04-23 | 163,100 | 233,000 | 69,900 | Exercise of stock options | 189 | Yes |
| Director | 2016-04-19 | 2026-04-23 | 30 | ||||||||
| Chen-Yen Wei | Director and President | Male | 71 | 2008-06-20 | 2026-04-23 | 140,000 | 200,000 | 60,000 | Exercise of stock options | 515 | No |
| Dtuang Wang | Director | Male | 66 | 2018-07-16 | 2026-04-23 | 0 | 0 | 0 | N/A | 30 | Yes |
| Andrew Robert Tang | Director | Male | 50 | 2024-04-23 | 2026-04-23 | 0 | 0 | 0 | N/A | 20 | Yes |
| Rutherford Chang | Former Director | Male | 46 | 2010-03-10 | 2025-02-07 | 0 | 0 | 0 | N/A | 30 | Yes |
| Neng Chao Chang | Director | Male | 47 | 2017-04-17 | 2026-04-23 | 0 | 0 | 0 | N/A | 30 | Yes |
| Yifan Li | Director | Male | 58 | 2023-04-24 | 2026-04-23 | 0 | 0 | 0 | N/A | 30 | No |
| Yongtao Cang | Independent director | Male | 48 | 2023-04-24 | 2026-04-23 | 0 | 0 | 0 | N/A | 36 | No |
| Jiangdong Huang | Independent director | Male | 46 | 2023-04-24 | 2026-04-23 | 0 | 0 | 0 | N/A | 36 | No |
| Wei Guo | Independent director | Female | 43 | 2023-04-24 | 2026-04-23 | 0 | 0 | 0 | N/A | 36 | No |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Li Zhang | Independent director | Female | 47 | 2024-04-23 | 2026-04-23 | 0 | 0 | 0 | N/A | 24 | No |
| Meng-Kuo Shih | Chairman of the Board of Supervisors | Male | 62 | 2008-06-19 | 2026-04-23 | 0 | 0 | 0 | N/A | 30 | Yes |
| Jye-Shing Lin | Supervisor | Male | 51 | 2023-04-24 | 2026-04-23 | 0 | 0 | 0 | N/A | 30 | Yes |
| David Huang | Employee supervisor | Male | 53 | 2020-04-28 | 2026-04-23 | 0 | 0 | 0 | N/A | 80 | No |
| Ta-I Lin | Vice President | Male | 62 | 2011-02-09 | 2026-04-23 | 141,800 | 193,700 | 51,900 | Exercise of stock options | 176 | No |
| Feng-Ta Chen | Vice President | Male | 63 | 2008-06-20 | 2026-04-23 | 121,100 | 121,100 | 0 | N/A | 168 | No |
| Jing Cao | Vice President | Male | 66 | 2017-04-27 | 2026-04-23 | 0 | 0 | 0 | N/A | 460 | No |
| Chen-Lung Wei | Vice President | Male | 62 | 2017-04-27 | 2026-04-23 | 0 | 0 | 0 | N/A | 149 | No |
| Tan-Yang Liu | Former Vice President and Chief Financial Officer | Male | 60 | 2008-06-20 | 2024-10-30 | 70,000 | 70,000 | 0 | N/A | 115 | No |
| Jinpeng Shi | Vice President and Secretary to the Board of Directors | Male | 49 | 2018-06-28 | 2026-04-23 | 91,000 | 130,000 | 39,000 | Exercise of stock options | 281 | No |
| Xinyu Wu | Vice President and Chief Financial Officer | Male | 58 | 2024-10-28 | 2026-04-23 | 0 | 0 | 0 | N/A | 330 | No |
| Total | / | / | / | / | / | 727,000 | 947,800 | 220,800 | / | 2,825 | / |
Note: The fixed allowances received by the directors (including independent directors) of the Sixth Session of the Board of Directors and the supervisors of the SixthSession of the Board of Supervisors of the Company have been considered and approved at the 2022 Annual General Meeting of the Company. Based on the data ofprofessional surveys on the remuneration of senior executives of companies in the same industry in Chinese mainland, Taiwan and the United States, the remunerationlevel of the Company's senior executives is at the 50th to 75th percentile of the remuneration of senior executives of companies in the same industry. In 2024, theremuneration of Jing Cao, Vice President of the Company, was higher than that of other executives of the same rank, mainly due to the fact that the revenue generatedby the business unit under his leadership accounted for more than 50% of the Company's consolidated revenue for the current year, and the level of profit was in line
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
with expectation; the remuneration of Chen-Yen Wei, President of the Company, was higher than that of the remuneration level for the rank of Vice President, whichwas in compliance with the Company's employee performance evaluation and management system; and Jeffrey Chen, Chairman of the Board of Directors, in additionto receiving remuneration from the Company, also served as director of ASE Technology Holding and its affiliates and received the remuneration for the directorship,and his remuneration arrangement was in compliance with the relevant rules of ASE Technology Holding.
| Name | Work Experience |
| Jeffrey Chen | Mr. Jeffrey Chen, from Taiwan, China, graduated from the University of British Columbia with a master’s degree in business administration. Mr. Chen previously worked for Citibank Taiwan as the general manager assistant and Bankers Trust Taipei Branch as the deputy general manager. He joined the predecessor of ASE Technology Holding Co., Ltd. in 1994, serving successively as the assistant to the central staff office, special assistant to the chairman and chief of staff of the Group, as well as CFO and director of ASE Test Limited, a subsidiary of the Group and a listed company on NASDAQ. In addition to serving as Chairman of the Board of the Company, he serves as director of ASE Technology Holding Co., Ltd., director (representative) and general manager of Shanghai headquarters of Advanced Semiconductor Engineering, Inc. |
| Chen-Yen Wei | Mr. 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 communication product business group, senior vice president of corporate service unit, and president of the company. Currently he serves as director and president of the Company. |
| Dtuang Wang | Mr. Dtuang Wang, from Taiwan, China, holds a bachelor’s degree in laws from National Taiwan University, a master’s degree in laws from National Chung Hsing University, and a doctorate in law from National Chengchi University. He was the CEO of ASE Cultural and Education Foundation, a director of Dinggu Holdings Co., Ltd., a director of Hongjing Construction Co., Ltd., an independent executive director of First Commercial Bank Co., Ltd., professor and dean of School of Law, Ming Chuan University. Currently he serves as Group Chief Executive and Corporate Governance Director of ASE Technology Holding Co., Ltd. and a member of the company’s Risk Management Committee, a director of ASE Semiconductor Manufacturing Co., Ltd., and the honorary professor of Ming Chuan University Law School. |
| Andrew Robert Tang | Mr. Andrew Robert Tang, American, graduated from Yale University. Mr. Tang previously worked for Morgan Stanley, and joined Advanced Semiconductor Engineering, Inc. in 2014 where he currently assumes director (representative), Vice Chairman, and deputy CEO, and he also serves as the chief procurement officer of ASE Technology Holding Co., Ltd. Mr. Andrew Robert Tang has served as a director of USI since April 2024. |
| Rutherford Chang (former director) | Mr. Rutherford Chang, American, holds a bachelor’s degree in Psychology from Wesleyan University. Mr. Chang served as the special assistant to the chairman of J&R Holding and the special assistant to the chairman of Advanced Semiconductor Engineering, Inc. In addition to serving as director of USI, he also serves as director of Advanced Semiconductor Engineering, Inc. |
| Neng Chao Chang | Mr. 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 general manager of ASE Global Sales, director of ASE Test Inc., director of USI Inc., and director of Advanced Semiconductor Engineering, Inc. |
| Yifan Li | Mr. Yifan Li, American, holds a bachelor’s degree in World Economy from Fudan University, an MBA degree from the University of Chicago, master’s degree in Accounting from the University of Texas. Mr. Li is qualified as the United States Certified Public Accountant, Chartered |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Global Management Accountant, and member of the American Institute of Certified Public Accountants and the Texas Society of CPAs. He worked as Executive Vice President and CFO of Zhengxing Wheel Group Co.,Ltd., Vice President and CFO of Sanpower Group Co.,Ltd., director, Vice President and CFO of Zhejiang Geely Holding Group Co.,Ltd., founding partner and CFO of Human Horizons. In addition to serving as a director of USI, he also serves as an independent director of Shanghai Jinqiao Export Processing Zone Development Co., Ltd. | |
| Yongtao Cang | Mr. Yongtao Cang, Chinese, holds a doctorate degree in accounting from Shanghai University of Finance and Economics. Mr. Cang is a non-practicing member of the Chinese Institute of CPA, and a member of CPA Australia. He worked as lecturer, assistant dean, associate professor of accounting and deputy dean successively at the School of Economics and Finance, Shanghai International Studies University (SISU). Currently he serves as professor of accounting at the School of Economics and Finance, SISU. Additionally, he served as an independent director of Zhejiang Qinglian Food Co.,Ltd. |
| Jiangdong Huang | Mr. Jiangdong Huang, Chinese, has a doctorate degree in law from East China University of Political Science and Law and qualifications to practice law in China. Mr. Huang worked as deputy director, director and deputy researcher of the Second Division of the China Securities Regulatory Commission (CSRC) Shanghai Office, deputy researcher of the CSRC Legal Affairs Department, deputy researcher of the Review Division of the CSRC Shanghai Commissioner Office, director of the Third Division of Investigation of the CSRC Shanghai Commissioner Office. He currently serves as partner of Grandall Law Firm, and independent director of Changjiang Pension Insurance Co.,Ltd., Sinopec Shanghai Petrochemical Company Limited and Fuanda Fund Management Co.,Ltd., and outside director of China Shipping Environment Technology (Shanghai) Co.,Ltd. |
| Wei Guo | Ms.Wei Guo, from Hong Kong, China, holds a doctorate degree in strategic management from the University of Maryland, an MBA degree from Marshall University, and a bachelor's degree in business from Auckland University of Technology. Ms. Guo used to work as assistant professor of strategy at Hong Kong Polytechnic University, and currently serves as associate professor of strategy and entrepreneurship at China Europe International Business School. |
| Li Zhang | Ms. Li Zhang, Chinese with permanent residency in Hong Kong, holds a bachelor’s degree in economics and law from Nanjing University and a master's degree in business administration from Tsinghua University. Ms. Zhang used to be a first-class partner of Beijing Grandway Kaiwen Law Firm and is now a first-class partner of Zhong Lun Law Firm Shanghai Office. Ms. Li Zhang has served as an independent director of USI since April 2024. |
| Meng-Kuo Shih | Mr. 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 director of finance of TECO Electric & Machinery Co., Ltd., director of finance of TECO OPTRONICS CORPORATION, chief financial officer and spokesperson of InterServ International Inc., and chief financial officer of Advanced Semiconductor Engineering, Inc. In addition to the supervisor of USI, he holds the position of director of USI Inc. |
| Jye-Shing Lin | Mr. Jye-Shing Lin, from Taiwan, China, holds a master’s degree in engineering from Massachusetts Institute of Technology (MIT) and National Taiwan University. Mr. Lin used to work for Accenture as an consultant and joined Advanced Semiconductor Engineering, Inc. in 2006. He currently serves as vice president of Advanced Semiconductor Engineering, Inc. Shanghai headquarters, and supervisor of USI Inc. |
| David Huang | Mr. David Huang, from Taiwan, China, holds an EMBA degree from Shanghai Jiaotong University. Mr. Huang previously worked for Universal Scientific Industrial Co., Ltd. Currently he serves as the director of USI's Manufacturing Service Division 1. |
| Chen-Lung Wei | Mr. Chen-Lung Wei, from Taiwan, China, holds an MBA's degree from Tunghai University. In July 1987, Mr. Wei joined in Universal Scientific Industrial Co., Ltd. where he served as the manager of the engineering department, the director of the development unit, the vice president of the |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| business unit, the senior vice general manager of the business group, and the general manager of the Company. Currently, he serves as the vice president of the Company. | |
| Ta-I Lin | Mr. Ta-I Lin, from Taiwan, China, has a bachelor's degree in Electrical Engineering from National Cheng Kung University and a master's degree of EMBA from Peking University. After graduation, Mr. Lin joined in Universal Scientific Industrial Co., Ltd. where he served successively as head of engineering, production, and business divisions, the general manager of information products business group, president of USI Electronics (Shenzhen) Co., Ltd., and manager of Universal Scientific Industrial Co., Ltd. Taiwan Factory. Currently, he serves as the Vice President of the Company. |
| Feng-Ta Chen | Mr. Feng-Ta Chen, from Taiwan, China, once served as deputy manager of SAMPO CORP., manager of wireless network card operation management of Universal Scientific Industrial Co., Ltd., associate manager of ERP project management, associate manager of global human resources administration, and general manager of Shanghai Zhangjiang Factory, Jinqiao Factory, and Shengxia Factory of USI. Currently, he serves as head of global business and after-sales service, global operations development, North American operations, special application products and green energy products business group, and vice president of the Company. |
| Jing Cao | Mr. Jing Cao, American, holds a double master's degree in engineering from Arizona State University. Once served as the senior Vice President of Mindspeed, the vice president of TE Connectivity, and the senior Vice President of UTAC Semiconductor Co., Ltd. Currently, serves as vice president of the Company. |
| Tan-Yang Liu (former senior executive) | Mr. Tan-Yang Liu, from Taiwan, China, holds a master's degree from the University of Southampton, UK. Once worked as director of Audit Department of KPMG, deputy manager of Underwriting Department of Taiwan International Securities Investment Consulting Corp., the deputy manager of International Department of UOB Securities Pte Ltd, the deputy manager of International Department of Mega Capital (Asia) Company Limited, and the vice president of Capital Market Department of Polaris Securities Co., Ltd. He serves as the vice president and chief financial officer of the Company. |
| Jinpeng Shi | Mr. 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 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 vice president and the secretary to the Board of Directors of the Company. |
| Xinyu Wu | Mr. Xinyu Wu, Canadian, holds a Master of Business Administration (MBA) from Bryant University in the United States and is a Canadian Chartered Accountant (CA) and Certified Management Accountant (CMA). He previously served as Vice President of Finance at Celestica International Group in Canada, where his responsibilities encompassed financial management for the Asia-Pacific region, global operational financial management for the group, and international financial integration. Earlier in his career, he held roles including Cost Management Manager at IBM Asia-Pacific, Financial Analysis Manager in Canada, and positions at KPMG Singapore. Mr. Xinyu Wu joined USI in June 2020 and currently serves as Group CFO and CFO of FAFG. |
Particulars on other information
□Applicable √Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(II) Employment of current directors, supervisors and senior management and those who left theposition during the reporting period
1. Employment in shareholders’ companies
√Applicable □ Not Applicable
| Name of person employed | Name of shareholder’s company | Position held in shareholder’s company | Start of tenure | End of tenure |
| Jeffrey Chen | ASE Technology Holding Co., Ltd. | Director (representative) | 2018-04-30 | |
| Advanced Semiconductor Engineering, Inc. | Director (representative) | 2003-06-19 | ||
| ASE Test Inc. | Director (representative) | 1998-06-30 | ||
| ASE (Shanghai) Inc. | Supervisor | 2018-06-19 | ||
| ASE (Korea) Inc. | Supervisor | 2021-03-30 | ||
| Wuxi Tongzhi Microelectronics Co.,Ltd. | Director | 2022-05-27 | ||
| ASE Test Limited (Singapore) | Director | 1998-03-31 | ||
| ASE Test Holdings Ltd. | Director | 1999-04-12 | ||
| Omniquest Industrial Ltd. | Director | 2001-06-01 | ||
| ASE Assembly & Test (Shanghai) Limited | Director | 2023-06-05 | ||
| Shanghai Ding Hui Real Estate Development Co., Ltd. | Director | 2005-04-18 | 2024-05-08 | |
| ASE Electronics Inc. | Director (representative) | 2006-03-14 | ||
| Advanced Semiconductor Engineering (HK) Limited | Director | 2008-05-05 | ||
| Shanghai Ding Wei Real Estate Development Co., Ltd. | Director | 2010-06-01 | 2024-04-16 | |
| Shanghai Ding Yu Real Estate Development Co., Ltd. | Director | 2010-05-12 | 2024-04-21 | |
| KunShan Ding Hong Real Estate Development Co., Ltd. | Director | 2012-02-01 | 2024-06-02 | |
| Shanghai Ding Qi Property Management Co., Ltd. | Director | 2005-05-11 | 2024-04-13 | |
| Shanghai Dingfan Business Management Co., Ltd | Director | 2016-03-18 | 2024-04-19 | |
| Shanghai DingXu Property Management Co., Ltd. | Director | 2017-06-19 | 2024-04-15 | |
| Real Tech Holdings Limited | Director | 2008-12-04 | ||
| USI Inc. | Chairman of the Board of Directors and director (representative) | 2018-06-26 | ||
| Huntington Holdings International Co., Ltd. | Director | 2012-06-30 | ||
| Shanghai Dingxu Property Management Co., Ltd. – | Director | 2016-03-31 | 2024-04-17 | |
| Real Tech Holdings Limited | Director | 2012-06-30 | ||
| ASE Environmental Protection and Sustainability Foundation | Director | 2020-09-14 | ||
| ASE Cultural and Educational Foundation | Director | 2020-06-10 |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| ASE Enterprise Service (Shanghai) Co., Ltd | Supervisor | 2023-11-01 | ||
| Chen-Yen Wei | USI Inc. | Director (representative) | 2015-04-01 | 2025-06-23 |
| HUNTINGTON HOLDINGS INTERNATIONAL CO. LTD. | Director | 2012-06-30 | ||
| UNITECH HOLDINGS INTERNATIONAL CO. LTD. | Director | 2012-06-30 | ||
| Real Tech Holdings Limited | Director | 2012-06-30 | ||
| USI Enterprise Limited | Director | 2012-12-28 | 2025-06-23 | |
| Dtuang Wang | ASE Technology Holding Co., Ltd. | Chief executive and corporate governance director, member of the Risk Management Committee and chief risk officer, chief information security officer | 2018-04-30 | |
| Advanced Semiconductor Engineering, Inc. | Director (representative) and chief executive | 2018-04-30 | ||
| Advanced Semiconductor Engineering (China) Ltd. | Chairman of the Board of Directors and General Manager | 2018-07-05 | ||
| ASE Assembly & Test (Shanghai) Limited | Director and President | 2021-07-29 | ||
| Sino Horizon Holdings Limited | Director | 2014-06-18 | ||
| Hung Ching Development & Construction Co., Ltd. | Director | 2011-07-13 | ||
| Hung Chin Hsin Co., Ltd. | Director and President | 2011-08-08 | ||
| ASE Social Enterprise Co., Ltd. | Director and President | 2022-04-21 | ||
| ASE Environmental Protection and Sustainability Foundation | Director and CEO | 2020-09-14 | ||
| Goodcare Holdings Inc. | Director | 2023-03-14 | ||
| Rutherford Chang | ASE Technology Holding Co., Ltd. | Director | 2018-04-30 | 2025-02-07 |
| Advanced Semiconductor Engineering, Inc. | Director (representative) | 2009-06-26 | 2025-02-07 | |
| ASE Test Inc. | Director (representative) | 2011-07-27 | 2025-02-07 | |
| ASE Investment (Kunshan) Limited | Director and General Manager | 2012-05-24 | 2025-02-07 | |
| USI Inc. | Director (representative) | 2015-04-01 | 2025-02-07 | |
| Neng Chao Chang | Advanced Semiconductor Engineering, Inc. | Director (representative) | 2018-04-30 | |
| ASE Test Inc. | Director (representative) | 2015-08-06 | ||
| USI Inc. | Director (representative) | 2015-04-01 |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Meng-Kuo Shih | USI Inc. | Director | 2015-04-01 | 2025-06-23 |
| HUNTINGTON HOLDINGS INTERNATIONAL CO. LTD. | Director | 2012-06-30 | ||
| UNITECH HOLDINGS INTERNATIONAL CO. LTD. | Director | 2012-06-30 | ||
| Real Tech Holdings Limited | Director | 2012-06-30 | ||
| Universal ABIT Holding Co.,Ltd. | Director | 2008-12-31 | ||
| USI Enterprise Limited | Director | 2012-12-28 | 2024-06-22 | |
| Andrew Robert Tang | Advanced Semiconductor Engineering, Inc. | Director (representative) | 2024-06-27 | |
| Group Chief Procurement Officer | 2023-09-01 | |||
| ASE Global Integrated Solutions Co.,Ltd. | Chairman | 2023-08-22 | ||
| Advanced Semiconductor Engineering, Inc. | Director (representative) | 2018-04-30 | ||
| Vice Chariman | 2022-12-15 | |||
| Vice CEO | 2023-01-01 | |||
| ASE Test Inc. | Supervisor (representative) | 2018-05-30 | ||
| Shanghai Ding Hui Real Estate Development Co., Ltd. | Director | 2018-08-29 | ||
| Shanghai Ding Wei Real Estate Development Co., Ltd. | Director | 2018-10-31 | ||
| Shanghai Ding Yu Real Estate Development Co., Ltd. | Director | 2018-10-17 | ||
| USI Inc. | Supervisor (representative) | 2018-06-26 | ||
| ASE Cultural and Educational Foundation | Director | 2020-06-10 | ||
| ASE Environmental Protection and Sustainability Foundation | Director | 2020-09-14 | ||
| Chen-Lung Wei | USI Inc. | Director | 2015-04-01 | 2025-06-23 |
| HUNTINGTON HOLDINGS INTERNATIONAL CO. LTD. | Director | 2012-06-30 | ||
| Universal ABIT Holding Co.,Ltd. | Director | 2008-12-31 | ||
| Tan-Yang Liu | USI Enterprise Limited | Director | 2020-12-30 | |
| Jye-Shing Lin | Advanced Semiconductor Engineering, Inc. | Deputy general manager of Shanghai headquarters | 2016-09-22 | |
| Shanghai Ding Wei Real Estate Development Co., Ltd. | Vice President | 2015-02-01 | ||
| USI Inc. | Supervisor (representative) | 2018-06-26 | 2025-06-23 | |
| Particulars on employment in shareholders’ companies | None | |||
2. Employment in other companies
√Applicable □ Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Name of person employed | Name of other companies | Position held in other companies | Start of tenure | End of tenure |
| Jeffrey Chen | Mercuries & Associates Holding, LTD | Independent director | 2015-06-24 | 2024-06-21 |
| Chen-Yen Wei | MUtek Electronics Co.,Ltd., etc | Director | 2022-05-12 | 2025-05-11 |
| Lelon Electronics Corp. | Independent director | 2022-06-29 | 2025-06-28 | |
| Dtuang Wang | Chang Yao Hong-Ying Social Welfare & Charity Foundation | Director and CEO | 2020-07-25 | |
| Bank of Kaohsiung Co., Ltd. | Independent director | 2023-05-25 | ||
| School of Law of Ming Chuan University, etc. | Honorary Professor | 2020-08-06 | ||
| Meng-Kuo Shih | MUtek Electronics Co.,Ltd., etc | Supervisor | 2022-05-12 | 2025-05-11 |
| Global Venture Capital Co., Ltd. | Director | 2023-06-12 | 2026-06-11 | |
| Yifan Li | Shanghai Jinqiao Export Processing Zone Development Co., Ltd. | Independent director | 2019-06-25 | |
| Yongtao Cang | School of Economics and Finance, Shanghai International Studies University | Professor of accounting | 2021-12-31 | |
| Deputy dean | 2023-11-19 | 2024-09-30 | ||
| Zhejiang Qinglian Food Co.,Ltd. | Independent director | 2018-07-19 | ||
| Jiangdong Huang | Grandall Law Firm | Partner | 2019-05-10 | |
| , Sinopec Shanghai Petrochemical Company Limited and Fuanda Fund Management Co.,Ltd., and outside director of China Shipping Environment Technology (Shanghai) Co.,Ltd. | Independent director | 2023-06-28 | ||
| Changjiang Pension Insurance Co.,Ltd. | Independent director | 2021-09-16 | ||
| Fuanda Fund Management Co.,Ltd. | Independent director | 2023-07-25 | ||
| China Shipping Environment Technology (Shanghai) Co.,Ltd. | Outside director | 2023-05-30 | ||
| Wei Guo | China Europe International Business School | Associate professor of strategy and entrepreneurship | 2020-06-01 | |
| Li Zhang | Zhong Lun Law Firm Shanghai Office | First-class Partner | 2014-06-01 | |
| Jinpeng Shi | GJS Capital Co., Ltd. | Director | 2023-05-28 | 2026-05-27 |
| Questyle Audio Technology Co.,Ltd | Director | 2022-11-29 | 2025-11-28 | |
| Particulars on | None | |||
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
employment inother companies
(III) Remuneration of directors, supervisors and members of the senior management
√Applicable □ Not Applicable
| Decision-making procedures for the remuneration of directors, supervisors and members of the senior management | The Proposal on the Remuneration of Directors of the Sixth Session of the Board of Directors was considered and approved at the Twenty-second Meeting of the Fifth Session of the Board of Directors and the 2022 Annual General Meeting of Shareholders; the Proposal on the Remuneration of Supervisors of the Sixth Session of the Board of Supervisors was considered and approved at the Twentieth Meeting of the Fifth Session of the Board of Supervisors and the 2022 Annual General Meeting of Shareholders; the Proposal on the Remuneration of the Senior Management for 2024 was considered and approved at the Tenth Meeting of the Remuneration Committee of the Sixth Session of the Board of Directors, and the Seventeenth Meeting of the Sixth Session of the Board of Directors. |
| Whether a director abstained from voting in discussion of his or her own remuneration issues | Yes |
| Opinion of the Remuneration Committee or the Special Meeting of Independent Directors on matters relating to the remuneration of directors, supervisors and senior management | The Company held the Twenty-second Meeting of the Fifth Session of the Board of Directors on March 31, 2023, at which the Independent Directors verified the remuneration of the directors of the Sixth Session of the Board of Directors of the Company, and commented that: the remuneration of the directors drawn up by the Board of Directors of the Company was determined after taking into account the characteristics of the industry in which the Company is operating, the scale of operation of the Company, the level of corporate governance, the backgrounds and professional qualities of the directors, and in the light of the actual circumstances of the Company, which is conducive to the enhancement of scientific decision-making by the Board of Directors of the Company, and ensures the realization of the Company's development strategy objectives, and is in line with the interests of investors. We approve the Proposal on the Remuneration of Directors of the Sixth Session of the Board of Directors, and agree to submit the proposal to shareholders' meeting for deliberation. The Company held the Tenth Meeting of the Remuneration Committee of the Sixth Session of the Board of Directors on March 28, 2025, and the Remuneration Committee deliberated and approved the Proposal on the Chairman's Actual Remuneration for 2024 and the Remuneration Plan for 2025 with a view that the Chairman of the Board of Directors of the Company, Mr. Jeffrey Chen, in addition to holding the position of director in ASE Technology Holding and its affiliated companies, works exclusively for the Company, and the assessment and issuance of his remuneration for 2024 and his remuneration plan for 2025 are in compliance with the Company's operation and management and remuneration assessment systems and would not jeopardize the interests of the Company and its shareholders. |
| Determination basis for the remuneration of directors, supervisors and members of the senior management | The Company adopted fixed remuneration for directors and supervisors taking into account the characteristics of the industry in which the Company operates, the scale of business operations, the level of corporate governance, the backgrounds and professional |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| qualities of the directors and supervisors, as well as the actual situation of the Company. Remuneration of senior management shall be determined according to their performance appraisal, combined with the Company's financial status, profitability and progress of annual business objectives. | |
| Actual payment of the remuneration of directors, supervisors and members of the senior management | For details, see Section IV-I (I) Changes in shareholding and remuneration of current directors, supervisors, and senior management and those who left the position during the reporting period. |
| Total remuneration actually received by all directors, supervisors and members of the senior management at the end of the reporting period | RMB 28.25 million |
(IV) Changes in directors, supervisors and members of the senior management of the Company
√Applicable □ Not Applicable
| Name | Position | Change | Reason for change |
| Andrew Robert Tang | Director | Appointment | Appointment by shareholders' meeting |
| Li Zhang | Independent Director | Appointment | Appointment by shareholders' meeting |
(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 | Contents |
| The Eighth Meeting of the Sixth Session of the Board of Directors | January 3, 2024 | Proposal on Not Making Downward Adjustment to the Conversion Price of USI Convertible Bonds |
| The Ninth Meeting of the Sixth Session of the Board of Directors | February 7, 2024 | Proposal on the Plan for Share Buy-back by Centralized Bidding Transactions in 2024 |
| The Tenth Meeting of the Sixth Session of the Board of Directors | March 29, 2024 | 1、 Proposal on 2023 Work Report of the Board of Directors 2、 Proposal on 2023 Work Report of the President 3、 Proposal on 2023 Financial Final Report 4、 Proposal on Profit Distribution Plan for 2023 5、 Proposal on 2023 Annual Report and its Summary 6、 Proposal on 2023 Annual Internal Control Self-Assessment Report 7、 Proposal on 2023 Sustainability Report 8、 Proposal on the Special Report on the Deposit and Actual Usage of the Raised Funds in 2023 9、 Proposal on Actual Regular Related Party Transactions in 2023 and Predicted Regular Related Party Transactions in |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| 2024 10、Proposal on the Amount of Wealth Management Products Using Self-owned Idle Funds Allowed for 2023 11、Proposal on Bank Credit Lines in 2023 12、Proposal on the Amount of Financial Derivative Transactions 13、Proposal on Recognition of Loss of Assets Deductible Against Taxable Income in 2023 14、Proposal on Providing Financial Assistance to Subsidiaries 15、Proposal on Guarantee Between Holding Subsidiaries 16、Proposal on 2024 Internal Audit Plan 17、Proposal 8: Amending the Articles of Association 18、Amending Procedural Rules of the Board of Directors 19、Proposal on Amending the Rules for Independent Directors 20、Proposal on Amending the Rules of Procedure for the Strategy Committee of the Board of Directors 21、Proposal on Amending the Rules of Connected Transaction Decision-making system 22、Proposal on Amending the Rules of External Guarantee Management 23、Proposal on Amending the Articles of Sustainability Committee 24、Proposal on Amending the Articles of ESG Practice Code 25、Proposal on Amending the Accounting Firm Selection and Appointment System 26、Proposal on Renewing the Contract with the Financial Audit Institution for 2024 27、Proposal on Renewing the Contract with the Internal Control Audit Institution for 2024 28、Proposal on Nominating Candidates for the Sixth Session of the Board of Directors 29、Proposal on Nominating Candidates for Independent Directors of the Sixth Session of the Board of Directors 30、Proposal on the Actual Remuneration of Chairman of the Board in 2023 and the Remuneration Plan in 2024 31、Proposal on Actual Remuneration of the Company's Senior Management in 2023 and the Remuneration Plan in 2024 32、Proposal on Purchasing Liability Insurance for Directors, Supervisors and Senior Management 33、Proposal on Cancellation of the Expired, Unexercised Shares of the First Exercise Period of the Incentive Stock Option Plan 2019 Part II 34、Proposal on Company's Assessment Report on the CPA Firm's Performance in 2023 35、Proposal on Holding 2023 Annual General Meeting of Shareholders | ||
| The Eleventh Meeting of the Sixth Session of the Board of Directors | April 23, 2024 | 1、 Proposal on Quarterly Report for Q1 2024 2、 Proposal on the Adjusting the Members of Special Committees of the Sixth Session of the Board of Directors of the Company 3、 Proposal on Formulating Corporate Tax Policy 4、 Proposal on Adjusting the Exercise Price of 2019 Incentive Stock Option Plan After Profit Distribution 5、 Proposal on Adjusting the Exercise Price of 2023 Incentive Stock Option Plan After Profit Distribution |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| 6、 Proposal on the Report of Participation in the PI Semi Capital Increase | ||
| The Twelfth Meeting of the Sixth Session of the Board of Directors | July 18, 2024 | 1、 Proposal on The completion and termination of Core Employee Stock Ownership Plan Phase I 2、 Proposal on Formulating USI Sustainable Raw Materials Policy |
| The Thirteenth Meeting of the Sixth Session of the Board of Directors | August 23, 2024 | 1、 Proposal on2024 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 2024 3、 Proposal on Providing Financial Assistance to Subsidiaries 4、 Proposal on Additional Amount of Wealth Management Products Using Self-owned Idle Funds 5、 Proposal on Cancellation of Shares Repurchased in 2022 and Previous Years 6、 Proposal on the adjustment of participants and cancellation of part of the options in the Incentive Stock Option Plan 2023 7、 Proposal on First exercise period of Incentive Stock Option Plan 2023 and the method of independent exercise 8、 Proposal on Holding the First Extraordinary General Meeting of Shareholders in 2024 |
| The Fourteenth Meeting of the Sixth Session of the Board of Directors | October 28, 2024 | 1、 Proposal on Quarterly Report for Q3 2024 2、 Proposal on the Adjustment of Senior Management of the Company 3、 Proposal on Appointing Securities Affairs Representative 4、 Proposal on Formulating the Administrative Rules of Public Opinions 5、 Proposal on Extension of Investment in Corporate Venture Capital with Self-owned Funds 6、 Proposal on the adjustment of participants and cancellation of part of the options in the Incentive Stock Option Plan 2015 |
| The Fifteenth Meeting of the Sixth Session of the Board of Directors | December 23, 2024 | 1、 Proposal on the completion and termination of Core Employee Stock Ownership Plan Phase I 2、 Proposal on Cancellation of the Expired, Unexercised Shares of the First Exercise Period of the Incentive Stock Option Plan 2019 Part III 3、Proposal on the Unlock of the First Lock-up Period of 2023 Employee Stock Ownership Plan |
VI. Performance of functions and duties by directors(I) Attendance of directors at meetings of the Board of Directors and general meetings ofshareholders
| Director Name | Independent director or not | Attendance at the Board of Directors meetings | Attendance at the shareholders' meetings | |||||
| Number of meetings | Number of attendance in | Number of attendance by telecommunication | Number of attendance by | Number of absence | Absence for two consecutive | Number of attendance | ||
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| held this year | person | proxy | meetings | |||||
| Jeffrey Chen | No | 8 | 8 | 4 | 0 | 0 | No | 2 |
| Chen-Yen Wei | No | 8 | 8 | 4 | 0 | 0 | No | 2 |
| Rutherford Chang | No | 8 | 8 | 4 | 0 | 0 | No | 2 |
| Neng Chao Chang | No | 8 | 8 | 4 | 0 | 0 | No | 2 |
| Dtuang Wang | No | 8 | 8 | 4 | 0 | 0 | No | 2 |
| Yifan Li | No | 8 | 8 | 4 | 0 | 0 | No | 2 |
| Andrew Robert Tang | No | 5 | 5 | 2 | 0 | 0 | No | 1 |
| Yongtao Cang | Yes | 8 | 8 | 4 | 0 | 0 | No | 2 |
| Jiangdong Huang | Yes | 8 | 8 | 4 | 0 | 0 | No | 2 |
| Wei Guo | Yes | 8 | 8 | 4 | 0 | 0 | No | 2 |
| Li Zhang | Yes | 5 | 5 | 2 | 0 | 0 | No | 1 |
Particulars on absence of two consecutive meetings of the Board of Directors
□Applicable √Not Applicable
| Number of meetings of the Board of Directors held in 2024 | 8 |
| Including: on site meetings | 4 |
| Meetings held by telecommunication | 4 |
| Number of meetings held both on site and by telecommunication | 0 |
(II) Objection raised by directors to relevant issues of the Company
□Applicable √Not Applicable
(III) Others
□Applicable √Not Applicable
VII. Special committees under the Board of Directors
√Applicable □ Not Applicable
(I) Members of special committees under the Board of Directors
| Type of special committees | Name of members of special committees |
| Audit Committee | Yongtao Cang, Jiangdong Huang, Wei Guo, Jeffrey Chen, Yifan Li |
| Nomination Committee | Wei Guo, Jiangdong Huang, Yongtao Cang, Jeffrey Chen, Chen-Yen Wei |
| Remuneration Committee | Jiangdong Huang, Yongtao Cang, Wei Guo, Li Zhang, Chen-Yen Wei |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Strategy and Sustainability Committee | Jeffrey Chen. Chen-Yen Wei, Neng Chao Chang, Andrew Robert Tang, Yifan Li, Wei Guo, Li Zhang |
(II) 4 meetings held by the Audit Committee during the reporting period
| Date | Contents | Important comments and suggestions | Other information on performance of duties |
| March 29, 2024 | The following proposals were deliberated and adopted: 1. Proposal on Financial Statements and Audit Report for 2023 2. Proposal on 2023 Financial Final Report 3. Proposal on 2023 Annual Internal Control Self-Assessment Report 4. Proposal on the Special Report on the Deposit and Actual Usage of the Raised Funds in 2023 5. Proposal on Actual Regular Related Party Transactions in 2023 and Predicted Regular Related Party Transactions in 2024 6. Proposal on the Wealth Management Products Using Self-owned Idle Funds Allowed for 2023 7. Proposal on Amending the Accounting Firm Selection and Appointment System 8. Proposal on Amending the Internal Audit Rules 9. Proposal on Renewing the Contract with the Financial Audit Institution for 2024 10. Proposal on Renewing the Contract with the Internal Control Audit Institution for 2024 11. Proposal on the Appointment of Head of Internal Audit 12. Proposal on Internal Audit Work Report for Q4 2023 13. Proposal on 2024 Internal Audit Plan 14. Proposal on the Report of the Audit Committee on the Fulfillment of Oversight Responsibilities of the Accounting Firm for 2023 15. Proposal on 2023 Performance Report of the Audit Committee | The Company's financial report was true, complete and accurate, with no related cheating, fraud and material misstatement, and the Company had no significant accounting error adjustments, no changes in significant accounting policies and estimates, no matters involving important accounting judgments, and no matters resulting other type of audit report than standard unqualified audit report. After the internal audit work report was reviewed, no major problems were found in the internal audit work. The Company used the raised funds in accordance with the provisions and requirements of relevant laws, regulations, and regulatory documents, and disclosed the relevant information of the raised funds in a timely, true, accurate and complete manner, with no violation of the use and management of the raised funds. | Communicated with the management on the Company's operations and development. |
| April 23, 2024 | The following proposals were deliberated and adopted: 1. Proposal on Quarterly Report for Q1 2024 | The Company operates strictly in accordance with the standard financial rules for the listed companies, | Communicated with the management on the Company's |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| 2. Proposal on Internal Audit Work Report for 2024 | and the Company's Quarterly Report for Q1 2024 fully and fairly reflected the financial condition and operating results for the reporting period. | operations and development. | |
| August 23, 2024 | The following proposals were deliberated and adopted: 1. Proposal on 2024 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 2024 3. Proposal on Additional Amount of Wealth Management Products Using Self-owned Idle Funds 4. Proposal on Internal Audit semi-annual Work Report for 2024 | The Company operates strictly in accordance with the standard financial rules for the listed companies, and the Company's Quarterly Report for 2024 Semi-Annual fully and fairly reflected the financial condition and operating results for the reporting period. | Communicated with the management on the Company's operations and development. |
| October 28, 2024 | The following proposals were deliberated and adopted: 1. Proposal on Quarterly Report for Q3 2024 2. Proposal on Work Report on Internal Audit for Q3 2024 3.Proposal on Adjustment of Senior Management of the Company | The Company operates strictly in accordance with the standard financial rules for the listed companies, and the Company's Quarterly Report for Q3 2024 fully and fairly reflected the financial condition and operating results for the reporting period. | Communicated with the management on the Company's operations and development. |
(III) 2 meetings held by the Nomination Committee during the reporting period
| Date | Contents | Important comments and suggestions | Other information on performance of duties |
| March 29, 2024 | The following proposals were deliberated and adopted: 1. Proposal on Nominating Candidates for the Sixth Session of the Board of Directors 2. Proposal on Nominating of Independent Director Candidates for the Sixth Session of the Board of Directors | The nominated non-independent director candidates have the qualifications and ability to serve as directors of the Company, and have not been found to have any circumstances prohibiting them from serving as directors of the Company as stipulated by laws and regulations; the independent director candidates have the qualifications and experience to perform the duties of an independent director, and have the independence required for serving as an independent | None |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| director, and have not been determined by the China Securities Regulatory Commission (CSRC) to be currently market banned. All the members agreed on the proposal. | |||
| October 28, 2024 | The following proposals were deliberated and adopted: 1. Proposal on the Nomination of Senior Management of the Company | The senior management personnel nominated herein are not in a situation where they are not allowed to be nominated as senior management; they have not been punished by the CSRC and other relevant authorities or disciplined by the stock exchange; they have not been investigated by the judicial authorities for suspected crimes or suspected of violating laws and regulations or subject to criminal investigation by the CSRC; they do not have any affiliation with the shareholders who hold more than 5% of the Company's shares, actual controllers, and the Company's other directors, supervisors and senior management; they are not the persons responsible for breach of trust or the targets of punishment for breach of trust, and they are not the persons subject to execution for breach of trust; and they do not have any other material matters requiring disclosure. | None |
(IV) 5 meetings held by the Remuneration Committee during the reporting period
| Date | Contents | Important comments and suggestions | Other information on performance of duties |
| March 29, 2024 | The following proposals were deliberated and adopted: 1. Proposal on the Actual Remuneration of Chairman of the Board in 2023 and the Remuneration Plan in 2024 2. Proposal on Actual Remuneration of the Company's Senior Management in 2023 and the Remuneration Plan in 2024 | The purchase of Directors and Senior Management Liability Insurance by the company safeguards the legitimate rights and interests of its directors, supervisors, and senior management (including those of subsidiaries). It supports their fulfillment of duties and lawful exercise of | None |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| 3. Proposal on Purchasing Liability Insurance for Directors, Supervisors and Senior Executives 4. Proposal on Cancellation of the Expired, Unexercised Shares of the First Exercise Period of the Incentive Stock Option Plan 2019 Part II | rights and obligations, thereby enhancing corporate governance standards. | ||
| April 23, 2024 | The following proposals were deliberated and adopted: Proposal on Performance Evaluation of the Company's Board of Directors | None | None |
| August 23, 2024 | The following proposals were deliberated and adopted: 1. Proposal on the adjustment of participants and cancellation of part of the options in the Incentive Stock Option Plan 2023 2. Proposal on the First exercise period of Incentive Stock Option Plan 2023 and the method of independent exercise | In accordance with laws, regulations and relevant rules and regulations, the Remuneration Committee fully communicated and discussed the submitted proposal and unanimously agreed. | None |
| October 28, 2024 | The following proposals were deliberated and adopted: Proposal on the adjustment of participants and cancellation of part of the options in the Incentive Stock Option Plan 2015 | The adjustment and granting of options are in line with the relevant provisions of the Company's 2015 Stock Option Incentive Plan. | None |
| December 23, 2024 | The following proposals were deliberated and adopted: 1. Proposal on Cancellation of the Expired, Unexercised Shares of the First Exercise Period of the Incentive Stock Option Plan 2019 Part III | The cancellation are in line with the relevant provisions of the Company's 2019 Incentive Stock Option Plan. | None |
(V) 3 meetings held by the Strategy and Sustainability Committee during the reporting period
| Date | Contents | Important comments and suggestions | Other information on performance of duties |
| February 7, 2024 | Proposal on the Plan for Share Buy-back by Centralized Bidding Transactions in 2024 | This share repurchase is conducive to safeguarding shareholder interests and reinforcing investor confidence. | None |
| March 29, 2024 | 1. Report on the special project of USI Park Urban 2. USI's Business Strategy in 2024 | None | None |
| October 28, 2024 | Proposal on Adjusting the Duration of Using Self-Owned Funds for Corporate Venture Capital Investments | Given the impact of external factors such as macroeconomic fluctuations, it is agreed to continue corporate venture capital investments using internal funds within the remaining allocated quota, provided that normal business | None |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
operations are unaffected andsystemic risks are controlled.No fixed investmenttimeframe will be imposed.
(VI) Specific particulars on matters of objection
□Applicable √Not Applicable
VIII. Particulars on risks in the Company identified by the Board of Supervisors
□Applicable √Not Applicable
The Board of Supervisors had no objection to the supervision during the reporting period.
IX. Employees of the parent company and major subsidiaries at the end of the period(I) Employees
| Number of on-the-job employees of the parent company | 1,960 |
| Number of on-the-job employees of the main subsidiaries | 20,244 |
| Total number of on-the-job employees | 22,204 |
| Number of retirees of whom the parent company and major subsidiaries are responsible for the expenses | 31 |
| Breakdown by function | |
| Function | Number |
| Production | 14,032 |
| Sales | 704 |
| Technical | 4,267 |
| Financial | 191 |
| Administrative | 3,010 |
| Total | 22,204 |
| Breakdown by education background | |
| Education background | Number |
| Doctor’s degree | 22 |
| Master’s degree | 1,683 |
| Bachelor’s degree | 6,133 |
| Junior college | 2,710 |
| Senior high school and below | 11,656 |
| Total | 22,204 |
(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 personneland outstanding talents competitive remuneration and provided them with equity incentives such as stockoptions or employee stock ownership plan.
(III) Training program
√Applicable □ Not Applicable
In order to enhance the effectiveness of organizational learning and create a learning corporate culture,the Company has set up the "USI University" (USIU), which continuously improves and develops theprofessional knowledge, skills and abilities of employees through the USIU online and offline courses, so
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
as to achieve the strategic goals of the Company. USIU offers internal training courses in differentcategories designed systematically and arranged by five colleges, so that employees can take requiredcourses, join training sessions held by internal lecturers as well as workshops organized by externalprofessional lecturers. The Company also promotes the Individual Development Program, so as to ensurethe depth and breadth of employees' career development and contribute to the Company's sustainabledevelopment.
(IV) Labor outsourcing
√Applicable □ Not Applicable
| Total working hours of labor outsourcing | 4,738,136 |
| Total remuneration paid for labor outsourcing | 13,526.56 |
X. Plan for profit distribution or conversion of capital reserve into share capital(I) Formulation, implementation or adjustment of the cash dividend policy
√Applicable □ Not Applicable
1.Formulation of the cash dividend policy
In order to improve and perfect the Company's scientific, sustainable, stable and active dividenddistribution and monitoring mechanism, and to actively reward investors, the Company has formulated aclear cash dividend policy and its decision-making and adjustment mechanism in the Articles ofAssociation in accordance with the Listed Companies Regulatory Guidance No. 3 – Cash DividendsDistribution of Listed Companies and other relevant policies.
2. Implementation of the cash dividend policy
During the reporting period, the Company formulated the profit distribution plan for 2023 in accordancewith the relevant regulations, the cash expenditure needs of the Company and the relevant provisions ofthe Articles of Association and taking into account the actual operation of the Company as the following:
Regarding its profit distribution plan for 2023, USI is going to distribute a cash dividend of RMB 2.70(tax included) for every 10 shares on the basis of the total share capital on the record date for implementingthe plan after deducting the number of shares in its special buy-back securities account, without bonusshare or transfer of capital reserve into share capital, and all the remaining undistributed profits shall becarried forward for distribution in the following years. The total share capital of the Company on therecord date for implementing the plan for 2023 was 2,210,611,709 shares. USI paid out the cash dividendson the basis of 2,186,285,964 shares, excluding 24,325,745 shares in its special buy-back securitiesaccount. 2023 profit distribution was completed on June 5, 2024.
3. Adjustment of cash dividend policy
During the reporting period, the Company did not adjust its cash dividend policy.
(II) Special description of the cash dividend policy
√Applicable □ Not Applicable
Whether in compliance with provisions of the Articles of Association orrequirements of the resolution of the general meeting of shareholders
| √Yes □ No | |
| 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 roles | √Yes □ No |
| Whether minority shareholders were given the opportunity to fully express their opinions and demands, and whether their legitimate rights and interests were fully protected | √Yes □ No |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(III) If the profits of the Company and the parent company's profits distributable to shareholdersare positive during the reporting period, but there is no profit distribution plan, the Companyshall disclose the reasons, the usage and the utilization plan of the undistributed profits in detail
□Applicable √Not Applicable
(IV) Plan of profit distribution and conversion of capital reserve into share capital in the reportingperiod
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
| Number of bonus shares distributed for every 10 shares held | 0 |
| Dividend for every 10 shares held (RMB yuan) (tax included) | 2.30 |
| Number of shares transferred from capital reserve for every 10 shares held | 0 |
| Amount of cash dividend (tax included) | 503,575,699.72 |
| Net profits attributable to common shareholders of the listed company in 2023 | 1,652,482,815.41 |
| Proportion of cash dividend to net profits attributable to common shareholders of the listed company (%) | 30.47 |
| Amount of share repurchase included in the cash dividend distribution | 100,033,251.00 |
| Total amount of dividend (tax included) | 603,608,950.72 |
| Proportion of total dividend distributed to net profits attributable to common shareholders of the listed company (%) | 36.53 |
(V) Cash dividends for the last three fiscal years
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
| Cumulative cash dividend amount for the last three fiscal years (including tax)(1) | 2,032,801,371.95 |
| Cumulative amount of repurchase and write-off in the last three fiscal years(2) | 432,147,608.76 |
| Cumulative amount of cash dividends and repurchase and write-off in the last three fiscal years(3)=(1)+(2) | 2,464,948,980.71 |
| Average annual net income for the last three fiscal years(4) | 2,220,098,920.91 |
| Proportion of cash dividends in the last three fiscal years (%)(5)=(3)/(4) | 111.03 |
| Net profit attributable to common shareholders of the listed company in the consolidated statement of income for the most recent fiscal year | 1,652,482,815.41 |
| Undistributed profit at the end of the year in the parent company's statement for the most recent fiscal year | 3,801,285,913.02 |
XI. Equity incentive plan, employee stock ownership plan or other employee incentive measures ofthe 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 |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Completion of Secondary Market Stock Purchases for the 2023 Employee Stock Ownership Plan: The Company entrusted a trust institution to establish a trust plan for purchasing company shares through the secondary market via centralized bidding. As of January 16, 2024, a total of 5,722,397 shares, representing 0.26% of the Company’s total share capital, have been purchased. The total transaction amount was RMB 82,129,501.83 (excluding transaction fees), with an average transaction price of approximately RMB 14.35 per share. | For details, see the announcement (No.: 2024-004) disclosed by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on January 18, 2024 |
| Cancellation of Expired Unexercised Stock Options Under the Second Exercise Period of the 2019 Stock Option Incentive Plan (Initial and Reserved Grants): On March 29, 2024, the company convened the 10th meeting of the 6th session of the Board of Directors and the 7th meeting of the 6th session of the Board of Supervisors, during which the "Proposal on the Cancellation of Expired Stock Options Under the Second Exercise Period of the 2019 Stock Option Incentive Plan (Initial and Reserved Grants)" was reviewed and approved. Given that the second exercise period for the initial grant portion of the 2019 Stock Option Incentive Plan expired on November 27, 2023, the company agreed to cancel 880,252 unexercised stock options held by 103 participants. Similarly, the second exercise period for the reserved grant portion expired on November 8, 2023, and the company agreed to cancel 297,000 unexercised stock options held by 4 participants. Following this adjustment, the total number of stock options under the initial grant portion has been revised from 13,138,705 to 12,258,453, and the total number of stock options under the reserved grant portion has been revised from 594,000 to 297,000. | For details, see the announcement (No.: 2024-038) disclosed by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on April 2, 2024 |
| Results of Exercise of Stock Options for the First Quarter of 2024: 2015 Stock Option Incentive Plan Exercise Results: During this quarter, a total of 0 shares were exercised and completed share transfer registration. As of March 31, 2024, the cumulative number of shares exercised and completed transfer registration was 8,618,787 shares, accounting for 42.42% of the total exercisable stock options. 2019 Stock Option Incentive Plan (Initial Grant) Exercise Results: During this quarter, a total of 323,900 shares were exercised and completed share registration. As of March 31, 2024, the cumulative number of shares exercised and completed transfer registration was 9,123,553 shares, accounting for 74.43% of the total exercisable stock options. 2019 Stock Option Incentive Plan (Reserved Grant) Exercise Results: As of the first quarter of 2024, no incentive recipients have exercised their stock options. | For details, see the announcement (No.: 2024-024) disclosed by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on April 2, 2024. |
| Adjustment of Exercise Price for the 2023 Stock Option Incentive Plan: Due to the implementation of the annual equity distribution, the exercise price of the 2023 Stock Option Incentive Plan has been adjusted from RMB 14.54 per share to RMB 14.27 per share. | For details, see the announcement (No.: 2024-046) disclosed by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on April 25, 2024 |
| Adjustment of Exercise Prices for the 2019 Stock Option Incentive Plan (Initial Grant and Reserved Grant): Due to the implementation of the annual equity distribution, the exercise price for the initial grant portion of the 2019 Stock Option Incentive Plan has been adjusted from RMB 11.98 per share to RMB 11.71 per share, and the exercise price for the reserved grant portion | For details, see the announcement (No.: 2024-045) disclosed by the Company on the website of Shanghai Stock Exchange |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| has been adjusted from RMB 20.46 per share to RMB 20.19 per share. | (www.sse.com.cn) on April 25, 2024 |
| Results of Exercise of Stock Options for Q2 2024: 2015 Stock Option Incentive Plan Exercise Results: A total of 18,900 shares were exercised and completed share transfer registration. Cumulative as of June 30, 2024: A total of 8,637,687 shares were exercised and completed share transfer registration, accounting for 42.51% of the total exercisable stock options. 2019 Stock Option Incentive Plan (Initial Grant Portion) Exercise Results: A total of 658,800 shares were exercised and completed share registration. As of June 30, 2024, a total of 9,782,353 shares were exercised and completed share registration, accounting for 79.80% of the total exercisable stock options. 2019 Stock Option Incentive Plan (Reserved Grant Portion) Exercise Results: As of Q2 2024, no participants have exercised their options. | For details, see the announcement (No.: 2024-061) disclosed by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on July 2, 2024 |
| Termination of the First Core Employee Shareholding Plan Upon Completion: On July 18, 2024, the company held the 12th meeting of the sixth Board of Directors, during which the "Proposal on the Termination of the First Core Employee Shareholding Plan Upon Completion" was reviewed and approved. The Board agreed to terminate the First Core Employee Shareholding Plan. | For details, see the announcement (No.: 2024-066) disclosed by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on July 20, 2024 |
| Announcement on the Fulfillment of Exercise Conditions for the First Exercise Period of the 2023 Stock Option Incentive Plan and the Cancellation of Partial Stock Options: As of the period from October 14, 2023, to August 23, 2024, 3 incentive recipients resigned, and 11 incentive recipients opted out, resulting in the number of incentive recipients under the 2023 Stock Option Incentive Plan being adjusted from 398 to 384. Additionally, 6 incentive recipients failed to meet the annual performance evaluation standards for 2023, necessitating the cancellation of the stock options granted to them for the first exercise period. Consequently, it is proposed to cancel a total of 637,500 stock options that were granted but not yet exercised by the aforementioned resigned, opted-out, and underperforming incentive recipients. After this adjustment, the total number of stock options under the company’s 2023 Stock Option Incentive Plan will be adjusted from 14,506,000 to 13,868,500. | For details, see the announcement (No.: 2024-077) disclosed by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on August 27, 2024 |
| Results of the Voluntary Exercise of Stock Options for the Third Quarter of 2024: 2015 Stock Option Incentive Plan Exercise Results:During this quarter, a total of 163,205 shares were exercised and completed the share transfer registration. As of September 30, 2024, a cumulative total of 8,800,892 shares have been exercised and completed the share transfer registration, accounting for 43.32% of the total exercisable stock options. 2019 Stock Option Incentive Plan (Initial Grant) Exercise Results: During this quarter, a total of 686,704 shares were exercised and completed the share transfer registration. As of September 30, 2024, a cumulative total of 10,469,057 shares have been exercised and completed the share transfer registration, accounting for 85.40% of the total exercisable stock options. 2019 Stock Option Incentive Plan (Reserved Grant) Exercise Results: As of the third quarter of 2024, no incentive recipients have exercised their stock options under this plan. | For details, see the announcement (No.: 2024-086) disclosed by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on October 9, 2024. |
| Adjustment of Incentive Recipients and Cancellation of Part of the Company’s Stock Options under the 2015 Stock Option Incentive | For details, see the announcement (No.: 2024- |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Plan: In light of the fact that, from October 25, 2023, to October 28, 2024, 15 incentive recipients have resigned and 13 incentive recipients have retired, the company has agreed to cancel 248,600 stock options that were granted to the 15 resigned recipients but had not yet been exercised. As for the 13 retired recipients, the stock options granted to them but not yet exercised had already been approved for exercise during the four exercise periods prior to their retirement; therefore, their exercise rights will continue to be retained. After this adjustment, excluding the resigned and retired individuals, the number of incentive recipients has been adjusted to 889, and the total number of stock options granted has been adjusted to 20,068,767 (including the stock options that meet the exercise conditions but have not yet been exercised by the retired incentive recipients). | 091) disclosed by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on October 30, 2024. |
| Termination of the Second Phase Core Employee Shareholding Plan upon Completion: On December 23, 2024, the company convened the 15th meeting of the sixth board of directors, during which the "Proposal on the Termination of the Second Phase Core Employee Shareholding Plan upon Completion" was reviewed and approved. The board agreed to terminate the Second Phase Core Employee Shareholding Plan. | For details, see the announcement (No.: 2024-101) disclosed by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on December 25, 2024 |
| Cancellation of Unexercised Stock Options from the Third Exercise Period of the 2019 Stock Option Incentive Plan (Initial and Reserved Grants): As the third exercise period for the initial grant portion of the 2019 Stock Option Incentive Plan expired on November 27, 2024, the company has agreed to cancel 794,580 unexercised stock options held by 90 incentive recipients. Similarly, the third exercise period for the reserved grant portion of the 2019 Stock Option Incentive Plan expired on November 8, 2024, and the company has agreed to cancel 297,000 unexercised stock options held by 4 incentive recipients. | For details, see the announcement (No.: 2024-102) disclosed by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on December 25, 2024 |
| Unlocking of the First Lock-Up Period for the 2023 Employee Stock Ownership Plan Upon Meeting Performance Criteria: The first lock-up period for the 2023 Employee Stock Ownership Plan is about to expire, and the shares are eligible for unlocking as the performance criteria have been met. Upon the expiration of the first lock-up period, the Management Committee will, in accordance with the relevant provisions of the 2023 Employee Stock Ownership Plan and the 2023 Employee Stock Ownership Plan Management Measures, sell the shares at an opportune time and proceed with their distribution. | For details, see the announcement (No.: 2024-103) disclosed by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on December 25, 2024 |
| Results of Voluntary Exercise of Stock Options for Q4 2024: 2015 Stock Option Incentive Plan Exercise Results: During this quarter, a total of 160,550 shares were exercised and transferred. As of December 31, 2024, the cumulative number of shares exercised and transferred reached 8,961,442, accounting for 44.65% of the total exercisable stock options. 2019 Stock Option Incentive Plan (Initial Grant) Exercise Results: During this quarter, a total of 994,816 shares were exercised and transferred. As of December 31, 2024, the cumulative number of shares exercised and transferred reached 11,463,873, accounting for 93.52% of the total exercisable stock options. 2019 Stock Option Incentive Plan (Reserved Grant) Exercise Results: As of Q4 2024, no participants have exercised their options under the reserved grant portion. | For details, see the announcement (No.: 2025-001) disclosed by the Company on the website of Shanghai Stock Exchange (www.sse.com.cn) on January 3, 2025 |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(II) Incentive matters not disclosed in temporary announcements or with further progressEquity incentive
□Applicable √Not Applicable
Other explanations
□Applicable √Not Applicable
Employee stock ownership plan
□Applicable √Not Applicable
Other incentive measures
□Applicable √Not Applicable
(III) Equity incentives granted to directors and members of the senior management during thereporting period
□Applicable √Not Applicable
(IV) Establishment and implementation of appraisal mechanism and the incentive mechanism for
senior management during the reporting period
√Applicable □ Not Applicable
The Company had an appraisal and incentive mechanism. The Remuneration Committee evaluateddirectors, supervisors and members of the senior management and formulated an annual remunerationplan based on the profit completion and the Company's operational indicators of the year. The plancomprehensively considered the average annual salary level of related industries and the current situationof the Company, and linked the annual salary of the Company's operators with the Company's financialposition, profitability and completion of annual business goals, to fully mobilize the enthusiasm ofoperators, further improve the work performance appraisal and the survival of the fittest mechanism forthe Company's members of the senior management, and strengthen the restraint of responsibilityobjectives.
XII. Construction and implementation of internal control system during the reporting period
√Applicable □ Not Applicable
In accordance with the requirements of the Company Law, the Basic Standards for Enterprise InternalControl, and their supporting guidelines, as well as other relevant laws and regulations, the company hasestablished internal control systems for various business operations and strictly implemented them. At thesame time, the company continues to carry out the construction, optimization, and improvement of internalcontrols. During the reporting period, the company revised a total of 9 systems, including the Articles ofAssociation and the Rules of Procedure for the Board of Directors, and formulated 3 new systems,including the Group Tax Policy, the Audit Firm Selection and Appointment System, and the PublicOpinion Management System. The company also guided its subsidiaries to conscientiously implementinternal control systems, improve relevant business processes, and effectively ensure the effectiveness ofinternal controls.The Company maintained effective internal control over all material aspects of financial and non-financialreporting during the reporting period, as detailed in the 2024 Internal Control Evaluation Report disclosedon the website of the Shanghai Stock Exchange (www.sse.com.cn) at the same time as this report.
Particulars on major defects in the internal control during the reporting period
□Applicable √Not Applicable
XIII. Management and control on subsidiaries during the reporting period
√Applicable □ Not Applicable
During the reporting period, subject to the requirements of the Company's internal control system, theCompany carried out effective management in terms of operation, organization structure, human resources,
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
finance, capital, guarantee and information disclosure of its subsidiaries in accordance with theAdministration Regulations for Subsidiaries. In order to strengthen the compliance management ofsubsidiaries and enhance management efficiency and convenience, the Company developed and put online a software platform of corporate governance system, which integrates a series of functions such asentity management, meeting management, and reporting of major issues, which enhances the digitalizationof the compliance management of subsidiaries. Subsidiaries operated in accordance with theadministration regulations formulated by the Company, and established corresponding decision-making,execution, monitoring and feedback systems. Their organizational structures were with clear division oflabor and sound and clear functions.
XIV. Particulars on the internal control audit report
√Applicable □ Not Applicable
The internal control audit report is available on the website of the Shanghai Stock Exchange atwww.sse.com.cn.Whether disclosed the internal control audit report: YesType of internal control audit report opinion: standard unqualified opinion
XV. Rectification of problems identified in self-examination of governance special actions by the
listed companyNot Applicable
XVI. Others
□Applicable √Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 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) | 3,585 |
(I) Environmental protection information of companies belonging to key pollutant-discharge units and their main subsidiaries announced by the environmentalprotection department
√Applicable □ Not Applicable
The companies included in the key pollutant discharge units during the reporting period are USI (notincluding subsidiaries) and wholly-owned subsidiary Asteelflash Suzhou.
1. Pollutant Discharge Information
√Applicable □ Not Applicable
(1) The information of wastewater detection and waste treatment in USI (not including subsidiaries) in2024 is as follows:
| Information on Wastewater Discharge in 2024 | |||
| Number & position of wastewater discharge port | DW001 | Monitoring units and methods | Entrust Shanghai Huihuan Environmental Testing Co., Ltd. to test |
| Discharge standard | GB 39731-2020 Electronic Industry Water Pollutant Discharge Standard, DB31/199-2018 “Integrated Wastewater Discharge Standard” | Discharge mode and destination | It is discharged from the pipe and enters the urban sewage treatment plant |
| Testing items | Standard value | Test date | |
| 2024/9/9 | |||
| pH | 6-9 | 7.7 | |
| Chemical Oxygen Demand (COD) (mg/L) | 500 | 52 | |
| Anionic Surfactant (mg/L) | 20 | 0.22 | |
| Biochemical Oxygen Demand (BOD5) (mg/L) | 300 | 24.8 | |
| Ammonia Nitrogen (NH3-N) (mg/L) | 45 | 0.854 | |
| Total Phosphorus (mg/L) | 8 | 0.76 | |
| Total Nitrogen (mg/L) | 70 | 3.64 | |
| Suspended Solids (SS) (mg/L) | 400 | 12 | |
| Petroleum (mg/L) | 15 | ND | |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Animal and Vegetable Oils (mg/L) | 100 | 1.03 |
| Dissolved Solids (mg/L) | 2000 | 248 |
| Note | / | Qualified |
| Information on Solid (Hazardous) Waste Discharge in 2024 | ||||||
| Name | Category | Code | Output (tons) | Transfer amount (tons) | Storage capacity (tons) | Disposal or recovery |
| PCB dust, board edge, PCB with parts | Hazardous waste | 900-045-49 | 40.331 | 40.331 | 0 | Handed over to a qualified unit for processing |
| Empty barrels, rags, filter elements and sludge contaminated with chemicals | Hazardous waste | 900-041-49 | 41.51 | 41.51 | 0 | Handed over to a qualified unit for processing |
| Organic resin | Hazardous waste | 900-014-13 | 43.804 | 43.804 | 0 | Handed over to a qualified unit for processing |
| Bromopropane | Hazardous waste | 900-404-06 | 3.274 | 3.274 | 0 | Handed over to a qualified unit for processing |
| DF10 and other solvents | Hazardous waste | 900-402-06 | 192.889 | 192.889 | 0 | Handed over to a qualified unit for processing |
| Isopropanol and other solvents | Hazardous waste | 900-402-06 | 18.631 | 18.631 | 0 | Handed over to a qualified unit for processing |
| Waste liquids generated in the laboratory | Hazardous waste | 900-047-49 | 0.1 | 0.1 | 0 | Handed over to a qualified unit for processing |
| Waste oil | Hazardous waste | 900-249-08 | 0.411 | 0.411 | 0 | Handed over to a qualified unit for processing |
| Waste cutting fluid | Hazardous waste | 900-006-09 | 0.094 | 0.094 | 0 | Handed over to a qualified unit for processing |
| Waste activated carbon | Hazardous waste | 900-039-49 | 14.092 | 14.092 | 0 | Handed over to a qualified unit for processing |
| Waste fluorescent tubes | Hazardous waste | 900-023-29 | 0.017 | 0.017 | 0 | Handed over to a qualified unit for processing |
| Waste lead-acid batteries | Hazardous waste | 900-052-31 | 1.1998 | 1.1828 | 0.017 | Handed over to a qualified unit for processing |
| Waste sludge | Hazardous waste | 900-041-49 | 4.092 | 4.092 | 0 | Handed over to a qualified unit for processing |
| Waste mud | Hazardous waste | 900-064-17 | 4.68 | 4.68 | 0 | Handed over to a qualified unit for processing |
| Lead-containing waste (tin slag, solder paste, etc.) | Hazardous waste | 900-025-31 | 0.798 | 0.798 | 0 | Handed over to a qualified unit for processing |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Information on Industrial Exhaust Emission in 2024 | ||||||
| Sampling point position | Standard dry flue gas flow rate | Test result | Remarks: | |||
| Particulate matter | Voc | Reporting date: January 9, 2024 | ||||
| Emission concentration Mg/m3 | Emission rate Kg/h | Emission concentration Mg/m3 | Emission rate Kg/h | |||
| DA001 | 57,800 | ND | - | 1.20 | 0.0694 | |
| DA002 | 120,000 | 1.0 | 0.120 | 2.73 | 0.328 | Entrusted third party: Shanghai Huihuan Environmental Testing Co., Ltd. to test |
| Integrated Emission Standard of Air Pollutants (DB 31/933-2015) | 30 | 1.5 | 70 | 3.0 | ||
(2) Information on wastewater detection and waste treatment of Asteelflash Suzhou in 2024 is asfollows:
| Information on Wastewater Discharge in 2024 | |||||
| Number & position of wastewater discharge port | Coordinates: X=53452.745 Y=31496.402 | Monitoring units and methods | Suzhou Youlian Checking & Measuring Technology Service Co., Ltd. | ||
| Discharge standard | Wastewater quality standards for discharge to municipal sewers GB/T31962-2015 | Discharge mode and destination | It is discharged from the pipe and enters the urban sewage treatment plant | ||
| Testing items | Standard value | Test date | |||
| 2024/09/20 | 2024/12/06 | ||||
| PH | 6.5-9.5 | 7.7 | 7.2 | ||
| Suspended Solids (SS) (mg/L) | ≤400 | 57 | 22 | ||
| Chemical Oxygen Demand (COD) (mg/L) | ≤500 | 214 | 282 | ||
| Biochemical Oxygen Demand (BOD5) (mg/L) | ≤350 | 120 | 140 | ||
| Ammonia Nitrogen (NH3-N) (mg/L) | ≤45 | 29.1 | 43.4 | ||
| Total Nitrogen (mg/L) | ≤70 | 36.8 | 67.6 | ||
| Total Phosphorus (mg/L) | ≤8 | 3.49 | 5.30 | ||
| Animal and Vegetable Oils (mg/L) | ≤100 | 0.57 | 0.65 | ||
| Note | / | Qualified | Qualified | ||
| Information on Solid (Hazardous) Waste Discharge in 2024 | ||||||
| Name | Category | Code | Output (tons) | Transfer amount (tons) | Storage capacity (tons) | Disposal or recovery |
| Empty chemical drums | Hazardous waste | 900-041-49 | 7.0535 | 6.8745 | 0.179 | Handed over to a qualified unit for processing |
| Chemical- | Hazardous | 900-041- | 5.43 | 5.275 | 0.155 | Handed over to a |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| contaminated rags | waste | 49 | qualified unit for processing | |||
| Waste flux | Hazardous waste | 900-402-06 | 3.712 | 3.712 | 0 | Handed over to a qualified unit for processing |
| Waste activated carbon | Hazardous waste | 900-039-49 | 0.21 | 0.21 | 0 | Handed over to a qualified unit for processing |
| Waste cleaning agent | Hazardous waste | 900-402-06 | 0 | 0 | 0 | Handed over to a qualified unit for processing |
| Waste circuit board scraps | Hazardous waste | 900-045-49 | 41.7685 | 39.645 | 2.1235 | Handed over to a qualified unit for processing |
| Dust | Hazardous waste | 900-451-13 | 0.7799 | 0.7235 | 0.0564 | Handed over to a qualified unit for processing |
| Waste flux | Hazardous waste | 900-402-06 | 4.445 | 4.445 | 0 | Handed over to a qualified unit for processing |
| Waste activated carbon | Hazardous waste | 900-039-49 | 0.21 | 0.21 | 0 | Handed over to a qualified unit for processing |
| Waste cleaning agent | Hazardous waste | 900-402-06 | 3.1665 | 2.8015 | 0.365 | Handed over to a qualified unit for processing |
| Spray wastewater | Hazardous waste | 900-041-49 | 1.4305 | 1.4305 | 0 | Handed over to a qualified unit for processing |
2. Construction and operation of pollution prevention and treatment facilities
√Applicable □ Not Applicable
(1) USI (not including subsidiaries) Construction and operation of pollution prevention and treatmentfacilitiesConstruction status: In 2024, the waste gas treatment facilities and wastewater treatment facilities are ingood operation, and consumables such as activated carbon and filter cotton were replaced regularly. Theoutsourced monitoring results show that the wastewater and waste gas emissions meet the standards.1 discharge port in Building A: Water spray + defogger +activated carbon adsorption + dry dust removaldischarged from Outlet DA0011 discharge port in Building B: South Side: Water Spray + Demister + Activated Carbon Adsorption
North Side: Activated Carbon AdsorptionAfter merging streams from both sides, the exhaust undergoes dry dustremoval and is discharged via Outlet DA002.
Total emissions: hazardous waste 365.906 tons / VOCs 2.0514 tonsExcessive emissions: N/AApproved total discharge: Wastewater CODcr: 10.3977 tons/year; Ammonia Nitrogen: 0.4993 tons/year;Total Nitrogen: 1.5844 tons/year; Total Phosphorus: 0.0653 tons/year; Exhaust Particulate Matter: 1.4847tons/year; SOx: 0.013 tons/year; NOx: 1.1098 tons/year; VOCs: 11.1716 tons/year
(2) Asteelflash Suzhou
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Construction Status: In June 2024, the integration and renovation of pollution source discharge outletswere completed, reducing the number of discharge outlets from 12 in December 2023 to 6.Building 1: 3 discharge outlets: Secondary activated carbon adsorption; panel cutting machines equippedwith bag dust collectors.Building 2: 2 discharge outlets: Water spray + primary activated carbon adsorption; panel cuttingmachines equipped with bag dust collectors.Restaurant: 1 discharge outlet: Fume purifier.Operational Status: In 2024, the exhaust gas treatment facilities operated well with regular maintenance.Third-party monitoring results for all exhaust gas discharge outlets indicated compliance with emissionstandards.Total Emissions: Tin and its compounds: Not detected. Non-methane total hydrocarbons: 0.0908 tons.Particulate matter: Not detected. Cooking fumes: 0.00734 tons. Exceedance of Emission Standards: Noexceedance of emission standards was recorded. Approved Total Emissions: Currently, there are nospecific requirements from the Suzhou government.
3. Environmental impact assessment of construction projects and other environmental protectionadministrative licenses
√Applicable □ Not Applicable
(1) USI (not including subsidiaries)
| Name of EIA/Administrative License | Licensing Authority | Licensing Date | License File No. |
| Pollutant discharge permit | Pudong New Area Ecological Environment Bureau | January 24, 2024 | 91310000745611834X001U |
| Environmental Impact Report | Pudong New Area Ecological Environment Bureau | December 2, 2024 | H.P.H.B.X.P [2024]292 |
(2) Asteelflash Suzhou
| Name of EIA/Administrative License | Licensing Authority | Licensing Date | License File No. |
| Pollutant discharge permit | Suzhou Wujiang Ecological Environment Bureau | July 2, 2024 | Permit No.: 91320509734422894M001Y |
4. Emergency plan for environmental emergencies
√Applicable □ Not Applicable
| Project file name | Filing Date | Filing Department | Record No. |
| Environmental Emergency Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. | November 30, 2022 | Pudong New Area Ecological Environment Bureau | 02-310115-2022-532-L |
| Environmental Emergency Plan of Asteelflash Suzhou | May 20, 2016 | Wujiang Environment Bureau | SST-WI-FA-009 |
5. Environmental self-monitoring scheme
√Applicable □ Not Applicable
The Company entrusts a third-party environmental testing agency to conduct environmental monitoringwork for the Company in strict accordance with the relevant requirements of the Technical Guide for Self-
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Monitoring of Pollutant Discharge Units. At the same time, the Company has also formulated a detaileddaily monitoring plan to monitor emission sources of various pollutants regularly and routinely. Afterbeing tested by a third-party environmental testing agency, pollutants in all processes of the Companymeet 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 pollution liability insurance | None |
| Payment of environmental tax | Pay environmental tax on time every quarter |
| Environmental policy and annual environmental objectives and results | Complying with laws and regulations, responding to environmental protection, hazard prevention, communication training, pollution prevention, continuous improvement, energy saving and waste reduction, effective utilization, setting goals and sustainable operation. |
| Environmental protection investment and environmental technology development | Every year, special funds are invested in environmental protection projects to ensure that environmental protection funds are earmarked. The funds are used for annual environmental testing, pollution prevention and control, waste reduction and recycling to ensure that all environmental emissions meet the requirements of environmental protection laws and regulations. |
| Recycling of waste products | A waste management plan has been formulated, in which hazardous wastes are handed over to qualified units for treatment and non-hazardous wastes are recycled by licensed recycling units. |
| Resource consumption in 2024 | USI (not including subsidiaries): 189,996 tons of water, 67,467,645 KWH of electricity Asteelflash Suzhou: 77,044 tons of water, 11,162,354 KWH of electricity |
| Environmental violations of law in 2024 | None |
| Environmental awards in 2024 | On March 11, 2024, USI was awarded the "Steady Progress Award for 2023" by the Shanghai Pudong New Area Work Safety Association. |
(II) Description of environmental protection of companies other than key pollutant-dischargingunits
□ Applicable √Not Applicable
(III) Relevant information conducive to protecting ecology, preventing and controlling pollution andfulfilling environmental responsibilities
√Applicable □ Not Applicable
1. Recycling of electronic waste
The Company 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’spolicies which are implemented by all factories and listed as annual performance indicators. It strengthensthe effective control of wastes through regular data recording, tracking and monitoring of use and output.Among them, hazardous wastes are handed over to licensed qualified processors for treatment and non-hazardous wastes are recycled by licensed recyclers or cleared and transported to licensed incinerationplants for treatment. In 2024, the recovery rate of waste reached 94%. USI will continue to implement the
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
waste reduction policy, reduce the waste from the source, and strive to achieve the goal of sustainableresources.
2. Cleaning technology
USI follows the strategy of green management and ecological design of products, quickly responds to thelatest international environmental protection laws and regulations and environmental protectioninstructions of sales areas, and formulates “Specifications of Green Products” to control the hazardoussubstances contained in electronic components and products. In product design, USI considers thepotential environmental impact of products according to specifications of green products and Design forEnvironment (DfE) operation procedures, and adopts the latest international energy consumption laws andregulations (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 cycleon the environment.The design and R&D personnel of USI have the ability of designing ecological products, and continuouslyintroduce the concepts of green products and clean technologies to ensure that the clean technologyproducts manufactured and sold will meet the requirements of environmental protection laws andregulations of various countries and meet customer needs, development trends of environmental protectionand internal control standards of the Company.
3. Renewable energy
In order to reduce the energy consumption of buildings and mitigate the impact of climate change, theCompany's Nantou Factory successfully obtained the first EEWH green building certification in 2020. Inaddition, the Nantou factory has cooperated with a photovoltaic panel construction manufacturer to builda photovoltaic power generation system, which has produced a total of 3,361 megawatt hours of renewableenergy by 2024 since it is officially put into power production since October 2019. In 2024, the Huizhoufactory set up a photovoltaic power generation system on the roof of the factory, with an annual powergeneration of 2,219 megawatt hours, and the Company’s cumulative total photovoltaic power generationwas 5,580 megawatt hours. In the future, the Company will continue to strive to promote cleanerproduction and green buildings, and establish green factories for USI.
(IV) Measures taken to reduce their carbon emissions during the reporting period and their effects
| Whether carbon reduction measures were taken | Yes |
| Reduction of carbon dioxide equivalent emissions (unit: tons) | 61,397.2 |
| Types of carbon reduction measures (such as using clean energy to generate electricity, using carbon reduction technologies in the production process, developing and producing new products that help reduce carbon emissions, etc.) | 1. In 2024, USI (not including subsidiaries) used 100% renewable energy certificates to offset greenhouse gas emissions from electricity consumption; 2. In 2024, USI (not including subsidiaries) completed various energy-saving schemes. 3. In 2024, Asteelflash Suzhou used 100% renewable energy certificates to offset greenhouse gas emissions from electricity consumption; 4. In 2024, Asteelflash Suzhou completed various energy-saving schemes. |
Detailed introductions
√Applicable □ Not Applicable
In 2024, USI fully utilized renewable energy certificates to offset greenhouse gas emissions fromelectricity consumption, totaling approximately 51,970 tons of CO2.In January 2024, USI completed the integration of two exhaust systems at the southwest corner of A5F.Actual operation verified an annual carbon reduction of approximately 108 tons of CO2.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
In January 2024, USI completed the PCW integration and heat exchange efficiency improvement project.Actual operation verified an annual carbon reduction of approximately 206 tons of CO2.In 2024, Asteelflash Suzhou fully utilized renewable energy certificates to offset greenhouse gas emissionsfrom electricity consumption, totaling approximately 9,035.93 tons of CO2.In January 2024, Asteelflash Suzhou completed the ESS energy-saving optimization. Actual operationverified a carbon reduction of 15.5 tons of CO2.In February 2024, Asteelflash Suzhou completed the energy-saving optimization of the testing room.Actual operation verified a carbon reduction of 14.69 tons of CO2.In February 2024, Asteelflash Suzhou completed the aging room renovation. Actual operation verified acarbon reduction of 42.7 tons of CO2.In July 2024, Asteelflash Suzhou Co., Ltd. completed the motion-sensor lighting retrofit in the office area.Actual operation verified a carbon reduction of 0.8 tons of CO2.In October 2024, Asteelflash Suzhou completed the photovoltaic retrofit of some streetlights. Actualoperation verified a carbon reduction of 3.68 tons of CO2.In 2024, Asteelflash Suzhou implemented various energy-saving solutions. Actual operation verified atotal carbon reduction of 77.37 tons.
II. Work on corporate social responsibility
(I) Whether social responsibility report, sustainability report or ESG report is disclosed separately
√Applicable □ Not Applicable
For the company's 2024 Sustainability Report, please refer to the Shanghai Stock Exchange website(www.sse.com.cn) and the Sustainability section of the company's official websit(https://www.usiglobal.com/csr).(II) Specific situation of corporate social responsibility
√Applicable □ Not Applicable
| Donations, public welfare projects | Quantity/Content | Remark |
| Total investment (Unit: RMB 10,000 yuan) | 851.3 | |
| Including funds (Unit: RMB 10,000 yuan) | 804.4 | |
| Materials (Unit: RMB 10,000 yuan) | 46.9 | |
| Number of beneficiaries | 9,037 |
Detailed introductions
√Applicable □ Not Applicable
USI has been adhering to the concept of “Unity of Knowledge and Action, Collective Wisdom andStrength”, actively fulfilling corporate social responsibilities by participating in social welfare, andpracticing 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”, hopingto become an excellent example of corporate citizenship. The Company gathered internal resources andmanpower, and invested RMB 8,513,852 yuan in support of social welfare projects in 2024, and promotedsocial engagement in the four aspects of “Education, Contributing to Society, Promoting Arts & Culture,and External Participation” to make a positive impact on surrounding communities.In addition to expanding educational initiatives to alleviate poverty and actively promoting rural educationand rural revitalization through public welfare actions, the company has sponsored various projects acrossits facilities in the fields of education, society, environment, and culture. These include the "5th Cross-Strait Student Baseball League," "China Weiqi League," "Library of Love," "Million Tree PlantingProject," "Beach Cleanup Campaign," "Campus LED Project," and cultural performances. By combiningcorporate efforts with the power of the community, the company aims to bring more positive energy andwarmth to society and the environment, creating greater value for humanity.III. Efforts in consolidating the achievements in poverty alleviation and rural revitalization
√Applicable □ Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Poverty Alleviation and Rural Revitalization Projects | Quantity/Content | Remark |
| Total investment (Unit: RMB 10,000 yuan) | 50.9 | |
| Including funds (Unit: RMB 10,000 yuan) | 38.7 | |
| Materials (Unit: RMB 10,000 yuan) | 12.2 | |
| Number of beneficiaries | 2,786 | |
| Forms of assistance (such as poverty alleviation by industrial development, poverty alleviation by job creation, poverty alleviation by educational support, etc.) | Poverty alleviation by educational support |
Detailed introductions
√Applicable □ Not Applicable
In response to SDG 4 Quality Education and to promote balanced educational development, the companyhas focused on expanding achievements in poverty alleviation through education. It actively engages inpublic welfare initiatives such as rural education support and rural revitalization, providing children inremote areas with access to better educational resources. The company is committed to consolidatingpoverty alleviation outcomes, helping more students achieve their dreams, and fostering harmonious socialdevelopment. In 2024, the company launched initiatives including the "Rural Science and TechnologyEducation Program," "Industry-University Collaboration with Shanghai University of EngineeringScience," "Pearl Retrieval Project," "Micro Light Love Reading Room," "Western Student Aid Program,"and the "Lucheng Great Love Charity Day Donation" through the Charity Federation, investing a total ofRMB 509,000 and benefiting 2,786 underprivileged students.
1. Rural Science and Technology Education Program
Guided by the belief in technology for good, the company places great emphasis on education inimpoverished areas. By donating computers and building computer classrooms, it helps children in remoteregions access better educational resources, aiming to bridge the urban-rural education gap. In 2024, theprogram provided customized, supportive technology empowerment to teachers in 7 schools. Throughinstructional videos and teaching materials, it revitalized computer education in these schools. To enhancestudents' enthusiasm for computer skills, the company organized fun typing competitions to reinforcelearning outcomes, fostering a more positive and innovative technology education environment. This notonly improved students' technological proficiency but also shaped confident and creative future citizensin the digital age, promoting the sustainable development of rural education. A total of 2,173 studentsbenefited from this initiative.
2. Industry-University Collaboration with Shanghai University of Engineering ScienceTo cultivate high-tech talent, the company established a deep industry-university collaboration withShanghai University of Engineering Science, adopting a "Four Synergies" model: collaborative education,talent development, innovation, and employment. The company donated equipment such as ultrasonicaluminum wire bonders and gold ball bonders to the university’s laboratories for student practice. Itorganized a one-day factory visit and seminar for 70 sophomore students and invited 10 students for athree-month internship. These industry-academia integration activities ensured seamless alignmentbetween the university’s talent development and the company’s talent needs, creating a win-win situation.Additionally, the company established the "USI Electronics Excellence Scholarship" to support 12outstanding underprivileged students, encouraging their academic pursuits.
3. Pearl Retrieval Project
The company’s Huizhou and Kunshan facilities actively participated in the "Pearl Retrieval Project,"supporting academically excellent students from impoverished families for nine consecutive years. In2024, the Huizhou facility organized the "Support Agriculture, Revitalize Villages, and Retrieve PearlsTogether" event, where employees raised funds by selling agricultural products from Qinglong. Theproceeds, totaling RMB 100,000, were donated to Zhuanglang County No. 1 Middle School in GansuProvince, supporting 40 students in the "2024 USI Water Pearl Class." The company also providedcustomized study materials to encourage their learning. Meanwhile, the Kunshan facility invited Pearlstudents for a factory visit, sharing career development and life advice. Through warm and interactiveexchanges, the students gained insights into professional fields, learning, life, and manufacturing trends,broadening their understanding of the corporate world and inspiring their future aspirations.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
4. Micro Light Love Reading Room
Reading is the foundation for cultivating innovative R&D capabilities. To implement the "PromoteEducation" initiative, the company established its third Love Reading Room in Hongdian Primary School,Hongdian Township, Wenshan City, Yunnan Province, a key area for rural revitalization support. Duringthe construction phase, the company encouraged employees to "Donate a Book, Fulfill a Dream," resultingin a collective effort to donate books and provide better educational resources to 441 children in remoteareas. Upon completion, the company, along with 54 employees, donated 1,693 books and 20 speakerspreloaded with 400 audiobooks, enriching the school’s teaching resources. The company hopes that thereading room will provide tangible support, narrow the urban-rural education gap, and promote balancededucational development. It sincerely wishes for students to gain knowledge and energy from books,enabling them to keep pace with technological advancements and develop holistically, just like their urbancounterparts.
5. Western Student Aid Program
"Ten years to grow trees, a hundred years to nurture people." Investing in education benefits the presentand future generations. Through the Cihui Foundation, the company implemented the Western StudentAid Program in rural areas of Yunnan and Sichuan, providing RMB 48,000 in scholarships to 12 collegestudents. This financial support ensures their access to education, helping outstanding students fromremote villages continue their studies and complete their education. The company aims to safeguard theirgrowth and enable them to use their knowledge to help others in the future.
6. Kunshan Charity Federation’s "Lucheng Great Love Charity Day Donation" ProjectWith a spirit of great love, the company participated in the "Lucheng Great Love Charity Day Donation"project, donating materials worth RMB 10,000 to support 20 individuals, including critically ill patients,disabled persons, underprivileged children, and special-needs groups. This initiative contributes to ruralrevitalization and demonstrates the company’s commitment to compassion and social responsibility.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Section VI Major Events
I. Performance of commitments(I) Commitments by the Company's actual controllers, shareholders, affiliates, acquirers, the Company and other relevant commitment parties during orsubsisted during the reporting period
√Applicable □ Not Applicable
| Commitment background | Commitment Type | Party making the commitment | Commitment content | Commitment time | Whether there is a deadline for performance | Commitment duration | Whether strictly performed in a timely manner | If not performed in a timely manner, describe the specific reasons | If not performed in a timely manner, describe the next step |
| Commitments related to major asset restructuring | Others | USI Enterprise Limited and actual controllers of USI | Note 1 | December 12, 2019 | No | Long term | Yes | ||
| Settlement of horizontal competition | USI Enterprise Limited and actual controllers of USI | Note 2 | December 12, 2019 | No | Long term | Yes | |||
| Settlement of related transactions | USI Enterprise Limited and actual controllers of USI | Note 3 | December 12, 2019 | No | Long term | Yes | |||
| Commitments related to IPO | Settlement of horizontal competition | USI Enterprise | Note 4 | May 3, 2010 | No | Long term | Yes |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Limited and ASE Inc. | ||||||||
| Settlement of horizontal competition | Actual controller of USI | Note 5 | May 3, 2010 | No | Long term | Yes | ||
| Others | USIE | Note 6 | June 17, 2010 | No | Long term | Yes | ||
| Others | ASE Shanghai | Note 7 | June 25, 2010 | No | Long term | Yes | ||
| Others | Actual controller of USI | Note 8 | June 17, 2010 | No | Long term | Yes |
Note 1: Commitment to Guarantee the Independence of the Listed Company:
(1) Guarantee that the listed company's personnel are independent
1) Guarantee that the general manager, vice president and other members of the senior management of the listed company hold full-time positions in the listed companyand receive remuneration from the listed company, and no other administrative positions other than directors and supervisors in the party making the commitment andits 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 completelyindependent 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 strictaccordance with the relevant provisions of the Company Law and the articles of association of the listed company, and no directors, supervisors and members of thesenior managers exceed the power or authority of the Board of Directors or the general meeting of the listed company to make personnel appointment and removaldecisions 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 independentlyowned 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 waybefore and after the completion of this transaction.
(3) Guarantee that the listed company's finance is independent
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
1) Guarantee that the listed company has an independent financial department and an independent financial accounting system, is equipped with specialized financialpersonnel, and establishes an independent and complete financial accounting system. Guarantee that the listed company has a standardized and independent financialaccounting 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 relatedparties;
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 thecommitment 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 organizationalstructure;
2) Guarantee that the general meeting of shareholders, the Board of Directors, independent directors, the Board of Supervisors, and the general manager of the listedcompany 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 tooperate 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 takeeffective measures to avoid horizontal competition.
(6) This letter of commitment shall have legal effect upon signature by the party making the commitment. The party making the commitment shall strictly fulfill allthe 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 thecommitment shall bear the corresponding legal liabilities.
Note 2: Commitment to avoid horizontal competition
(1) The party making the commitment guarantees that after the completion of this transaction, it shall not directly or indirectly engage in the same or similar businessor 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.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(2) The controlling shareholder of the Company guarantees that it shall not use its share-controlling relationship with the Company to conduct business activities thatdamage 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 Companyto 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 inor 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 relationshipwith 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 theinformation 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 theCompany.
(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 commitmentshall be liable for compensation and bear corresponding legal liabilities. The above commitments shall take effect from the date of this letter of commitment, and shallcontinue to be effective throughout the period in which the party making the commitment is the controlling shareholder and the actual controller of the Company, andcannot be changed or revoked.
Note 3: Commitment to reduce and regulate related transactions:
(1) The party making the commitment and the enterprises controlled or influenced by the party making the commitment shall try their best to avoid and reduce relatedtransactions 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 andindependent third parties through the market shall be conducted by the listed company and its subsidiaries and independent third parties. Other companies controlledor 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 itssubsidiaries, 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 thelisted 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 shallprevail; 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 reasonableprofit level;
(3) Related transactions between the party making the commitment and the listed company and its subsidiaries shall be subject to necessary legal procedures andinformation disclosure obligations in strict accordance with the listed company's articles of association and related transaction management system. The party makingthe 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 itssubsidiaries undertake any undue obligations. If the listed company or its subsidiaries or other shareholders suffer losses due to the violation of the above commitments
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
by the party making the commitment, or the listed company or its subsidiaries or other shareholders' interests are misappropriated due to the use of related relationshipby the party making the commitment, the party making the commitment shall be liable for compensation to the losses caused therefrom of the listed company, itssubsidiaries 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 theparty making the commitment constitute the related parties of the listed company, and cannot be changed or revoked.
Note 4:
(1) The commitment person (including other enterprises controlled by the party making the commitment, the same below) currently does not engage in the same orsimilar business as or to that of Universal Scientific Industrial (Shanghai) Co., Ltd. ("USI"), which constitute horizontal competition with USI, or other business thatmay adversely affect USI. (2) The person making the commitment shall not directly or indirectly engage in or participate in any business or activity that competeswith 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 opportunityobtained by the person making the commitment from any third party does or may constitute competition with the business operated by USI, the person making thecommitment shall notify USI immediately and cause the business opportunity to be transferred to USI. (4) Where USI further expands its business scope on the basisof its existing business, if the Company has already carried out production and operation of such expanded business, the person making the commitment agrees thatUSI 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 suchexpanded business, it shall not engage in new business that competes with USI. (5) The person making the commitment shall, in future business operations, avoidoperating business that constitutes horizontal competition with USI. If the new business that the person making the commitment intends to carry out may constitutehorizontal competition with USI, the person making the commitment shall obliged to notify USI of the new business. If USI objects to this, the person making thecommitment shall unconditionally give up the development of the new business. If USI believes that the new business is beneficial to its development, the personmaking 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. IfUSI determines that a certain business the person making the commitment has already conducted is in competition with USI, the person making the commitment shalltransfer 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 personmaking the commitment shall unconditionally transfer the above-mentioned business and assets to USI in priority at a fair price assessed by an intermediary withqualifications for securities business.
Note 5:
(1) Other enterprises excluding USI (including enterprises controlled by USI, the same below) controlled by the person making the commitment currently do notengage 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 USIaccording 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 butnot limited to independent operation, joint venture operation, or owning equity and other interests in anothercompany or enterprise) inside or outside China, or engage
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
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 thecommitment from any third party does or may constitute competition with the business operated by USI, the person making the commitment shall notify USIimmediately 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, ifother enterprises controlled by the person making the commitment have already carried out production and operation of such expanded business, the person makingthe commitment agrees that USI has the right of first refusal to purchase the relevant business under the same commercial conditions; If other enterprises controlledby the person making the commitment have not yet produced or operated such expanded business, the person making the commitment shall ensure that the enterpriseunder their control does not engage in new business that competes with USI. (5) Other enterprises controlled by the person making the commitment shall, in futurebusiness operations, avoid operating business that constitutes horizontal competition with USI. If the new business that other enterprises controlled by the personmaking 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 toits development, such other enterprises shall not only unconditionally give up the development of the new business, but also promote the new business to be carriedout 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 theperson 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 USImakes 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 anintermediary with qualifications for securities business. (5) Other enterprises controlled by the person making the commitment shall not engage in business or activitiesthat 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 customerresources of the person making the commitment to hinder or limit the independent development of USI; spreading news or information that is unfavorable to USI inthe society and among customers; using the control position of the person making the commitment to exert influence, resulting in abnormal changes or fluctuations ofUSI's management personnel and R&D technicians, which are not conducive to the development of USI.
Note 6:
(1) For the situation that USI currently has or is about to have some patent rights and patent application rights in common with Universal Scientific Industrial Co.,Ltd., in order to protect the interests of USI and its minority shareholders, the person making the commitment hereby commits that: if Universal Scientific IndustrialCo., Ltd. (including other enterprises controlled by Universal Scientific Industrial Co., Ltd. except USI and enterprises controlled by USI) causes any right infringementand economic losses to USI and enterprises controlled by USI when exercising its patent application co-ownership and patent co-ownership, the person making thecommitment 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 dispatchedpersonnel’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 socialinsurance premiums or housing provident fund for employees as required or decided by the competent department, or USI and its subsidiaries are fined or suffer lossesfor failure to pay social insurance premiums or housing provident funds for employees in accordance with the law, the person making the commitment shall be willingto assume such liability without the consideration of USI and its subsidiaries.
Note 7
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
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. Theperson making the commitment hereby makes the following commitments: If USI cannot continue using the leased property or suffers a claim from a third party dueto 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 legalliabilities, and shall also fully compensate USI for any losses, fines and relocation expenses incurred thereby.
Note 8:
The person making the commitment and enterprises controlled by the person making the commitment (except ASE Technology Holding Co., Ltd. and enterprisescontrolled by ASE Technology Holding Co., Ltd.) do not own any patents, patent application rights or non-profit patented technology. (2) For the situation that USIcurrently 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 theinterests of USI and its minority shareholders, the person making the commitment hereby commits that: if Universal Scientific Industrial Co., Ltd. (including otherenterprises controlled by Universal Scientific Industrial Co., Ltd. except USI and enterprises controlled by USI) causes any right infringement and economic losses toUSI and enterprises controlled by USI when exercising its patent application co-ownership and patent co-ownership, the person making the commitment shall belegally 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 jointlyand 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 personmaking the commitment agrees to compensate USI for the entire economic loss. (4) If USI and its subsidiaries need to pay social insurance premiums or housingprovident 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 socialinsurance premiums or housing provident funds for employees in accordance with the law, the person making the commitment shall be willing to assume such liabilitywithout the consideration of USI and its subsidiaries.
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(II) Where the Company has profit forecasts on assets or projects, and the reporting period waswithin the term of profit forecasts, the Company has to state whether such profit forecasts onassets or projects are fulfilled and the reasons therefor
□Fulfilled □Unfulfilled √Not Applicable
(III) Execution of the performance commitments and its impact on the goodwill impairment testing
□Applicable √Not Applicable
II. Non-operating misappropriation of funds by controlling shareholders and other related parties
during the reporting period
□Applicable √Not Applicable
III. Illegal guarantees
□Applicable √Not Applicable
IV. Explanation by the Board of Directors of the Company on other type of audit report thanstandard unqualified audit report issued by the accounting firm
□Applicable √Not Applicable
V. Analysis by the Company on reasons for and impacts of changes in accounting policies andaccounting estimates or corrections of significant accounting errors(I) Analysis by the Company on reasons for and impacts of changes in accounting policies andaccounting estimates
√Applicable □Not Applicable
1. Classification of Current Liabilities and Non-Current Liabilities
(1) Reason for Accounting Policy Change
On October 25, 2023, the Ministry of Finance issued the Interpretation of Accounting Standards forBusiness Enterprises No. 17, which came into effect on January 1, 2024. Enterprises are required to adjustcomparable period information when first implementing the provisions of this interpretation.
(2) Main Content of the Accounting Policy Change
The Interpretation No. 17 revises and improves the classification principles for current liabilities and non-current liabilities under Accounting Standards for Business Enterprises No. 30—Presentation of FinancialStatements, as explained below:
It clarifies that if an enterprise does not have the substantive right to defer the settlement of a liability formore than one year after the balance sheet date, the liability shall be classified as a current liability. Thesubjective possibility of the enterprise exercising such a right does not affect the liquidity classification ofthe liability.For liabilities arising from loan arrangements, if the enterprise’s right to defer settlement depends onwhether it complies with the conditions specified in the loan arrangement (hereinafter referred to as thecontractual conditions), the classification of the liability’s liquidity on the balance sheet date shall bedetermined by distinguishing between situations before or on the balance sheet date and after the balancesheet date.It clarifies that if the counterparty to the liability has the option to settle the liability using the enterprise’sown equity instruments and such option is classified as an equity instrument and separately recognized,the relevant terms do not affect the liquidity classification of the liability.It specifies the disclosure requirements for loan arrangements with contractual conditions classified asnon-current liabilities, where the enterprise’s right to defer settlement depends on the contractualconditions to be met within one year after the balance sheet date.
(3) Impact on the Company
The company has evaluated and confirmed the classification principles for current liabilities and non-current liabilities under the Interpretation No. 17. After assessment, the company believes that thisaccounting policy change is a reasonable adjustment in accordance with the interpretation issued by the
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Ministry of Finance and has no impact on the company’s financial position, operating results, or cashflows.
2. Accounting Treatment for Warranty-Type Quality Assurance Not Classified as a Single PerformanceObligation
(1) Reason for Accounting Policy Change
On December 6, 2024, the Ministry of Finance issued the Interpretation of Accounting Standards forBusiness Enterprises No.18, which provides clear explanations and regulations on the accountingtreatment for warranty-type quality assurance not classified as a single performance obligation. Theinterpretation came into effect upon issuance, allowing enterprises to implement it early in the year ofrelease.
(2) Main Content of the Accounting Policy Change
In accordance with Article 33 of Accounting Standards for Business Enterprises No. 14-Revenue and otherrelevant provisions, for warranty-type quality assurance not classified as a single performance obligation,enterprises shall recognize the estimated liability amount by debiting accounts such as “Cost of GoodsSold” and “Other Operating Costs” and crediting the “Estimated Liabilities” account. These amountsshall be presented in the “Operating Costs” line item in the income statement and in “Other CurrentLiabilities”, “Non-Current Liabilities Due Within One Year”, and “Estimated Liabilities” in the balancesheet. When first implementing this change, if the warranty-type quality assurance was previouslyrecorded under “Selling Expenses”, enterprises shall treat the changes in the relevant accounting accountsand financial statement presentation items as an accounting policy change and make retrospectiveadjustments in accordance with Accounting Standards for Business Enterprises No. 28-Changes inAccounting Policies, Accounting Estimates, and Corrections of Errors.
(3) Impact on the Company
Prior to the issuance of the Interpretation No. 18, the company recorded the amount of warranty-typequality assurance under “Selling Expenses”. After the issuance, the company retrospectively adjusted theamount of warranty-type quality assurance for 2023, reclassifying it from “Selling Expenses” to“Operating Costs”.The impact of this accounting policy change on the relevant accounts and amounts in the company’sfinancial statements is as follows:
| Consolidated Income Statement | ||||
| Unit: RMB Yuan | ||||
| Item | Amount as Originally Reported for 2023 | Adjustments Due to Changes in Accounting Policies | Amount as Restated for 2023 | |
| Operating Costs | 54,939,136,481.69 | 26,710,213.12 | 54,965,846,694.81 | |
| Selling Expenses | 367,994,662.03 | (26,710,213.12) | 341,284,448.91 | |
| Parent Company Income Statement | ||||
| Unit: RMB Yuan | ||||
| Item | Amount as Originally Reported for 2023 | Adjustments Due to Changes in Accounting Policies | Amount as Restated for 2023 | |
| Operating Costs | 17,928,507,549.98 | 12,556.36 | 17,928,520,106.34 | |
| Selling Expenses | 77,474,832.09 | (12,556.36) | 77,462,275.73 | |
After evaluation, the Company concludes that this change in accounting policies not only affects thepresentation items and amounts in the income statement but also marginally impacts financial metrics suchas gross profit margin. However, it has no material impact on the Company's financial position, operatingresults, or cash flows.
(II) Analysis by the Company on reasons and impacts of the correction of significant accountingerrors
□Applicable √Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(III) Communication with the previous accounting firm
□Applicable √Not Applicable
(IV) Approval process and other explanations
□Applicable √Not Applicable
VI. Appointment and dismissal of the accounting firm
Unit: 10,000 Currency: RMB
| Current accounting firm | |
| Name of domestic accounting firm | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
| Remuneration of domestic accounting firm | 466 |
| Number of years of audit services by the domestic accounting firm | 14 |
| Name of CPAs from domestic accounting | Yuan Shouqing, and Hu Ke |
| Number of consecutive years of audit services of CPAs in domestic accounting firms | 14 |
| Name | Remuneration | |
| Internal control audit accounting firm | Deloitte Touche Tohmatsu Certified Public Accountants LLP | 118.3 |
| Sponsor | Haitong Securities Co., Ltd. | 0 |
Particulars on appointment and dismissal of the accounting firm
√Applicable □ Not Applicable
The Company's 2023 annual general meeting of shareholders was held on April 23, 2024, and this meetingdeliberated and approved the appointment of Deloitte Touche Tohmatsu Certified Public Accountants LLPas the Company's 2024 financial audit institution and internal control audit institution.
Particulars on the change of accounting firm during the auditing period
□Applicable √Not Applicable
Explanation of the decrease of 20% or more (including 20%) in audit fees compared to theprevious year
□Applicable √Not Applicable
VII. Risk of suspension of listing(I) Reasons for the suspension of listing risk warning
□Applicable √Not Applicable
(II) Measures to be taken by the Company
□Applicable √Not Applicable
(III) Circumstances and reasons for termination of listing
□Applicable √Not Applicable
VIII. Matters related to bankruptcy and reorganisation
□Applicable √Not Applicable
IX. Material litigation and arbitration
□Applicable √Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
X. The listed company, directors, supervisors, senior management, controlling shareholders and
actual controllers suspected of violating laws and regulations, penalized and relevantrectifications
□Applicable √Not Applicable
XI. Particulars on credibility status of the Company, its controlling shareholders and actualcontrollers during the reporting period
√Applicable □ Not Applicable
During the reporting period, the Company's controlling shareholders and actual controllers did not fail toperform the obligations determined by the effective legal documents of the court, and had no bad faithsituation 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 insubsequent implementation
√Applicable □ Not Applicable
| Overview | Index |
| Announcement on Actual Regular Related Party Transactions in 2023 and Predicted Regular Related Party Transactions in 2024 | For details, see the announcement (No.: 2024-030) on the website of the Shanghai Stock Exchange (www.sse.com.cn). |
1. Events disclosed in temporary announcements and with further progress or change in subsequentimplementation
□Applicable √Not Applicable
2. Events not disclosed in temporary announcements
□Applicable √Not Applicable
(II) Related transactions as a result of acquisition and disposal of assets or equity
2. Events disclosed in temporary announcements and without further progress or change insubsequent implementation
□Applicable √Not Applicable
3. Events disclosed in temporary announcements and with further progress or change in subsequentimplementation
□Applicable √Not Applicable
4. Events not disclosed in temporary announcements
□Applicable √Not Applicable
5. Disclosable performance achievements during the reporting period when involved with agreed-
upon performance
□Applicable √Not Applicable
(III) Major related transactions in joint external investment
1. Events disclosed in temporary announcements and without further progress or change insubsequent implementation
□Applicable √Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
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 subsequentimplementation
3. □Applicable √Not Applicable
4. Events not disclosed in temporary announcements
□Applicable √Not Applicable
(V) Financial business between the Company and the financial company with a related relationshipwith 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
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(II) Guarantees
√Applicable □ Not Applicable
Unit: 10,000 Currency: EUR
| The Company's external guarantees (excluding guarantees to subsidiaries) | |||||||||||||||
| Guarantor | Relationship between the guarantor and the listed company | Guaranteed party | Guarantee amount | Guarantee date (date of signing the agreement) | Guarantee start date | Guarantee expiry date | Guarantee type | Collateral (if any) | Whether fulfilled | Whether overdue | Guarantee overdue amount | Counter-guarantee situation | Whether for related parties | Related relationship | |
| / | / | / | / | / | / | / | / | ||||||||
| Total amount of guarantees during the reporting period (excluding guarantees to subsidiaries) | 0 | ||||||||||||||
| Total balance of guarantees at the end of the reporting period (A) (excluding guarantees to subsidiaries) | 0 | ||||||||||||||
| Guarantee of the Company and its subsidiaries to subsidiaries | |||||||||||||||
| Total amount of guarantees to subsidiaries during the reporting period | 2,300 | ||||||||||||||
| Total balance of guarantees to subsidiaries at the end of the reporting period (B) | 2,300 | ||||||||||||||
| Total amount of the Company's guarantees (including guarantees to subsidiaries) | |||||||||||||||
| Total amount of guarantees (A+B) | 2,300 | ||||||||||||||
| Proportion of the total amount of guarantees in the Company's net assets (%) | 0.96 | ||||||||||||||
| Including: | |||||||||||||||
| Amount of guarantee provided to shareholders, actual controllers and related parties (C) | 0 | ||||||||||||||
| Amount of debt guarantee provided directly or indirectly for the guaranteed party whose asset-liability ratio exceeds 70% (D) | 2,300 | ||||||||||||||
| Amount of the total guarantee exceeding 50% of the net assets (E) | 0 | ||||||||||||||
| Total amount of the above three guarantees (C+D+E) | 2,300 | ||||||||||||||
| Particulars on the situation that unexpired guarantees may bear joint liability for repayment | None | ||||||||||||||
| Particulars on guarantees | |||||||||||||||
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(III) Entrusting others to manage cash assets
1. Entrusted wealth management
(1) Overall condition of entrusted wealth management
√Applicable □ Not Applicable
Unit: 10,000 Currency: RMB
| Type | Source of fund | Amount incurred | Undue balance | Overdue uncollected amount |
| Bank wealth management products | Self-owned funds | 1,415,600.00 | 0 | 0 |
Others
□Applicable √Not Applicable
(2) Individual entrusted wealth management
□Applicable √Not Applicable
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
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(3) Provision for the impairment of entrusted loans
□Applicable √Not Applicable
3. Others
□Applicable √Not Applicable
(IV) Other material contracts
□Applicable √Not Applicable
XIV. Progress of the use of raised funds
√Applicable □ Not Applicable
(I) An overview of the use of raised funds
√Applicable □ Not Applicable
Unit: RMB 10,000 yuan
| Sources of Funds Raised | Time of Funds Raised Being Received | Total Amount of Funds Raised | Net Amount of Funds Raised (1) | Total Committed Investment Amount of Funds Raised in the Prospectus or Fund-Raising Prospectus (2) | Total Amount of Excess Funds Raised (3) = (1) - (2) | Cumulative Amount of Funds Raised Invested by the End of the Reporting Period (4) | Cumulative Amount of Excess Funds Raised Invested by the End of the Reporting Period (5) | Cumulative Investment Progress of Funds Raised by the End of the Reporting Period (%) (6) = (4)/(1) | Cumulative Investment Progress of Excess Funds Raised by the End of the Reporting Period (%) (7) = (5)/(3) | Amount Invested in the Current Year (8) | Proportion of Amount Invested in the Current Year (%) (9) = (8)/(1) | Total Amount of Funds Raised with Changed Use |
| Issue Convertible Bonds | March 10, 2021 | 345,000.00 | 342,957.00 | 342,957.00 | 0 | 337,871.25 | 0 | 98.52 | 0 | 18,661.13 | 5.44 | 36,716.99 |
| Total | / | 345,000.00 | 342,957.00 | 342,957.00 | 0 | 337,871.25 | 0 | / | / | 18,661.13 | / | 36,716.99 |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(II) Details of investment projects with raised funds
√Applicable □ Not Applicable
Unit: RMB 10,000 yuan
| Source of raised funds | Name of project | Nature of project | Is it a committed investment project | change in investment direction? | Total planned investment amount of raised funds (1) | Amount invested this year | Total cumulative investment of raised funds as of the reporting period end (2) | Cumulative investment progress as of the reporting period end (%) (3) = (2)/(1) | Date when the project reaches its intended usable state | Has the project been concluded? | Does the investment progress align with the planned schedule? | Specific reasons for the investment progress not meeting the plan | Benefits achieved this year | Benefits or R&D results already achieved by this project | significant change in the project's feasibility? | Surplus amount |
| Issuance of convertible bonds | Chip module project in Shengxia site | Production and construction | Yes | Yes, this project is canceled, and the total amount of the raised funds for investment has been adjusted. | 79,283.01 | 0 | 79,283.01 | 100.00 | 2022Q4 | Yes | Yes | Not Applicable | Not Applicable (Note 1) | No | 0 | |
| Issuance of convertible bonds | Wearable device project in Vietnam site | Production and construction | Yes | No | 56,000.00 | 2,432.71 | 53,082.26 | 94.79 | 2024Q4 | Yes | Yes | Not Applicable | 14,207 | 30,388 | No | 3,596.63 |
| Issuance of convertible bonds | Electronic product project in Huizhou site | Production and construction | Yes | Yes, this project is not canceled, and the total amount of the raised funds for investment has been adjusted. | 70,000.00 | 0 | 69,926.48 | 99.89 | 2023Q3 | Yes | Yes | Not Applicable | 26,676 | 50,656 | No | 73.52 |
| Issuance of convertible bonds | Supplementary Working | Supplementary working | Yes | 100,957.00 | 0 | 101,037.47 | 100.08 | Not Applicable | Yes | Yes | Not Applicable | No | 0 |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Capital Project | capital and loan repayment | |||||||||||||||
| Issuance of convertible bonds | Construction and loan repayment of Mexico Second Factory Project | Production and construction | No | Yes, new project | 43,479.78 | 16,228.42 | 34,542.03 | 79.44 | 2024Q4 | Yes | Yes | Not Applicable | Not Applicable (Note 2) | No | 8,848.52 | |
| Total | / | / | / | / | 349,719.79 | 18,661.13 | 337,871.25 | / | / | / | / | / | / | / | 12,518.68 |
Note 1: Given that this project is a technical upgrade for the Shengxia Factory, the realized benefits cannot be separately quantified.Note 2: The raised funds are used for the construction of the second factory building at the Mexico Factory, which does not directly generate economic benefits, andtherefore, this is not applicable.(III) Changes or Termination of Fundraising Projects During the Reporting Period
□Applicable √Not Applicable
(IV) Other information on the usage of raised funds during the reporting Period
1. Replacement of pre-issuance investment with raised funds
□Applicable √Not Applicable
2. Use idle raised funds as working capital
□Applicable √Not Applicable
3. Cash management of idle raised funds
□Applicable √Not Applicable
4. Others
√Applicable □Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
During the construction of the fundraising projects, the company strictly adhered to the relevant regulations on the use of raised funds, exercised caution in theirutilization, and strictly controlled expenditures while ensuring the quality of project construction. The company strengthened the control, supervision, and managementof project costs, fully considering the comprehensive utilization of fund settlements and other effective resources. Additionally, due to the extended payment cyclesfor certain project works and equipment, as well as the unmet payment conditions for some acceptance payments and warranty deposits, certain contract final paymentshave not yet been made. To enhance the efficiency of the raised funds, in accordance with the Regulatory Guidelines No. 2 for Listed Companies-Management andUse of Raised Funds and the Shanghai Stock Exchange Self-Regulatory Guidelines No.1 for Listed Companies-Standardized Operations, and in line with thecompany’s actual production and operational needs, the company has permanently supplemented its working capital with the remaining raised funds of RMB 124.33million and the subsequent interest of RMB 117,300, totaling RMB 124.45 million, after the completion of the fundraising projects.According to Article 6.3.21 of the Shanghai Stock Exchange Self-Regulatory Guidelines No. 1 for Listed Companies-Standardized Operations, if the remaining raisedfunds (including interest income) used by a listed company after the completion of all fundraising projects are less than RMB 5 million or 5% of the net amount ofraised funds, the company may be exempt from procedures such as board of directors review. The aforementioned use of remaining raised funds of RMB 124.4516million by the company is less than 5% of the net amount of raised funds, complying with the requirements of the Shanghai Stock Exchange Self-Regulatory GuidelinesNo. 1 for Listed Companies-Standardized Operations.XV. Particulars on other major events that have great influence on investors' value judgments and investment decisions
□Applicable √Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Section VII Changes in Shares and Information of ShareholdersI. Changes in share capital(I) Table of changes in shares
1. Table of changes in shares
Unit: Share
| Before the change | Change | After the change | |||||||
| Number | % | New Issue | Bonus Issue | Shares converted from capital reserve | Others | Subtotal | Number | % | |
| II. Tradable shares held not subject to selling restrictions | 2,209,991,580 | 100 | 3,910,431 | 0 | 0 | -23,345,545 | -19,435,114 | 2,190,556,466 | 100 |
| 1. RMB ordinary shares | 2,209,991,580 | 100 | 3,910,431 | 0 | 0 | -23,345,545 | -19,435,114 | 2,190,556,466 | 100 |
| III. Total number of shares | 2,209,991,580 | 100 | 3,910,431 | 0 | 0 | -23,345,545 | -19,435,114 | 2,190,556,466 | 100 |
2. Particulars on changes in ordinary shares
√Applicable □ Not Applicable
During the reporting period, the company's total share capital increased by 3,910,431 shares due to theexercise of equity incentives and the conversion of convertible bonds, while it decreased by 23,345,545shares due to the cancellation of repurchased shares. As a result, the total share capital decreased by19,435,114 shares, from 2,209,991,580 shares to 2,190,556,466 shares.
3. Impact of changes in shares on the earnings per share, net asset value per share and otherfinancial indicators in the last year and period (if any)
√Applicable □ Not Applicable
During the reporting period, the company's total share capital decreased by a total of 19,435,114 sharesdue to the exercise of equity incentives, the conversion of convertible bonds, and share repurchasecancellations. This reduction accounted for 0.89% of the company's total share capital after the changesand had a minimal impact on financial indicators such as earnings per share and net assets per share.
4. Other contents that must be disclosed in the opinion of the Company or according to requirements
of the securities regulatory institution
□Applicable √Not Applicable
(II) Changes in shares subject to selling restrictions
□Applicable √Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Unit: share
II. Issuance and listing of securities(I) Issuance of securities durin the reporting period
□Applicable √Not Applicable
Particulars on issuance of securities during the reporting period (please explain separately the bonds withdifferent interest rates during their duration):
□Applicable √Not Applicable
(II) Changes in the total number of shares and shareholder structure of the Company and changesin the structure of assets and liabilities of the Company
√Applicable □ Not Applicable
1. Changes in Total Share Capital
During the reporting period, the company's total share capital decreased by a total of 3,910,431 shares dueto the exercise of equity incentives, the conversion of convertible bonds, and the cancellation ofrepurchased shares.
2. Changes in Shareholder Structure
The company's controlling shareholder and actual controller remained unchanged. The controllingshareholder is still USI Enterprise Limited , whose shareholding ratio increased from 76.19% to 76.86%due to the reduction in total share capital. Apart from the controlling shareholder, there are no othershareholders holding more than 5% of the company's shares. The actual controllers remain Mr. Jason C.S.Chang and Mr. Richard H.P. Chang .
3. Changes in the Company's Asset and Liability Structure
At the beginning of the reporting period, the company's total assets were RMB 39.40 billion (restated),and total liabilities were RMB 22.31 billion (restated), with a debt-to-asset ratio of 56.62%. At the end ofthe reporting period, total assets were RMB 39.998 billion, and total liabilities were RMB 21.939 billion,with a debt-to-asset ratio of 54.85%. The company's debt-to-asset ratio decreased by 1.77 percentagepoints compared to the same period last year.(III) Existing internal employee shares
□Applicable √Not Applicable
III. Shareholders and actual controllers(I) Total number of shareholders
| Total number of shareholders of ordinary shares at the end of the reporting period | 39,310 |
| Total number of shareholders of ordinary shares at the end of previous month prior to the disclosure date of this annual report | 39,244 |
| Total number of preferred shareholders whose voting rights have been restored as of the end of the reporting period | 0 |
| Total number of preferred shareholders at the end of the previous month prior to the disclosure date of the annual report | 0 |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
(II) Table of shareholdings of the top ten shareholders and the top ten shareholders of shares in
circulation (or shareholders not subject to selling restrictions) at the end of the reporting period
Unit: share
| Shareholdings of the top ten shareholders (Excluding share lending through refinancing business) | |||||||
| Name of shareholder (full name) | Change during the reporting period | Shares held by the end of the reporting period | % | Restricted shares held | Pledge, marking or freezing | Nature of shareholder | |
| Share status | Number | ||||||
| USI Enterprise Limited | 0 | 1,683,749,126 | 76.86 | 0 | None | Foreign legal person | |
| Hong Kong Securities Clearing Company Ltd. | 18,525,171 | 83,230,028 | 3.80 | 0 | Unknow | Foreign legal person | |
| China Securities Finance Co., Ltd. | -23,700 | 22,893,936 | 1.05 | 0 | Unknow | State-owned legal person | |
| ASE (Shanghai) Inc. | 0 | 18,098,476 | 0.83 | 0 | None | Domestic non-state-owned legal person | |
| Agricultural Bank of China Limited - CSI 500 Exchange Traded Open-End Index Securities Investment Fund | 5,567,602 | 9,135,802 | 0.42 | 0 | Unknow | Others | |
| USI Account for Share Repurchase | -16,605,145 | 6,740,400 | 0.31 | 0 | None | Others | |
| China Life Insurance Company Limited - Traditional - General Insurance Product - 005L-CT001 Shanghai | 3,025,057 | 5,452,900 | 0.25 | 0 | Unknow | Others | |
| Industrial and Commercial Bank of China Limited - Golden Eagle Technology Innovation Equity Securities Investment Fund | 5,204,700 | 0.24 | 0 | Unknow | Others | ||
| Huang Zhilong | 3,100,000 | 3,850,000 | 0.18 | 0 | Unknow | Individual | |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Bank of China Limited - Morgan Stanley Digital Economy Mixed Securities Investment Fund | 3,408,700 | 0.16 | 0 | Unknow | Others | |||
| Shareholding of top 10 shareholders subject to no selling restrictions | ||||||||
| Name of shareholder | Number of tradable shares held not subject to selling restrictions | Type and number of shares | ||||||
| Species | Number | |||||||
| USI Enterprise Limited | 1,683,749,126 | RMB ordinary shares | 1,683,749,126 | |||||
| Hong Kong Securities Clearing Company Ltd. | 83,230,028 | RMB ordinary shares | 83,230,028 | |||||
| China Securities Finance Co., Ltd. | 22,893,936 | RMB ordinary shares | 22,893,936 | |||||
| ASE (Shanghai) Inc. | 18,098,476 | RMB ordinary shares | 18,098,476 | |||||
| Agricultural Bank of China Limited - CSI 500 Exchange Traded Open-End Index Securities Investment Fund | 9,135,802 | RMB ordinary shares | 9,135,802 | |||||
| USI Account for Share Repurchase | 6,740,400 | RMB ordinary shares | 6,740,400 | |||||
| China Life Insurance Company Limited - Traditional - General Insurance Product - 005L-CT001 Shanghai | 5,452,900 | RMB ordinary shares | 5,452,900 | |||||
| Industrial and Commercial Bank of China Limited - Golden Eagle Technology Innovation Equity Securities Investment Fund | 5,204,700 | RMB ordinary shares | 5,204,700 | |||||
| Huang Zhilong | 3,850,000 | RMB ordinary shares | 3,850,000 | |||||
| Bank of China Limited - Morgan Stanley Digital Economy Mixed Securities Investment Fund | 3,408,700 | RMB ordinary shares | 3,408,700 | |||||
| Particulars on the special buy-back securities account of the top ten shareholders | As of the reporting period, the company's special repurchase account initially held 23,345,545 unrestricted tradable shares and held 6,740,400 unrestricted tradable shares at the end of the reporting period, resulting in a total reduction of 16,605,145 shares. The changes during the reporting period are as follows: 1. From March to July 2024, the company's special repurchase account increased its holdings by 6,740,400 shares due to the company's share repurchases in the secondary market. 2. On November 4, 2024, the company canceled 23,345,545 repurchased shares. | |||||||
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| Particulars on the above-mentioned shareholders' entrusting voting rights, entrusted voting rights and abstention from voting rights | None |
| Related or concert parties among the shareholders above | The actual controllers of the Company are Mr. Jason C.S. Chang and Mr. Richard H.P. Chang, who are brothers and ultimately control the Company through indirect shareholding by controlling USI Enterprise 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 restored and their shareholdings | None |
Top ten shareholders participating in share lending through refinancing business
□Applicable √Not Applicable
The top ten shareholders and the top ten shareholders with unrestricted tradable shares have experiencedchanges compared to the previous period due to the lending/returning of shares through the securitieslending mechanism.
□Applicable √Not Applicable
Number of shares held by the top ten shareholders subject to selling restrictions and description of theselling restrictions
□Applicable √Not Applicable
(III) Strategic investors or general legal persons becoming the top ten shareholders because ofplacing of new shares
□Applicable √Not Applicable
IV. Controlling shareholder and actual controllers(I) Controlling shareholder1 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 |
| Main businesses | Investment consulting services and warehouse management services |
| Equity of other domestic and overseas listed companies controlled or invested during the reporting period | None |
| Particulars on other information | None |
2 Natural person
□Applicable √Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
3 Special particulars on the Company not having controlling shareholder
□Applicable √Not Applicable
4 Changes in controlling shareholders during the reporting period
□Applicable √Not Applicable
5 The ownership structure of USI and its controlling shareholder
√Applicable □ Not Applicable
(II) Actual controller1 Legal person
□Applicable √Not Applicable
2 Natural person
√Applicable □ Not Applicable
| Name | Jason C.S. Chang |
| Nationality | Singapore |
| Acquire right of residence in other countries or regions or not | No |
| 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 overseas listed companies over the past 10 years | Mr. Chang currently controls 21.51% equity in ASE Investment Holding Co., Ltd. (a company listed in Taiwan, with the stock code of 3711), holds 32.23% equity in Hung Ching Development & Construction Co. (a company listed in Taiwan, with the stock code of 2527) including 26.22% through ASE Investment Holding Co., Ltd., and controls 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. |
| Name | Richard H.P. Chang |
| Nationality | Hong Kong, China |
| Acquire right of residence in other countries or regions or not | Yes |
| Main job and title | Since 2018, has been serving as vice chairman and president of |
| USI Enterprise Limited | |||
| 76.19% | |||
| USI | |||
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| ASE Technology Holding Co., Ltd. | |
| Shareholdings in other domestic or overseas listed companies over the past 10 years | As a brother of Jason C.S. Chang, holds 2.81% equity in ASE Investment Holding Co., Ltd. (a company listed in Taiwan, with the stock code of 3711) and 12.90% equity in Hung Ching Development & Construction Co. (a company listed in Taiwan, with the stock code of 2527), and controls 48.69% equity in SINO HORIZON (a company listed in Taiwan, with the stock code of 2923). Once held the equity of ASE Co., Ltd., a company listed on the Taiwan Stock Exchange, with a stock code of 2311, which was terminated from listing on April 30, 2018. |
3 Special particulars on the Company not having actual controllers
□Applicable √Not Applicable
4 Particulars on changes in the Company's control during the reporting period
□Applicable √Not Applicable
5 The ownership Structure of USI and its Actual Controller
√Applicable □ Not Applicable
| (Shanghai) | ||||||||||||||||
| USI Inc. | ||||||||||||||||
| 100% | ||||||||||||||||
| 100% | ||||||||||||||||
| Inc. | ||||||||||||||||
| 100% | ||||||||||||||||
| Special buy-back securities account of USI | ||||||||||||||||
| 1.06% | ||||||||||||||||
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
6 Control of the Company by actual controllers by way of trust or other means of asset management
□Applicable √Not Applicable
(III) Other particulars regarding the controlling shareholders and the actual controllers
□Applicable √Not Applicable
V. Shares accumulatively pledged by the Company's controlling shareholder or largest shareholderand its persons acting in concert account for more than 80% of their shareholding in theCompany
□Applicable √Not Applicable
VI. Other legal person shareholders with more than 10% shareholdings
□Applicable √Not Applicable
VII. Particulars on restrictions on reduction of shareholding
□Applicable √Not Applicable
VIII. Specific implementation of share repurchase during the reporting period
√Applicable □Not Applicable
Unit: 10,000 yuan Currency: RMB
| Share Repurchase Plan Name | 2024 Share Repurchase Plan via Centralized Bidding Transactions |
| Disclosure Time of the Share Repurchase Plan | February 8, 2024 |
| Proposed Number of Shares to be Repurchased and Percentage of Total Share Capital (%) | 6,451,612 shares~12,903,225 shares 0.29~0.58 |
| Proposed Repurchase Amount | 10,000~20,000 |
| Proposed Repurchase Period | February 7,2024 to August 6, 2024 |
| Purpose of the Repurchase | Employee Stock Ownership Plan (ESOP) |
| Number of Shares Already Repurchased | 6,740,400 shares |
| Percentage of Shares Already Repurchased Relative to the Target Shares Involved in the Equity Incentive Plan (if applicable) | Not Applicable |
| Progress of the Company's Reduction of Repurchased Shares Through Centralized Bidding Transactions | Not Applicable |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Section VIII Information on Preferred Shares
□Applicable √Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Section IX Information on Bonds
I. Corporate bonds and debt financing instruments issued by non-financial entities
□Applicable √Not Applicable
II. Convertible corporate bonds
√Applicable □ Not Applicable
(I) Issuance of convertible bonds
√Applicable □ Not Applicable
After being approved by the China Securities Regulatory Commission with a document (Z.J.X.K.[2021] No. 167), the Company publicly issued 34.5 million convertible corporate bonds on March4, 2021, each with a face value of RMB 100, amounting to RMB 3.45 billion in total. After beingapproved 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 StockExchange on April 2, 2021. The bonds are abbreviated as "USI Convertible Bonds", with the bondcode of 113045.
(II) Convertible bond holders and guarantors during the reporting period
√Applicable □ Not Applicable
| Name of convertible corporate bonds | Convertible corporate bonds publicly issued by Universal Scientific Industrial (Shanghai) Co., Ltd. in 2021 | |
| Number of convertible bond holders at the end of the period | 5,303 | |
| Guarantor of the Company's convertible bonds | None | |
| Top ten convertible bond holders: | ||
| Name of holders of convertible corporate bonds | Amount of bonds held at the end of the period (RMB) | Holding ratio (%) |
| USI Enterprise Limited | 771,169,000 | 22.35 |
| China Merchants Bank Co., Ltd. - Bosera CSI Convertible Bond and Exchangeable Bond ETF | 144,783,000 | 4.20 |
| Northwest Investment Management (Hong Kong) Limited - Northwest Flying Dragon Fund Limited | 132,412,000 | 3.84 |
| UBS AG | 69,656,000 | 2.02 |
| Guosen Securities Co., Ltd. | 68,667,000 | 1.99 |
| Bank of China Limited - E Fund Sui Feng Tian Li Bond Fund | 54,991,000 | 1.59 |
| Huatai Yousheng Convertible Bond Fixed Income Pension Product - China Merchants Bank Co., Ltd. | 52,204,000 | 1.51 |
| New China Life Insurance Co., Ltd. - Traditional - | 50,168,000 | 1.45 |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| General Insurance Product - 018L-CT001 Hu | ||
| Industrial and Commercial Bank of China Limited - GF Convertible Bond Fund | 48,144,000 | 1.40 |
| Bank of China Limited - E Fund Steady Return Bond Fund | 43,961,000 | 1.27 |
(III) Changes in convertible bonds during the reporting period
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
| Name of convertible corporate bonds | Before the change | Change | After the change | ||
| Converted into shares | Redeemed | Put | |||
| Convertible corporate bonds publicly issued by Universal Scientific Industrial (Shanghai) Co., Ltd. in 2021 | 3,449,878,000 | 22,000 | 0 | 0 | 3,449,856,000 |
Cumulative conversion of convertible bonds during the reporting period
√Applicable □ Not Applicable
| Name of convertible corporate bonds | Convertible corporate bonds publicly issued by Universal Scientific Industrial (Shanghai) Co., Ltd. in 2021 |
| Conversion amount (RMB) during the reporting period | 22,000 |
| Number of shares converted during the reporting period | 1,163 |
| Cumulative number of converted shares | 7,378 |
| Proportion of cumulative number of converted shares to the total number of shares of the Company issued before the conversion (%) | 0.0003 |
| Unconverted amount (RMB) | 3,449,856,000 |
| Proportion of unconverted convertible bonds to the total convertible bonds issued (%) | 99.9958 |
(IV) Historical adjustments of conversion price
√Applicable □ Not Applicable
Unit: yuan Currency: RMB
| Name of convertible corporate bonds | Convertible corporate bonds publicly issued by Universal Scientific Industrial (Shanghai) Co., Ltd. in 2021 | |||
| Conversion | Adjusted | Disclosure time | Disclosure | Particulars on |
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
| price adjustment date | conversion price | media | conversion price adjustment Note | |
| June 3, 2021 | 19.75 | June 1, 2021 | Shanghai Securities News, China Securities Journal, and Securities Times | 2020 profit distribution |
| June 13, 2022 | 19.49 | June 7, 2022 | 2021 profit distribution | |
| July 21, 2022 | 19.52 | July 20, 2022 | Cancellation of repurchased shares | |
| December 9, 2022 | 19.50 | December 8, 2022 | The accumulative exercise of stock options reached the degree of adjusting the conversion price | |
| May 30, 2023 | 19.07 | May 24, 2023 | 2022 profit distribution | |
| November 29, 2023 | 19.06 | November 28, 2023 | The accumulative exercise of stock options reached the degree of adjusting the conversion price | |
| June 5, 2024 | 18.79 | May 30, 2024 | 2023 profit distribution | |
| November 7, 2024 | 18.84 | November 6, 2024 | Cancellation of repurchased shares and The accumulative exercise of stock options reached the degree of adjusting the conversion price | |
| The latest conversion price as of the end of the reporting period | 18.84 | |||
(V) The Company's liabilities, changes in credit and cash arrangements for debt repayment
in future years
√Applicable □ Not Applicable
As of the beginning of the reporting period, the company's total assets amounted to RMB 39.404billion (restated), total liabilities were RMB 22.311 billion (restated), and the asset-liability ratiowas 56.62%. By the end of the reporting period, total assets increased to RMB 39.998 billion, totalliabilities decreased to RMB 21.939 billion, and the asset-liability ratio was 54.85%. Compared tothe same period last year, the company's asset-liability ratio decreased by 1.77 percentage points.On April 30, 2024, China Chengxin Credit Rating Group issued the "2024 Follow-up Rating Reportfor USI". The company's entity credit rating remained at AA+, and the credit rating for "USI
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Convertible Bonds" also remained at AA+, with a stable outlook. No adjustments were made to thisrating result.The company adopts an annual interest payment method, with the principal and the interest for thefinal accrual year to be repaid upon maturity.(VI) Particulars on other information of convertible bonds
□Applicable √Not Applicable
Universal Scientific Industrial (Shanghai) Co., Ltd. 2024 Annual Report
Section X Financial StatementsI. Auditor’s reportThe Company's annual financial report has been audited and given a standard unqualified opinionby Chinese Certified Public Accountant Yuan Shouqing and Hu Ke of Deloitte Touche TohmatsuCertified Public Accountants LLP.II. Financial statements and notesPlease refer to the attached financial statements and auditor’s report for more details.
Universal Scientific Industrial (Shanghai) Co., Ltd.
Financial Statements and Auditor's ReportFor the year ended 31 December 2024
Financial Statements and Auditor's ReportFor the year ended 31 December 2024
CONTENTS PAGE(S)
AUDITOR'S REPORT 126 - 130
CONSOLIDATED BALANCE SHEET 131 - 132
BALANCE SHEET OF THE COMPANY 133 - 134
CONSOLIDATED INCOME STATEMENT 135
INCOME STATEMENT OF THE COMPANY 136
CONSOLIDATED CASH FLOW STATEMENT 137
CASH FLOW STATEMENT OF THE COMPANY 138
THE CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY 139 - 140
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY OF THE COMPANY 141 - 142
NOTES TO THE FINANCIAL STATEMENTS 143 - 271
AUDITOR'S REPORT
De Shi Bao (Shen) Zi (25) No. P02415
(Page 1 of 5)
To the Shareholders of Universal Scientific Industrial (Shanghai) Co., Ltd.,
I. Opinion
We have audited the financial statements of Universal Scientific Industrial (Shanghai) Co., Ltd.("USI"), which comprise the consolidated and Company's balance sheets as at 31 December 2024,and the consolidated and Company's income statements, the consolidated and Company's cash flowstatements and the consolidated and Company's statements of changes in shareholders' equity for theyear then ended, and the notes to the financial statements.
In our opinion, the accompanying financial statements are prepared and present fairly, in all materialrespects, the consolidated and Company's financial position as at 31 December 2024, and theconsolidated and the Company's results of operations and cash flows of USI for the year then endedin accordance with Accounting Standards for Business Enterprises.
II. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing. Our responsibilities underthose standards are further described in the "Auditor's Responsibilities for the Audit of the FinancialStatements" section of our report. We are independent of USI in accordance with the Code of Ethicsfor Chinese Certified Public Accountants (the "Code"), and we have fulfilled our other ethicalresponsibilities in accordance with the Code. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance inour audit of the financial statements of the current period. These matters were addressed in thecontext of our audit of the financial statements as a whole, and in forming our opinion thereon, andwe do not provide a separate opinion on these matters. We determine the followings are key auditmatters in need of communication in our report.
AUDITOR'S REPORT (continued)
De Shi Bao (Shen) Zi (25) No. P02415
(Page 2 of 5)
III. Key Audit Matters - continued
Cut-off of Revenue Recognition
Matter Description
As set out in Notes (V), 48 to the financial statements, the operating income in 2024 in theconsolidated financial statements of USI is RMB 60,690,651,098.10, which is significant. USI'ssales mainly include revenue from sale of goods , and the revenue is recognized at the time pointwhen the customer obtains the control over the commodity. Under different terms of sales contractsand trades, the time point of the transfer of commodity control is different. As revenue is one of thekey performance indicators of USI, and the time point for the transfer of control is different forvarious transaction modes in relation to revenue recognition, there is a risk that revenue is notrecognized in the appropriate accounting period. Therefore, we consider whether revenue is recordedin the appropriate accounting period as a key audit matter.
Audit Response
1. Understand the accounting policies for revenue recognition and key internal controls related tothe cut-off of revenue recognition of USI, evaluate the design and implementation of relevantinternal control, and test the effectiveness of its operation;
2. Check the material sales contracts, identify the contract terms and trade conditions related to the
time point of goods control transfer, and evaluate whether the time point of revenue recognitionof USI 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, andcheck the accounting records, delivery orders, cargo right transfer documents and othersupporting documents related to revenue recognition, so as to evaluate whether the revenue isrecorded in the appropriate accounting period;
4. Review sales records after the balance sheet date for material sales returns and check relevant
supporting documentation to assess whether the related revenue was recorded in the correctaccounting period;
5. Analyze the fluctuation of revenue and gross margin before and after the year-end, and pay
attention to whether there is any abnormal change.
AUDITOR'S REPORT (continued)
De Shi Bao (Shen) Zi (25) No. P02415
(Page 3 of 5)
IV. Other Information
The management of USI is responsible for other information. The other information comprises theinformation included in USI's annual report of 2024, but does not include the financial statementsand our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not expressany form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of the Management and Those Charged with Governance for the FinancialStatements
The management of USI is responsible for the preparation and fair presentation of the financialstatements in accordance with the Accounting Standards for Business Enterprises, and designing,implementing and maintaining internal control that is necessary to enable that the financialstatements are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing USI's ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and usingthe going concern basis of accounting unless the management either intends to liquidate USI or tocease operations, or has no realistic alternative but to do so.
Those charged with governance is responsible for supervising the financial reporting process of USI.
AUDITOR'S REPORT (continued)
De Shi Bao (Shen) Zi (25) No. P02415
(Page 4 of 5)
VI. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a wholeare free from material misstatement, whether due to fraud or error, and to issue an auditor's reportthat includes our opinion. Reasonable assurance is a high level of assurance, but is not a guaranteethat an audit conducted in accordance with China Standards on Auditing will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and are considered materialif, individually or in the aggregate, they could reasonably be expected to influence the economicdecisions of users taken on the basis of these financial statements.
As part of an audit in accordance with China Standards on Auditing, we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detectinga material misstatement resulting from fraud is higher than for one resulting from error, as fraud mayinvolve collusion, forgery, intentional omissions, misrepresentations, or the override of internalcontrol.
(2) Obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by the management.
(4) Conclude on the appropriateness of the management's use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists relatedto events or conditions that may cast significant doubt on USI'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'sreport to the related disclosures in the financial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However, future events or conditions may cause USI to cease to continue as a goingconcern.
(5) Evaluate the overall presentation (including the disclosures), structure and content of the financialstatements and whether the financial statements represent the underlying transactions and events ina manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within USI to express an opinion on the financial statements. We are responsiblefor the direction, supervision and performance of the group audit. We remain solely responsible forour audit opinion.
AUDITOR'S REPORT (continued)
De Shi Bao (Shen) Zi (25) No. P02415
(Page 5 of 5)
VI. Auditor's Responsibilities for the Audit of the Financial Statements - continued
We communicate with those charged with governance regarding, among other matters, the plannedscope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied withrelevant ethical requirements regarding independence, and to communicate with them allrelationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those mattersthat were of most significance in the audit of the financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's report unless law orregulation 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 adverseconsequences of doing so would reasonably be expected to outweigh the public interest benefits ofsuch communication.
Deloitte Touche Tohmatsu CPA LLP Chinese Certified Public Accountant:
(Engagement partner)
Shanghai, China
Yuan, Shou Qing
Chinese Certified Public Accountant:
Hu, Ke
28 March 2025
The auditor's report and the accompanying financial statements are English translations of the Chinese auditor's reportand statutory financial statements prepared under accounting principles and practices generally accepted in the People'sRepublic of China. These financial statements are not intended to present the financial position and results of operationsand cash flows in accordance with accounting principles and practices generally accepted in other countries andjurisdictions. In case the English version does not conform to the Chinese version, the Chinese version prevails.
Financial StatementsAt 31 December 2024
Consolidated Balance Sheet
Unit: RMB
| ITEM | Note | 31/12/2024 | 31/12/2023 (restated) |
| Current Assets: | |||
| Cash and bank balances | (V)1 | 12,487,357,842.47 | 11,218,698,389.32 |
| Held-for-trading financial assets | (V)2 | 42,291,303.91 | 245,558,007.22 |
| Notes receivable | (V)3 | 79,450,682.42 | 65,545,008.33 |
| Accounts receivable | (V)4 | 10,255,502,444.64 | 10,025,329,076.47 |
| Prepayments | (V)5 | 53,561,714.38 | 55,649,536.45 |
| Other receivables | (V)6 | 134,298,737.44 | 275,674,265.31 |
| Inventories | (V)7 | 7,750,208,908.58 | 8,323,944,087.96 |
| Non-current assets due within one year | (V)8 | 130,008.72 | 123,989.32 |
| Other current assets | (V)9 | 793,813,622.28 | 838,262,285.94 |
| Total Current Assets | 31,596,615,264.84 | 31,048,784,646.32 | |
| Non-current Assets: | |||
| Long-term receivables | (V)10 | 13,787,074.59 | 13,647,410.80 |
| Long-term equity investments | (V)11 | 516,492,474.11 | 498,271,541.60 |
| Other equity instrument investments | (V)12 | 22,769,795.62 | 38,935,237.58 |
| Other non-current financial assets | (V)13 | 201,093,233.84 | 193,994,862.05 |
| Investment properties | (V)14 | 4,044,288.01 | 4,324,045.51 |
| Fixed assets | (V)15 | 5,120,055,058.11 | 4,711,701,980.06 |
| Construction in progress | (V)16 | 364,667,733.73 | 641,030,985.98 |
| Right-of-use assets | (V)17 | 467,197,344.08 | 605,954,561.75 |
| Intangible assets | (V)18 | 311,389,637.91 | 368,303,316.37 |
| Goodwill | (V)19 | 585,220,427.80 | 611,169,486.97 |
| Long-term prepaid expenses | (V)20 | 175,639,403.30 | 212,629,008.92 |
| Deferred tax assets | (V)21 | 434,071,460.33 | 387,273,954.10 |
| Other non-current assets | (V)22 | 184,987,639.10 | 68,274,790.92 |
| Total Non-current Assets | 8,401,415,570.53 | 8,355,511,182.61 | |
| TOTAL ASSETS | 39,998,030,835.37 | 39,404,295,828.93 |
Financial StatementsAt 31 December 2024
Consolidated Balance Sheet - continued
Unit: RMB
| ITEM | Note | 31/12/2024 | 31/12/2023 (restated) |
| Current Liabilities: | |||
| Short-term borrowings | (V)24 | 3,676,702,163.10 | 4,378,428,691.47 |
| Derivative financial liabilities | (V)25 | 4,775,306.67 | 173,872.64 |
| Accounts payable | (V)26 | 11,055,392,929.15 | 10,574,123,769.47 |
| Contract liabilities | (V)27 | 542,457,418.46 | 348,380,131.33 |
| Employee benefits payable | (V)28 | 904,910,191.47 | 922,911,255.08 |
| Taxes payable | (V)29 | 390,100,700.18 | 354,947,363.81 |
| Other payables | (V)30 | 805,175,805.23 | 1,113,646,751.39 |
| Non-current liabilities due within one year | (V)31 | 193,691,444.57 | 3,564,025,750.56 |
| Other current liabilities | (V)32 | 11,106,077.85 | 3,944,775.07 |
| Total Current Liabilities | 17,584,312,036.68 | 21,260,582,360.82 | |
| Non-current Liabilities: | |||
| Long-term borrowings | (V)33 | 29,872,115.04 | 47,385,951.10 |
| Bonds payable | (V)34 | 3,467,944,609.76 | - |
| Lease liabilities | (V)35 | 377,309,333.43 | 486,775,229.42 |
| Long-term payables | (V)36 | 18,348,682.49 | 25,526,297.84 |
| Long-term employee benefits payable | (V)37 | 230,871,543.86 | 275,438,833.95 |
| Provisions | (V)38 | 74,187,068.91 | 48,279,064.03 |
| Deferred income | (V)39 | 72,457,875.12 | 59,885,005.66 |
| Deferred tax liabilities | (V)21 | 82,878,640.62 | 106,003,965.43 |
| Other non-current liabilities | (V)40 | 1,317,464.14 | 1,046,909.26 |
| Total Non-current Liabilities | 4,355,187,333.37 | 1,050,341,256.69 | |
| TOTAL LIABILITIES | 21,939,499,370.05 | 22,310,923,617.51 | |
| SHAREHOLDERS' EQUITY: | |||
| Share capital | (V)41 | 2,190,556,466.00 | 2,209,991,580.00 |
| Other equity instruments | (V)42 | 409,888,096.26 | 409,890,710.14 |
| Capital reserve | (V)43 | 2,049,016,598.82 | 2,283,965,543.00 |
| Less: Treasury shares | (V)44 | 100,052,846.15 | 321,730,995.54 |
| Other comprehensive income | (V)45 | 176,365,826.20 | 264,387,466.62 |
| Surplus reserve | (V)46 | 1,049,724,882.30 | 966,801,754.40 |
| Retained profits | (V)47 | 12,159,024,853.45 | 11,179,762,376.22 |
| Total owners' equity attributable to equity holders of the Company | 17,934,523,876.88 | 16,993,068,434.84 | |
| Minority interests | 124,007,588.44 | 100,303,776.58 | |
| TOTAL SHAREHOLDERS' EQUITY | 18,058,531,465.32 | 17,093,372,211.42 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 39,998,030,835.37 | 39,404,295,828.93 |
The accompanying notes form part of the financial statements.
The financial statements on pages 6 to 145 were signed by the following:
____________________ ____________________ ____________________Head of the Company Chief Financial Officer Person in charge of the Accounting Body
Financial StatementsAt 31 December 2024
Balance Sheet of the Company
Unit: RMB
| ITEM | Note | 31/12/2024 | 31/12/2023 |
| Current Assets: | |||
| Cash and bank balances | 3,175,577,806.90 | 3,166,517,228.25 | |
| Held-for-trading financial assets | - | 1,470,156.89 | |
| Notes receivable | (XV)1 | 66,017,318.26 | 49,427,125.85 |
| Accounts receivable | (XV)2 | 3,434,505,018.46 | 2,871,903,374.08 |
| Prepayments | 6,206,791.81 | 6,942,635.46 | |
| Other receivables | (XV)3 | 643,273,134.04 | 733,104,536.58 |
| Inventories | 1,764,715,535.20 | 1,654,172,789.68 | |
| Other current assets | 52,820,691.60 | 34,001,587.46 | |
| Total Current Assets | 9,143,116,296.27 | 8,517,539,434.25 | |
| Non-current Assets: | |||
| Long-term equity investments | (XV)4 | 7,051,019,621.05 | 6,733,236,951.63 |
| Other non-current financial assets | 80,819,941.58 | 46,933,111.53 | |
| Fixed assets | 1,094,606,101.11 | 1,185,256,610.21 | |
| Construction in progress | 23,564,795.30 | 15,109,116.60 | |
| Right-of-use assets | 25,787,662.19 | 36,821,679.59 | |
| Intangible assets | 12,625,793.70 | 9,809,422.12 | |
| Long-term prepaid expenses | 36,046,864.86 | 46,354,232.90 | |
| Deferred tax assets | 65,684,705.63 | 60,805,635.89 | |
| Other non-current assets | 11,593,335.74 | 19,775,697.94 | |
| Total Non-current Assets | 8,401,748,821.16 | 8,154,102,458.41 | |
| TOTAL ASSETS | 17,544,865,117.43 | 16,671,641,892.66 |
Financial StatementsAt 31 December 2024
Balance Sheet of the Company - continued
Unit: RMB
| ITEM | Note | 31/12/2024 | 31/12/2023 |
| Current Liabilities: | |||
| Short-term borrowings | 21,581,521.53 | 109,505,392.33 | |
| Accounts payable | 4,195,865,246.89 | 3,605,760,600.86 | |
| Contract liabilities | 71,514,490.87 | 39,365,501.07 | |
| Employee benefits payable | 127,828,187.55 | 127,557,430.98 | |
| Taxes payable | 28,274,390.73 | 23,281,137.14 | |
| Other payables | 49,142,457.37 | 51,640,284.57 | |
| Non-current liabilities due within one year | 51,411,112.20 | 3,396,626,721.03 | |
| Total Current Liabilities | 4,545,617,407.14 | 7,353,737,067.98 | |
| Non-current Liabilities: | |||
| Bonds payable | 3,467,944,609.76 | - | |
| Lease liabilities | 18,452,945.56 | 29,464,371.43 | |
| Deferred income | 52,523,647.44 | 34,345,491.81 | |
| Other non-current liabilities | 6,000.00 | - | |
| Total Non-current Liabilities | 3,538,927,202.76 | 63,809,863.24 | |
| TOTAL LIABILITIES | 8,084,544,609.90 | 7,417,546,931.22 | |
| SHAREHOLDERS' EQUITY: | |||
| Share capital | (V)41 | 2,190,556,466.00 | 2,209,991,580.00 |
| Other equity instruments | (V)42 | 409,888,096.26 | 409,890,710.14 |
| Capital reserve | 2,108,917,996.10 | 2,343,866,940.28 | |
| Less: Treasury shares | (V)44 | 100,052,846.15 | 321,730,995.54 |
| Surplus reserve | (V)46 | 1,049,724,882.30 | 966,801,754.40 |
| Retained profits | 3,801,285,913.02 | 3,645,274,972.16 | |
| TOTAL SHAREHOLDERS' EQUITY | 9,460,320,507.53 | 9,254,094,961.44 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 17,544,865,117.43 | 16,671,641,892.66 |
____________________ ____________________ ____________________Head of the Company Chief Financial Officer Person in charge of the Accounting Body
Financial StatementsFor the year ended 31 December 2024
Consolidated Income Statement
Unit: RMB
| ITEM | Note | Amount incurred in the current year | Amount incurred in the prior year (restated) |
| I. Operating income | (V)48 | 60,690,651,098.10 | 60,791,909,537.87 |
| Less: Operating costs | (V)48 | 54,929,613,226.02 | 54,965,846,694.81 |
| Taxes and levies | (V)49 | 137,973,117.73 | 95,769,988.19 |
| Selling expenses | (V)50 | 409,346,671.29 | 341,284,448.91 |
| Administrative expenses | (V)51 | 1,370,514,447.54 | 1,215,427,939.02 |
| Research and development expenses | (V)52 | 1,907,549,706.46 | 1,807,204,128.27 |
| Financial expenses | (V)53 | 312,651,073.77 | 212,029,208.10 |
| Including: Interest expenses | 391,009,108.71 | 400,215,716.04 | |
| Interest income | 304,283,941.12 | 236,527,756.09 | |
| Add: Other income | (V)54 | 63,432,650.72 | 90,221,824.09 |
| Investment income | (V)55 | 213,463,202.51 | 142,700,250.52 |
| Including: Income from investments in associates and joint ventures | 33,862,787.66 | 8,752,751.61 | |
| Losses from changes in fair values | (V)56 | (2,460,620.20) | (27,107,751.82) |
| Impairment loss of credit | (V)57 | (32,800,121.83) | (21,981,473.91) |
| Impairment gains (losses) of assets | (V)58 | 312,399.29 | (166,836,089.16) |
| Gains from disposal of assets | (V)59 | 7,531,285.09 | 6,334,307.77 |
| II. Operating profit | 1,872,481,650.87 | 2,177,678,198.06 | |
| Add: Non-operating income | (V)60 | 25,287,666.76 | 18,086,136.60 |
| Less: Non-operating expenses | (V)61 | 43,952,744.22 | 6,076,478.46 |
| III. Total profit | 1,853,816,573.41 | 2,189,687,856.20 | |
| Less: Income tax expenses | (V)62 | 209,647,374.75 | 239,978,749.21 |
| IV. Net profit | 1,644,169,198.66 | 1,949,709,106.99 | |
| (I) Net profit classified by operating continuity: | |||
| 1. Net profit from continuing operations | 1,644,169,198.66 | 1,949,709,106.99 | |
| 2. Net profit from discontinued operations | - | - | |
| (II) Net profit classified by ownership ascription: | |||
| 1. Net profit attributable to owners of the Company | 1,652,482,815.41 | 1,947,846,866.12 | |
| 2. Profit or loss (net loss) attributable to minority interests | (8,313,616.75) | 1,862,240.87 | |
| V. Other comprehensive income, net of tax | (V)45 | (94,946,218.21) | 150,654,063.55 |
| (I) Other comprehensive income attributable to owners of the Company, net of tax | (88,021,640.42) | 149,876,486.87 | |
| 1. Other comprehensive income that cannot be subsequently reclassified to profit or loss | 13,484,045.36 | 12,172,076.30 | |
| (1) Changes from re-measurement of defined benefit plans | 6,887,026.91 | (14,990,727.75) | |
| (2) Changes in fair values of other equity instrument investments | 6,597,018.45 | 27,162,804.05 | |
| 2. Other comprehensive income that will be reclassified to profit or loss | (101,505,685.78) | 137,704,410.57 | |
| (1) Other comprehensive income that can be reclassified to profit or loss under the equity method | (6,856,487.42) | (7,656,754.91) | |
| (2) Translation differences of financial statements denominated in foreign currencies | (220,145,754.73) | 216,849,856.44 | |
| (3) Hedging reserves of net investment in foreign operations | 125,496,556.37 | (71,488,690.96) | |
| (II) Other comprehensive income attributable to minority interests, net of tax | (6,924,577.79) | 777,576.68 | |
| VI. Total comprehensive income | 1,549,222,980.45 | 2,100,363,170.54 | |
| (I) Total comprehensive income attributable to owners of the Company | 1,564,461,174.99 | 2,097,723,352.99 | |
| (II) Total comprehensive income attributable to minority interests | (15,238,194.54) | 2,639,817.55 | |
| VII. Earnings per share | |||
| (I) Basic earnings per share (RMB/share) | (XVI)2 | 0.76 | 0.89 |
| (II) Diluted earnings per share (RMB/share) | (XVI)2 | 0.75 | 0.87 |
____________________ ____________________ ____________________Head of the Company Chief Financial Officer Person in charge of the Accounting Body
Financial StatementsFor the year ended 31 December 2024
Income Statement of the Company
Unit: RMB
| ITEM | Note | Amount incurred in the current year | Amount incurred in the prior year (restated) |
| I. Operating income | (XV)5 | 21,949,264,518.64 | 19,677,036,021.69 |
| Less: Operating costs | (XV)5 | 20,016,518,726.72 | 17,928,520,106.34 |
| Taxes and levies | 58,505,199.33 | 28,574,670.28 | |
| Selling expenses | 89,214,417.22 | 77,462,275.73 | |
| Administrative expenses | 194,076,182.74 | 163,145,034.68 | |
| Research and development expenses | 718,909,310.11 | 677,138,253.59 | |
| Financial expenses | 11,072,834.38 | 76,585,926.77 | |
| Including: Interest expenses | 161,447,593.54 | 172,202,443.99 | |
| Interest income | 125,653,147.34 | 109,201,065.07 | |
| Add: Other income | 28,034,470.97 | 31,164,163.32 | |
| Investment income | (XV)6 | 12,915,726.69 | 325,724,208.11 |
| Including: Loss from investments in associates and joint ventures | (3,459,733.12) | (3,294,727.52) | |
| Losses from changes in fair values | (5,988,719.20) | (13,609,149.40) | |
| Gains (losses) from impairment of credit | (765,483.93) | 3,685,934.28 | |
| Impairment gains (losses) of assets | (15,060,813.56) | 762,694.28 | |
| Gains from disposal of assets | 692,982.05 | 3,442,727.96 | |
| II. Operating profit | 880,796,011.16 | 1,076,780,332.85 | |
| Add: Non-operating income | 1,476,699.06 | 2,306,506.80 | |
| Less: Non-operating expenses | 1,086,232.04 | 172,287.02 | |
| III. Total profit | 881,186,478.18 | 1,078,914,552.63 | |
| Less: Income tax expenses | 51,955,199.14 | 31,705,331.20 | |
| IV. Net profit | 829,231,279.04 | 1,047,209,221.43 | |
| (I) Net profit from continuing operations | 829,231,279.04 | 1,047,209,221.43 | |
| (II) Net profit from discontinued operations | - | - | |
| V. Other comprehensive income, net of tax | - | - | |
| VI. Total comprehensive income | 829,231,279.04 | 1,047,209,221.43 |
____________________ ____________________ ____________________Head of the Company Chief Financial Officer Person in charge of the Accounting Body
Financial StatementsFor the year ended 31 December 2024
Consolidated Cash Flow Statement
Unit: RMB
| ITEM | Note | Amount incurred in the current year | Amount incurred in the prior year |
| I. Cash Flows from Operating Activities: | |||
| Cash receipts from the sale of goods and the rendering of services | 61,750,716,937.26 | 62,945,879,717.98 | |
| Receipts of tax refunds | 558,900,621.53 | 332,597,175.15 | |
| Other cash receipts relating to operating activities | (V)63(1) | 521,859,456.50 | 444,054,452.60 |
| Sub-total of cash inflows from operating activities | 62,831,477,015.29 | 63,722,531,345.73 | |
| Cash payments for goods purchased and services received | 52,626,999,310.02 | 51,127,038,702.23 | |
| Cash payments to and on behalf of employees | 4,548,139,402.46 | 4,543,803,455.43 | |
| Payments of various types of taxes | 814,158,824.01 | 947,833,332.58 | |
| Other cash payments relating to operating activities | (V)63(1) | 631,912,867.26 | 280,420,362.87 |
| Sub-total of cash outflows from operating activities | 58,621,210,403.75 | 56,899,095,853.11 | |
| Net Cash Flow from Operating Activities | (V)64(1) | 4,210,266,611.54 | 6,823,435,492.62 |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from disposals and recovery of investments | (V)63(2) | 14,236,609,027.28 | 10,588,663,201.29 |
| Cash receipts from investment income | 185,687,208.00 | 141,117,928.09 | |
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 68,504,500.64 | 39,129,732.67 | |
| Other cash receipts relating to investing activities | (V)63(2) | - | 2,214,334.90 |
| Sub-total of cash inflows from investing activities | 14,490,800,735.92 | 10,771,125,196.95 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 1,261,962,209.69 | 1,549,925,467.96 | |
| Cash payments to acquire investments | (V)63(2) | 14,209,224,800.00 | 10,379,130,858.29 |
| Net cash payments for acquisitions of subsidiaries and other business units | 215,479,003.07 | 270,966,057.90 | |
| Sub-total of cash outflows from investing activities | 15,686,666,012.76 | 12,200,022,384.15 | |
| Net Cash Flow from Investing Activities | (1,195,865,276.84) | (1,428,897,187.20) | |
| III. Cash Flows from Financing Activities: | |||
| Cash receipts from capital contributions | 88,509,406.27 | 134,160,438.42 | |
| Including: cash receipts from capital contributions from minority owners of subsidiaries | 38,942,006.40 | 96,336,780.30 | |
| Cash receipts from borrowings | 10,402,853,293.23 | 15,773,337,049.55 | |
| Other cash receipts relating to financing activities | (V)63(3) | - | 26,686,556.25 |
| Sub-total of cash inflows from financing activities | 10,491,362,699.50 | 15,934,184,044.22 | |
| Cash repayments of borrowings | 11,147,070,897.24 | 16,428,061,798.41 | |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 829,073,975.05 | 1,179,079,074.37 | |
| Other cash payments relating to financing activities | (V)63(3) | 278,192,358.83 | 163,296,399.80 |
| Sub-total of cash outflows from financing activities | 12,254,337,231.12 | 17,770,437,272.58 | |
| Net Cash Flow from Financing Activities | (1,762,974,531.62) | (1,836,253,228.36) | |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | 26,573,176.36 | (52,036,402.36) | |
| V. Net Increase in Cash and Cash Equivalents | 1,277,999,979.44 | 3,506,248,674.70 | |
| Add: Opening balance of cash and cash equivalents | (V)64(2) | 11,184,292,778.70 | 7,678,044,104.00 |
| VI. Closing Balance of Cash and Cash Equivalents | (V)64(2) | 12,462,292,758.14 | 11,184,292,778.70 |
____________________ ____________________ ____________________Head of the Company Chief Financial Officer Person in charge of the Accounting Body
Financial StatementsFor the year ended 31 December 2024
Cash Flow Statement of the Company
Unit: RMB
| ITEM | Note | Amount incurred in the current year | Amount incurred in the prior year |
| I. Cash Flows from Operating Activities: | |||
| Cash receipts from the sale of goods and the rendering of services | 21,490,324,283.88 | 19,715,179,735.51 | |
| Receipts of tax refunds | 117,340,133.07 | 88,661,201.75 | |
| Other cash receipts relating to operating activities | 178,802,198.22 | 143,944,381.68 | |
| Sub-total of cash inflows from operating activities | 21,786,466,615.17 | 19,947,785,318.94 | |
| Cash payments for goods purchased and services received | 19,550,062,914.78 | 16,698,151,441.53 | |
| Cash payments to and on behalf of employees | 616,276,076.27 | 625,256,609.26 | |
| Payments of various types of taxes | 181,670,342.07 | 148,511,099.34 | |
| Other cash payments relating to operating activities | 185,171,636.39 | 156,801,933.88 | |
| Sub-total of cash outflows from operating activities | 20,533,180,969.51 | 17,628,721,084.01 | |
| Net Cash Flow from Operating Activities | (XV)7 | 1,253,285,645.66 | 2,319,064,234.93 |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from disposals and recovery of investments | 4,406,180,000.00 | 5,094,828,000.00 | |
| Cash receipts from investment income | 16,063,975.03 | 329,018,935.63 | |
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 15,615,218.91 | 78,422,754.70 | |
| Sub-total of cash inflows from investing activities | 4,437,859,193.94 | 5,502,269,690.33 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 240,995,233.42 | 272,929,329.02 | |
| Cash payments to acquire investments | 4,689,524,200.00 | 4,486,995,119.70 | |
| Other cash payments relating to investing activities | - | 817,776,000.00 | |
| Sub-total of cash outflows from investing activities | 4,930,519,433.42 | 5,577,700,448.72 | |
| Net Cash Flow from Investing Activities | (492,660,239.48) | (75,430,758.39) | |
| III. Cash Flows from Financing Activities: | |||
| Cash receipts from capital contributions | 49,567,399.87 | 37,823,658.12 | |
| Cash receipts from borrowings | 1,148,465,800.00 | 3,486,983,652.26 | |
| Other cash receipts relating to financing activities | - | 26,686,556.25 | |
| Sub-total of cash inflows from financing activities | 1,198,033,199.87 | 3,551,493,866.63 | |
| Cash repayments of borrowings | 1,236,520,276.30 | 3,937,358,875.96 | |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 627,438,082.56 | 975,226,652.63 | |
| Other cash payments relating to financing activities | 115,164,986.67 | 22,742,198.55 | |
| Sub-total of cash outflows from financing activities | 1,979,123,345.53 | 4,935,327,727.14 | |
| Net Cash Flow from Financing Activities | (781,090,145.66) | (1,383,833,860.51) | |
| V. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | 25,197,378.34 | (75,741,157.11) | |
| V. Net Increase in Cash and Cash Equivalents | 4,732,638.86 | 784,058,458.92 | |
| Add: Opening balance of cash and cash equivalents | 3,166,517,228.25 | 2,382,458,769.33 | |
| VI. Closing Balance of Cash and Cash Equivalents | 3,171,249,867.11 | 3,166,517,228.25 |
____________________ ____________________ ____________________Head of the Company Chief Financial Officer Person in charge of the Accounting Body
Financial StatementsFor the year ended 31 December 2024
Consolidated Statement of Changes in Shareholders' Equity
Unit: RMB
| ITEM | 2024 | ||||||||
| Attributable to owners of the Company | Minority interests | Total shareholders' equity | |||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Surplus reserve | Retained profits | |||
| I. Closing balance of the prior year | 2,209,991,580.00 | 409,890,710.14 | 2,283,965,543.00 | (321,730,995.54) | 261,726,655.45 | 966,801,754.40 | 11,179,762,376.22 | 99,421,563.54 | 17,089,829,187.21 |
| Add: Adjustment to the provisional value of business combination not involving enterprises under common control (Note V, 19) | - | - | - | - | 2,660,811.17 | - | - | 882,213.04 | 3,543,024.21 |
| II. Opening balance of the current year (restated) | 2,209,991,580.00 | 409,890,710.14 | 2,283,965,543.00 | (321,730,995.54) | 264,387,466.62 | 966,801,754.40 | 11,179,762,376.22 | 100,303,776.58 | 17,093,372,211.42 |
| III. Changes for the year | |||||||||
| (I) Total comprehensive income | - | - | - | - | (88,021,640.42) | - | 1,652,482,815.41 | (15,238,194.54) | 1,549,222,980.45 |
| (II) Owners’ contributions and reduction in capital | |||||||||
| 1. Ordinary shares contributed by shareholders (Note V, 41) | 3,909,268.00 | - | 45,658,131.87 | - | - | - | - | 38,942,006.40 | 88,509,406.27 |
| 2. Capital contribution by owners of other equity instruments (Note V, 42) | 1,163.00 | (2,613.88) | 23,374.49 | - | - | - | - | - | 21,923.61 |
| 3. Share-based payment recognized in shareholders' equity (Note V, 43) | - | - | 17,755,000.00 | - | - | - | - | - | 17,755,000.00 |
| 4. Cancellation of treasury shares (Note V, 44) | (23,345,545.00) | - | (298,385,450.54) | 321,730,995.54 | - | - | - | - | - |
| 5. Others (Note V, 44) | - | - | - | (100,052,846.15) | - | - | - | - | (100,052,846.15) |
| (III) Profit distribution | - | - | - | - | - | - | |||
| 1. Transfer to surplus reserve | - | - | - | - | - | 82,923,127.90 | (82,923,127.90) | - | - |
| 2. Distributions to shareholders | - | - | - | - | - | - | (590,297,210.28) | - | (590,297,210.28) |
| IV. Closing balance of the current year | 2,190,556,466.00 | 409,888,096.26 | 2,049,016,598.82 | (100,052,846.15) | 176,365,826.20 | 1,049,724,882.30 | 12,159,024,853.45 | 124,007,588.44 | 18,058,531,465.32 |
Financial StatementsFor the year ended 31 December 2024
Consolidated Statement of Changes in Shareholders' Equity - continued
Unit: RMB
| ITEM | 2023 (restated) | ||||||||
| Attributable to owners of the Company | Minority interests | Total shareholders' equity | |||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Surplus reserve | Retained profits | |||
| I. Opening balance of the current year | 2,206,864,239.00 | 409,897,126.04 | 2,234,529,885.62 | (351,392,965.86) | 111,850,168.58 | 862,080,832.26 | 10,275,564,894.22 | 444,965.69 | 15,749,839,145.55 |
| II. Changes for the year | |||||||||
| (I) Total comprehensive income | - | - | - | - | 149,876,486.87 | - | 1,947,846,866.12 | 2,639,817.55 | 2,100,363,170.54 |
| (II) Owners’ contributions and reduction in capital | |||||||||
| 1. Ordinary shares contributed by shareholders (Note V, 41 and Note VI, 1) | 3,124,565.00 | - | 34,699,093.12 | - | - | - | - | 96,336,780.30 | 134,160,438.42 |
| 2. Capital contribution by owners of other equity instruments (Note V, 42) | 2,776.00 | (6,415.90) | 54,888.33 | - | - | - | - | - | 51,248.43 |
| 3. Share-based payment recognized in shareholders' equity (Note V, 43) | - | - | 17,684,000.00 | - | - | - | - | - | 17,684,000.00 |
| 4. Transfer from treasury shares (Note V, 44) | - | - | 363,746.57 | (364,587.57) | - | - | - | - | (841.00) |
| 5. Others (Note V, 44) | - | - | (3,366,070.64) | 30,026,557.89 | - | - | - | - | 26,660,487.25 |
| 6. Business combination (restated) | - | - | - | - | 2,660,811.17 | - | - | 882,213.04 | 3,543,024.21 |
| (III) Profit distribution | |||||||||
| 1. Transfer to surplus reserve | - | - | - | - | - | 104,720,922.14 | (104,720,922.14) | - | - |
| 2. Distributions to shareholders | - | - | - | - | - | - | (938,928,461.98) | - | (938,928,461.98) |
| III. Closing balance of the current year | 2,209,991,580.00 | 409,890,710.14 | 2,283,965,543.00 | (321,730,995.54) | 264,387,466.62 | 966,801,754.40 | 11,179,762,376.22 | 100,303,776.58 | 17,093,372,211.42 |
____________________ ____________________ ____________________Head of the Company Chief Financial Officer Person in charge of the Accounting Body
Financial StatementsFor the year ended 31 December 2024
Statement of Changes in Shareholders' Equity of the CompanyUnit: RMB
| ITEM | 2024 | ||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Surplus reserve | Retained profits | Total shareholders' equity | |
| I. Opening balance of the current year | 2,209,991,580.00 | 409,890,710.14 | 2,343,866,940.28 | (321,730,995.54) | 966,801,754.40 | 3,645,274,972.16 | 9,254,094,961.44 |
| II. Changes for the year | |||||||
| (I) Total comprehensive income | - | - | - | - | - | 829,231,279.04 | 829,231,279.04 |
| (II) Owners' contributions and reduction in capital | - | - | |||||
| 1. Ordinary shares contributed by shareholders | 3,909,268.00 | - | 45,658,131.87 | - | - | - | 49,567,399.87 |
| 2. Capital contribution by owners of other equity instruments | 1,163.00 | (2,613.88) | 23,374.49 | - | - | - | 21,923.61 |
| 3. Share-based payment recognized in shareholders' equity | - | - | 17,755,000.00 | - | - | - | 17,755,000.00 |
| 4. Cancellation of treasury shares | (23,345,545.00) | - | (298,385,450.54) | 321,730,995.54 | - | - | - |
| 5. Others | - | - | - | (100,052,846.15) | - | - | (100,052,846.15) |
| (III) Profit distribution | - | - | - | - | |||
| 1. Transfer to surplus reserve | - | - | - | - | 82,923,127.90 | (82,923,127.90) | - |
| 2. Distributions to shareholders | - | - | - | - | - | (590,297,210.28) | (590,297,210.28) |
| III. Closing balance of the current year | 2,190,556,466.00 | 409,888,096.26 | 2,108,917,996.10 | (100,052,846.15) | 1,049,724,882.30 | 3,801,285,913.02 | 9,460,320,507.53 |
Financial StatementsFor the year ended 31 December 2024
Statement of Changes in Shareholders' Equity of the Company - continued
Unit: RMB
| ITEM | 2023 | ||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Surplus reserve | Retained profits | Total shareholders' equity | |
| I. Opening balance of the current year | 2,206,864,239.00 | 409,897,126.04 | 2,294,431,282.90 | (351,392,965.86) | 862,080,832.26 | 3,641,715,134.85 | 9,063,595,649.19 |
| II. Changes for the year | |||||||
| (I) Total comprehensive income | - | - | - | - | - | 1,047,209,221.43 | 1,047,209,221.43 |
| (II) Owners' contributions and reduction in capital | |||||||
| 1. Ordinary shares contributed by shareholders | 3,124,565.00 | - | 34,699,093.12 | - | - | - | 37,823,658.12 |
| 2. Capital contribution by owners of other equity instruments | 2,776.00 | (6,415.90) | 54,888.33 | - | - | - | 51,248.43 |
| 3. Share-based payment recognized in shareholders' equity | - | - | 17,684,000.00 | - | - | - | 17,684,000.00 |
| 4. Transfer from treasury shares | - | - | 363,746.57 | (364,587.57) | - | - | (841.00) |
| 5. Others | - | - | (3,366,070.64) | 30,026,557.89 | - | - | 26,660,487.25 |
| (III) Profit distribution | |||||||
| 1. Transfer to surplus reserve | - | - | - | - | 104,720,922.14 | (104,720,922.14) | - |
| 2. Distributions to shareholders | - | - | - | - | - | (938,928,461.98) | (938,928,461.98) |
| III. Closing balance of the current year | 2,209,991,580.00 | 409,890,710.14 | 2,343,866,940.28 | (321,730,995.54) | 966,801,754.40 | 3,645,274,972.16 | 9,254,094,961.44 |
____________________ ____________________ ____________________Head of the Company Chief Financial Officer Person in charge of the Accounting Body
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(I) BASIC INFORMATION ABOUT THE COMPANY
1. General
Universal Scientific Industrial (Shanghai) Co., Ltd. ("Company" or "the Company") is a joint-stock limitedcompany changed from Universal Scientific Industrial (Shanghai) Co., Ltd. (the "Limited Company") on anoverall basis.
The Limited Company is a foreign-funded enterprise invested and established in Zhangjiang Integrated CircuitPort, 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 companyand renamed as Universal Scientific Industrial (Shanghai) Co., Ltd. in accordance with the Official Reply (ShangZi Pi No. [2008] 654) of the Ministry of Commerce of the People's Republic of China. The Company's registeredcapital totals RMB 2,190,556,466.00 as at 31 December 2024.
The Company was listed on the Shanghai Stock Exchange in February 2012 and publicly issued Class A Ordinaryshares in RMB in China.
The Company is headquartered in Shanghai, the People’s Republic of China. The main operating activities theCompany and its subsidiaries ("the Group") actually engaged in design and manufacturing services (DMS) forelectronic products; design, production and processing of communication products, consumer electronic products,industrial products, cloud and storage products, automotive electronic products and medical products andprovision of relevant technical consulting services and relevant supporting services.
2. Date of approval for issue of the financial statements
The Company's and consolidated financial statements were approved by the board of directors of the Companyand authorized for issue on 28 March 2025.
(II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
1. Basis of preparation
The Group has adopted the Accounting Standards for Business Enterprises ("ASBE") and relative regulationsissued by the Ministry of Finance ("MoF"). In addition, the Group has disclosed relevant financial information inaccordance with Information Disclosure and Presentation Rules for Companies Offering Securities to the PublicNo. 15 - General Provisions on Financial Reporting (Revised in 2023).
2. Going concern
The Group assessed its ability to continue as a going concern for the 12 months from 31 December 2024 and didnot notice any events or circumstances that may cast significant doubt upon its ability to continue as a goingconcern. Therefore, the financial statements have been prepared on a going concern basis.
3. Basis of accounting and principle of measurement
The Group has adopted the accrual basis of accounting. Except for certain financial instruments which aremeasured at fair value, the Company adopts the historical cost as the principle of measurement in the financialstatements. Where assets are impaired, provisions for asset impairment are made in accordance with relevantrequirements.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(II) BASIS OF PREPARATION OF FINANCIAL STATEMENTS - continued
3. Basis of accounting and principle of measurement - continued
Where the historical cost is adopted as the measurement basis, assets are recorded at the amount of cash or cashequivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition.Liabilities are measured at the amount of proceeds or assets received or the contractual amounts for assuming thepresent obligation, or, at the amounts of cash or cash equivalents expected to be paid to settle the liabilities in thenormal 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 transactionbetween market participants at the measurements date, regardless of whether that price is directly observable orestimated using valuation technique. Regardless of whether that price is directly observable or estimated usinganother valuation technique, fair value for measurement and/or disclosure purposes in these financial statementsis determined on such a basis.
The capacity of market participants to realize the maximum profit of non-financial assets, or the capacity of otherparticipants who acquired non-financial assets to realize the maximum profit will be considered when measuringfair values of such non-financial assets.
For a financial asset taking the transaction price as its fair value on initial recognition and using valuationtechniques involving unobservable inputs in subsequent measurement of fair value, such valuation technique iscorrected in the valuation process, as to ensure that the initial recognition result determined by valuationtechniques 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 valuemeasurements are observable and the significance of the inputs to the fair value measurement in its entirety, whichare described as follows:
? Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that theentity can access at the measurement date;
? Level 2 inputs are inputs, other than inputs included within Level 1, that are observable for the asset orliability, either directly or indirectly;? Level 3 inputs are unobservable inputs for the asset or liability.
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
1. Statement of Compliance the Accounting Standards for Business Enterprises ("ASBE")
The financial statements of the Company have been prepared in accordance with ASBE, and present truly andcompletely, the Company's and consolidated financial position as of 31 December 2024, and the Company's andconsolidated 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 therealization of those assets in cash or cash equivalents. The Group's operating cycle is less than 12 months, and theGroup takes 12 months as the criteria for determining liquidity of assets and liabilities.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(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 domesticsubsidiaries operate. Therefore, the functional currency of the Company is RMB. The Company's domesticsubsidiaries choose RMB as their functional currency, except those adopt USD as their functional currency astheir sales of goods, purchase of raw materials and other expenses are settled in USD and their financing is madein USD. The Company's foreign subsidiary chooses USD, JYP, TWD, GBP or EUR as its functional currency onthe basis of the primary economic environment in which it operates. The Group adopts RMB to prepare itsfinancial statements.
5. Determining method and selecting basis of significance criterion
| Item | Significance criterion |
| Significant construction in progress | The investment budge of a single item is more than RMB 70 million |
| Significant non-wholly-owned subsidiary | The investment amount of a single significant non-wholly-owned subsidiary is more than RMB 70 million |
| Significant joint venture and associate | The investment amount of a single investee is more than RMB 70 million |
| Cash receipts from/ payments to significant investing activities | Cash inflow or outflow from a single investing activity is more than RMB 70 million. |
| Significant accounts payable aged over one year | Accounts payable aged over one year that individually account for more than 10% of total accounts payable and amount to more than RMB70 million. |
| Significant other payables aged over one year | Other payables aged over one year that individually account for more than 10% of total other payables and amount to more than RMB70 million. |
6. Accounting treatment of business combinations not involving enterprises under common control
6.1 Business combinations not involving enterprises under common control and goodwill
A business combination not involving enterprises under common control is a business combination in which allof the combining enterprises are not ultimately controlled by the same party or parties before and after thecombination.
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets given, liabilitiesincurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree. Theintermediary expenses incurred by the acquirer in respect of auditing, legal services, valuation and consultancyservices, etc. and other associated administrative expenses attributable to the business combination are recognizedin profit or loss when they are incurred.
The acquiree's identifiable assets, liabilities and contingent liabilities, acquired by the acquirer in a businesscombination, that meet the recognition criteria shall be measured at fair value at the acquisition date.
Where the cost of combination exceeds the acquirer's interest in the fair value of the acquiree's identifiable netassets, the difference is treated as an asset and recognized as goodwill, which is measured at cost on initialrecognition. Where the cost of combination is less than the acquirer's interest in the fair value of the acquiree'sidentifiable net assets, the acquirer firstly reassesses the measurement of the fair values of the acquiree'sidentifiable assets, liabilities and contingent liabilities and measurement of the cost of combination. If after thatreassessment, the cost of combination is still less than the acquirer's interest in the fair value of the acquiree'sidentifiable net assets, the acquirer recognizes the remaining difference immediately in profit or loss for thecurrent period.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
6. Accounting treatment of business combinations not involving enterprises under common control -
continued
6.1 Business combinations not involving enterprises under common control and goodwill - continued
If either the fair values of identifiable assets, liabilities and contingent liabilities acquired in a combination or thecost of business combination can be determined only provisionally by the end of the year in which the businesscombination 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 theyhad been recognized and measured on the acquisition date.
Goodwill arising on a business combination is measured at cost less accumulated impairment losses, and ispresented separately in the consolidated financial statements.
7. Criteria of control and preparation of consolidated financial statements
7.1 Criteria of control
Control is the power over the investee, exposures or rights to variable returns from its involvement with theinvestee, and the ability to use its power over the investee to affect the amount of the investor's returns. If changesof related facts and situations lead to changes of related elements of control, the Group will conduct reassessment.
7.2 Preparation of consolidated financial statements
The scope of consolidation in the consolidated financial statements is determined on the basis of control.
The combination of subsidiaries begins with the Group's control over the subsidiary, and ceases with the Group'slosing control of the subsidiary.
For a subsidiary disposed by the Group, the operating results and cash flows before the date of disposal (the datewhen 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 thecombined party under combination by merge, the operating results and cash flows from the acquisition date (thedate when control is obtained) are included in the consolidated income statement and consolidated statement ofcash flows, as appropriate.
The significant accounting policies and accounting periods adopted by the subsidiaries are determined based onthe uniform accounting policies and accounting periods set out by the Company.
Influence over the consolidated financial statements arising from significant intra-group transactions areeliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as minority interests andpresented as "minority interests" in the consolidated balance sheet within shareholders' equity. The portion of netprofits or losses of subsidiaries for the period attributable to minority interests is presented as "Profit or lossattributable 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 theminority shareholders' portion of the opening balance of owners' equity of the subsidiary, the excess amount isstill allocated against minority interests.
Acquisition of minority interests or disposal of interest in a subsidiary that does not result in the loss of controlover the subsidiary is accounted for as equity transactions. The carrying amounts of the Company's interests andminority interests are adjusted to reflect the changes in their relative interests in the subsidiary. The differencebetween the amount by which the minority interests are adjusted and the fair value of the consideration paid orreceived is adjusted to capital reserve under owners' equity. If the capital reserve is not sufficient to absorb thedifference, the excess is adjusted against retained profits.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
8. Classification of joint arrangements and accounting treatments of joint operations
A joint arrangement is classified into joint operation and joint venture, depending on the rights and obligations ofthe 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 rightsto the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangementwhereby 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) 16.3.2 "Long-termequity investments accounted for using the equity method" for details.
9. Recognition criteria of cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are theGroup's short-term (generally refers to expiration within three months from the date of purchase), highly liquidinvestments that are readily convertible to known amounts of cash and which are subject to an insignificant riskof changes in value.
10. Translation of transactions and financial statements denominated in foreign currencies
10.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying an exchange rate that approximatesthe actual spot exchange rate on the date of the transaction. The exchange rate that approximates the actual spotexchange rate on the date of the transaction is calculated and determined according to the middle price of themarket exchange rate on the day before the period in which the transaction occurs (each month is divided intothree time periods: the first ten-day period of the month, the middle ten-day period of the month, and the last ten-day period of the month). The Group updates the exchange rate that approximates the actual spot exchange rateevery period.
At the balance sheet date, foreign currency monetary items are translated into functional currency using the spotexchange rates at the balance sheet date. Exchange differences arising from the differences between the spotexchange rates prevailing at the balance sheet date and those on initial recognition or at the previous balance sheetdate 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 thecost of the qualifying asset during the capitalization period; (2) exchange differences related to hedginginstruments 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 monetaryitems 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 monetaryitem constituting a net investment in a foreign operation, exchange difference arising from changes in exchangerates are recognized as "exchange differences arising on translation of financial statements denominated in foreigncurrencies " in other comprehensive income, and in profit and loss for the period upon disposal of the foreignoperation.
Foreign currency non-monetary items measured at historical cost are translated to the amounts in functionalcurrency at the spot exchange rates on the dates of the transactions. Foreign currency non-monetary itemsmeasured 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 istreated as changes in fair value (including changes of exchange rate) and is recognized in profit and loss or asother comprehensive income.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
10.2 Translation of financial statements denominated in foreign currencies
For the purpose of preparing the consolidated financial statements, financial statements of a foreign operation aretranslated from the foreign currency into RMB using the following method: assets and liabilities on the balancesheet are translated at the spot exchange rate prevailing at the balance sheet date; shareholders' equity items aretranslated at the spot exchange rates at the dates on which such items arose; all items in the income statement aswell as items reflecting the distribution of profits are translated at an exchange rates that approximate the actualspot exchange rates on the dates of the transactions; The difference between the translated assets and the aggregateof liabilities and shareholders' equity items is recognized as other comprehensive income and included inshareholders' equity.
Cash flows arising from a transaction in foreign currency and the cash flows of a foreign subsidiary are translatedat an exchange rate which approximates the spot exchange rate on the date of the cash flows. The effect ofexchange rate changes on cash and cash equivalents is regarded as a reconciling item and presented separately inthe 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 theprevious 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 operationdue to disposal of certain equity investments or other reasons, the Group transfers the accumulated exchangedifferences arising on translation of financial statements of this foreign operation attributable to the owners' equityof 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 foreignoperations but does not result in the Group losing control over a foreign operation, the proportionate share ofaccumulated exchange differences arising on translation of financial statements are re-attributed to minorityinterests and are not recognized in profit and loss. For partial disposals of equity interests in foreign operationswhich are associates or joint ventures, the proportionate share of the accumulated exchange differences arising ontranslation of financial statements of foreign operations is reclassified to profit or loss.
11. Financial instruments
Financial assets and financial liabilities are recognized when the Group becomes a party to the contractualprovisions of the instrument.
For financial assets purchased or sold in a regular way, the Company recognizes assets acquired and liabilitiesassumed on a trade date basis, or derecognizes the assets sold on a trade date basis.
Financial assets and financial liabilities are initially measured at fair value (please refer to the relevant disclosureof basis of accounting and principle of measurement in Note (II) for methods in determination of fair value forfinancial assets and financial liabilities). For financial assets and financial liabilities at fair value through profit orloss, transaction costs are immediately recognized in profit or loss. For other financial assets and financialliabilities, transaction costs are included in their initial recognized amounts. Upon initial recognition of accountsreceivable that does not contain significant financing component or without considering the financing componentincluded in the contract with a term not exceeding one year under the Accounting Standards for BusinessEnterprises No. 14 - Revenue ("Revenue Standards"), the Group adopts the transaction price as defined in theRevenue Standards for initial measurement.
The effective interest method is a method that is used in the calculation of the amortized cost of a financial assetor a financial liability and in the allocation of the interest income or interest expense in profit or loss over therelevant period.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
The effective interest rate is the rate that exactly discounts estimated future cash flows through the expected lifeof the financial asset or financial liability to the carrying amount of the financial asset or to the amortized cost ofthe financial liability. When determining the effective interest rate, the Group estimates future cash flows byconsidering all contractual terms of the financial asset or financial liability including early repayment, extension,call option or other similar options etc. without considering future credit losses.
The amortized cost of a financial asset or a financial liability is the amount of a financial asset or a financialliability initially recognized net of principal repaid, plus or less the cumulative amortized amount arising fromamortization of the difference between the amount initially recognized and the amount at the maturity date usingthe effective interest method, net of cumulative loss allowance (only applicable to financial assets).
11.1 Classification, recognition and measurement of financial assets
After initial recognition, the Group's financial assets of various types are subsequently measured at amortizedcost, at fair value through other comprehensive income ("FVTOCI") or at fair value through profit or loss("FVTPL"), respectively.
If contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments ofprincipal and interest on the principal amount outstanding, and the financial asset is held within a business modelwhose objective is to hold financial assets in order to collect contractual cash flows, such asset is classified intofinancial assets measured at amortized cost, which include cash and bank balances, notes receivable, accountsreceivable, other receivables, non-current assets due within one year and long-term receivables and etc.
On initial recognition, the Group may irrevocably designate non-trading equity instruments, other than contingentconsideration recognized through business combination not involving enterprises under common control, asfinancial assets at FVTOCI on an individual basis. Such financial assets at FVTOCI are presented as other equityinstrument.
A financial asset is classified as held-for-trading if any of the following criteria is satisfied:
? It has been acquired principally for the purpose of selling it in near term.? On initial recognition, it is part of a portfolio of identifiable financial instruments that the Group managestogether and there is objective evidence that the Group has a recent actual pattern of short-term profit-taking.? It is a derivative that is neither a financial guarantee contract nor designated as an effective hedginginstrument.
Financial assets at FVTPL include financial assets classified as at FVTPL and financial assets designated as atFVTPL:
? Any financial assets that do not qualify for amortized cost measurement or measurement at FVTOCI or
designated at FVTOCI are classified into financial assets at FVTPL.? Upon initial recognition, in order to eliminate or significantly reduce accounting mismatch and qualified
hybrid financial instrument combines financial asset with embedded derivatives, the Group will irrevocably
designate it as financial liabilities at FVTPL.
Financial assets at FVTPL assets other than derivative financial assets are presented as "held-for-trading financialassets". Such financial assets at FVTPL which may fall due more than one year (or without fixed term) since thebalance sheet date and will be held more than one year are presented as other non-current financial assets.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.1 Classification, recognition and measurement of financial assets - continued
11.1.1 Financial assets at amortized cost
The financial assets measured at amortized cost are subsequently measured at amortized cost using the effectiveinterest 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 usingthe effective interest method. The Group calculates and recognizes interest income through account balance offinancial assets multiplying effective interest, except for the following circumstances:
? For purchased or originated credit-impaired financial assets, the Group calculates and recognizes its interestincome based on amortized cost of the financial asset and the effective interest through credit adjustmentsince initial recognition.
? For purchased or originated financial assets without credit impairment incurred while with creditimpairment incurred in subsequent periods, the Group calculates and recognizes its interest income basedon amortized cost of the financial asset and the effective interest in subsequent periods. If the credit risk ofthe financial asset is reduced during subsequent periods and credit impairment does not exist, and theimprovement can be related to an event occurring after application of aforesaid provisions, the Group shallcalculate and recognize interest income through account balance of financial assets multiplying effectiveinterest.
11.1.2 Financial assets at FVTOCI
Changes in fair value of non-held-for-trading equity instrument investments designated as financial assets atFVTOCI are recognized in other comprehensive income. When the financial asset is derecognized, the cumulativegains or losses previously recognized in other comprehensive income are transferred and included in retainedearnings. During the period in which the Group holds the non-trading equity instrument, revenue from dividendsis recognized in profit or loss for the period when (1) the Group has established the right of collecting dividends;
(2) it is probable that the associated economic benefits will flow to the Group; and (3) the amount of dividendscan be measured reliably.
11.1.3 Financial assets at FVTPL
Financial assets at FVTPL are subsequently measured at fair value, with gains or losses on fair value changes andrelated dividends and interest income included in profit or loss for the period.
11.2 Impairment of financial instruments
The Group makes accounting treatment on impairment and recognizes loss allowance for expected credit losses("ECL") on financial assets measured at amortized cost and lease receivables.
The Group makes a loss allowance against amount of lifetime ECL of accounts receivable arising fromtransactions adopting the Revenue Standard as well as lease receivables arising from transactions adopting ASBENo. 21- Leases.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.2 Impairment of financial instruments - continued
For other financial instruments, except for the purchased or originated credit-impaired financial assets, at eachbalance sheet date, the Group assess changes in credit risk of relevant financial instruments since initialrecognition. 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 instrumenthas not increased significantly since initial recognition, the Group recognizes loss allowance based on 12-monthECL of the financial instrument. Increase in or reversal of credit loss allowance is included in profit or loss asloss/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 othercomprehensive income and recognizes the loss/gain on impairment in profit or loss, while the Group does notdecrease 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 ECLfor the entire period of the financial instrument, but on the current balance sheet date, the financial instrument isno longer a significant increase in credit risk since the initial recognition. The Group measures the loss allowancefor the financial instrument on the balance sheet date based on the amount of ECL in the next 12 months. Thereversal amount of the loss allowance formed is recognized in profit and loss for the period as an impairment gain.
11.2.1 Significant increase in credit risk
In assessing whether the credit risk has increased significantly since initial recognition, the Group compares therisk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurringon 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 increasedsignificantly:
(1) Significant changes in internal price indicators as a result of a change in credit risk;
(2) An actual or expected significant change in the financial instrument's external credit rating;
(3) An actual or expected decrease in the internal credit rating for the debtor;
(4) Adverse changes in business, financial or economic conditions that are expected to cause a significant
decrease in the debtor's ability to meet its debt obligations;
(5) An actual or expected significant change in the operating results of the debtor;
(6) Significant adverse changes in regulatory, economic, or technological environment of the debtor;
(7) Significant changes in circumstances expected to reduce the debtor's economic incentive to make scheduled
contractual payments;
(8) Significant changes in expected performance and repayment of the debtor;
(9) Changes in the Group's credit management approach in relation to the financial instrument.
No matter whether credit risk has increased significantly or not subsequent to aforementioned assessment, theGroup considers credit risk of financial instruments has increased significantly when contractual payments offinancial instruments past due over 30 days (inclusive).
The Group assumes that the credit risk on a financial instrument has not increased significantly since initialrecognition if the financial instrument is determined to have lower credit risk at the balance sheet date. A financialinstrument is determined to have lower credit risk if: i) it has a lower risk of default, ii) the borrower has a strongcapacity to meet its contractual cash flow obligations in the near term and iii) adverse changes in economic andbusiness conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil itscontractual cash flow obligations.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.2 Impairment of financial instruments - continued
11.2.2 Credit-impaired financial assets
When the Group expected occurrence of one or more events which may cause adverse impact on future cash flowsof a financial asset, the financial asset will become a credit-impaired financial assets. Objective evidence that afinancial asset is impaired includes but not limited to the following observable events:
(1) Significant financial difficulty of the issuer or debtor;
(2) Breach of contract by the debtor, such as a default or delinquency in interest or principal payments;
(3) The creditor, for economic or contractual reasons relating to the debtor's financial difficulty, has granted tothe debtor a concession that the creditor would not otherwise consider;
(4) it is becoming probable that the borrower will enter bankruptcy or other financial reorganization;
(5) Purchase or originate a financial asset with a large scale of discount, which reflects facts of credit lossincurred.
Whatever the aforementioned assessment results are, the Group presumes that the financial instruments havedefaulted when contractual payments of financial instruments past due over 90 days (inclusive).
11.2.3 Determination of expected credit loss
The Group determines the ECL of relevant financial instruments using the following method:
? For a financial asset and a lease receivable, a credit loss is the present value of the difference between thecontractual cash flows that are due to the Group under the contract and the cash flows that the Group expectsto receive;
? For credit-impaired financial assets other than the purchased or originated credit-impaired financial assets
at the balance date, credit loss is difference between the carrying amount of financial assets and the presentvalue of expected future cash flows discounted at original effective interest rate.
The factors reflected in methods of measurement of expected credit losses include an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; time value of money; reasonableand supportable information about past events, current conditions and forecasts on future economic status atbalance sheet date without unnecessary additional costs or efforts.
11.2.4 Write-down of financial assets
When the Group will no longer reasonably expect that the contractual cash flows of financial assets can becollected in aggregate or in part, the Group will directly write down the carrying amount of the financial asset,which constitutes derecognition of relevant financial assets.
11.3 Transfer of financial assets
The Group will derecognize a financial asset if one of the following conditions is satisfied: (i) the contractualrights to the cash flows from the financial asset expire; (ii) the financial asset has been transferred and substantiallyall the risks and rewards of ownership of the financial asset is transferred to the transferee; or (iii) although thefinancial asset has been transferred, the Group neither transfers nor retains substantially all the risks and rewardsof ownership of the financial asset but has not retained control of the financial asset.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.3 Transfer of financial assets - continued
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 itscontinuing involvement in the transferred financial asset and recognize an associated liability. The Group willmeasure relevant liabilities as follows:
? For transferred financial assets carried at amortized cost, the carrying amount of relevant liabilities is thecarrying amount of financial assets transferred with continuing involvement less amortized cost of theGroup's retained rights (if the Group retains relevant rights upon transfer of financial assets) with additionof amortized cost of obligations assumed by the Group (if the Group assumes relevant obligations upontransfer of financial assets). Relevant liabilities are not designated as financial liabilities at fair valuethrough profit or loss.
? For transferred financial assets carried at fair value, the carrying amount of relevant financial liabilities isthe carrying amount of financial assets transferred with continuing involvement less fair value of theGroup's retained rights (if the Group retains relevant rights upon transfer of financial assets) with additionof fair value of obligations assumed by the Group (if the Group assumes relevant obligations upon transferof financial assets). Accordingly, the fair value of relevant rights and obligations shall be measured on anindividual 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 theconsideration received from the transfer of financial assets and any cumulative gain or loss allocated to the partderecognized which has been previously recognized in other comprehensive income, is recognized in profit orloss. If the financial assets transferred by the Group are designated as equity instrument investments at fair valuethrough other comprehensive income that are not held for trading, the cumulative gains or losses previouslyrecognized 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 financialasset 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 carryingamount allocated to the part derecognized on the date of derecognition; and (2) the sum of the considerationreceived for the part derecognized and any cumulative gain or loss allocated to the part derecognized which hasbeen previously recognized in other comprehensive income, is recognized in profit or loss. If the financial assetstransferred by the Group are designated as equity instrument investments at fair value through othercomprehensive income that are not held for trading, the cumulative gains or losses previously recognized in othercomprehensive 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 willcontinue to recognize the transferred financial asset in its entirety and recognize the consideration received asfinancial liabilities.
11.4 Classification of financial liabilities and equity instruments
The Group classifies the financial instrument or its components into financial liabilities or equity instruments atinitial recognition on the basis of the terms of the contract of the financial instruments, the economic substanceas well as legal form reflected, and the definition of financial liabilities or equity instruments.
11.4.1 Classification, recognition and measurement of financial liabilities
On initial recognition, financial liabilities are classified into financial liabilities at FVTPL and other financialliabilities.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.4 Classification of financial liabilities and equity instruments - continued
11.4.1 Classification, recognition and measurement of financial liabilities - continued
11.4.1.1 Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading (including derivatives that are financialliabilities) and financial liabilities designated as at FVTPL. Except that the derivative financial liability ispresented separately, financial liabilities at FVTPL are presented as financial liabilities held-for-trading.
A financial liability is classified as held-for-trading if any of the following criteria is satisfied:
? It has been incurred principally for the purpose of repurchasing it in the near term.? On initial recognition, it is part of a portfolio of identified financial instruments that the Group managestogether and there is objective evidence that the Group has a recent actual pattern of short-term profit-taking.? It is a derivative that is neither a financial guarantee contract nor designated as an effective hedginginstrument.
On initial recognition, financial liabilities that meet one of the following conditions are designated as financialliabilities at FVTPL: (1) Such designation eliminates or significantly reduces accounting mismatch; (2) Thefinancial 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 riskmanagement or investment strategy, and information about the grouping is reported to key management personnelon 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 fromchanges in fair value and any dividend or interest income earned on the financial liabilities are recognized inprofit or loss.
For a financial liability designated as at FVTPL, the amount of changes in the fair value of the financial liabilitythat are attributable to changes in the credit risk of that liability shall be presented in other comprehensive income,while other changes in fair values are included in profit or loss for the current period. Upon the derecognition ofsuch financial liability, the accumulated amount of changes in fair value that are attributable to changes in thecredit risk of that liability, which was recognized in other comprehensive income, is transferred to retainedearnings. Any dividend or interest expense on the financial liabilities is recognized in profit or loss. If theaccounting treatment for the impact of the change in credit risk of such financial liability in the above ways wouldcreate or enlarge an accounting mismatch in profit or loss, the Group shall present all gains or losses on thatliability (including the effects of changes in the credit risk of that liability) in profit or loss for the period.
11.4.1.2 Other financial liabilities
Other financial liabilities except for the financial liabilities arising from the transferred financial assets that do notqualify for derecognition or financial liabilities arising from continuing involvement in the transferred financialasset are classified as financial liabilities measured at amortized cost, and are subsequently measured at amortizedcost, with gain or loss arising from derecognition or amortization recognized in profit or loss.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.4 Classification of financial liabilities and equity instruments - continued
11.4.1 Classification, recognition and measurement of financial liabilities - continued
11.4.1.2 Other financial liabilities - continued
If the Group modifies or renegotiates the contract with the counterparty and the financial liability subsequentlymeasured 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 lossof the period. The re-calculated carrying amount of the financial liability shall be determined by the Groupaccording to the cash flow of the renegotiated or modified contract based on the present value discounted at theoriginal effective interest rate of the financial liability. For all the costs or expenses arising from the modificationor renegotiation of the contract, the Group shall adjust the modified carrying amount of the financial liability andamortize them within the remaining term of the financial liability.
11.4.2 Derecognition of financial liabilities
The Group recognizes a financial liability (or part of it) only when the underlying present obligation (or part ofit) is discharged. An agreement between the Group (an existing borrower) and an existing lender to replace theoriginal financial liability with a new financial liability with substantially different terms is accounted for as anextinguishment 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 carryingamount of the financial liability (or part of the financial liability) derecognized and the consideration paid(including any non-cash assets transferred or new financial liabilities assumed) in profit or loss.
11.4.3 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deductingall of its liabilities. Equity instruments issued (including refinanced), repurchased, sold and cancelled by theGroup are recognized as changes of equity. Change of fair value of equity instruments is not recognized by theGroup. 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 dividendspaid do not affect total amount of shareholders equity.
11.5 Derivatives and embedded derivatives
Derivatives 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 andare subsequently re-measured at fair value.
Derivatives embedded in hybrid contracts that contain financial asset hosts are not separated. The entire hybridcontract 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-alonederivative.
(1) The economic characteristics and risks of the embedded derivative are not highly related to the economiccharacteristics and risks of the host contract;
(2) A separate instrument with the same terms as the embedded derivative would meet the definition of aderivative; and
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(3) The hybrid instrument is not designated as a financial asset or financial liability at FVTPL.
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
11. Financial instruments - continued
11.5 Derivatives and embedded derivatives - continued
If the embedded derivative is separated from the hybrid contract, the host contract shall be accounted for inaccordance with the applicable standards. If the Group is unable to measure reliably the fair value of an embeddedderivative on the basis of its terms and conditions, the fair value of the embedded derivative is the differencebetween the fair value of the hybrid contract and the fair value of the host contract. If the Group is still unable tomeasure the fair value of the embedded derivative separately either at acquisition or at a subsequent balance sheetdate after the above methods are applied, it designates the entire hybrid contract as a financial instrument at fairvalue through profit or loss.
11.6 Offsetting financial assets and financial liabilities
Where the Group has a legal right that is currently enforceable to set off the recognized financial assets andfinancial liabilities, and intends either to settle on a net basis, or to realize the financial asset and settle the financialliability simultaneously, a financial asset and a financial liability shall be offset and the net amount is presentedin the balance sheet. Except for the above circumstances, financial assets and financial liabilities shall be presentedseparately in the balance sheet and shall not be offset.
11.7 Compound instruments
Convertible bonds issued by the Group that contain both the liability, the conversion option, the resale option andearly redemption option are classified separately into respective items on initial recognition. Conversion optionthat is settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of theCompany's own equity instruments is an equity instrument.
At the date of issue, the liability, resale option derivatives and early redemption option derivatives are initiallymeasured at fair value. The difference between the gross proceeds of the issue of the convertible bonds and thefair value assigned to the liability, resale option derivatives and early redemption option derivatives, representingthe conversion option for the holder to convert the bonds into equity instrument, is included in other equityinstruments.
In subsequent periods, the liability component of the convertible bonds is carried at amortized cost using theeffective interest method. The resale option derivatives and early redemption option derivatives are measured atfair value with changes in fair value recognized in profit or loss. The conversion option classified as equityinstruments remains in equity instruments. No gain or loss is recognized in profit or loss upon conversion orexpiration 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 theirrespective fair values. Transaction costs relating to the resale option derivative components and early redemptionoption are charged to profit or loss. Transaction costs relating to the liability component are included in thecarrying amount of the liability component and amortized over the period of the convertible loan notes using theeffective interest method. Transaction costs relating to the equity instruments component are charged directly toequity instruments.
12. Notes receivable
12.1 Categories of portfolios for which loss provision is assessed on a portfolio basis according to credit riskcharacteristics and the basis for determination
The Group believes that the credit risk of the bank acceptances held by the Group was insignificant due to thehigh credit rating of the accepting banks. Therefore, no provision for credit loss was made.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
13. Accounts receivable
13.1 Categories of portfolios for which bad debt provision is assessed on a portfolio basis according to credit riskcharacteristics and the basis for determination
The Group classifies accounts receivable into different groups based on common risk characteristics. Commoncredit risk characteristics include the aging of accounts receivable.
13.2 Aging calculation method for portfolio of credit risk characteristics recognized based on aging
The Group uses the aging of accounts receivable as a credit risk characteristic to determine its credit loss usingan impairment matrix. The aging is calculated from the date of obtaining the right to collect the contractualpayment.
13.3 Judgement criteria for loss provision assessed on an individual basis
The Group assesses the credit risk of the accounts receivable from the debtor with significant financial difficultieson an individual basis based on the risk assessment and judgement of the management.
14. Other receivables
14.1 Determination of ECL on other receivables and accounting treatment
The Group determines credit losses on other receivables on an individual asset basis.
15. Inventories
15.1 Categories of inventories, valuation method of inventories upon delivery, inventory count system andamortization method for reusable materials
15.1.1 Categories of inventories
The Group's inventories mainly include raw materials, work in progress, finished goods, reusable materials, etc.Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of conversionand other expenditures incurred in bringing the inventories to their present location and condition.
15.1.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the weighted average method.
15.1.3 Inventory count system
The perpetual inventory system is maintained for stock system.
15.1.4 Amortization method for reusable materials
Reusable materials are amortized using the multiple-stage amortization method.
15.2 Recognition criteria and provision methods for decline in value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net realizable value. If the netrealizable value is below the cost of inventories, a provision for decline in value of inventories is made.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
15. Inventories - continued
15.2 Recognition criteria and provision methods for decline in value of inventories - continued
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs ofcompletion, the estimated costs necessary to make the sale and relevant taxes. Net realizable value is determinedon the basis of clear evidence obtained, and takes into consideration the purposes of holding inventories and effectof post balance sheet events.
After the provision for decline in value of inventories is made, if the circumstances that previously causedinventories to be written down below cost no longer exist so that the net realizable value of inventories is higherthan their cost, the original provision for decline in value is reversed and the reversal is included in profit or lossfor the period.
The Group makes provision for decline in value of inventories on an individual basis (differentiated by productand material model), please refer to Note V, 7 for the basis of determining the net realizable value of each typeof inventories.
16. Long-term equity investments
16.1 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, variablereturns from its involvement with the investee; and has the ability to use its power to affect its return. Joint controlis the contractually agreed sharing of control over an economic activity, and exists only when the strategicfinancial and operating policy decisions relating to the activity require the unanimous consent of the partiessharing control. Significant influence is the power to participate in the financial and operating policy decisions ofthe investee but is not control or joint control over those policies. When determining whether an investingenterprise is able to exercise control or significant influence over an investee, the effect of potential voting rightsof the investee (for example, warrants and convertible debts) held by the investing enterprises or other parties thatare currently exercisable or convertible shall be considered.
16.2 Determination of initial investment cost
For a long-term equity investment acquired through business combination not involving enterprises undercommon control, the investment cost of the long-term equity investment is the cost of acquisition at the date ofcombination.
The expenses incurred by the acquirer or in respect of auditing, legal services, valuation and consultancy servicesand other associated administrative expenses attributable to the business combination are recognized in profit orloss when they are incurred.
Long-term equity investment acquired otherwise than through a business combination is initially measured at itscost.
16.3 Subsequent measurement and recognition of profit or loss
16.3.1 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 investmentsof 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 additionalinvestment is made or the investment is recouped, the cost of the long-term equity investment is adjustedaccordingly. Investment income is recognized in the period in accordance with the attributable share of cashdividends or profit distributions declared by the investee.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
16. Long-term equity investments - continued
16.3 Subsequent measurement and recognition of profit or loss - continued
16.3.2 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 anentity over which the Group has significant influence and a joint venture is an entity over which the Groupexercises joint control along with other investors.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds the Group'sshare of the fair value of the investee's identifiable net assets at the time of acquisition, no adjustment is made tothe initial investment cost. Where the initial investment cost is less than the Group's share of the fair value of theinvestee's identifiable net assets at the time of acquisition, the difference is recognized in profit or loss for theperiod, and the cost of the long-term equity investment is adjusted accordingly.
Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensive incomeof 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 investmentis decreased in accordance with its share of the investee's declared profit or cash dividends; Other changes inowners' equity of the investee other than net profit or loss and other comprehensive income are correspondinglyadjusted to the carrying amount of the long-term equity investment, and recognized in the capital reserve. TheGroup recognizes its share of the investee's net profit or loss based on the fair value of the investee's individualidentifiable 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 recognizesinvestment income and other comprehensive income after making appropriate adjustments to conform to theCompany's accounting policies and accounting period. However, unrealized gains or losses resulting from theGroup's transactions with its associates and joint ventures, which do not constitute a business, are eliminatedbased 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 jointventures 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 inthe 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 profitsonly after its share of the profits exceeds the share of losses previously not recognized.
16.4 Disposal of long-term equity investments
On disposal of a long-term equity investment, the difference between the proceeds actually received andreceivable and the carrying amount is recognized in profit or loss for the period.
17. Investment properties
Investment property is property held to earn rentals or for capital appreciation or both, including buildings leasedout.
An investment property is measured initially at cost. Subsequent expenditures incurred for such investmentproperty are included in the cost of the investment property if it is probable that economic benefits associatedwith an investment property will flow to the Group and the subsequent expenditures can be measured reliably.Other subsequent expenditures are recognized in profit or loss in the period in which they are incurred.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
17. Investment properties - continued
The Group uses the cost model for subsequent measurement of investment property, and adopts the straight-linemethod for depreciation over its useful life. The depreciation method, depreciation period, estimated residualvalue rate and annual depreciation rate of each category of investment properties are as follows:
| Category | Depreciation method | Depreciation period (years) | Residual value rate (%) | Annual depreciation rate (%) |
| Buildings | Straight-line method | 35 years | - | 2.86 |
An investment property is derecognized upon disposal or when the investment property is permanently withdrawnfrom use and no future economic benefits are expected from its disposals.
When an investment property is sold, transferred, retired or damaged, the Group recognizes the amount of anyproceeds on disposal net of the carrying amount and related taxes in profit or loss for the period.
18. Fixed Assets
18.1 Recognition criteria
Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental toothers, or for administrative purposes, and have useful lives of more than one accounting year. A fixed asset isrecognized only when it is probable that economic benefits associated with the asset will flow to the Group andthe 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 probablethat economic benefits associated with the asset will flow to the Group and the subsequent expenditures can bemeasured reliably. Meanwhile the carrying amount of the replaced part is derecognized. Other subsequentexpenditures are recognized in profit or loss in the period in which they are incurred.
18.2 Depreciation method
A fixed asset other than land operated overseas is depreciated over its useful life using the straight-line methodsince the month subsequent to the one in which it is ready for intended use.
Land operated overseas is not depreciated. The depreciation method, depreciation period, estimated residual valuerate and annual depreciation rate of other categories 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, appliances and furniture | 3-10 years | - | 10.00-33.33 |
| Renovation costs | 3-10 years | - | 10.00-33.33 |
Estimated net residual value of a fixed asset is the estimated amount that the Group would currently obtain fromdisposal of the asset, after deducting the estimated costs of disposal, if the asset was already of the age and in thecondition expected at the end of its useful life.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
18. Fixed Assets - continued
18.3 Other descriptions
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use ordisposal, the fixed asset is derecognized. When a fixed asset is sold, transferred, retired or damaged, the amountof any proceeds on disposal of the asset net of the carrying amount and related taxes is recognized in profit or lossfor the period.
The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation methodapplied at least once at each financial year-end, and account for any change as a change in an accounting estimate.
19. Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various construction expendituresduring the construction period, borrowing costs capitalized before it is ready for intended use and other relevantcosts. Construction in progress is not depreciated.
Construction in progress is transferred to a fixed asset when it is ready for intended use. The criteria and timepoints for the transfer of various types of construction in progress to fixed assets are as follows:
| Category | Criteria for transfer to fixed assets | Time points for transfer to fixed assets |
| Buildings | Construction work is completed, meets intended design requirements and satisfies acceptance quality criteria | When acceptance criteria are met |
| Machinery and equipment, electronic equipment, fixtures and furniture, transportation vehicles, etc. to be installed | (1) Relevant equipment and other supporting facilities have been installed; or (2) The equipment can maintain normal and stable operation for a period of time after commissioning | When the asset utilization notice is obtained or when acceptance criteria are met |
20. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset arecapitalized when expenditures for such asset and borrowing costs are incurred and activities relating to theacquisition, construction or production of the asset that are necessary to prepare the asset for its intended use orsale 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 anexpense 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 theactual interest expense incurred on that borrowing for the period less any bank interest earned from depositingthe borrowed funds before being used on the asset or any investment income on the temporary investment of thosefunds. Where funds are borrowed under general-purpose borrowings, the Group determines the amount of interestto be capitalized on such borrowings by applying a capitalization rate to the weighted average of the excess ofcumulative expenditures on the asset over the amounts of specific-purpose borrowings. The capitalization rate isthe weighted average of the interest rates applicable to the general-purpose borrowings.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
21. Intangible assets
21.1 Determination basis, estimation, amortization method and review procedure of useful life
Intangible assets include software, patents, trademarks, land use rights and customer relations, etc.
An intangible asset is measured initially at cost. When an intangible asset with a finite useful life is available foruse, its original cost less any accumulated impairment losses is amortized over its estimated useful life using thestraight-line method. An intangible asset with an indefinite useful life is not amortized.
The amortization methods, useful lives, and residual value rates of each class of intangible assets are as follows:
| Category | Amortization method | Useful life (Years) | Residual value rate (%) |
| Land use right | Straight-line method | 50 years | - |
| Software | Straight-line method | 3-10 years | - |
| Patents | Straight-line method | 3-20 years | - |
| Trademarks | Straight-line method | 10 years | - |
| Customer relation | Straight-line method | 16 years | - |
For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method at theend of the year, and makes adjustments when necessary.
21.2 Attribution scope and related accounting treatments of research and development expenditure
All of the Group's research and development expenditures do not meet the conditions for capitalization and arecharged to profit or loss for the period when incurred.
Attribution scope of research and development expenditure includes the salaries, wages and welfare expenses ofthe personnel directly engaged in research and development activities, material expenses directly consumed inresearch and development activities, depreciation expenses of apparatus and equipment relevant to research anddevelopment activities, rental and maintenance expenses of research and development sites, travel, transportationand communication expenses necessary for research and experimental development, etc.
22. Impairment of long-term assets
The Group reviews the long-term equity investments, investment properties measured using the cost model, fixedassets, construction in progress, right-of-use assets and intangible assets with a finite useful life at each balancesheet date to determine whether there is any indication that they have suffered an impairment loss. If animpairment indication exists, the recoverable amount is estimated. Intangible assets with an indefinite useful lifeand not yet available for use are tested for impairment annually, irrespective of whether there is any indicationthat the assets may be impaired.
Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount ofan individual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. Therecoverable amount of an asset or asset group is the higher of its fair value less costs of disposal and the presentvalue of the future cash flows expected to be derived from the asset or asset group.
If such recoverable amount is less than its carrying amount, a provision for impairment losses in respect of thedeficit is recognized in profit or loss for the period.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
22. Impairment of long-term assets - continued
Goodwill is tested for impairment at least at the end of each year. For the purpose of impairment testing, goodwillis considered together with the related assets group(s), i.e., goodwill is reasonably allocated to the related assetsgroup(s) or each of assets group(s) expected to benefit from the synergies of the combination. An impairment lossis recognized if the recoverable amount of the assets group or sets of assets groups (including goodwill) is lessthan its carrying amount. The impairment loss is firstly allocated to reduce the carrying amount of any goodwillallocated to such assets group or sets of assets groups, and then to the other assets of the group on the pro-ratabasis of the carrying amount of each asset (other than goodwill) in the group.
Once an impairment loss of the above-mentioned assets is recognized, it will not be reversed in any subsequentperiod.
23. Long-term prepaid expenses
Long-term prepaid expenses represent expenses incurred that should be borne and amortized over the current andsubsequent periods (together with more than one year), including the decoration works of the leased assets, etc.Long-term prepaid expenses are amortized using the straight-line method over the expected periods in whichbenefits are derived.
24. Contract liabilities
A contract liability represents the Group's obligation to transfer goods or services to a customer for which theGroup has received consideration (or an amount of consideration is due) from the customer.
25. Employee benefits
25.1 Accounting treatment of short-term benefits
Actually occurred short-term employee benefits are recognized as liabilities, with a corresponding charge to theprofit or loss for the period or in the costs of relevant assets in the accounting period in which employees provideservices to the Group. Staff welfare expenses incurred by the Group are recognized in profit or loss for the periodor the costs of relevant assets based on the actually occurred amounts when it actually occurred. Non-monetarystaff welfare expenses are measured at fair value.
Payment made by the Group of social security contributions for employees such as premiums or contributions onmedical insurance, work injury insurance and maternity insurance, etc. and payments of housing funds, as wellas trade union fund and employee education fund provided in accordance with relevant requirements, arecalculated according to prescribed bases and percentages in determining the amount of employee benefits andrecognized as relevant liabilities, with a corresponding charge to the profit or loss for the period or the costs ofrelevant assets in the accounting period in which employees provide services.
25.2 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 paidaccording to defined contribution plans is recognized as liabilities, and recognized in profit or loss or related costsof assets.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
25. Employee benefits - continued
25.2 Accounting treatment of post-employment benefits - continued
For defined benefit plans, the Group calculates defined benefit plan obligations using projected unit credit methodand the service cost resulting from employee service in the current period is recorded in profit or loss or the costof relevant assets. Defined benefit costs are categorized as follows:
? service cost (including current service cost, past service cost, as well as gains and losses on settlements);? net interest of net liabilities or assets of defined benefit plan (including interest income of planned assets,interest expenses of defined benefit plan liabilities and effect of asset ceiling); and? changes arising from re-measurement of net liabilities or net assets of defined benefit plans.
Service costs and net interest of net liabilities and net assets of defined benefit plans are recognized in profit orloss 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 thenet defined benefit liability (asset), and any change in the effect of the asset ceiling, excluding amounts includedin 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 ofdefined benefit plans are recognized as net liabilities or net assets of a defined benefit plan.
25.3 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 Groupcannot unilaterally withdraw from the termination plan or the redundancy offer and when the Group recognizesany related restructuring costs or expenses.
26. Provisions
Provisions are recognized when the Group has a present obligation related to a contingency such as productsquality assurance, etc., 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 presentobligation 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 theprovision is determined by discounting the related future cash outflows.
27. Share-based payments
A share-based payment is a transaction which the Group grants equity instruments, or incurs liabilities for amountsthat are determined based on the price of equity instruments, in return for services rendered by employees. TheGroup's share-based payments are equity-settled share-based payments.
27.1 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 fairvalue of the equity instruments granted to employees at the grant date. Such amount is recognized as related costsor expenses on a straight-line basis over the vesting period, based on the best estimate of the number of equityinstruments expected to vest, with a corresponding increase in capital reserve.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
27. Share-based payments - continued
27.1 Equity-settled share-based payments - continued
At each balance sheet date during the vesting period, the Group makes the best estimate according to thesubsequent 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 recognizedas related costs or expenses, with a corresponding adjustment to capital reserve. When the employee can choosewhether to meet the non-vesting condition but the condition is not met during the vesting period, the Group treatsit as a cancellation of the equity instruments granted.
28. Revenue
28.1 Accounting policies for revenue recognition and measurement disclosed by business types
When (or as) a performance obligation in a contract is satisfied, i.e., when (or as) the customer obtains control ofrelevant goods or services, the Group recognizes as revenue the amount of the transaction price that is allocatedto that performance obligation. A performance obligation is the Group's promise to transfer to a customer a goodor service (or a bundle of goods or services) that is distinct, in a contract with the customer.
The Group assesses a contract at contract inception, identifies each individual performance obligation included inthe contract, and determines whether the performance obligation is satisfied over time or at a point in time. It is aperformance obligation satisfied over time and the Group recognizes revenue over time according to the progressof performance if one of the following conditions is met: (1) the customer simultaneously receives and consumesthe economic benefits provided by the Group's performance as the Group performs; (2) the customer is able tocontrol goods under construction as the Group performs; (3) the goods generated from the Group's performancehave irreplaceable utilization, and the Group is entitled to collect payment for performance completed to datethroughout the contract period. Otherwise, revenue is recognized at a point in time when the customer obtainscontrol over the relevant goods or services. The Group's revenue is mainly derived from the sale of goods, etc.,all of which are performance obligations satisfied at a point in time, and revenue is recognized at the point in timewhen the customer obtains control of the related goods (or services), and the specific accounting policies are setout below:
(1) Sales of goods
The Group sells customers communication products, consumer electronic products, industrial products, cloud andstorage products, automotive electronic products and medical products. Usually, there is only one performanceobligation in the relevant contract or order for selling goods, and the consideration of selling goods is recognizedaccording to the price agreed in the sales contract or order. For domestic sales, the Group recognizes revenue afterthe products are delivered to the carrier designated by the customer, or the products are delivered to the agreeddelivery place according to the agreement or contract and received by the customer and the control of goods istransferred to the customer. For overseas sales, the Group recognizes revenue after the products are delivered tothe carrier designated by the customer, processed with customs clearing procedure for export and loaded on boardthe ship, delivered to the designated delivery place or picked up by the customer from the warehouse respectivelyaccording to the different international trade terms stipulated in the sales contracts or orders and the control ofgoods is transferred to the customer.
The Group provides products quality assurance for the goods sold according to legal regulations and contractualagreements, i.e. assuring the customers that the goods sold comply with the established standards. The Groupaccounts for the quality warranty liabilities in accordance with the Accounting Standard for Business EnterprisesNo. 13 - Contingencies, please refer to Note (III), 26 for details.
The Group determines whether it is a principal or an agent at the time of the transaction based on whether it ownsthe "control" of the goods before the transfer of such goods to the customer. The Group assumes the primaryresponsibility for the transfer of goods to customers, assumes the inventory risk of the goods before the transfer,has the right to determine the price of the traded goods at its own discretion, and assumes the major risks andrewards associated with the ownership of the traded goods during the sales process, therefore, the Group is aprincipal and the revenue shall be recognized based on the total consideration received or receivable.
Where payment is received in advance from customers for the sale of goods, the advance payment received shallbe recorded as a liability and recognized as revenue when the relevant performance obligation is satisfied.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
28. Revenue - continued
28.1 Accounting policies for revenue recognition and measurement disclosed by business types - continued
(2) Other revenue
Other revenue mainly comes from sales of scrap to customers. Usually, there is only one performance obligation(i.e., delivery of goods) in the relevant contract for sales of products. Relevant revenue is recognized at the timepoint when the control of the relevant products is transferred to the customer. The consideration for the sales ofproducts is determined according to the fixed price agreed in the sales contract.
29. Government grants
Government grants are monetary assets and non-monetary assets from the government to the Group at noconsideration. A government grant is recognized only when the Group can comply with the conditions attachingto 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 orreceivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fairvalue cannot be reliably determined, it is measured at a nominal amount. A government grant measured at anominal amount is recognized immediately in profit or loss for the period.
29.1 Determination basis and accounting treatment of government grants related to assets
The Group's government grants, such as the technology reform item for ultra-thin communication module deepintelligent production line, are government grants related to assets, as they are directly related to the investmentand construction of fixed assets. See Notes (VII), 1 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 theuseful life of the related asset with the straight-line method.
29.2 Determination basis and accounting treatment of government grants related to income
Government grants other than those related to assets are classified as government grants related to income. SeeNotes (VII), 2 for details of the Group's government grants related to income. The Group classifies governmentgrants 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 beincurred in subsequent periods, the grant is recognized as deferred income over the periods in which the relatedcosts or losses are recognized; If the grant is a compensation for related expenses or losses already incurred, thegrant 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 ofeconomic activities; a government grant not related to the Group's daily activities is recognized in non-operatingincome and expenses.
For the repayment of a government grant already recognized, if there is any related deferred income, therepayment is offset against the carrying amount of the deferred income, with any excess recognized in profit orloss for the period.
30. Deferred tax assets/ deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
30.1 Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are measuredat the amount expected to be paid (or recovered) according to the requirements of tax laws.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
30. Deferred tax assets/ deferred tax liabilities - continued
30.2 Deferred tax assets and deferred tax liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and their tax base, orbetween the nil carrying amount of those items that are not recognized as assets or liabilities and their tax basethat can be determined according to tax laws, deferred tax assets and liabilities are recognized using the balancesheet liability method.
Deferred tax is generally recognized for all temporary differences. Deferred tax assets for deductible temporarydifferences are recognized to the extent that it is probable that taxable profits will be available against which thedeductible temporary differences can be utilized. However, for temporary differences associated with the initialrecognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a businesscombination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time oftransaction and will not result in taxable temporary differences and deductible temporary differences in equalamounts, no deferred tax asset or liability is recognized.
For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the extentthat it is probable that future taxable profits will be available against which the deductible losses and tax creditscan be utilized.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments insubsidiaries and associates, and interests in joint ventures, except where the Group is able to control the timing ofthe reversal of the temporary difference and it is probable that the temporary difference will not reverse in theforeseeable future. Deferred tax assets arising from deductible temporary differences associated with suchinvestments and interests are only recognized to the extent that it is probable that there will be taxable profitsagainst which to utilize the benefits of the temporary differences and they are expected to reverse in theforeseeable 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 arisefrom 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 arisefrom 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 longerprobable that sufficient taxable profits will be available in the future to allow the benefit of deferred tax assets tobe utilized. Such reduction in amount is reversed when it becomes probable that sufficient taxable profits will beavailable.
30.3 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 theassets and settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presentedon a net basis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assetsand deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxableentity or different taxable entities which intend either to settle current tax assets and liabilities on a net basis or torealize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred taxassets or liabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset andpresented on a net basis.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
31. Leases
A lease is a contract whereby the lessor conveys to the lessee in return for a consideration the right to use an assetfor an agreed period of time.
The Group assesses whether a contract is or contains a lease at inception date. Such contract will not be reassessedunless the terms and conditions of the contract are subsequently changed.
31.1 The Group as lessee
31.1.1 Separating components of a lease
If the contract contains one or more lease and non-lease components, the Group will separate the individual leaseand non-lease components and allocate contract consideration according to the relative proportion of the sum ofthe stand-alone prices of the lease components and the stand-alone prices of the non-lease components.
31.1.2 Right-of-use assets
Except for short-term leases and leases of low-value assets, at the commencement date of the lease, the Grouprecognizes a right-of-use assets. The commencement date of the lease is the date on which a lessor makes anunderlying asset available for use by the Group. The Group measures the right-of-use assets at cost. The cost ofthe right-of-use assets comprises:
? the amount of the initial measurement of the lease liabilities;? any lease payments made at or before the commencement date, less any lease incentives received.
The Group depreciates right-of-use assets by reference to the relevant depreciation provisions of the AccountingStandards for Business Enterprises No. 4 - Fixed Assets. The right-of-use assets are depreciated over theremaining useful lives of the leased assets where the Group is reasonably certain to obtain ownership of theunderlying assets at the end of the lease term. Otherwise, right-of-use assets are depreciated over the shorter ofthe lease term and the remaining useful lives of the leased assets.
The Group applies the Accounting Standards for Business Enterprises No. 8 - Impairment of Assets, to determinewhether the right-of-use assets are impaired and perform accounting treatment to identified impairment loss.
31.1.3 Lease liabilities
Except for short-term leases and leases of low-value assets, at the commencement date of the lease, the Groupmeasures the lease liabilities at the present value of the lease payments that are not paid at that date. If the interestrate implicit in the lease cannot be readily determined, the lessee shall use the lessee's incremental borrowing rate.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
31. Leases - continued
31.1 The Group as lessee - continued
31.1.3 Lease liabilities - continued
Lease payments refer to payments relating to the right to use leased assets during the lease term which are madeby the Group to the lessor, including fixed payments and in-substance fixed payments, less any lease incentivesreceivable (if any).
After the commencement date of the lease, the Group calculates interest expenses of lease liabilities for eachperiod of the lease term based on fixed periodic rate, and recognizes such expenses in profit or loss or cost ofrelated assets.
After the commencement date of the lease, if there is a change in the lease term, or in the assessment of an optionto purchase the underlying asset, in which case the related lease liability is remeasured by discounting the revisedlease payments using a revised discount rate at the date of reassessment, the Group re-measures the lease liabilitiesand adjusts the right-of-use assets accordingly. If the book value of the right-of-use asset has been reduced to zero,but the lease liability needs to be reduced further, the Group will recognize the difference in profit or loss for theperiod.
31.1.4 Determination basis and accounting treatment of short-term leases and leases of low-value assets treatedunder a simplified method as lessee
For short-term leases of machinery and equipment and leases of low-value assets to which the recognitionexemption is applied by the Group, right-of-use assets and lease liabilities are not recognized. A short-term leaserefers to a lease that, at the commencement date, has a lease term of 12 months or less and do not contain apurchase option. A lease of low value asset refers to a single lease asset, when new, is no more than USD 5,000.Lease payments on short-term leases and leases of low-value assets are recognized in profit or loss or the cost ofunderlying assets on a straight-line basis over the lease term.
31.1.5 Lease modifications
The Group accounts for a lease modification as a separate lease if:
? the lease modification expanded the scope of the lease by adding the right-of-use of one or more lease assets;and? the increased consideration is equivalent to the amount of stand-alone price of the expanded lease scopeadjusted according to the contract.
If the lease modification is not accounted for as an individual lease, on the effective date of the lease modification,the Group reallocates the consideration of the contract after the change, re-determines the lease term, and re-measures lease liabilities based on the changed lease payments and the present value calculated by the reviseddiscount rate.
If the lease modification results in a reduction in the lease scope or lease term, the carrying amount of the right-of-use assets will be reduced, and the gains or losses relevant to the lease partially of fully terminated will beincluded in profit or loss for the period; for other lease modifications resulting in the re-measurement of leaseliabilities, the carrying amount of right-of-use assets is adjusted accordingly.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
31. Leases - continued
31.2 The Group as lessor
31.2.1 Classification criteria and accounting treatment of leases as lessor
Leases are classified as finance leases whenever the terms of the leased assets transfer substantially all the risksand rewards of ownership to the lessee. All other leases are classified as operating leases.
31.2.1.1 The Group as lessor under operating leases
Receipts of lease under operating leases are recognized as rental income on a straight-line basis over the term ofthe relevant lease. Initial direct costs related to operating leases incurred by the Group are capitalized whenincurred, and are recognized in profit or loss for the current period on the same basis as recognition of rentalincome over the lease term.
31.2.2 Subleases
As the lessor of a sublease, the Group accounts for the original lease contract and the sublease contract as twoseparate contracts. The Group classifies the subleases based on the right-of-use assets generating from the originallease rather than the underlying assets of the original lease.
32. Hedge accounting
32.1. 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 riskexposure arising from specific risk, such as exchange rate risk, etc. The Group applies hedging accounting for ahedge that satisfies the prescribed conditions. Hedging activities of the Group include hedges of net investmentin foreign operations.
At the inception of hedging, the Group officially designated hedging instruments and hedged items, and preparedwritten documents recording the nature of hedging instruments, hedged items, hedged risks, and hedgeeffectiveness evaluation methods (including the analysis of the causes of invalid hedges and methods to determinethe hedge ratio).
The Group will discontinue hedge accounting when one of the following conditions occurs:
? Due to changes in risk management objectives, the hedging relationship no longer meets the risk
management objectives.? The hedging instrument expires, or is sold, terminated or exercised.? There is no longer an economic relationship between the hedged item and the hedging instruments, or in
the changes of the value arising from the economic relationship between the hedged item and the hedging
instrument, the impact of credit risk begins to dominate.
? The hedging relationship no longer meets other conditions for using the hedge accounting methods.
Hedges for net investment in foreign operations
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or losson the hedging instrument relating to the effective portion of the hedge is recognized in other comprehensiveincome. 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 includedin other comprehensive income shall be reclassified in the current profits and losses.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
32. Hedge accounting - continued
32.2 Methods of assessing effectiveness of hedges
The Group continuously evaluates whether the hedging relationship meets the requirements of hedgingeffectiveness on and after the inception date of hedging. If the hedging meets the following conditions at the sametime, 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 hedginginstruments, 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'shedging 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, butthe risk management objectives of the hedging relationship have not changed, the Group will rebalance thehedging relationship. The number of hedged items or hedging instruments in the hedging relationship is adjustedso that the hedging ratio meets the requirements of hedging effectiveness again.
33. Accounting treatment in relation to the repurchase of equity instruments
The consideration and transaction costs paid to repurchase own equity instruments are deducted from equity. Nogain or loss is recognized in profit or loss on the repurchase, sale or cancellation of the Company's equityinstruments.
34. 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 tomake judgments, estimates and assumptions about the carrying amounts of items in the financial statements thatcannot 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 factorsthat 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. Theeffect of a change in accounting estimate is recognized in the period of the change, if the change affects that periodonly; or recognized in the period of the change and future periods, if the change affects both.
- Key assumptions and uncertainties in accounting estimates
At the balance sheet date, the key assumptions and uncertainties that are probable to cause significant adjustmentsto the carrying amounts of assets and liabilities in future periods include:
Impairment of accounts receivables
The management considers reasonable and supportable information and makes significant accounting estimatesin assessing the ECL on accounts receivable. The Group estimates the ECL rate of accounts receivable based onfactors such as historical bad debt loss records, customer defaults or delayed payments, and the aging of accountsreceivable, as well as forward-looking information. When considering forward-looking information, the Grouptakes into account the impact of macroeconomic conditions, industry conditions, etc. The amount of ECL willchange according to the Group's estimates and judgments. As of 31 December 2024, the balance of the Group'sprovision for credit losses of accounts receivable was RMB 56,773,852.18 (31 December 2023: RMB43,964,811.88).
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
34. 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 theinventory costs beyond its net realizable value. The recognition of the net realizable value of inventories requiresthe 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 amountof the inventories over the period in which the estimate is changed. As of 31 December 2024, the balance of theGroup's provision for the decline in the value of inventories was RMB 296,531,721.64 (31 December 2023: RMB331,096,345.17).
Deferred tax assets
The recognition of deferred tax assets requires estimates of taxable income and applicable tax rates for each futureyear. Deferred tax assets are recognized to the extent that it is probable that taxable income will be availableagainst which the deductible temporary differences can be utilized. The timing of the reversal of temporarydifferences and changes in future tax rates would affect income tax expenses (benefits) and the amount of deferredtax recognized. Changes in the Group's estimates of the timing of reversal of temporary differences and the taxrates as well as the judgment on whether it is probable that sufficient taxable income will be timely obtained mayresult in a material adjustment to deferred income taxes. As of 31 December 2024, the Group had recognized thedeferred tax assets of RMB 515,829,271.42 (31 December 2023: RMB 490,796,164.94).
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation ofthe future recoverable amount from the asset groups or set of asset groups to which the goodwill is allocated.Estimating the future recoverable amount requires the Group to make an estimate of the expected future cashflows from the asset groups or set of asset groups and also choose a suitable discount rate in order to calculate thepresent value of those cash flows. When considering the present value of future cash flow, changes in keyassumptions such as revenue growth rate of the projection period, long-term growth rate, profit margin anddiscount rate adopted by the Group may have significant impacts on the present value of the future cash flow usedin impairment testing.
Useful life and estimated net residual value of fixed assets
As disclosed in Note (III) 18, the Group reviews the useful life and estimated net residual value of a fixed assetat least once at each financial year-end. Both scientific and technological innovation and intense competitionwithin the industry significantly impact the estimation of useful life. The Group's management did not findanything that might shorten or extend the useful life of fixed assets of the Group or require changing the estimatednet residual value.
35. Changes in significant accounting policies and accounting estimates
35.1 Changes in significant accounting policies
The Ministry of Finance issued the Interpretation No. 17 of the Accounting Standards for Business Enterprises("Interpretation No. 17") and the Interpretation No. 18 of the Accounting Standards for Business Enterprises("Interpretation No. 18") on 25 October 2023 and 6 December 2024 respectively.
Interpretation No. 17 stipulated the classification of current liabilities and non-current liabilities, and came intoeffect on 1 January 2024.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
35. Changes in significant accounting policies and accounting estimates - continued
35.1 Changes in significant accounting policies - continued
Classification of current liabilities and non-current liabilities
Interpretation No. 17 amended and improved the principles for classification of current liabilities and non-currentliabilities in the Accounting Standards for Business Enterprises No. 30 - Presentation of Financial Statements,specifying (1) that a liability shall be classified as a current liability if the enterprise has no substantive right atthe balance sheet date to defer the settlement of the liability for more than one year after the balance sheet date.The subjective likelihood of the enterprise's exercise of the aforesaid right does not affect the classification of aliability as current and non-current; (2) that where a liability is arising from the enterprise's loan arrangement andthe enterprise's right to defer the settlement of the liability for more than one year after the balance sheet date maydepend on covenants, the enterprise should distinguish the covenants to be complied with on or before the balancesheet date from those to be complied with after the balance sheet date in determining whether it has the right todefer the settlement of the liability at the balance sheet date; (3) that the associated settlement terms of a liabilityare irrelevant to the classification of the liability as current and non-current if the counterparty has the option tosettle the liability with the enterprise's own equity instrument and the option is classified as an equity instrumentand separately recognized; and (4) the disclosure requirements relating to a loan arrangement with covenants thatis classified as a non-current liability. Meanwhile, enterprises are also required to adjust the information for thecomparative period upon initial application.
The Group considers that the adoption of the provisions has no significant impact on the financial statements ofthe Group.
Interpretation No. 18 stipulated the accounting treatment of assurance-type warranties that are not separateperformance obligations, and came into effect on 6 December 2024, and enterprises are allowed to implement itin advance from the year of release.
Accounting treatment of assurance-type warranties that are not separate performance obligations
Interpretation No. 18 stipulates that when accounting for provisions arising from assurance-type warranties thatare not separate performance obligations in accordance with the Accounting Standards for Business EnterprisesNo. 14 - Revenue, the amount determined shall be debited to "principal operating costs" or "other operating costs"and credited to "provisions", and presented accordingly under "operating costs" in the income statement and"other current liabilities", "non-current liabilities due within one year" and "provisions" in the balance sheet inaccordance with the Accounting Standards for Business Enterprises No. 13 - Contingencies. When theinterpretation is initially applied, the enterprise shall retrospectively adjust the changes in accounts and itemspresented in the financial statements involving the accounting treatment of the above assurance-type warrantiesas changes in accounting policies if such assurance-type warranties were included in "selling expenses". TheGroup included the assurance-type warranties in "selling expenses", and implemented the provisions in advancein the current year. The specific impacts are presented as follows:
Consolidated Income Statement:
Unit: RMB
| Item | Note | Before adjustment 2023 | Adjustment | After adjustment 2023 |
| Operating costs | Note V, 48 | 54,939,136,481.69 | 26,710,213.12 | 54,965,846,694.81 |
| Selling expenses | Note V, 50 | 367,994,662.03 | (26,710,213.12) | 341,284,448.91 |
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(III) SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
35. Changes in significant accounting policies and accounting estimates - continued
35.1 Changes in significant accounting policies - continued
Accounting treatment of assurance-type warranties that are not separate performance obligations - continued
Income Statement of the Company
Unit: RMB
| Item | Note | Before adjustment 2023 | Adjustment | After adjustment 2023 |
| Operating costs | Note XV, 5 | 17,928,507,549.98 | 12,556.36 | 17,928,520,106.34 |
| Selling expenses | 77,474,832.09 | (12,556.36) | 77,462,275.73 |
(IV) TAXES
1. Major categories of taxes and tax rates
| Category of tax | Basis of tax computation | Tax rate |
| Value-added tax ("VAT")-Chinese (Note 1) | VAT payable is calculated and paid based on the balance of output tax less deductible input tax in the current period of taxable income such as product sales income, service income, interest income and lease income. The Company and its domestic subsidiaries are general VAT taxpayers | 13%, 9%, 6%, 5% and 3% |
| Non-resident enterprises obtain commission income within China | 6% | |
| Value-added tax-French | VAT payable is the balance of output tax less deductible input tax of taxable income such as product sales income, service income | 20% |
| Value-added tax-German | VAT payable is the balance of output tax less deductible input tax of taxable income such as product sales income, service income | 19% |
| Value-added-Tunisian | VAT payable is the balance of output tax less deductible input tax of taxable income such as product sales income, service income | 19% |
| Enterprise income tax | Taxable income | Note 2 |
| Non-resident enterprises obtain investment income and property transfer income from within China | 10% | |
| Property tax | Residual value after deducting 30% from the original value of the property at one time | 1.2% |
| 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 isdifferent according to the scope of export goods.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(IV) 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. | 25% |
| Universal Global Technology (Kunshan) Co., Ltd. | 15%(Note 2) |
| Universal Global Technology (Shanghai) Co., Ltd. | 15%(Note 3) |
| Universal Global Electronics (Shanghai) Co., Ltd. | 25% |
| Universal Global Technology (Huizhou) Co., Ltd. | 15%(Note 4) |
| Universal Global Technology Co., Limited | 16.5% (Note 5) |
| Universal Global Industrial Co., Ltd. | 16.5% (Note 5) |
| Universal Global Electronics Co., Ltd. | 16.5% (Note 5) |
| Universal Global Scientific Industrial Co., Ltd. | Note 6 |
| Universal Scientific Industrial Co., Ltd. | Note 6 |
| USI Japan Co., Ltd. | 23.2% (Note 7) |
| USI America.Inc. | 21% (Note 8) |
| Universal Scientific Industrial De México S.A. De C.V. | 30% (Note 9) |
| Universal Scientific Industrial (France) | 25%(Note 10) |
| Universal Scientific Industrial Vietnam Company Limited | 20%(Note 11) |
| Asteelflash Suzhou Co., Ltd. | 15%(Note 12) |
| FINANCI?RE AFG S.A.S. ("FAFG") | 25%(Note 13) |
| USI Science and Technology (Shenzhen) Co., Ltd. | 15%(Note 14) |
| Hirschmann Car Communication Holding S.a.r.l. ("Hirschmann") | 24.94%(Note 15) |
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 StateAdministration of Taxation and Shanghai Municipal Bureau of Local Taxation in 2023, and obtained theHigh-tech Enterprise Certificate (Certificate No. is GR202331006257), which was valid for 3 years. TheCompany applies the enterprise income tax rate of 15% from 2023 to 2025.
Note 2: Universal Global Technology (Kunshan) Co., Ltd. was approved as a high-tech enterprise by Jiangsu
Provincial Department of Science and Technology, Department of Finance of Jiangsu Province, JiangsuProvincial Office of State Administration of Taxation and Jiangsu Provincial Bureau Local Taxation in2022, and obtained the High-tech Enterprise Certificate (Certificate No.: GR202232008811), which wasvalid for 3 years. Universal Global Technology (Kunshan) Co., Ltd. applies the enterprise income taxrate of 15% from 2022 to 2024.
Note 3: Universal Global Technology (Shanghai) Co., Ltd. was approved as a high-tech enterprise by Science and
Technology Commission of Shanghai Municipality, Shanghai Municipal Finance Bureau, ShanghaiMunicipal Office of the State Administration of Taxation and Shanghai Municipal Bureau of LocalTaxation 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 enterpriseincome tax rate of 15% from 2022 to 2024.
Note 4: Universal Global Technology (Huizhou) Co., Ltd. was approved as a high-tech enterprise by Department
of Science and Technology of Guangdong Province, Department of Finance of Guangdong Province,Guangdong Provincial Tax Service, State Taxation Administration in 2022, and obtained the High-techEnterprise Certificate (Certificate No.: GR202244008509), which is valid for 3 years. Universal GlobalTechnology (Huizhou) Co., Ltd. applies the enterprise income tax rate of 15% from 2022 to 2024.
Note 5: Universal Global Technology Co., Limited, Universal Global Industrial Co., Ltd. and Universal Global
Electronics Co., Ltd. (“UGE”) are companies in Hong Kong, China. The applicable enterprise incometax rate is 8.25% for the part with operating profits not exceeding HKD 2 million; and 16.5% for the partwith operating profits exceeding HKD 2 million.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(IV) TAXES - continued
1. Major categories of taxes and tax rates - continued
Note 6: Universal Global Scientific Industrial Co., Ltd. (“UGSI”) and the Universal Scientific Industrial Co., Ltd.
(“USI”) are registered and established in Taiwan, China. According to the income tax regulations inChina's Taiwan region, (1) the enterprises with profit taxable income less than TWD 120,000 is exemptfrom profit tax; (2) the enterprises with the annual taxable income more than TWD 120,000 shall belevied at 20% of its total taxable income. But its taxable amount shall not exceed half of the taxableincome of a profit-making enterprise exceeding TWD 120,000. At the same time, the income tax law inTaiwan, China stipulates that an additional 10% income tax shall be levied on the undistributed surplusof the current year, which shall be listed as the income tax expense of the year decided by the board ofdirectors.
Note 7: USI Japan Co., Ltd. is established and registered in Japan and is subject to the national tax law of Japan.
According to the provisions of Japan's national tax law, the statutory tax rate is 23.2% for the enterprisetaking the taxable income as the tax base, and the enterprise shall pay local income tax according to theregulations of the city where the enterprise is located. If the taxable income of an enterprise is negativeand is reported with a cyan E-Tax return (i.e. self-accounting, self-reporting and self-taxation), theaccumulated deductible loss can be deducted within 9 years after the year in which the loss occurs (2023:
30%).
Note 8: USI America. Inc. is incorporated and registered in the United States, and the applicable enterprise income
tax rate is 21%. According to the tax law of California where the enterprise is registered, even if there isno profit in establishing or engaging in commercial activities in the state, it is required to pay CaliforniaRegional Income Tax of USD 800 per year according to the Alternative Minimum Tax.
Note 9: Universal Scientific Industrial De México S.A. De C.V. is registered and established in Mexico, and the
applicable enterprise income tax rate is 30%.
Note 10: Universal Scientific Industrial (France) ("USI France") is established and registered in France, and the
applicable enterprise income tax rate is 25%.
Note 11: Universal Scientific Industrial Vietnam Company Limited is established and registered in Vietnam, and
the applicable enterprise income tax rate is 20%. The Company is established in the economicdevelopment zone and enjoys a preferential policy of income tax rate of 0% for 4 years since theprofitable year and half tax rate for the subsequent 9 years. In 2024, the applicable enterprise income taxrate is 0%.
Note 12: Asteelflash Suzhou Co., Ltd. was approved as a high-tech enterprise by Jiangsu Provincial Department
of Science and Technology, Department of Finance of Jiangsu Province, Jiangsu Provincial Office ofState Administration of Taxation and Jiangsu Provincial Bureau Local Taxation in 2023, and obtainedthe High-tech Enterprise Certificate (Certificate No.: GR202332016930), which was valid for 3 years.Asteelflash Suzhou Co., Ltd. applies the enterprise income tax rate of 15% from 2023 to 2025.
Note 13: FINANCI?RE AFG S.A.S. (“FAFG”) is established and registered in France, and the applicable
enterprise income tax rate is 25%. The enterprise income tax rate applicable to German subsidiary is 30%.The enterprise income tax rate applicable to the Tunisian subsidiary is 20% (2023: 15%). The enterpriseincome tax rate applicable to its U.S. subsidiaries is 21%. The enterprise income tax rate applicable tothe Polish subsidiary is 19%. The enterprise income tax rate applicable to the Czech subsidiary is 21%(2023: 19%).
Note 14: In 2022, USI Science and Technology (Shenzhen) Co., Ltd. was approved and identified as a high-tech
enterprise by the Science and Technology Innovation Committee of Shenzhen, the Finance Committeeof Shenzhen, the Shenzhen Tax Service of State Taxation Administration, and the Shenzhen LocalTaxation Bureau, and obtained the High-tech Enterprise Certificate (certificate number:
GR202244201005), with a validity period of 3 years. A preferential tax rate of 15% can be applied from2022 to 2024. USI Science and Technology (Shenzhen) Co., Ltd. applied the enterprise income tax rateof 15% in 2024.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(IV) TAXES - continued
1. Major categories of taxes and tax rates - continued
Note 14: - continued
According to the Announcement of the Ministry of Finance and the State Taxation Administration on theRelevant Tax and Fee Policies for Further Supporting the Development of Micro and Small Enterprisesand Individual Industrial and Commercial Households (Announcement [2023] No. 12 of the Ministry ofFinance and the State Taxation Administration), micro and small low-profit enterprises are given areduced rate of 25% in calculating the taxable income, and are subject to an enterprise income tax at atax rate of 20%. USI Science and Technology (Shenzhen) Co., Ltd. is a qualified micro and small low-profit enterprise in 2023, which calculates taxable income at a reduced rate of 25% and pays enterpriseincome tax at a rate of 20%.
Note 15: Hirschmann is established and registered in Luxembourg, and the applicable enterprise income tax rate
is 24.94%.
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS
1. Cash and bank balances
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 | ||||
| Foreign currency | Exchange rate | RMB | Foreign currency | Exchange rate | RMB | |
| Cash: | ||||||
| RMB | 7,202.97 | 549.32 | ||||
| USD | 2,119.55 | 7.1884 | 15,236.17 | 2,524.00 | 7.0827 | 17,876.73 |
| EUR | 9,655.69 | 7.4680 | 72,108.69 | 6,970.06 | 7.8264 | 54,550.48 |
| HKD | 269.00 | 0.9260 | 249.09 | 269.00 | 0.9062 | 243.77 |
| JPY | 37,000.00 | 0.0462 | 1,709.40 | 47,000.00 | 0.0502 | 2,359.40 |
| GBP | 576.83 | 9.0761 | 5,235.37 | 596.59 | 9.0057 | 5,372.71 |
| MXN | 30,000.00 | 0.3547 | 10,641.00 | 30,000.00 | 0.4193 | 12,579.00 |
| PLN | 5,100.15 | 1.7597 | 8,974.73 | 8,575.50 | 1.8107 | 15,527.66 |
| TND | 3,094.12 | 2.2471 | 6,952.80 | 2,192.99 | 2.3010 | 5,046.07 |
| CZK | 4,952.00 | 0.2965 | 1,468.27 | 4,612.00 | 0.3165 | 1,459.70 |
| Bank balances: | ||||||
| RMB | 4,332,930,647.22 | 5,452,876,386.47 | ||||
| USD | 817,888,919.28 | 7.1884 | 5,879,312,707.35 | 578,752,731.52 | 7.0827 | 4,099,131,971.54 |
| EUR | 70,731,788.77 | 7.4680 | 528,224,998.53 | 56,940,875.16 | 7.8264 | 445,642,065.35 |
| HKD | 1,323,438.00 | 0.9260 | 1,225,503.59 | 2,273,083.08 | 0.9062 | 2,059,867.89 |
| JPY | 123,210,679.78 | 0.0462 | 5,692,333.41 | 158,795,833.00 | 0.0502 | 7,971,550.82 |
| GBP | 2,997,042.94 | 9.0761 | 27,201,461.43 | 1,941,353.30 | 9.0057 | 17,483,245.41 |
| MXN | 150,563,803.58 | 0.3547 | 53,404,981.13 | 22,032,456.68 | 0.4193 | 9,238,209.09 |
| TWD | 7,033,826,682.08 | 0.2193 | 1,542,518,191.38 | 4,386,124,749.00 | 0.2307 | 1,011,878,979.59 |
| SGD | 26,186.34 | 5.3214 | 139,347.99 | 24,736.69 | 5.3772 | 133,014.13 |
| TND | 7,123,331.44 | 2.2471 | 16,006,838.08 | 1,836,432.91 | 2.3010 | 4,225,632.13 |
| CZK | 73,898.77 | 0.2965 | 21,910.99 | - | 0.3165 | - |
| PLN | 23,820,298.35 | 1.7597 | 41,916,579.01 | 48,243,800.71 | 1.8107 | 87,355,049.95 |
| VND | 154,056,665,921.99 | 0.0003 | 46,216,999.78 | 153,937,471,634.00 | 0.0003 | 46,181,241.49 |
| Other cash and bank balances: | ||||||
| RMB | 2,502,688.09 | 3,000,000.00 | ||||
| TWD | 45,000,000.00 | 0.2193 | 9,866,646.00 | 45,000,000.00 | 0.2307 | 10,380,118.50 |
| JPY | 1,000,000.00 | 0.0462 | 46,230.00 | 1,000,000.00 | 0.0502 | 50,210.00 |
| USD | - | 7.1884 | - | 2,961,481.09 | 7.0827 | 20,975,282.12 |
| Total | 12,487,357,842.47 | 11,218,698,389.32 | ||||
| Including: Balance kept in a foreign country | 3,253,261,118.22 | 3,597,054,385.03 | ||||
As at 31 December 2024, the Group's restricted cash and bank balances included in other cash and bank balancesequivalent to RMB 11,912,876.00 were the customs deposits and RMB 502,688.09 were frozen funds due tolitigation (31 December 2023: equivalent to RMB 13,430,328.50 were the customs deposits and RMB20,975,282.12 were the investment deposits).
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
2. Held-for-trading financial assets
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Financial assets at fair value through profit or loss ("FVTPL") | 42,291,303.91 | 245,558,007.22 |
| Including: Accounts receivable factoring (Note 1) | - | 223,401,570.22 |
| Derivative financial instruments (Note 2) | 42,291,303.91 | 22,156,437.00 |
Note1: 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 suchfinancial assets through factoring.
Note 2: The derivative financial instruments held by the Group are foreign exchange forward contracts, which
are not accounted for as hedging instruments and are measured at fair value through profit or loss.
3. Notes receivable
(1) Categories of notes receivable
Unit: RMB
| Category | 31/12/2024 | 31/12/2023 |
| Bank acceptances | 79,450,682.42 | 65,545,008.33 |
(2) As at 31 December 2024, the Group had no notes receivable that have been pledged as security.
(3) As at 31 December 2024, the Group had no notes receivable that have been endorsed or discounted and
were not yet matured at the balance sheet date.
(4) As at 31 December 2024, 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 riskwas expected to exist.
(5) As at 31 December 2024, the Group had no notes receivable that have been actually written off.
4. Accounts receivable
(1) Disclosure of accounts receivable by aging
Unit: RMB
| Aging | 31/12/2024 | 31/12/2023 (restated) |
| Within the credit term | 9,343,453,773.95 | 9,198,706,920.24 |
| 1-30 days overdue | 778,869,895.84 | 645,623,766.37 |
| 31-60 days overdue | 99,373,557.48 | 111,023,244.93 |
| 61-90 days overdue | 31,891,507.16 | 40,083,422.87 |
| 91-180 days overdue | 15,902,652.98 | 19,353,226.81 |
| More than 180 days overdue | 42,784,909.41 | 54,503,307.13 |
| Total | 10,312,276,296.82 | 10,069,293,888.35 |
(2) Disclosure by category of loss provision method
Unit: RMB
| Category | 31/12/2024 | 31/12/2023 (restated) | ||||||||
| Book value | Bad debt provision | Carrying amount | Book value | Bad debt provision | Carrying amount | |||||
| Amount | Proportion (%) | Amount | Proportion of provision (%) | Amount | Proportion (%) | Amount | Proportion of provision (%) | |||
| Bad debt provision assessed on an individual basis | 6,213,504.41 | 0.06 | 6,213,504.41 | 100.00 | - | 71,829,986.74 | 0.71 | 26,767,777.12 | 37.27 | 45,062,209.62 |
| Bad debt provision assessed on a portfolio basis | 10,306,062,792.41 | 99.94 | 50,560,347.77 | 0.49 | 10,255,502,444.64 | 9,997,463,901.61 | 99.29 | 17,197,034.76 | 0.17 | 9,980,266,866.85 |
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
| Total | 10,312,276,296.82 | 100.00 | 56,773,852.18 | 0.55 | 10,255,502,444.64 | 10,069,293,888.35 | 100.00 | 43,964,811.88 | 0.44 | 10,025,329,076.47 |
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Accounts receivable - continued
(2) Disclosure by category of loss provision method - continued
Bad debt provision assessed on an individual basis
Unit: RMB
| Company name | 31/12/2024 | Reason for provision | ||
| Book value | Bad debt provision | Proportion of provision (%) | ||
| Company A | 6,213,504.41 | 6,213,504.41 | 100.00 | Due to the customer's financial difficulties and poor realization of assets, the specific provision is made based on the risk assessment and judgement of the management. |
Bad debt provision assessed on a portfolio basis
Unit: RMB
| Bad debt provision | Lifetime ECL |
| At 1 January 2024 | 17,197,034.76 |
| ECL accrued | 32,500,825.98 |
| Effect of changes in exchange rate | 862,487.03 |
| At 31 December 2024 | 50,560,347.77 |
As part of the Group's credit risk management, the expected credit losses on accounts receivable are assessed usingthe aging analysis approach. According to the Group's assessment on credit risk, the aging reflects the solvency ofcustomers when the receivables are due.
At 31 December 2024, the credit risk and expected credit losses on accounts receivable were as follows:
Unit: RMB
| Aging | 31/12/2024 | |||
| Expected average loss rate (%) | Book value | Bad debt provision | Carrying amount | |
| Within credit period | 0.02 | 9,343,453,773.95 | 2,006,381.32 | 9,341,447,392.63 |
| 1-30 days overdue | 0.35 | 778,869,895.84 | 2,717,123.08 | 776,152,772.76 |
| 31-60 days overdue | 2.29 | 99,373,557.48 | 2,271,038.49 | 97,102,518.99 |
| 61-90 days overdue | 9.70 | 31,891,507.16 | 3,092,825.63 | 28,798,681.53 |
| 91-180 days overdue | 24.53 | 15,902,652.98 | 3,901,574.25 | 12,001,078.73 |
| More than 180 days overdue | 100.00 | 36,571,405.00 | 36,571,405.00 | - |
| Total | 0.49 | 10,306,062,792.41 | 50,560,347.77 | 10,255,502,444.64 |
At 31 December 2023, the credit risk and expected credit losses on accounts receivable were as follows:
Unit: RMB
| Aging | 31/12/2023 (restated) | |||
| Expected average loss rate (%) | Book value | Bad debt provision | Carrying amount | |
| Within credit period | 0.01 | 9,183,098,415.78 | 1,361,522.66 | 9,181,736,893.12 |
| 1-30 days overdue | 0.10 | 643,088,509.46 | 640,718.58 | 642,447,790.88 |
| 31-60 days overdue | 0.49 | 105,845,863.32 | 520,695.94 | 105,325,167.38 |
| 61-90 days overdue | 0.91 | 37,560,177.81 | 341,939.13 | 37,218,238.68 |
| 91-180 days overdue | 7.41 | 14,622,655.71 | 1,083,878.92 | 13,538,776.79 |
| More than 180 days overdue | 100.00 | 13,248,279.53 | 13,248,279.53 | - |
| Total | 0.17 | 9,997,463,901.61 | 17,197,034.76 | 9,980,266,866.85 |
The expected average loss rate mentioned above is based on the historical actual credit loss rates and the currentconditions as well as the forecast of future economic conditions. In 2024, the Group's valuation method remainsunchanged.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
4. Accounts receivable - continued
(3) Changes in bad debt provision
Unit: RMB
| Category | 31/12/2023 | Changes for the year | 31/12/2024 | |||
| Provision in the current year | Collection or reversal | Write-off | Translation differences arising on translation of financial statements denominated in foreign currencies | |||
| Bad debt provision assessed on an individual basis | 26,767,777.12 | 6,410,565.15 | (6,111,269.30) | (20,240,930.34) | (612,638.22) | 6,213,504.41 |
| Bad debt provision assessed using aging matrix | 17,197,034.76 | 32,500,825.98 | - | - | 862,487.03 | 50,560,347.77 |
| Total | 43,964,811.88 | 38,911,391.13 | (6,111,269.30) | (20,240,930.34) | 249,848.81 | 56,773,852.18 |
(4) Accounts receivable that have been actually written off in the year
Unit: RMB
| Item | Write-off amount |
| Company B | 20,240,930.34 |
(5) Top five accounts receivable at 31 December 2024 categorized by debtor
Unit: RMB
| Company name | Accounts receivable at 31 December 2024 | Percentage to total accounts receivable at 31 December 2024 (%) | Provision for bad debt at 31 December 2024 |
| Company C | 2,659,640,532.28 | 25.79 | 531,928.11 |
| Company D | 893,512,153.62 | 8.66 | 178,702.43 |
| Company E | 723,830,434.59 | 7.02 | 144,766.09 |
| Company F | 722,054,138.48 | 7.00 | 144,410.83 |
| Company G | 476,072,291.86 | 4.62 | 95,214.46 |
| Total | 5,475,109,550.83 | 53.09 | 1,095,021.92 |
5. Prepayments
(1) Aging analysis of prepayments is as follows:
Unit: RMB
| Aging | 31/12/2024 | 31/12/2023 | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within 1 year | 47,189,783.80 | 88.10 | 45,932,130.14 | 82.54 |
| 1-2 years | 6,371,930.58 | 11.90 | 9,717,406.31 | 17.46 |
| Total | 53,561,714.38 | 100.00 | 55,649,536.45 | 100.00 |
(2) Top five balances of prepayments categorized by receivers
Unit: RMB
| Company name | Relationship with the Company | Book value | Proportion to total prepayments at 31 December 2024(%) |
| Company H | Third party | 6,044,882.52 | 11.29 |
| Company I | Third party | 4,637,715.01 | 8.66 |
| Company J | Third party | 4,605,670.27 | 8.60 |
| Company K | Third party | 4,082,387.46 | 7.62 |
| Company L | Third party | 2,512,942.69 | 4.69 |
| Total | 21,883,597.95 | 40.86 |
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
6. Other receivables
(1) Disclosure of other receivables by aging
Unit: RMB
| Aging | 31/12/2024 | 31/12/2023 (restated) |
| Within 1 year | 108,433,848.28 | 275,674,265.31 |
| 1-2 years | 25,864,889.16 | - |
| Total | 134,298,737.44 | 275,674,265.31 |
(2) Classification by the nature of other receivables
Unit: RMB
| Nature of other receivables | Book value at 31 December 2024 | Book value at 31 December 2023 (restated) |
| Advances for third parties | 81,135,294.31 | 94,510,940.45 |
| Service and purchase rebates receivable | 38,570,029.70 | 54,080,897.36 |
| Receivables from equipment transfers | 6,864,778.23 | - |
| Advance payments for employees | 6,390,152.64 | 7,559,285.63 |
| Principal of investment receivable | 594,607.64 | - |
| Receivable from former shareholders of Hirschmann | - | 64,411,136.21 |
| Contingent consideration receivable | - | 29,366,894.59 |
| Others | 743,874.92 | 25,745,111.07 |
| Total | 134,298,737.44 | 275,674,265.31 |
(3) The Company recognizes credit losses on its other receivables on an individual asset basis. As at 31
December 2024, no provision for expected credit loss has been made and no provision for expected creditloss has been reversed or collected due to the low probability that the Company's other receivables willnot be collected.
(4) Top five other receivables at 31 December 2024 categorized by debtor
Unit: RMB
| Company name | 31/12/2024 | Proportion to total other receivables at 31 December 2024(%) | Nature of the amount | Aging | Bad debt provision at 31 December 2024 |
| Company M | 10,567,747.97 | 7.87 | Advances | Within 1 year | - |
| Company F | 7,645,345.12 | 5.69 | Advances | Within 1 year | - |
| Company N | 5,113,898.71 | 3.81 | Advances | Within 1 year | - |
| Company O | 4,481,693.87 | 3.34 | Advances | Within 1 year | - |
| Company P | 4,104,254.31 | 3.06 | Advances | Within 1 year | - |
| Total | 31,912,939.98 | 23.77 | - |
(5) As at 31 December 2024, there were no other receivables presented for centralized management of funds.
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
7. Inventories
(1) Categories of inventories
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 (restated) | ||||
| Book value | Provision for decline in value of inventories | Carrying amount | Book value | Provision for decline in value of inventories | Carrying amount | |
| Raw materials | 4,704,209,891.60 | 255,166,248.29 | 4,449,043,643.31 | 5,313,478,327.08 | 282,382,106.86 | 5,031,096,220.22 |
| Work in progress | 1,158,555,723.48 | - | 1,158,555,723.48 | 1,162,814,912.86 | - | 1,162,814,912.86 |
| Finished goods | 2,072,505,327.77 | 41,365,473.35 | 2,031,139,854.42 | 2,073,127,009.34 | 48,714,238.31 | 2,024,412,771.03 |
| Reusable materials | 111,469,687.37 | - | 111,469,687.37 | 105,620,183.85 | - | 105,620,183.85 |
| Total | 8,046,740,630.22 | 296,531,721.64 | 7,750,208,908.58 | 8,655,040,433.13 | 331,096,345.17 | 8,323,944,087.96 |
(2) Provision for decline in value of inventories
Unit: RMB
| Item | 31/12/2023 | Provision | Decrease in the year | Exchange differences arising on translation of foreign currencies | 31/12/2024 | |
| Reversal | Write-off | |||||
| Raw materials | 282,382,106.86 | 328,360,409.50 | 333,323,804.11 | 5,820,944.68 | (16,431,519.28) | 255,166,248.29 |
| Finished goods | 48,714,238.31 | 34,471,026.92 | 39,163,210.42 | 664,118.00 | (1,992,463.46) | 41,365,473.35 |
| Total | 331,096,345.17 | 362,831,436.42 | 372,487,014.53 | 6,485,062.68 | (18,423,982.74) | 296,531,721.64 |
| Item | Specific determination basis of net realizable value | Reasons for reversal/write-off of provision for decline in value of inventories |
| Raw materials | The higher of the estimated selling price of raw materials less estimated costs of sales and related taxes and the estimated selling price of finished goods less estimated costs of completion and estimated costs necessary to make the sale as well as related taxes | Sold or net realizable value recovered |
| Work in progress | Value of estimated selling price less estimated costs of completion and estimated costs necessary to make the sale as well as related taxes | Sold or net realizable value recovered |
| Finished goods | Value of estimated selling price less estimated costs necessary to make the sale as well as related taxes | Sold or net realizable value recovered |
NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
8. Non-current assets due within one year
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Lease receivables | 130,008.72 | 123,989.32 |
9. Other current assets
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Input taxes to be deducted | 332,326,929.82 | 371,315,725.27 |
| Tax refunds receivable | 220,524,523.09 | 201,905,394.74 |
| FPC expenses to be amortized | 163,891,084.27 | 138,201,479.43 |
| Prepaid income tax | 56,817,571.71 | 102,930,242.78 |
| Mold costs to be amortized | 14,031,803.36 | 15,688,151.48 |
| Others | 6,221,710.03 | 8,221,292.24 |
| Total | 793,813,622.28 | 838,262,285.94 |
10. Long-term receivables
(1) Long-term receivables
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Employee borrowings for house purchasing | 13,787,074.59 | 13,517,402.09 |
| Lease receivables | - | 130,008.71 |
| Total | 13,787,074.59 | 13,647,410.80 |
(2) As at 31 December 2024, no bad debt provision has been made as the Group's long-term receivables are
less likely to be uncollectable.
(3) As at 31 December 2024, there are no long-term receivables that have been actually written off by the
Group.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Long-term equity investments
(1) Long-term equity investments
Unit: RMB
| Name of investee | 1/1/2024 | Changes for the year | 31/12/2024 | Impairment provision at 31/12/2024 | |||||||
| Additional investment | Reduction in investment | Investment profit or loss recognized under equity method | Other comprehensive income adjustments | Other equity changes | Cash dividends or profit declared | Impairment provision | Exchange differences arising on translation of financial statements denominated in foreign currencies | ||||
| I. Joint ventures | |||||||||||
| MUtek Electronics Co., Ltd. (Note 1) | 3,547,050.76 | - | - | (681,438.59) | - | - | - | - | (156,378.87) | 2,709,233.30 | - |
| II. Associates | |||||||||||
| M-Universe Investments Pte. Ltd. (Note 2) | 478,019,218.36 | - | - | 38,003,959.37 | (6,856,487.42) | - | (6,884,831.63) | - | 7,599,021.59 | 509,880,880.27 | - |
| Questyle Audio Technology Co., Ltd. (Note 3) | 16,705,272.48 | - | - | (3,459,733.12) | - | - | - | (9,343,178.82) | - | 3,902,360.54 | (9,343,178.82) |
| Total | 498,271,541.60 | - | - | 33,862,787.66 | (6,856,487.42) | - | (6,884,831.63) | (9,343,178.82) | 7,442,642.72 | 516,492,474.11 | (9,343,178.82) |
Note 1: In April 2022, UGSI, the Company's wholly-owned subsidiary, established a joint venture, MUtek Electronics Co., Ltd. ("MUtek Electronics") with Merry Electronics
Co., Ltd. ("Merry Electronics"). Under Joint-Venture Agreement, UGSI intends to contribute TWD 191,100,000.00 (RMB 43,338,816.67), with a capital contributionof 49%. As at 31 December 2024, the accumulated capital contribution paid up by UGSI totals TWD 29,400,000.00 (RMB 7,044,079.28), with a capital contribution of49%. It is stipulated in the Joint-Venture Agreement that the financial and operating plans of MUtek Electronics shall be submitted to the Board of Directors for approvalonly when a joint resolution by UGSI and Merry Electronics is achieved. According to the articles of association of MUtek Electronics, the board of directors is composedof 4 directors, 2 of whom are appointed by UGSI Therefore, MUtek Electronics is a joint venture of UGSI, and the Group accounts for this long-term equity investmentunder the equity method.
Note 2: In July 2019, Universal Global Technology Co., Limited, the Company's wholly-owned subsidiary, made an additional contribution of SGD 79,862,500 to M-Universe
Investments Pte. Ltd. ("M-Universe"), a sub-subsidiary of it established in Singapore, to publicly acquire the ordinary shares of Memtech International Ltd. ("Memtech"),a company listed in Singapore. Pursuant to the Equity Acquisition Agreement, M-Universe acquired 42.23% of Memtech's equity interest at the market price of SGD
1.35 per share on 30 June 2019, meanwhile, M-Universe issued new shares at the same subscription price to Keytech Investment Pte. Ltd. ("Keytech"), the originalshareholder 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, UniversalGlobal Technology Co., Limited's shareholding in M-Universe was reduced from 100 % to 42.23%. According to the Shareholder Agreement of M-Universe, the boardof 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 approvedby the majority of the directors attending the board meeting, so the Group accounts for this long-term equity investment under the equity method.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Long-term equity investments - continued
(1) Long-term equity investments - continued
Note 3: In November 2022, the Company made an additional contribution of RMB 20,000,000.00 to Questyle Audio Technology Co., Ltd. ("Questyle Audio Technology"), to
acquire 6.6667% of equity interests of Questyle Audio Technology upon the capital contribution according to the Capital Increase Agreement. As at 29 November 2022,the additional capital contribution has been paid up. According to the Shareholder Agreement of Questyle Audio Technology, the board of directors is composed of 3directors, 1 of which is appointed by the Company, being responsible to develop its annual budget and resolutions in relation to substantial modifications of corporateaccounting 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 whenattended by shareholders representing more than a half of the voting rights, involving investors of previous and current rounds. Ordinary resolution requires the approvalof shareholders representing more than a half of the voting rights, which mainly includes the approvals of corporate's management principle and investment plan, annualfinancial budget plan and final accounts plan and plans of profit distribution and losses recovery. The Company has significant influence on Questyle Audio Technology,so it is an associate of the Company, and the Group accounts for it under the equity method.
(2) Impairment testing of long-term equity investments
The recoverable amount is determined based on the present value of expected future cash flows
Unit: RMB
| Item | Carrying amount | Recoverable amount | Amount of impairment | Projection period | Key parameters for projection period | Key parameters for steady period | Basis to determine the key parameters for steady period |
| Questyle Audio Technology | 13,245,539.36 | 3,902,360.54 | 9,343,178.82 | 5 years | Revenue growth rate of the projection period: 21.24%-190.89% Profit margin of the projection period: 3.44%-7.83% | Post-tax discount rate: 11.65% Long-term growth rate: 3.00% | Long-term discount rate and average growth rate of the industry |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
12. Other equity instrument investments
(1) Other equity instrument investments
Unit: RMB
| Item | 31/12/2023 | Changes for the year | 31/12/2024 | Dividend income recognized in the year | Accumulated gains recognized in other comprehensive income | Reasons for designation as at fair value through other comprehensive income | |||
| Additional investment | Reduction in investment | Gains recognized in other comprehensive income in the year | Translation differences arising on translation of financial statements denominated in foreign currencies | ||||||
| TriKnight Capital Corporation (Note) | 38,935,237.58 | - | 20,829,586.70 | 6,597,018.45 | (1,932,873.71) | 22,769,795.62 | - | 8,524,795.21 | Non-trading equity investments that the Group 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.
(2) There was no other equity instrument investment derecognized in the year.
13. Other non-current financial assets
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| PHI FUND, L.P. (Note IX, 4) | 105,896,492.26 | 147,061,750.52 |
| Suzhou Yaotu Equity Investment Partnership (Note IX, 4) | 32,981,373.58 | 23,449,331.00 |
| PI Semiconductor (Shenzhen) Co., Ltd. (Note IX, 4) | 30,000,000.00 | - |
| Senscomm Semiconductor Co., Ltd. (Note IX, 4) | 17,838,568.00 | 23,483,780.53 |
| NeuroBlade Ltd. (Note IX, 4) | 14,376,800.00 | - |
| Total | 201,093,233.84 | 193,994,862.05 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Investment properties
(1) Investment properties measured using cost model
Unit: RMB
| Item | Buildings |
| I. Original carrying amount | |
| 1. 01/01/2024 | 11,507,908.40 |
| 2. Increase in the year | - |
| 3. Decrease in the year | - |
| 4. Translation differences arising from translation denominated in foreign currencies | - |
| 5. 31/12/2024 | 11,507,908.40 |
| II. Accumulated depreciation | |
| 1. 01/01/2024 | 7,183,862.89 |
| 2. Increase in the year | 279,757.50 |
| (1) Provision | 279,757.50 |
| 3. Decrease in the year | - |
| 4. Translation differences arising from translation denominated in foreign currencies | - |
| 5. 31/12/2024 | 7,463,620.39 |
| III. Provision for impairment losses | |
| 31/12/2023 & 31/12/2024 | - |
| IV. Carrying amount | |
| 1. 31/12/2024 | 4,044,288.01 |
| 2. 31/12/2023 | 4,324,045.51 |
(2) As of 31 December 2024, the Group had no investment properties for which certificates of title have not
been obtained.
(3) The Group as lessor under operating leases
Unit: RMB
| Item | Lease income | Including: Income related to variable lease payments not included in lease receipts |
| Investment properties | 3,714,471.75 | - |
Income relating to operating leases for the year amounted to RMB3,714,471.75 (2023: RMB1,301,600.00), andthere was no income related to variable lease payments not included in the lease receipts.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Fixed Assets
(1) Fixed Assets
Unit: RMB
| Item | Land operated overseas | Buildings | Machinery and equipment | Transportation vehicles | Electronic equipment, appliances and furniture | Renovation costs | Total |
| I. Original carrying amount | |||||||
| 1. 1/1/2024 (restated) | 251,455,711.38 | 1,806,224,315.31 | 7,443,055,371.81 | 19,771,276.57 | 591,205,610.47 | 377,682,028.85 | 10,489,394,314.39 |
| 2. Increase in the year | - | 719,983,280.50 | 626,087,789.18 | 3,991,838.77 | 93,463,073.24 | 30,718,564.01 | 1,474,244,545.70 |
| (1) Purchase | - | - | 47,343,221.45 | 990,685.46 | 20,384,155.44 | - | 68,718,062.35 |
| (2) Transfer from construction in progress | - | 719,983,280.50 | 578,744,567.73 | 3,001,153.31 | 73,078,917.80 | 30,718,564.01 | 1,405,526,483.35 |
| 3. Decrease in the year | - | 4,262,809.62 | 102,570,283.89 | 245,566.12 | 16,756,621.13 | 737,940.31 | 124,573,221.07 |
| (1) Disposal or retirement | - | 4,262,809.62 | 102,570,283.89 | 245,566.12 | 16,756,621.13 | 737,940.31 | 124,573,221.07 |
| 4. Translation differences arising from translation denominated in foreign currencies | (8,559,257.53) | (25,887,161.52) | (72,383,019.44) | (442,934.64) | (13,231,026.33) | 1,190,994.00 | (119,312,405.46) |
| 5. 31/12/2024 | 242,896,453.85 | 2,496,057,624.67 | 7,894,189,857.66 | 23,074,614.58 | 654,681,036.25 | 408,853,646.55 | 11,719,753,233.56 |
| II. Accumulated depreciation | |||||||
| 1. 1/1/2024 | - | 540,529,440.74 | 4,639,109,082.80 | 12,431,470.17 | 364,001,907.13 | 171,682,022.91 | 5,727,753,923.75 |
| 2. Increase in the year | - | 68,194,753.02 | 801,324,266.64 | 2,891,058.82 | 73,363,542.98 | 43,901,856.85 | 989,675,478.31 |
| (1) Provision | - | 68,194,753.02 | 801,324,266.64 | 2,891,058.82 | 73,363,542.98 | 43,901,856.85 | 989,675,478.31 |
| 3. Decrease in the year | - | 3,962,809.62 | 66,994,242.05 | 243,536.11 | 10,508,443.57 | 655,742.57 | 82,364,773.92 |
| (1) Disposal or retirement | - | 3,962,809.62 | 66,994,242.05 | 243,536.11 | 10,508,443.57 | 655,742.57 | 82,364,773.92 |
| 4. Translation differences arising from translation denominated in foreign currencies | - | (15,957,153.18) | (63,829,253.33) | (210,319.15) | (4,695,578.05) | (323,262.00) | (85,015,565.71) |
| 5. 31/12/2024 | - | 588,804,230.96 | 5,309,609,854.06 | 14,868,673.73 | 422,161,428.49 | 214,604,875.19 | 6,550,049,062.43 |
| III. Provision for impairment losses | |||||||
| 1. 1/1/2024 | - | 49,938,410.58 | - | - | - | - | 49,938,410.58 |
| 2. Increase in the year | - | - | - | - | - | - | - |
| (1) Provision | - | - | - | - | - | - | - |
| 3. Decrease in the year | - | - | - | - | - | - | - |
| (1) Disposal or retirement | - | - | - | - | - | - | - |
| 4. Translation differences arising from translation denominated in foreign currencies | - | (289,297.56) | - | - | - | - | (289,297.56) |
| 5. 31/12/2024 | - | 49,649,113.02 | - | - | - | - | 49,649,113.02 |
| IV. Carrying amount | |||||||
| 1. 31/12/2024 | 242,896,453.85 | 1,857,604,280.69 | 2,584,580,003.60 | 8,205,940.85 | 232,519,607.76 | 194,248,771.36 | 5,120,055,058.11 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
| 2. 1/1/2024 (restated) | 251,455,711.38 | 1,215,756,463.99 | 2,803,946,289.01 | 7,339,806.40 | 227,203,703.34 | 206,000,005.94 | 4,711,701,980.06 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
15. Fixed assets - continued
(2) As at 31 December 2024, the Group had no significant temporarily idle fixed asset.
(3) As at 31 December 2024, the Group had no fixed assets of which certificates of title have not been
obtained.
(4) As at 31 December 2024, the Group had no fixed assets that have been pledged.
16. Construction in progress
(1) Construction in progress
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 | ||||
| Book value | Provision for impairment | Carrying amount | Book value | Provision for impairment | Carrying amount | |
| Shengxia factory-Chip module production project | 845,000.00 | - | 845,000.00 | 1,024,368.86 | - | 1,024,368.86 |
| Veitnam factory-Wearable device production project | 159,925,813.30 | - | 159,925,813.30 | 6,404,156.87 | - | 6,404,156.87 |
| Huizhou factory-Electronic product production project | 7,487,599.80 | - | 7,487,599.80 | 6,111,984.67 | - | 6,111,984.67 |
| Mexico factory-New construction of the second factory project | 31,473,246.32 | - | 31,473,246.32 | 359,629,706.09 | - | 359,629,706.09 |
| Poland factory project | 19,838,939.60 | - | 19,838,939.60 | 81,472,620.08 | - | 81,472,620.08 |
| Other construction, decoration and uninstalled equipment | 145,097,134.71 | - | 145,097,134.71 | 186,388,149.41 | - | 186,388,149.41 |
| Total | 364,667,733.73 | - | 364,667,733.73 | 641,030,985.98 | - | 641,030,985.98 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Construction in progress - continued
(2) Changes in construction in progress
Unit: RMB
| Item name | Budget | 31/12/2023 | Increase in the year | Transfer to fixed assets | Transferred to long-term prepaid expenses | Exchange differences arising on translation of financial statements denominated in foreign currencies | 31/12/2024 | Amount injected as a proportion of budget amount | Amount of accumulated capitalized interest | Including: capitalized interest for the year | Interest capitalization rate for the year (%) | Source of funds |
| Shengxia factory-Chip module production project | 842,830,100.00 | 1,024,368.86 | 70,785,560.52 | (70,964,929.38) | - | - | 845,000.00 | 87% | - | - | - | Self-owned funds / Raised funds |
| Veitnam factory-Wearable device production project | 1,400,000,000.00 | 6,404,156.87 | 179,922,194.82 | (27,949,608.80) | - | 1,549,070.41 | 159,925,813.30 | 67% | - | - | - | Self-owned funds / Raised funds |
| Huizhou factory-Electronic product production project | 1,350,000,000.00 | 6,111,984.67 | 28,003,069.19 | (26,627,454.06) | - | - | 7,487,599.80 | 56% | - | - | - | Self-owned funds / Raised funds |
| Mexico factory-New construction of the second factory project | 767,360,378.79 | 359,629,706.09 | 259,230,483.63 | (589,594,278.04) | - | 2,207,334.64 | 31,473,246.32 | 88% | - | - | - | Self-owned funds / Raised funds |
| Poland factory project | 218,247,060.24 | 81,472,620.08 | 94,339,373.51 | (156,593,514.60) | - | 620,460.61 | 19,838,939.60 | 81% | - | - | - | Self-owned funds |
| Other construction, decoration and uninstalled equipment | N/A | 186,388,149.41 | 542,981,677.04 | (533,796,698.47) | (58,718,116.77) | 8,242,123.50 | 145,097,134.71 | N/A | - | - | - | Self-owned funds |
| Total | 641,030,985.98 | 1,175,262,358.71 | (1,405,526,483.35) | (58,718,116.77) | 12,618,989.16 | 364,667,733.73 |
(3) As at 31 December 2024, the Group had no construction in progress that requires provision for
impairment losses.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
17. Right-of-use assets
(1) Right-of-use assets
Unit: RMB
| Item | Buildings | Machinery and equipment | Transportation equipment | Others | Total |
| I. Original carrying amount | |||||
| 1. 1/1/2024 | 1,082,479,281.10 | 2,075,498.81 | 15,307,712.93 | 2,281,033.53 | 1,102,143,526.37 |
| 2. Increase in the year | 52,196,200.20 | 457,769.60 | 3,220,129.52 | 1,012,912.32 | 56,887,011.64 |
| (1) Increase | 52,196,200.20 | 457,769.60 | 3,220,129.52 | 1,012,912.32 | 56,887,011.64 |
| 3. Decrease in the year | 98,780,277.25 | 216,953.92 | 1,706,672.12 | 1,398,543.82 | 102,102,447.11 |
| (1) Disposal | 98,780,277.25 | 216,953.92 | 1,706,672.12 | 1,398,543.82 | 102,102,447.11 |
| 4. Translation differences arising from translation denominated in foreign currencies | (21,329,805.42) | (40,872.01) | (719,133.17) | (90,389.83) | (22,180,200.43) |
| 5. 31/12/2024 | 1,014,565,398.63 | 2,275,442.48 | 16,102,037.16 | 1,805,012.20 | 1,034,747,890.47 |
| II. Accumulated depreciation | |||||
| 1. 1/1/2024 | 486,881,499.62 | 856,570.43 | 7,289,842.33 | 1,161,052.24 | 496,188,964.62 |
| 2. Increase in the year | 154,241,867.51 | 625,507.39 | 4,735,302.55 | 375,328.75 | 159,978,006.20 |
| (1) Provision | 154,241,867.51 | 625,507.39 | 4,735,302.55 | 375,328.75 | 159,978,006.20 |
| 3. Decrease in the year | 73,212,089.59 | 216,953.92 | 1,706,672.12 | 1,019,217.97 | 76,154,933.60 |
| (1) Disposal | 73,212,089.59 | 216,953.92 | 1,706,672.12 | 1,019,217.97 | 76,154,933.60 |
| 4. Translation differences arising from translation denominated in foreign currencies | (12,012,224.56) | (5,056.56) | (403,625.37) | (40,584.34) | (12,461,490.83) |
| 5. 31/12/2024 | 555,899,052.98 | 1,260,067.34 | 9,914,847.39 | 476,578.68 | 567,550,546.39 |
| III. Provision for impairment losses | |||||
| 1/1/2024 & 31/12/2024 | - | - | - | - | - |
| IV. Carrying amount | |||||
| 1. 31/12/2024 | 458,666,345.65 | 1,015,375.14 | 6,187,189.77 | 1,328,433.52 | 467,197,344.08 |
| 2. 1/1/2024 | 595,597,781.48 | 1,218,928.38 | 8,017,870.60 | 1,119,981.29 | 605,954,561.75 |
The Group has leased a number of assets, including offices, plants, dormitories, machinery equipment andtransportation equipment, with a lease term ranging from 2 to 10 years. The related right-of-use assets may notbe used for purposes such as security for borrowings.
In 2024, the total short-term lease and leases of low-value assets expenses included in the profit or loss for thecurrent period and treated under a simplified method is RMB 57,618,528.16 (2023: RMB 24,250,481.19).
The cash outflows related to leases are RMB 235,612,311.91 (2023: RMB 186,457,187.69).
The assets leased in shall not be used as collateral for borrowings.
The Group's potential future cash flows not included in the measurement of lease liabilities are mainly derivedfrom the rentals that will be adjusted to the market levels upon renewal of the lease contracts relating to buildings.As at 31 December 2024, the Group had no leases committed but not yet commenced.
(2) As at 31 December 2024, the Group had no right-of-use asset that requires provision for impairment
losses.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
18. Intangible assets
(1) Intangible assets
Unit: RMB
| Item | Software | Patents | Trademarks | Land use right | Customer relation | Total |
| I. Original carrying amount | ||||||
| 1. 1/1/2024 | 492,140,194.80 | 2,114,844.33 | 413,970.57 | 132,841,934.49 | 175,899,121.52 | 803,410,065.71 |
| 2. Increase in the year | 36,692,714.63 | - | - | 1,306,247.02 | - | 37,998,961.65 |
| (1) Purchase | 36,692,714.63 | - | - | 1,306,247.02 | - | 37,998,961.65 |
| 3. Decrease in the year | 2,171,933.03 | 2,051,422.23 | - | 1,299,595.52 | - | 5,522,950.78 |
| (1) Disposal or retirement | 2,171,933.03 | 2,051,422.23 | - | 1,299,595.52 | - | 5,522,950.78 |
| 4. Translation differences arising from translation denominated in foreign currencies | (8,989,396.49) | 10,832.90 | (11,262.13) | (534,571.00) | (8,054,075.55) | (17,578,472.27) |
| 5. 31/12/2024 | 517,671,579.91 | 74,255.00 | 402,708.44 | 132,314,014.99 | 167,845,045.97 | 818,307,604.31 |
| II. Accumulated amortization | ||||||
| 1. 1/1/2024 | 379,681,906.81 | 2,114,844.33 | 413,970.57 | 19,155,844.42 | 33,740,183.21 | 435,106,749.34 |
| 2. Increase in the year | 66,118,408.25 | - | - | 7,900,455.64 | 10,834,982.76 | 84,853,846.65 |
| (1) Provision | 66,118,408.25 | - | - | 7,900,455.64 | 10,834,982.76 | 84,853,846.65 |
| 3. Decrease in the year | 1,319,981.70 | 2,051,422.23 | - | 39,939.76 | - | 3,411,343.69 |
| (1) Disposal or retirement | 1,319,981.70 | 2,051,422.23 | - | 39,939.76 | - | 3,411,343.69 |
| 4. Translation differences arising from translation denominated in foreign currencies | (7,752,155.17) | 10,832.90 | (11,262.13) | (737.14) | (1,877,964.36) | (9,631,285.90) |
| 5. 31/12/2024 | 436,728,178.19 | 74,255.00 | 402,708.44 | 27,015,623.16 | 42,697,201.61 | 506,917,966.40 |
| III. Provision for impairment losses | ||||||
| 1/1/2024 & 31/12/2024 | - | - | - | - | - | - |
| IV. Carrying amount | ||||||
| 1. 31/12/2024 | 80,943,401.72 | - | - | 105,298,391.83 | 125,147,844.36 | 311,389,637.91 |
| 2. 1/1/2024 | 112,458,287.99 | - | - | 113,686,090.07 | 142,158,938.31 | 368,303,316.37 |
(2) As at 31 December 2024, the Group had no land use rights of which certificates of title have not been obtained.
(3) As at 31 December 2024, the Group had no intangible asset that requires provision for impairment losses.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
19. Goodwill
(1) Original book value of goodwill
Unit: RMB
| Name of investee | 31/12/2023 (restated) | Changes for the year | 31/12/2024 |
| Translation differences arising on translation of financial statements denominated in foreign currencies | |||
| Universal Scientific Industrial Poland Sp. z o.o. ("USI Poland") | 28,935,519.65 | 431,824.65 | 29,367,344.30 |
| FAFG | 577,647,261.44 | (26,449,334.38) | 551,197,927.06 |
| Hirschmann (Note (VI), 3) | 4,586,705.88 | 68,450.56 | 4,655,156.44 |
| Total | 611,169,486.97 | (25,949,059.17) | 585,220,427.80 |
(2) Impairment provision of goodwill
As at 31 December 2024, there is no impairment provision of goodwill.
(3) Relative information of asset group or a set of asset groups where the goodwill is related
| Name | Composition of the asset group or a set of asset groups and its basis | Operating segment and its basis | Is it consistent with previous years |
| FAFG China | FAFG - Company in Chinese mainland Cash flow generated independently | Chinese mainland Manufacturing location | Yes |
| FAFG Europe | FAFG - Company in Europe Cash flow generated independently | European region Manufacturing location | Yes |
| USI Poland | USI Poland Cash flow generated independently | European region Manufacturing location | Yes |
| Hirschmann Europe | Hirschmann - Company in Europe Cash flow generated independently | European region Manufacturing location | Yes |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
19. Goodwill - continued
(4) Specific method of determining the recoverable amount
Recoverable amount determined by the present value of the estimated future cash flows.
Unit: RMB
| Item | Carrying amount | Recoverable amount | Amount of impairment | Projection period | Key parameters for projection period | Basis to determine the parameters for projection period | Key parameters for steady period | Basis to determine the key parameters for steady period |
| FAFG China | 1,219,218,208.43 | 1,351,006,463.22 | - | 5 years | Revenue growth rate of the projection period: 10.00%-17.71% Profit margin: 9.14%-11.03% | Growth forecast based on itself and relevant industries | Post-tax discount rate: 14.99% Long-term growth rate: 3% | Long-term discount rate and average growth rate of the industry |
| FAFG Europe | 1,569,786,057.33 | 1,825,539,713.21 | - | 5 years | Revenue growth rate of the projection period: 7.01%-11.80% Profit margin: 2.54%-4.54% | Growth forecast based on itself and relevant industries | Post-tax discount rate: 14.60% Long-term growth rate: 3% | Long-term discount rate and average growth rate of the industry |
| USI Poland | 404,278,736.56 | 419,580,191.62 | - | 5 years | Revenue growth rate of the projection period: 8.88%-45.60% Profit margin: (3.03%)-5.42% | Growth forecast based on itself and relevant industries | Post-tax discount rate: 12.05% Long-term growth rate: 3% | Long-term discount rate and average growth rate of the industry |
| Hirschmann Europe | 413,243,742.72 | 844,846,026.01 | - | 5 years | Revenue growth (reduction) rate of the projection period: (2.17%)-11.45% Profit margin: (2.12%)-9.87% | Growth forecast based on itself and relevant industries | Post-tax discount rate: 13.74% Long-term growth rate: 3% | Long-term discount rate and average growth rate of the industry |
| Total | 3,606,526,745.04 | 4,440,972,394.06 |
(5) Adjustments to the provisional values recognized within 12 months after the acquisition date
The Group acquired Hirschmann in October 2023 and recognized goodwill of RMB1,139,331.87 on theacquisition date. In order to recognize the fair value of its identifiable net assets, the Group engaged Ernst &Young Financial Management Consulting Services Co., Ltd. to conduct an appraisal. In 2024, the Group obtainedan appraisal report of identifiable net assets and recognized that the fair value on the acquisition date wasRMB3,509,219.13 lower than the original provisional value, therefore, the Group should increase the goodwill ofRMB3,509,219.13 on the acquisition date, detailed in Note (VI), 3. The comparative financial statements havebeen restated.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
20. Long-term prepaid expenses
Unit: RMB
| Item | 31/12/2023 | Transfer from construction in progress | Amortization for the year | Translation of financial statements denominated in foreign currencies | 31/12/2024 |
| Leased-in plant decoration works | 212,629,008.92 | 58,718,116.77 | 89,259,727.65 | (6,447,994.74) | 175,639,403.30 |
21. Deferred tax assets/deferred tax liabilities
(1) Deferred tax assets that are not offset
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Provision for impairment of assets | 350,484,017.65 | 71,617,189.10 | 349,082,227.15 | 68,671,893.65 |
| Provision for credit loss | 48,216,478.38 | 9,982,247.67 | 40,837,701.20 | 6,996,575.28 |
| Deferred income | 70,500,832.93 | 10,575,124.94 | 58,185,280.57 | 8,728,331.08 |
| Employee benefits payable | 274,314,423.18 | 46,341,508.77 | 263,238,805.17 | 40,813,544.17 |
| Defined benefit plans | 109,155,597.67 | 28,863,045.33 | 131,600,416.30 | 31,828,838.11 |
| Depreciation differences | 6,679,490.15 | 1,485,153.02 | 5,058,455.04 | 887,662.10 |
| Provisions | 37,717,040.00 | 9,429,260.00 | 54,423,688.91 | 11,683,937.24 |
| Unrealized profit | 37,049,520.25 | 6,192,275.96 | 68,178,132.14 | 12,438,968.17 |
| Deductible losses | 279,910,895.00 | 82,385,697.72 | 323,379,248.56 | 69,535,131.21 |
| Sales discount | 527,373,474.77 | 100,677,265.97 | 458,680,034.68 | 81,787,688.20 |
| Lease liabilities | 394,834,647.49 | 74,678,048.88 | 441,145,480.48 | 93,761,901.35 |
| Others | 268,005,483.58 | 73,602,454.06 | 264,590,855.95 | 63,661,694.38 |
| Total | 2,404,241,901.05 | 515,829,271.42 | 2,458,400,326.15 | 490,796,164.94 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
21. Deferred tax assets/ deferred tax liabilities - continued
(2) Deferred tax liabilities that are not offset
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 (restated) | ||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Depreciation differences in research and development equipment tax credits | 21,284,927.28 | 3,224,822.43 | 30,215,661.25 | 4,575,432.53 |
| Right-of-use assets | 366,223,014.38 | 69,143,633.50 | 417,724,474.58 | 89,196,889.01 |
| Asset valuation appreciation for business combination involving enterprise not under common control | 311,914,199.61 | 82,878,640.62 | 393,308,746.54 | 104,329,046.70 |
| Others | 31,297,825.42 | 9,389,355.16 | 35,219,714.85 | 11,424,808.03 |
| Total | 730,719,966.69 | 164,636,451.71 | 876,468,597.22 | 209,526,176.27 |
(3) Deferred tax assets and deferred tax liabilities that are presented at the net amount after offset
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 (restated) | ||
| Offset amount between deferred tax assets and liabilities at the end of the year | Deferred tax assets or liabilities after offset | Offset amount between deferred tax assets and liabilities at the end of the year | Deferred tax assets or liabilities after offset | |
| Deferred tax assets | (81,757,811.09) | 434,071,460.33 | (103,522,210.84) | 387,273,954.10 |
| Deferred tax liabilities | 81,757,811.09 | 82,878,640.62 | 103,522,210.84 | 106,003,965.43 |
Deferred tax assets are recognized for deductible temporary differences and deductible losses as the Groupbelieves that it is probable that sufficient taxable profits will be available in the future.
(4) Deferred tax assets not recognized
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Deductible temporary differences | 5,529,613.34 | 6,680,749.95 |
| Deductible losses | 667,567,244.01 | 280,875,884.29 |
| Total | 673,096,857.35 | 287,556,634.24 |
(5) Deductible losses, for which no deferred tax assets are recognized, will expire in the following years
Unit: RMB
| Year | 31/12/2024 | 31/12/2023 |
| No time limit | 667,567,244.01 | 280,875,884.29 |
No deferred tax assets are recognized for deductible temporary differences and deductible losses due to theuncertainty in certain subsidiaries whether sufficient taxable profits will be available in the future.
22. Other non-current assets
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Prepayment for equipment and projects | 156,514,600.51 | 47,404,680.89 |
| Guarantee and deposit | 21,740,962.14 | 9,576,400.85 |
| Prepayment for platform fee | 5,417,611.16 | 10,179,323.04 |
| Prepayment for enterprise income tax | 1,314,465.29 | 1,114,386.14 |
| Total | 184,987,639.10 | 68,274,790.92 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
23. Assets with restrictions on ownership or use rights
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 | ||||
| Book value | Carrying amount | Restriction case | Book value | Carrying amount | Restriction case | |
| Other cash and bank balances | 11,912,876.00 | 11,912,876.00 | Customs deposits | 13,430,328.50 | 13,430,328.50 | Customs deposits |
| Other cash and bank balances | 502,688.09 | 502,688.09 | Frozen funds due to litigation | 20,975,282.12 | 20,975,282.12 | Investment deposits |
| Total | 12,415,564.09 | 12,415,564.09 | 34,405,610.62 | 34,405,610.62 | ||
24. Short-term borrowings
(1) Categories of short-term borrowings:
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Credit loans | 3,676,702,163.10 | 4,378,428,691.47 |
As at 31 December 2024, the Group's short-term borrowings are all composed of credit loans with no pledged,mortgaged or guaranteed borrowings. As at 31 December 2024, the credit loan of EUR 262,500,000.00, equivalentto RMB 1,960,357,549.50, is a hedge instrument, as detailed in Note (V), 66.
(2) As at 31 December 2024, the Group has no short-term borrowings overdue but not yet repaid.
25. Derivative financial liabilities
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Financial liabilities at FVTPL | 4,775,306.67 | 173,872.64 |
| Including: Derivative financial instruments (Note) | 4,775,306.67 | 173,872.64 |
Note: The derivative financial liabilities held by the Group are foreign exchange forward contracts, which are
not accounted for as hedging instruments and are measured at fair value through profit or loss.
26. Accounts payable
(1) Accounts payable
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Payable for materials | 10,458,137,573.11 | 10,075,200,190.46 |
| Payable for assets | 313,707,505.97 | 177,402,797.98 |
| Expenses payable | 283,547,850.07 | 321,520,781.03 |
| Total | 11,055,392,929.15 | 10,574,123,769.47 |
| Including: Accounts payable under supplier financing arrangements (Note) | 231,644,532.10 | N/A |
| Amounts already received by suppliers from financing providers | 229,360,838.17 | N/A |
Note: Some suppliers have engaged in factoring businesses with banks to obtain financing support. Under the
reverse factoring arrangements, banks provide the suppliers with factoring financing with an amountequal to that of the purchase orders. The Group will repay the full invoice amounts to the banks on theagreed payment due date. The Group considers that the amount owed to the banks should be classifiedas accounts payable, as the arrangement does not allow the Group to obtain financing from the banks byextending the original payment period to repay the banks. The foresaid reverse factoring arrangementallows the suppliers to settle invoice amounts in advance every six months, with a limit of USD73,000,000.00, equivalent to RMB 524,753,200.00.
(2) As at 31 December 2024, the Group has no significant accounts payable aged more than one year.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
27. Contract liabilities
(1) Contract liabilities
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Receipts in advance | 542,457,418.46 | 348,380,131.33 |
The Group's revenue from sales of goods is recognized when the control over related goods is transferred to thecustomer. A contract liability is recognized at the time of the transaction for goods paid for in advance by thecustomer until control of the goods is transferred to the customer.
The carrying amount of contract liabilities of RMB 348,380,131.33 at the beginning of the year has beenrecognized as revenue in the current year, while that of RMB 542,457,418.46 at the end of the year is expected tobe recognized as revenue in 2025.
28. Employee benefits payable
(1) Employee benefits payable
Unit: RMB
| Item | 31/12/2023 | Increase | Decrease | Exchange differences arising on translation of financial statements denominated in foreign currencies | 31/12/2024 |
| 1. Short-term benefits | 893,414,238.64 | 4,171,754,562.51 | 4,177,707,767.74 | (25,633,229.37) | 861,827,804.04 |
| 2. Post-employment benefits-defined contribution plan | 29,086,273.31 | 274,296,331.38 | 270,286,790.67 | (243,326.29) | 32,852,487.73 |
| 3. Long-term employee benefits payable due within one year | 410,743.13 | 38,957,696.95 | 38,802,695.95 | (22,570.12) | 543,174.01 |
| 4. Termination benefits | - | 14,445,685.38 | 4,850,727.82 | 91,768.13 | 9,686,725.69 |
| Total | 922,911,255.08 | 4,499,454,276.22 | 4,491,647,982.18 | (25,807,357.65) | 904,910,191.47 |
(2) Short-term employee benefits
Unit: RMB
| Item | 31/12/2023 | Increase | Decrease | Exchange differences arising on translation of financial statements denominated in foreign currencies | 31/12/2024 |
| 1. Wages or salaries, bonuses, allowances and subsidies | 819,113,386.26 | 3,505,009,074.39 | 3,514,090,494.40 | (21,584,303.83) | 788,447,662.42 |
| 2. Staff welfare | 24,352,395.53 | 271,945,850.75 | 277,969,439.16 | (1,425,278.57) | 16,903,528.55 |
| 3. Social security contributions | 43,617,101.22 | 296,238,992.51 | 287,148,873.68 | (2,574,761.40) | 50,132,458.65 |
| Including: Medical insurance | 35,036,391.78 | 194,676,480.95 | 185,688,956.35 | (2,193,024.57) | 41,830,891.81 |
| Work injury insurance | 7,716,904.33 | 49,659,121.86 | 49,944,563.12 | (373,227.22) | 7,058,235.85 |
| Maternity insurance | 40,445.27 | 1,809,527.31 | 1,802,806.89 | 669.66 | 47,835.35 |
| Overseas comprehensive insurance expenses | 823,359.84 | 50,093,862.39 | 49,712,547.32 | (9,179.27) | 1,195,495.64 |
| 4. Housing funds | 5,149,063.85 | 84,585,314.32 | 84,575,084.33 | (38,654.51) | 5,120,639.33 |
| 5. Union running costs and employee education cost | 1,182,291.78 | 13,975,330.54 | 13,923,876.17 | (10,231.06) | 1,223,515.09 |
| Total | 893,414,238.64 | 4,171,754,562.51 | 4,177,707,767.74 | (25,633,229.37) | 861,827,804.04 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
28. Employee benefits payable - continued
(3) Defined contribution plan (Note)
Unit: RMB
| Item | 31/12/2023 | Increase | Decrease | Exchange differences arising on translation of financial statements denominated in foreign currencies | 31/12/2024 |
| 1. Basic pensions | 28,648,353.79 | 257,070,315.83 | 253,056,136.95 | (234,672.71) | 32,427,859.96 |
| 2. Unemployment insurance | 437,919.52 | 17,226,015.55 | 17,230,653.72 | (8,653.58) | 424,627.77 |
| Total | 29,086,273.31 | 274,296,331.38 | 270,286,790.67 | (243,326.29) | 32,852,487.73 |
Note: The Group participates, as required, in the pension insurance and unemployment insurance plans
established by Chinese government authorities, Mexican authorities and French authorities. Accordingto such plans, the Group contributes monthly to such plans based on corresponding percentages ofcontribution base. Except for above monthly contributions, the Group does not assume further paymentobligations. The related expenditures are either included in cost of related assets or charged to profit orloss in the period when they are incurred.
In this year, the Group should contribute pension insurance and unemployment insurance plans
amounting to RMB 257,070,315.83 and RMB 17,226,015.55 (2023: RMB 232,422,846.31 and RMB15,718,861.28). As at 31 December 2024, the Group has outstanding contributions to pension insuranceand unemployment insurance plans that are accrued but not yet paid in the current reporting periodamounting to RMB 32,427,859.96 and RMB 424,627.77 (31 December 2023: RMB 28,648,353.79 andRMB 437,919.52). The outstanding contributions have been paid after the reporting period.
29. Taxes payable
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 (restated) |
| Enterprise income tax | 164,689,764.66 | 155,394,883.50 |
| Withholding of income tax | 130,081,236.21 | 105,052,473.58 |
| Value-added taxes | 54,670,173.86 | 52,031,278.71 |
| Surcharges | 19,598,431.46 | 16,369,181.10 |
| Individual income tax | 9,602,342.80 | 15,701,551.89 |
| Stamp duty | 5,590,250.40 | 5,491,534.27 |
| Withholding of VAT and levies | - | 28,017.34 |
| Others | 5,868,500.79 | 4,878,443.42 |
| Total | 390,100,700.18 | 354,947,363.81 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
30. Other payables
(1) Other payables by nature
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 (restated) |
| Collection on behalf of third parties | 297,469,296.00 | 357,810,180.31 |
| Customer deposit | 284,758,340.56 | 292,519,736.99 |
| Accrued expenses | 113,892,240.27 | 136,491,122.43 |
| Professional service fee | 28,829,046.07 | 31,132,851.27 |
| Utilities, storage and transportation costs | 18,934,955.70 | 9,601,794.55 |
| Miscellaneous fees | 12,478,053.65 | 22,388,211.91 |
| Procurement of non-raw materials | 1,007,400.40 | 1,659,108.02 |
| Outstanding payment for equity purchases | - | 212,851,984.74 |
| Others | 47,806,472.58 | 49,191,761.17 |
| Total | 805,175,805.23 | 1,113,646,751.39 |
As at 31 December 2024, the Group has no significant other payables aged more than one year.
31. Non-current liabilities due within one year
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Lease liabilities due within one year (Note (V), 35) | 141,402,864.11 | 166,945,559.82 |
| Bonds payable due within one year (Note (V), 34) | 37,230,089.82 | 3,381,278,375.98 |
| Long-term borrowings due within one year (Note (V), 33) | 15,058,490.64 | 15,801,814.76 |
| Total | 193,691,444.57 | 3,564,025,750.56 |
32. Other current liabilities
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Relocation expense of Shenzhen plant | 3,562,072.89 | 3,944,775.07 |
| Products quality assurance within one year | 7,544,004.96 | - |
| Total | 11,106,077.85 | 3,944,775.07 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
33. Long-term borrowings
Category of long-term borrowings
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Credit loans (Note) | 44,930,605.68 | 63,187,765.86 |
| Less: Long-term borrowings due within one year (Note (V), 31) | 15,058,490.64 | 15,801,814.76 |
| Total | 29,872,115.04 | 47,385,951.10 |
Note: In November 2022, FAFG, a subsidiary of the Group, borrowed EUR 10,000,000.00 from the bank,
equivalent to RMB 74,284,423.60. The repayment method is EUR 500,000.00 per quarter starting fromFebruary 2023, and the final repayment date is November 2027, with the interest rate of 3.9% fixed. Asof 31 December 2024, the balance of the above borrowings of EUR 2,000,000.00 (equivalent to RMB15,058,490.64) is included in the non-current liabilities due within one year.
As at 31 December 2024, the Group had no long-term borrowings that were due but not yet repaid.
34. Bonds payable
(1) Bonds payable
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Convertible corporate bonds | 3,467,944,609.76 | - |
(2) Movements in bonds payable
Unit: RMB
| Name of bonds | Nominal value | Date of issue | Term | Issue amount | 31/12/2023 | Transfer from non-current liabilities due within one year (Note) | Issued in the current year | Interest accrued as per nominal value | Amortization of premiums or discounts | Repayment | Swap to equity | Included non-current liabilities due within one year (Note) | 31/12/2024 | Default or not |
| Universal Global Convertible Bonds (SH:113045) | 100 | 4 March 2021 | 6 years | 3,450,000,000.00 | - | 3,381,278,375.98 | - | 40,793,078.56 | 103,824,482.40 | 20,699,268.00 | 21,969.36 | 37,230,089.82 | 3,467,944,609.76 | No |
Note: According to the terms of selective resale in the prospectus of the Company's public offering of
convertible bonds: when the convertible bonds have been issued for three years, the holders of theconvertible bonds have the right to sell back at one time, that is, they have the right to sell back all or partof 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 outresale within the reporting period for the option of resale after the announcement of the company; Thosewho do not carry out resale within the reporting period of selective resale shall no longer enjoy the rightsagreed in the terms of selective resale. In 2023, all of the above bonds payable are recognized in non-current liabilities due within one year (including the interest payables of bonds: RMB 17,136,279.26). Atthe end of the resale period on 15 March 2024, it was reclassified from non-current liabilities due withinone year to bonds payable.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
34. Bonds payable - continued
(3) Description on issuing, conversion condition and conversion time of convertible corporate bonds
As approved by CSRC with "Zheng Jian Xu Ke [2021] No. 167", the Company issued 34,500,000 convertiblebonds 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 payableat the date of each full year from the first date of issue of the convertible bonds in this issue. The initial conversionprice is RMB20.25, with provisions for adjustment and downward revision of the conversion price, redemptionprovisions and resale provisions. The convertible bonds in this issue is allowed to swap to equity from the firsttrading date in the 10th month subsequent to the closing date of this issue (namely 10 March 2021) to the expirydate of convertible bonds. Within five trading days after the expiration of the convertible bonds issued, theCompany will redeem the convertible bonds not converted into shares at the price of 108.00% (including the lastinterest) of the face value of the bonds.
When the convertible corporate bonds issued by the company are initially measured, the amount of the fair valueof the corresponding liability component after deducting the issuance expenses to be apportioned is RMB3,010,541,240.32, which is included in the bonds payable; The corresponding amount of redemption right and putback right is RMB 6,900,000.00, which is included in derivative financial liabilities; The amount of issuanceexpenses to be apportioned for the derivative financial liabilities is RMB 45,397.90, which is included in thecurrent profit and loss; The fair value of the corresponding equity part after deducting the apportioned issuanceexpenses is RMB 409,905,205.31, which is included in other equity instruments. The amortized cost of theadjusted liability is RMB 103,824,482.40 withdrawn according to the effective interest rate method in the currentperiod.
As of 31 December 2024, the Company has convertible bonds with face value of RMB 144,000 (book value ofRMB 135,241.37) converted into A-share ordinary shares, and the number of shares converted is 7,378 shares.Among them, in 2024, convertible bonds with a face value of RMB 22,000 (book value of RMB 21,969.36) wereconverted into A-share ordinary shares, the number of shares converted was 1,163 shares.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
35. Lease liabilities
(1) Details of lease liabilities
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Lease liabilities | 518,712,197.54 | 653,720,789.24 |
| Less: Lease liabilities included in non-current liabilities due within one year (Note (V), 31) | 141,402,864.11 | 166,945,559.82 |
| Total | 377,309,333.43 | 486,775,229.42 |
The following is the maturity analysis for lease liabilities which is based on undiscounted remaining contractualobligations:
Unit: RMB
| Within 1 year | 1-5 years | Over 5 years | Total | |
| 31/12/2024 | 147,775,048.87 | 257,814,920.38 | 159,558,930.01 | 565,148,899.26 |
| 31/12/2023 | 171,679,696.45 | 329,233,957.90 | 217,512,341.22 | 718,425,995.57 |
36. Long-term payables
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Software licensing fee (Note) | 24,263,594.23 | 31,646,041.98 |
| Less: Long-term payables due within one year | 5,914,911.74 | 6,119,744.14 |
| Total | 18,348,682.49 | 25,526,297.84 |
Note: It refers to software licensing fee payable by the Group, of which the portion due within one year is
recognized in accounts payable, as detailed in Note (X), 6.
37. Long-term employee benefits payable
(1) Long-term employee benefits payable
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 (restated) |
| 1. Post-employment benefits- net liability of defined benefit plans | 222,112,153.76 | 266,512,022.46 |
| 2. Termination benefits | 8,759,390.10 | 8,926,811.49 |
| Total | 230,871,543.86 | 275,438,833.95 |
(2) Changes in defined benefit plans
Net liability of defined benefit plans
Unit: RMB
| Item | 2024 | 2023 (restated) |
| I. 31/12/2023 | 266,922,765.59 | 211,205,107.45 |
| II. Additions due to business combination | - | 44,226,261.38 |
| III. Defined benefits costs recognized in profit or loss for the year | 13,160,720.78 | 13,489,424.98 |
| IV. Defined benefits costs recognized in other comprehensive income | (6,670,754.08) | 19,541,638.43 |
| V. Amount contributed and paid during the year | (38,802,695.95) | (31,908,844.17) |
| VI. Exchange differences arising on translation of foreign currencies | (11,954,708.57) | 10,369,177.52 |
| VII. 31/12/2024 | 222,655,327.77 | 266,922,765.59 |
| Less: Long-term employee benefits payable due within one year | 543,174.01 | 410,743.13 |
| Long-term employee benefits payable paid after one year | 222,112,153.76 | 266,512,022.46 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
37. Long-term employee benefits payable - continued
(2) Changes in defined benefit plans - continued
Contents of defined benefit plans and related risks, and its impact over the Group's future cash flows, timing anduncertainty:
UGSI and USI, the Group's subsidiaries, provide retirement benefit plan for full-time regular employees hiredbefore 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 workingyears and certain rate of their salaries in recent 10 years, and a pension for some employees who have worked formore than 2 years according to the working years and certain rate of their salaries in recent 12 months. The Groupacquired Hirschmann in 2023. Hirschmann provides a retirement benefit plan for full-time employees hired before2011.
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 ofretirement benefit plan of UGSI and USI by actuary in accordance with the projected unit credit method. Futuresalary growth rate and mortality rate are used to estimate the future cash outflows to recognize the present valueof the plan at a discounted rate which is determined in accordance with the market interest rate of high-qualitycorporate bonds at the balance sheet date. In countries where there is no market for such bonds, the market interestrate for government bonds (at the balance sheet date) shall be used. Since the Group's post-employment benefitobligations remain effective for 9 to 10 years, the discount rate is determined by reference to the bonds with asimilar duration to the post-employment benefit obligations. Therefore, the average interest rate for governmentbonds with a duration of 9 years or more is referenced. The Group recognizes liabilities based on the actuarialresult, with gains or losses arising from actuary recognized in other comprehensive income and not to be reversedto profit or loss in subsequent accounting periods. Past service cost is included in profit or loss for the periodwhen the modification to the plan is made. And net interest is recognized as the amount of net liabilities or assetsof 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 presentvalue of the defined benefit plan obligations:
| 31/12/2024 | 31/12/2023 | |
| Discount rate | 1.60% | 1.40% |
| Future salary growth rate | 2.25% | 2.25% |
| Mortality rate | Assumptions made based on the sixth Mortality Table in Taiwan | Assumptions made based on the sixth Mortality Table in Taiwan |
Sensitive analysis as below is based on reasonable changes of corresponding assumptions at the end of the reportingperiod (all other assumptions remain unchanged):
? When the discount rate is up (down) 0.5%, the present value of defined benefit plan obligations of UGSIand USI will be decreased by RMB 5,049,311.08 (increased by RMB 5,338,732.70) and RMB 263,987.60(increased by RMB 276,485.36), respectively.? When the future salary growth rate is up (down) 0.5%, the present value of defined benefit plan obligationsof UGSI and USI will be increased by RMB 5,280,848.38 (decreased by RMB 5,044,706.64) and RMB273,415.73 (decreased by RMB 263,768.35), respectively.
The Group hired Confera to estimate the present value of retirement benefit plan obligation of FAFG by actuaryin accordance with the projected unit credit method. Future salary growth rate is used to estimate the future cashoutflows to recognize the present value of the plan at a discounted rate.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
37. Long-term employee benefits payable - continued
(2) Changes in defined benefit plans - continued
The following table lists the significant actuarial assumptions used by FAFG in determining the present value ofthe defined benefit plan obligations:
| 31/12/2024 | 31/12/2023 | |
| Discount rate | 3.1%~3.2% | 3.15%-3.75 % |
| Future salary growth rate | 2.25%~3.5% | 2.25%-2.6 % |
| Mortality rate | Life expectancy table of local National Bureau of Statistics | Life expectancy table of local National Bureau of Statistics |
Sensitive analysis as below is based on reasonable changes of corresponding assumptions at the end of thereporting period (all other assumptions remain unchanged):
? When the discount rate is up (down) 0.5%, the present value of defined benefit plan obligations of FAFGwill be decreased by RMB 7,402,392.26 (increased by RMB 8,024,344.63).
? 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 2,441,903.51 (decreased by RMB 2,311,750.71).
The Group hired Willis Towers Watson GmbH to estimate the present value of retirement benefit plan ofHirschmann by actuary in accordance with the projected unit credit method. Future pension payment growth rateis 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 Hirschmann in determining the presentvalue of the defined benefit plan obligations:
| 31/12/2024 | 31/12/2023 | |
| Discount rate | 2.76%~3.36% | 3.20%~3.53 % |
| Future pension payment growth rate | 2.00%~3.10% | 2.00%~3.30% |
| Mortality rate | Life expectancy table of local National Bureau of Statistics | Life expectancy table of local National Bureau of Statistics |
Sensitive analysis as below is based on reasonable changes of corresponding assumptions at the end of thereporting period (all other assumptions remain unchanged):
? When the discount rate is up (down) 0.5%, the present value of defined benefit plan obligations ofHirschmann will be decreased by RMB 2,263,410.16 (increased by RMB 2,470,386.57).? When the future pension payment rate is up (down) 0.5%, the present value of defined benefit planobligations of Hirschmann will be increased by RMB 1,981,970.02 (decreased by RMB 1,843,430.62).
As it is unlikely that an assumption can change in an isolated manner due to correlations among certainassumptions, the sensitivity analysis above may not reflect actual changes in present value of defined benefitplans.
In sensitivity analysis above, the method used to calculate net liabilities of defined benefit plans at the end of theperiod 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.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
38. Provisions
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| Products quality assurance | 63,200,068.91 | 41,946,064.03 |
| Funds allocated by the government department to be refunded (Note) | 10,987,000.00 | 6,333,000.00 |
| Total | 74,187,068.91 | 48,279,064.03 |
Note 1: Universal Global Technology (Huizhou) Co., Ltd. a wholly-owned subsidiary of the Company, is
expected to refund the funds already allocated by relevant government department.
39. Deferred income
(1) Details of deferred income
Unit: RMB
| Item | 31/12/2023 | Increase | Decrease | Translation differences arising on translation of financial statements denominated in foreign currencies | 31/12/2024 | Reason |
| Government grants | 58,106,941.94 | 40,412,855.97 | 25,995,817.79 | (194,904.24) | 72,329,075.88 | Note (VII), 1 |
| Subsidies for purchase of fixed assets | 1,778,063.72 | - | 1,624,736.93 | (24,527.55) | 128,799.24 | |
| Total | 59,885,005.66 | 40,412,855.97 | 27,620,554.72 | (219,431.79) | 72,457,875.12 |
40. Other non-current liabilities
Other non-current liabilities refer to guarantee deposits and margins received from suppliers.
41. Share capital
Unit: RMB
| 31/12/2023 | Changes for the year | 31/12/2024 | |||
| New shares issued (Note 1) | Convertible bond to equity swap (Note 2) | Treasury shares canceled (Note 4) | |||
| Total shares | 2,209,991,580.00 | 3,909,268.00 | 1,163.00 | (23,345,545.00) | 2,190,556,466.00 |
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 tosubscribe for the Company's ordinary shares. In 2024, 342,655 common shares were vested at a price ofRMB 15.54 per share. In November 2019, the Company implemented the 2019 Stock Option IncentivePlan of Universal Scientific Industrial (Shanghai) Co., Ltd. to grant eligible employees a certain numberof stock options to subscribe for shares of the Company's common stock. In 2024, 619,920 and 2,044,300ordinary shares granted by the Company were exercised at RMB 11.98 per share and RMB 11.71 pershare respectively. In October 2023, the Company implemented the 2023 Stock Option Incentive Planof Universal Scientific Industrial (Shanghai) Co., Ltd. to grant eligible employees a certain number ofstock options to subscribe for shares of the Company's common stock. In 2024, 902,393 ordinary sharesgranted by the Company were exercised at RMB 14.27 per share and registered with the Shanghai Branchof China Securities Depositories and Clearing Co., LTD. The total increase in capital stock is RMB3,909,268.00 and capital reserve is RMB 45,658,131.87.
Note 2: See Note (V), 34 for convertible bond to equity swap.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
41. Share capital - continued
Note 3: According to the resolution of the first extraordinary general meeting of shareholders on 13 September
2024, in 2024, the Company cancelled 23,345,545 shares of unused treasury shares that were repurchasedin 2022 and before 2022.
42. Other equity instruments
Unit: RMB
| Outstanding financial instruments | 31/12/2023 | Increase | Decrease | 31/12/2024 | ||||
| Qty. | Carrying amount | Qty. | Carrying amount | Qty. | Carrying amount | Qty. | Carrying amount | |
| Convertible corporate bonds | 34,498,780.00 | 409,890,710.14 | - | - | 220 | 2,613.88 | 34,498,560.00 | 409,888,096.26 |
Note: Other equity instruments are formed by the equity part of convertible corporate bonds issued. For the
details, see Note (V), 34.
43. Capital reserve
Unit: RMB
| Item | 31/12/2023 | Increase | Decrease | 31/12/2024 |
| Share premium | 2,133,538,619.33 | 73,561,103.01 | 298,385,450.54 | 1,908,714,271.80 |
| Including: Share capital invested by investors (Note V, (41)) | 3,195,825,693.45 | 45,658,131.87 | - | 3,241,483,825.32 |
| Purchase of minority interests | (4,405,590.07) | - | - | (4,405,590.07) |
| Differences resulting from combination involving enterprise under common control | (5,621,108.53) | - | (5,621,108.53) | |
| Transfer of capital reserve to share capital | (1,087,961,790.00) | - | - | (1,087,961,790.00) |
| Share-based payment exercise included in owners' equity | 144,847,090.43 | 27,879,596.65 | - | 172,726,687.08 |
| Treasury shares transferred out (Note (V), 44) | (109,266,742.06) | - | 298,385,450.54 | (407,652,192.60) |
| Exercise of convertible bonds (Note (V), 34) | 121,066.11 | 23,374.49 | - | 144,440.60 |
| Other capital reserve | 150,426,923.67 | 17,755,000.00 | 27,879,596.65 | 140,302,327.02 |
| Total | 2,283,965,543.00 | 91,316,103.01 | 326,265,047.19 | 2,049,016,598.82 |
44. Treasury shares
Unit: RMB
| Item | 31/12/2023 | Increase (Note 1) | Decrease (Note 2) | 31/12/2024 |
| Employee stock ownership plan | 321,730,995.54 | 100,052,846.15 | 321,730,995.54 | 100,052,846.15 |
Note 1: According to the "Proposal on the Plan of Repurchase of Shares by Way of Centralized Competitive
Bidding in 2024" adopted at the Ninth Meeting of the Sixth Session of the Board of Directors on 7February 2024, the Company has cumulatively repurchased 6,740,400 shares of the Company in the formof centralized competitive bidding from 7 February 2024 to 6 August 2024, totaling RMB100,052,846.15.
Note 2: According to the resolution of the first extraordinary general meeting of shareholders on 13 September
2024, in 2024, the Company cancelled 23,345,545 shares of unused treasury shares that were repurchasedin 2022 and before 2022, totaling RMB 321,730,995.54, of which, the share capital was reduced by RMB23,345,545.00 and the capital reserve was reduced by RMB 298,385,450.54.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
45. Other comprehensive income
Unit: RMB
| Item | 31/12/2023 (restated) | Amount incurred in the current year | 31/12/2024 | ||||
| Amount incurred for current year before tax | Less: Amount previously included in other comprehensive income and transferred to profit or loss for the period | Less: Income tax expenses | Attributable to owners of the company after tax | Attributable to minority interests after tax | |||
| I. Other comprehensive income that cannot be subsequently reclassified to profit or loss | (14,827,526.19) | 13,267,772.53 | - | 828,422.69 | 13,484,045.36 | (1,044,695.52) | (1,343,480.83) |
| Including: Recalculation of the changes in defined benefit plans | (16,755,302.95) | 6,670,754.08 | - | 828,422.69 | 6,887,026.91 | (1,044,695.52) | (9,868,276.04) |
| Fair value changes in other equity instruments investment | 1,927,776.76 | 6,597,018.45 | - | - | 6,597,018.45 | - | 8,524,795.21 |
| II. Other comprehensive income that will be reclassified to profit or loss | 279,214,992.81 | (107,385,568.05) | - | - | (101,505,685.78) | (5,879,882.27) | 177,709,307.03 |
| Including: Other comprehensive income that can be reclassified to profit or loss under equity method | (22,128,042.59) | (6,856,487.42) | - | - | (6,856,487.42) | - | (28,984,530.01) |
| Exchange differences on translation of financial statements denominated in foreign currencies | 222,912,142.99 | (226,025,637.00) | - | - | (220,145,754.73) | (5,879,882.27) | 2,766,388.26 |
| Hedges for net investment in foreign operations | 78,430,892.41 | 125,496,556.37 | - | - | 125,496,556.37 | - | 203,927,448.78 |
| Total other comprehensive income | 264,387,466.62 | (94,117,795.52) | - | 828,422.69 | (88,021,640.42) | (6,924,577.79) | 176,365,826.20 |
46. Surplus reserve
Unit: RMB
| Item | 31/12/2023 | Increase | Decrease | 31/12/2024 |
| Statutory surplus reserve (Note) | 966,801,754.40 | 82,923,127.90 | - | 1,049,724,882.30 |
Note: According to the Articles of Association, Universal Scientific Industrial (Shanghai) Co., Ltd. is required
to transfer 10% of its net profit in 2024 to the statutory surplus reserve. Statutory surplus reserve can beused to cover the Company's losses, expand the Company's production and operation or increase theCompany's capital.
47. Retained profits
Unit: RMB
| Item | 2024 | 2023 |
| Retained profits at the end of prior year | 11,179,762,376.22 | 10,275,564,894.22 |
| Add: Net profit attributable to owners of the Company for the year | 1,652,482,815.41 | 1,947,846,866.12 |
| Less: Appropriation to statutory surplus reserve (Note 1) | 82,923,127.90 | 104,720,922.14 |
| Dividends on ordinary shares payable (Note 2) | 590,297,210.28 | 938,928,461.98 |
| Retained profits at the end of the year (Note 3) | 12,159,024,853.45 | 11,179,762,376.22 |
(1) Appropriation to statutory surplus reserve
According to the Articles of Association, the Company is required to transfer 10% of its net profit to the statutorysurplus reserve. The transfer may be ceased if the balance of the statutory surplus reserve has reached 50% of theCompany's registered capital.
(2) Profit distribution approved in shareholders' meeting during the year
As proposed by the resolution of the Tenth Meeting of the Sixth Session of the Board of Directors of the Companyheld on 29 March 2024, and approved by the Annual General Meeting on 23 April 2024, a cash dividend of RMB
2.70 (including tax) per 10 shares will be distributed on the basis of the total share capital registered at the equityregistration date less the number of the shares repurchased by the Company from special accounts, with no bonusissue and no increase in share capital.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
47. Retained profits - continued
(3) Profit distribution decided after the balance sheet date
As proposed by the resolution of the Seventeenth Meeting of the Sixth Session of the Board of Directors of theCompany held on 28 March 2025, a cash dividend of RMB 2.30 (including tax) per 10 shares will be distributedon the basis of the total share capital at the equity registration date less the number of the shares repurchased bythe Company from special accounts, with no bonus issue and no increase in share capital. The above proposalregarding dividends distribution is yet to be approved in a shareholders' meeting.
(4) Appropriation to surplus reserve by subsidiaries
As at 31 December 2024, the balance of the Group's retained profits include appropriation to surplus reserve bysubsidiaries amounting to RMB 1,426,611,703.45 (31 December 2023: RMB 1,395,095,817.26).
48. Operating income and operating costs
(1) Details of operating income and operating costs
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year | ||
| Income | Costs | Income | Costs (restated) | |
| Principal operating activities | 60,614,675,278.72 | 54,927,952,825.90 | 60,729,838,575.32 | 54,962,470,214.46 |
| Other operating activities | 75,975,819.38 | 1,660,400.12 | 62,070,962.55 | 3,376,480.35 |
| Total | 60,690,651,098.10 | 54,929,613,226.02 | 60,791,909,537.87 | 54,965,846,694.81 |
(2) Analysis of principal operating income and principal operating costs by product categories:
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year | ||
| Principal operating income | Principal operating costs | Principal operating income | Principal operating costs (restated) | |
| Communication products | 21,066,324,772.56 | 19,461,280,894.30 | 21,799,269,805.02 | 20,103,325,388.12 |
| Consumer electronic products | 19,202,788,679.81 | 17,619,172,017.93 | 19,254,189,286.98 | 17,728,447,510.30 |
| Industrial products | 7,118,040,087.74 | 6,286,188,145.15 | 8,164,460,442.66 | 7,001,696,050.61 |
| Cloud and storage products | 6,096,580,972.15 | 5,012,146,620.93 | 5,378,779,152.02 | 4,518,811,870.40 |
| Automotive electronic products | 5,971,513,470.61 | 5,496,881,090.19 | 5,137,439,831.33 | 4,722,555,924.70 |
| Medical products | 333,877,608.87 | 318,805,428.38 | 376,027,790.19 | 350,846,493.08 |
| Others | 825,549,686.98 | 733,478,629.02 | 619,672,267.12 | 536,786,977.25 |
| Total | 60,614,675,278.72 | 54,927,952,825.90 | 60,729,838,575.32 | 54,962,470,214.46 |
(3) Other operating income and other operating costs:
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year | ||
| Other operating income | Other operating costs | Other operating income | Other operating costs | |
| Scrap income | 65,972,922.49 | - | 53,239,459.39 | - |
| Others | 10,002,896.89 | 1,660,400.12 | 8,831,503.16 | 3,376,480.35 |
| Total | 75,975,819.38 | 1,660,400.12 | 62,070,962.55 | 3,376,480.35 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
48. Operating income and operating costs - continued
(4) Fulfillment of contractual obligations:
The Group's sales include domestic sales and export sales. The Group's performance obligation is to providegoods to customers, including communication products, consumer electronic products, industrial products, cloudand storage 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 recognizessales revenue from domestic sales at the time when the goods are delivered to the warehouse designated by thecustomer and the customer signs for them on the receipt, while that from export sales is recognized when thegoods 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 locationdesignated by the customer, respectively, according to the specific trading terms agreed in the contract. The Groupprovides products quality assurance for goods sold in accordance with legal requirements and contractualagreements. The Group, as the principal, recognizes revenue based on the total consideration received orreceivable.
49. Taxes and levies
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year |
| City maintenance and construction tax | 46,164,488.17 | 26,088,040.95 |
| Education surcharge | 43,631,816.82 | 23,413,277.40 |
| Stamp duty | 21,048,478.39 | 20,308,111.04 |
| Property Tax | 17,518,442.52 | 18,777,242.42 |
| Urban land use tax | 868,329.08 | 864,618.59 |
| Others | 8,741,562.75 | 6,318,697.79 |
| Total | 137,973,117.73 | 95,769,988.19 |
50. Selling expenses
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year (restated) |
| Staff costs | 306,108,452.94 | 258,156,410.38 |
| Labor costs | 22,279,147.80 | 14,242,897.36 |
| Depreciation and amortization | 18,060,153.77 | 16,504,412.59 |
| Insurance | 12,202,127.97 | 12,865,317.46 |
| Traveling expenses | 11,247,867.56 | 10,010,174.36 |
| Entertainment expenses | 4,355,534.88 | 3,715,932.13 |
| Material consumption | 4,343,527.49 | 8,717,711.11 |
| Share-based payments | 2,435,273.50 | 1,123,494.86 |
| Utilities | 2,209,008.12 | 2,290,917.38 |
| Royalty fees | 168,116.77 | 115,357.28 |
| Commission | - | 494,454.41 |
| Others | 25,937,460.49 | 13,047,369.59 |
| Total | 409,346,671.29 | 341,284,448.91 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
51. Administrative expenses
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year |
| Staff costs | 847,069,509.53 | 733,392,318.30 |
| Labor costs and professional services fee | 184,492,002.89 | 163,770,021.83 |
| Depreciation and amortization | 130,161,204.37 | 118,434,053.03 |
| Software costs | 44,647,077.16 | 31,191,025.01 |
| Renovation costs | 39,668,414.38 | 41,479,606.89 |
| Traveling expenses | 24,387,765.01 | 23,849,101.79 |
| Insurance | 21,620,642.77 | 15,487,901.30 |
| Utilities | 15,656,341.07 | 16,061,160.20 |
| Material consumption | 6,919,108.73 | 8,662,138.73 |
| Share-based payments | 4,537,893.13 | 11,401,068.29 |
| Others | 51,354,488.50 | 51,699,543.65 |
| Total | 1,370,514,447.54 | 1,215,427,939.02 |
52. Research and development expenses
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year |
| Staff costs | 982,398,963.63 | 858,849,931.21 |
| Material and sample costs | 549,301,124.62 | 637,590,081.04 |
| Depreciation and amortization | 173,331,810.22 | 150,773,895.37 |
| Renovation costs | 32,115,490.59 | 21,913,004.84 |
| Labor costs | 24,042,992.99 | 11,603,187.49 |
| Mold costs | 23,519,659.33 | 15,042,616.72 |
| Software costs | 22,174,359.19 | 24,471,359.74 |
| Utilities | 19,024,825.87 | 20,542,686.36 |
| Traveling expenses | 13,731,691.25 | 10,517,776.73 |
| Consumables and miscellaneous | 12,401,892.28 | 14,493,723.19 |
| Share-based payments | 7,893,689.70 | 3,823,834.77 |
| Others | 47,613,206.79 | 37,582,030.81 |
| Total | 1,907,549,706.46 | 1,807,204,128.27 |
53. Financial expenses
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year |
| Interest expenses | 391,009,108.71 | 400,215,716.04 |
| Including: Interest expenses on lease liabilities | 21,696,686.25 | 18,068,930.94 |
| Interest expenses on issue of convertible bonds | 144,617,560.96 | 139,416,505.81 |
| Less: Interest income | 304,283,941.12 | 236,527,756.09 |
| Exchange differences | 215,822,333.26 | 32,024,532.96 |
| Others | 10,103,572.92 | 16,316,715.19 |
| Total | 312,651,073.77 | 212,029,208.10 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
54. Other income
Unit: RMB
| Classified by the nature | Amount incurred in the current year | Amount incurred in the prior year | Amount included in non-recurring profit or loss for the period |
| Government grants | 59,889,514.85 | 89,396,536.73 | 39,593,697.06 |
| Additional value-added tax credit | 3,543,135.87 | 825,287.36 | - |
| Total | 63,432,650.72 | 90,221,824.09 | 39,593,697.06 |
55. Investment income
(1) Details of investment income
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year |
| Income from long-term equity investments under equity method | 33,862,787.66 | 8,716,784.59 |
| Investment income on disposal of long-term equity investments | - | 35,967.02 |
| Investment income of other non-current financial assets during the hold period | 3,124,318.92 | 8,455,456.44 |
| Investment income on disposal of held-for-trading financial assets | 175,989,542.23 | 111,775,513.07 |
| Investment income on disposal of other non-current financial assets | 486,553.70 | 13,716,529.40 |
| Total | 213,463,202.51 | 142,700,250.52 |
56. Losses from changes in fair values
Unit: RMB
| Source resulting in gains (losses) from changes in fair values | Amount incurred in the current year | Amount incurred in the prior year |
| Held-for-trading financial assets | 19,726,794.19 | (32,979,655.61) |
| Including: Derivative financial instruments | 19,726,794.19 | (32,979,655.61) |
| Derivative financial liabilities | (4,601,434.03) | 2,945,018.68 |
| Other non-current financial assets | (17,585,980.36) | 2,926,885.11 |
| Total | (2,460,620.20) | (27,107,751.82) |
57. Impairment loss of credit
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year |
| Bad debt losses on accounts receivable | (32,800,121.83) | (21,981,473.91) |
| Total | (32,800,121.83) | (21,981,473.91) |
58. Impairment gains (losses) of assets
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year |
| Gains (losses) on decline in value of inventories | 9,655,578.11 | (166,836,089.16) |
| Impairment losses of long-term equity investments | (9,343,178.82) | - |
| Total | 312,399.29 | (166,836,089.16) |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
59. Gains from disposal of assets
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year | Amount included in non-recurring profit or loss for the period |
| Gains from disposal of non-current assets | 8,335,633.43 | 9,671,649.96 | 8,335,633.43 |
| Less: Losses from disposal of non-current assets | 804,348.34 | 3,337,342.19 | 804,348.34 |
| Total | 7,531,285.09 | 6,334,307.77 | 7,531,285.09 |
60. Non-operating income
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year | Amount included in non-recurring profit or loss for the period |
| Sporadic income | 25,287,666.76 | 18,086,136.60 | 25,287,666.76 |
61. Non-operating expenses
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year | Amount included in non-recurring profit or loss for the period |
| Losses on retirement of non-current assets | 2,429,573.97 | 907,053.77 | 2,429,573.97 |
| Others | 41,523,170.25 | 5,169,424.69 | 41,523,170.25 |
| Total | 43,952,744.22 | 6,076,478.46 | 43,952,744.22 |
62. Income tax expenses
(1) Statement of income tax expenses
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year |
| Current income tax expenses | 327,027,432.67 | 342,953,512.21 |
| Annual filing differences of income tax | (24,220,221.26) | (79,209,205.14) |
| Deferred income tax expenses | (93,159,836.66) | (23,765,557.86) |
| Total | 209,647,374.75 | 239,978,749.21 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
62. Income tax expenses - continued
(2) Reconciliation of income tax expenses to the accounting profit
Unit: RMB
| Amount incurred in the current year | Amount incurred in the prior year | |
| Total profit | 1,853,816,573.41 | 2,189,687,856.20 |
| Applicable tax rate | 15% | 15% |
| Income tax expenses accounted at an applicable tax rate | 278,072,486.01 | 328,453,178.43 |
| Effect of non-deductible cost, expense and loss | 23,957,218.76 | 5,514,328.92 |
| Effect of non-taxable income | (9,975,565.89) | (7,924,742.71) |
| Tax effect of additional deductible expenses | (109,330,481.25) | (119,266,234.38) |
| Effect of deductible temporary difference or deductible loss not recognized for deferred tax assets for the current year | 58,819,396.28 | 17,181,991.50 |
| Effect of utilizing deductible temporary differences or deductible loss not recognized for deferred tax assets for prior period | (988,362.81) | (464,956.20) |
| Additional levy on undistributed surplus of Taiwan subsidiaries | 8,148,356.59 | 24,129,623.96 |
| Annual filing differences of income tax | (24,220,221.26) | (79,209,205.14) |
| Effect of different tax rates applied by subsidiaries | (9,731,565.63) | 73,877,533.67 |
| Effect of changes in income tax rates of subsidiaries on the opening balance of deferred tax assets | (5,685,309.76) | (7,776,934.75) |
| Others | 581,423.71 | 5,464,165.91 |
| Income tax expenses | 209,647,374.75 | 239,978,749.21 |
63. Items in the cash flow statement
(1) Cash relating to operating activities
Other cash receipts relating to operating activities
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year |
| Interest income | 302,079,461.47 | 246,972,796.68 |
| Subsidy income | 80,006,553.03 | 93,639,071.75 |
| Receivable from former shareholders of Hirschmann | 64,411,136.21 | - |
| Service and purchase rebates received | 15,510,867.66 | - |
| Advanced payment | 13,375,646.14 | - |
| Customs deposits received | 497,311.91 | 1,500,000.00 |
| Customer deposit | - | 91,558,970.22 |
| Others (Note) | 45,978,480.08 | 10,383,613.95 |
| Total | 521,859,456.50 | 444,054,452.60 |
Note: It mainly refers to sporadic income.
Other cash payments relating to operating activities
Unit: RMB
| Amount incurred in the current year | Amount incurred in the prior year | |
| Other expenses paid | 563,810,586.52 | 261,322,155.09 |
| Customer deposits returned | 7,761,396.43 | |
| Payment of advances | 60,340,884.31 | 19,098,207.78 |
| Total | 631,912,867.26 | 280,420,362.87 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
63. Items in the cash flow statement - continued
(2) Cash relating to investing activities
Cash receipts relating to significant investing activities
Unit: RMB
| Amount incurred in the current year | Amount incurred in the prior year | |
| Principal of financial products | 14,156,000,000.00 | 10,325,000,000.00 |
Cash payments relating to significant investing activities
Unit: RMB
| Amount incurred in the current year | Amount incurred in the prior year | |
| Principal of financial products | 14,156,000,000.00 | 10,325,000,000.00 |
Other cash receipts relating to investing activities
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year |
| Investment deposits received | - | 2,214,334.90 |
(3) Cash relating to financing activities
Other cash receipts relating to financing activities
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year |
| Shareholding plan exercise payment | - | 26,686,556.25 |
Other cash payments relating to financing activities
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year |
| Payment of lease principal and interest | 177,993,783.75 | 162,206,706.50 |
| Repurchase of treasury shares | 100,052,846.15 | - |
| Others | 145,728.93 | 1,089,693.30 |
| Total | 278,192,358.83 | 163,296,399.80 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
63. Items in the cash flow statement - continued
(3) Cash relating to financing activities - continued
Changes in various liabilities from financing activities
Unit: RMB
| Item | 31/12/2023 | Increase | Decrease | 31/12/2024 | ||
| Change in cash | Change in non-cash | Change in cash | Change in non-cash | |||
| Short-term borrowings | 4,378,428,691.47 | 10,402,853,293.23 | 243,086,224.21 | 11,347,666,045.81 | - | 3,676,702,163.10 |
| Dividends payable | - | - | 590,297,210.28 | 590,297,210.28 | - | - |
| Long-term borrowings (including those due within one year) | 63,187,765.86 | - | 2,078,390.47 | 17,482,348.20 | 2,853,202.45 | 44,930,605.68 |
| Bonds payable (including those due within one year) | 3,381,278,375.98 | - | 144,617,560.96 | 20,699,268.00 | 21,969.36 | 3,505,174,699.58 |
| Lease liabilities (including those due within one year) | 653,720,789.24 | - | 42,985,192.05 | 177,993,783.75 | - | 518,712,197.54 |
| Total | 8,476,615,622.55 | 10,402,853,293.23 | 1,023,064,577.97 | 12,154,138,656.04 | 2,875,171.81 | 7,745,519,665.90 |
(4) Description of cash flow presented on a net basis
Unit: RMB
| Item | Relevant facts | Basis for presenting on a net basis | Financial impact |
| Other cash receipts relating to operating activities / other cash payments relating to operating activities | Cash received or paid by the Group on behalf of customers | Accounting Standards for Business Enterprises No.31 - Cash Flow Statements stipulates that cash received or paid on behalf of customers can be presented on a net basis. | The net cash flow presented on a net basis in the year is a payment of RMB 46,965,238.17. |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
64. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
Unit: RMB
| Supplementary Information | 2024 | 2023 |
| 1. Reconciliation of net profit to cash flow from operating activities: | ||
| Net profit | 1,644,169,198.66 | 1,949,709,106.99 |
| Add: Impairment losses (gains) of assets | (312,399.29) | 166,836,089.16 |
| Impairment losses of credit | 32,800,121.83 | 21,981,473.91 |
| Depreciation of investment properties | 279,757.50 | 139,878.71 |
| Depreciation of fixed assets | 989,675,478.31 | 919,092,232.02 |
| Depreciation of right-of-use assets | 159,978,006.20 | 139,576,364.62 |
| Amortization of intangible assets | 84,853,846.65 | 89,318,624.87 |
| Amortization of long-term prepaid expenses | 89,259,727.65 | 76,621,504.00 |
| Amortization of deferred income | (21,920,554.72) | (18,209,241.88) |
| Gains on disposal of fixed assets, intangible assets and other long-term assets | (7,531,285.09) | (6,334,307.77) |
| Losses on retirement of fixed assets | 2,429,573.97 | 907,053.77 |
| Losses on changes in fair values | 2,460,620.20 | 27,107,751.82 |
| Financial expenses | 269,039,772.55 | 506,491,993.18 |
| Investment income | (213,463,202.51) | (142,700,250.52) |
| Share-based payments settled by equity | 17,755,000.00 | 17,684,000.00 |
| Increase in deferred tax assets | (68,514,575.31) | (18,723,957.98) |
| Decrease in deferred tax liabilities | (23,125,324.81) | (5,041,599.88) |
| Increase in inventories | 601,814,740.23 | 2,652,192,570.73 |
| Decrease in receivables from operating activities | 117,948,421.46 | 1,154,349,482.14 |
| Increase (Decrease) in payables from operating activities | 532,669,688.07 | (707,563,275.27) |
| Net cash flow from operating activities | 4,210,266,611.54 | 6,823,435,492.62 |
| 2. Significant investing and financing activities that do not involve cash receipts and payments: | ||
| Acquisition of long-term assets with debt | 313,707,505.97 | 242,425,552.98 |
| Increase in right-of-use assets | 56,887,011.64 | 177,402,797.98 |
| Convertible corporate bonds due within one year | 37,230,089.82 | 3,364,142,096.72 |
| 3. Net changes in cash and cash equivalents: | ||
| Cash at the end of the year | 12,462,292,758.14 | 11,184,292,778.70 |
| Less: Cash at the beginning of the year | 11,184,292,778.70 | 7,678,044,104.00 |
| Add: Closing balance of cash equivalents | - | - |
| Less: Opening balance of cash equivalents | - | - |
| Net increase in cash and cash equivalents | 1,277,999,979.44 | 3,506,248,674.70 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
64. Supplementary information to the cash flow statement - continued
(2) Composition of cash and cash equivalents
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| I. Cash | 12,462,292,758.14 | 11,184,292,778.70 |
| Including: Cash on hand | 129,778.49 | 115,564.84 |
| Bank deposits that can be readily withdrawn on demand | 12,462,162,979.65 | 11,184,177,213.86 |
| II. Cash equivalents | - | - |
| III. Closing balance of cash and cash equivalents | 12,462,292,758.14 | 11,184,292,778.70 |
(3) Cash and bank balances not included in cash and cash equivalents
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 | Reasons |
| Cash and bank balances | 12,649,520.24 | - | Interest receivable on demand bank deposits |
| Other cash and bank balances | 11,912,876.00 | 13,430,328.50 | Customs deposits |
| Other cash and bank balances | 502,688.09 | - | Frozen funds due to litigation |
| Other cash and bank balances | - | 20,975,282.12 | Investment deposits |
| Total | 25,065,084.33 | 34,405,610.62 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
65. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
| Item | Closing balance of foreign currency | Exchange rate | Closing balance of RMB equivalent |
| Cash and bank balances | |||
| Including: RMB | 364,958,031.04 | 1.0000 | 364,958,031.04 |
| USD | 684,981,094.83 | 7.1884 | 4,923,918,102.08 |
| EUR | 3,358,783.14 | 7.4680 | 25,083,392.49 |
| HKD | 1,322,864.76 | 0.9260 | 1,224,972.77 |
| JPY | 7,972,627.00 | 0.0462 | 368,335.37 |
| GBP | 139.20 | 9.0761 | 1,263.39 |
| MXN | 150,593,803.58 | 0.3547 | 53,415,622.13 |
| SGD | 26,186.34 | 5.3214 | 139,347.99 |
| CZK | 78,850.77 | 0.2965 | 23,379.25 |
| TND | 2,957,287.93 | 2.2471 | 6,645,321.72 |
| PLN | 23,825,398.50 | 1.7597 | 41,925,553.74 |
| VND | 154,056,665,921.99 | 0.0003 | 46,216,999.78 |
| Accounts receivable | |||
| Including: RMB | 137,289,047.34 | 1.0000 | 137,289,047.34 |
| USD | 937,666,089.80 | 7.1884 | 6,740,318,919.92 |
| EUR | 4,276,105.32 | 7.4680 | 31,933,954.53 |
| MXN | 479,288.42 | 0.3547 | 170,003.60 |
| TND | 36,320.18 | 2.2471 | 81,615.08 |
| PLN | 727,191.51 | 1.7597 | 1,279,638.90 |
| Other receivables | |||
| Including: RMB | 504,767.86 | 1.0000 | 504,767.86 |
| USD | 2,005,512.15 | 7.1884 | 14,416,423.54 |
| EUR | 25,158.95 | 7.4680 | 187,887.04 |
| HKD | 2,800.00 | 0.9260 | 2,592.80 |
| MXN | 12,998,752.46 | 0.3547 | 4,610,657.50 |
| VND | 2,479,988,246.00 | 0.0003 | 743,996.47 |
| CHF | 2,500.00 | 7.9342 | 19,835.50 |
| TND | 1,896,632.47 | 2.2471 | 4,261,922.83 |
| Short-term borrowings | |||
| Including: USD | 17,252,523.94 | 7.1884 | 124,018,043.09 |
| EUR | 340,931,476.54 | 7.4680 | 2,546,076,266.80 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
65. Foreign currency monetary items - continued
(1) Foreign currency monetary items - continued
Unit: RMB
| Item | Closing balance of foreign currency | Exchange rate | Closing balance of RMB equivalent |
| Accounts payable | |||
| Including: RMB | 94,824,886.26 | 1.0000 | 94,824,886.26 |
| USD | 1,034,877,139.65 | 7.1884 | 7,439,110,830.66 |
| EUR | 51,721.10 | 7.4680 | 386,253.17 |
| HKD | 743,451.39 | 0.9260 | 688,435.99 |
| JPY | 616,737,429.00 | 0.0462 | 28,493,269.22 |
| MXN | 176,136,449.25 | 0.3547 | 62,475,598.55 |
| VND | 324,241,436,514.00 | 0.0003 | 97,272,430.95 |
| GBP | 3,142,693.43 | 9.0761 | 28,523,399.84 |
| PLN | 45,731,189.82 | 1.7597 | 80,473,174.73 |
| TND | 1,290,547.90 | 2.2471 | 2,899,990.18 |
| CZK | 986,247.50 | 0.2965 | 292,422.38 |
| Other payables | |||
| Including: RMB | 2,268,406.33 | 1.0000 | 2,268,406.33 |
| USD | 27,866,967.84 | 7.1884 | 200,318,911.62 |
| EUR | 199,759.50 | 7.4680 | 1,491,803.95 |
| HKD | 45,000.00 | 0.9260 | 41,670.00 |
| MXN | 65,065,656.77 | 0.3547 | 23,078,788.46 |
| VND | 35,562,397,986.00 | 0.0003 | 10,668,719.40 |
| PLN | 1,100,414.70 | 1.7597 | 1,936,399.74 |
| TND | 1,989,725.63 | 2.2471 | 4,471,112.46 |
| CZK | 1,174,527.38 | 0.2965 | 348,247.37 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
65. Foreign currency monetary items - continued
(2) Description of overseas operating entities
| Full name of the subsidiary | Principal operation place | Functional currency | Choosing basis |
| Universal Global Technology Co., Limited ("UGT") | Hong Kong | USD | Major currencies used in operating and financing activities |
| Universal Global Industrial Co., Limited ("UGI") | Hong Kong | USD | Major currencies used in operating activities |
| Universal Global Electronics Co., Limited ("UGE") | Hong Kong | USD | Major currencies used in operating 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. De C.V. | Mexico | USD | Major currencies used in operating and financing activities |
| Universal Scientific Industrial Poland Sp. z o.o. | Poland | USD | Major currencies used in operating activities |
| Universal Scientific Industrial (France) | France | EUR | Currency in major economic environment |
| Universal Scientific Industrial Vietnam Company Limited | Vietnam | USD | Major currencies used in operating and financing activities |
| Hirschmann Car Communication Holding S.a.r.l. | Luxembourg | EUR | Currency in major economic environment |
| ASTEELFLASH (BEDFORD) LIMITED | England | GBP | Currency in major economic environment |
| ASTEELFLASH FRANCE | France | EUR | Currency in major economic environment |
| ASTEELFLASH TUNISIE S.A. | Tunisia | EUR | Major currencies used in operating activities |
| ASTEELFLASH MEXICO S.A. de C.V. | Mexico | USD | Major currencies used in operating and financing activities |
| ASTEELFLASH GERMANY GmbH | Germany | EUR | Currency in major economic environment |
| ASTEELFLASH PLZEN S.R.O. | Czech Republic | EUR | Currency in major economic environment |
| ASTEELFLASH TECHNOLOGIE | France | EUR | Currency in major economic environment |
| ASTEELFLASH BRETAGNE | France | EUR | Currency in major economic environment |
| ASTEELFLASH HERSFELD GmbH | Germany | EUR | Currency in major economic environment |
| ASTEELFLASH DESIGN SOLUTIONS HAMBOURG GmbH | Germany | EUR | Currency in major economic environment |
| ASTEELFLASH USA CORP. | USA | USD | Currency in major economic environment |
66. Hedge
Disclose by category the following information of hedge items and related hedging instruments, the qualitativeand 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 andmanufacturing. The Group's net investment in FAFG's foreign operations with EUR as the functional currency isexposed to risks of exchange rate changes in EUR. The Group uses loan contracts in EUR to manage the foreignexchange 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 thehedging instrument (short-term borrowings) and the hedged item (the Group's net investment in foreign operationsof FAFG). The Group designates the overall foreign exchange risk component of short-term as the hedginginstrument and designates a portion of the Group's net investment in foreign operations of FAFG as the hedgeditem, which are equal in quantity. The Group uses hedges for net investment in foreign operations.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(V) NOTES TO ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS - continued
66. Hedge - continued
Hedging instrument
A summary of hedging instrument:
Unit: EUR
| Hedging instrument | 31/12/2024 | |||
| Within 6 months | 6 to 12 months | After 12 months | ||
| Hedges for net investment in foreign operations (Note (V), 24) | ||||
| Foreign exchange risk -Short-term borrowings in EUR | Nominal amount | 262,500,000.00 | - | - |
Unit: RMB
| 31/12/2024 | 31/12/2024 | Items presented for assets and liabilities that include hedging instruments | 2024 | ||
| Nominal amount of the hedging instrument | Carrying amount of the hedging instrument | Changes in fair value of the invalid part of hedge | |||
| Assets | Liabilities | ||||
| Hedges for net investment in foreign operations | |||||
| Foreign exchange risk -Short-term borrowings in EUR | 1,960,357,549.50 | - | 1,960,357,549.50 | Short-term borrowings | - |
Details of hedged items:
Unit: RMB
| Carrying amount of hedged items at 31/12/2024 | Items presented in the balance sheet that include hedged instruments | Changes in fair value of the invalid part of hedged items in 2024 | Hedge reserve for net investment in foreign operations at 31/12/2024 | ||
| Assets | Liabilities | ||||
| Hedges for net investment in foreign operations | |||||
| Foreign exchange risk | 1,960,357,549.50 | - | The Group's net investment in FAFG's foreign operations | - | 203,927,448.78 |
Hedge effect
Unit: RMB
| Hedges for net investment in foreign operations | 2024 | 2024 | Items presented in the income statement including invalid part of hedge recognized | Amount reclassified from hedge reserves for net investment in foreign operations to profit or loss for the current period in 2024 | Items listed in the income statement including reclassification adjustment |
| Changes in hedge reserves for net investment in foreign operations of hedging instruments included in other comprehensive income | The invalid part of hedge included in profit or loss for the current period | ||||
| Foreign exchange risk -Short-term borrowings in EUR | 125,496,556.37 | - | N/A | N/A | N/A |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(VI) EQUITY IN OTHER ENTITIES
1. Equity in major subsidiaries
(1) Composition of enterprise group
| Full name of subsidiary | Principal operation place | Currency of registered capital | Registered capital | Place of incorporation | Nature of business | Proportion of shareholding (%) | Acquisition method | |
| Direct | Indirect | |||||||
| Universal Global Electronics (Shanghai) Co., Ltd. | Shanghai | RMB | 1,330,000,000.00 | No.501 Long Gui Road, China (Shanghai) Pilot Free Trade Zone | Production and sales, product design and research development | 100 | - | Acquisition through establishment |
| Universal Global Technology (Kunshan) Co., Ltd. | Kunshan | RMB | 550,000,000.00 | No.497 Huangpujiang Road, Qiandeng Town, Kunshan City, Jiangsu Province | Production and sales | 100 | - | Acquisition through establishment |
| Universal Global Scientific Industrial Co., Ltd | Taiwan | TWD | 1,980,000,000.00 | No. 141, Lane 351, Sec. 1, Taiping Road, Caotun Town, Nantou County, Taiwan | Production and sales, product design and research development | - | 100 | Acquisition through establishment |
| Universal Scientific Industrial Co., Ltd | Taiwan | TWD | 1,399,727,400.00 | No. 141, Lane 351, Sec. 1, Taiping Road, Caotun Town, Nantou County, Taiwan | Production and sales, product maintenance | - | 100 | Acquisition through business combinations involving enterprises under common control |
| Universal Global Technology Co., Limited | Hong Kong | USD | 524,803,000.00 | Room A, 7th Floor, Yuen Long Hi-Tech Centre, No. 11Wang Yip Street West, Yuen Long, New Territories, Hong Kong | Trade and investment | 100 | - | Acquisition through establishment |
| Universal Global Industrial Co., Limited | Hong Kong | USD | 51,000,000.00 | Room 2702-3, 27th Floor, Bank of East Asia Harbour Centre, No. 56 Gloucester Road, Wanchai, Hong Kong | Trade and investment | - | 100 | Acquisition through establishment |
| USI Electronics (Shenzhen) Co., Ltd. | Shenzhen | USD | 75,000,000.00 | Huanxu Electronics Park, North of Hi-Tech Park, Nanshan District, Shenzhen City, Guangdong Province | Production and sales | 50 | 50 | Acquisition through business combinations involving enterprises under common control |
| USI Japan Co., Ltd. | Japan | JPY | 95,000,000.00 | Sumitomo Fudosan Shin-yokohama Bldg. 10F 2-5-5. Shin-yokohama, Kouhoku-ku, Yokohama, Japan | Product maintenance and related services | - | 100 | Acquisition through business combinations involving enterprises under common control |
| Universal Scientific Industrial De México S.A. De C.V. | Mexico | MXN | 2,293,299,926.00 | Anillo Periferico Manuel Gomez Morin No. 656 Jardines de Santa Isabel CP44300, Guadalajara, Jalisco, México | Contractual manufacturing, product maintenance and related services | - | 100 | Acquisition through business combinations involving enterprises under common control |
| Universal Global Technology (Huizhou) Co., Ltd. | Huizhou | RMB | 800,000,000.00 | No.369 Xinhe Avenue, Daya Wan, Huizhou | Production and sales | 100 | - | Acquisition through establishment |
| Universal Scientific Industrial (France) | France | EUR | 321,374,822.00 | 1 Rue Royale 92210 Saint-Cloud | Investment | - | 100 | Acquisition through establishment |
| Universal Scientific Industrial Vietnam Company Limited | Vietnam | USD | 115,000,000.00 | Land Plot CN4.1H, Dinh Vu Industrial Zone, Dinh Vu – Cat Hai Economic Zone, Dong Hai 2 Ward, Hai An District, Hai Phong City, Vietnam | Production and sales, product design and research development | - | 100 | Acquisition through establishment |
| USI Science and Technology (Shenzhen) Co., Ltd. | Shenzhen | RMB | 15,000,000.00 | 101 Huanxu Electronics Factory, Gaoxin North District, Songpingshan North Ring Road, Songpingshan Community, Xili Street, Nanshan District, Shenzhen | Product design and research development, Real estate development and operation | - | 100 | Acquisition through establishment |
| FINANCI?RE AFG S.A.S. | France | EUR | 183,649,562.80 | 1 Rue Royale 92210 Saint-Cloud | Production and sales | 10.42 | 89.58 | Acquisition through business combinations not involving enterprises under common control |
| Asteelflash Suzhou Co., Ltd. | Suzhou | USD | 18,000,000.00 | 8 Gutang Road, Wujiang Economic and Technological Development Zone | Production and sales | - | 100 | Acquisition through business combinations not involving enterprises under common control |
(2) Significant non-wholly-owned subsidiary
Unit: RMB
| Full name of subsidiary | Minority shareholding ratio | Profit or loss attributable to minority shareholders for the year | Dividends declared to minority shareholders for the year | Balance of minority interests at the end of the year |
| Universal Ample Technology Co., Limited ("Universal Ample Technology") | 24.90% | (8,325,036.74) | - | 123,528,196.81 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(VI) EQUITY IN OTHER ENTITIES - continued
1. Equity in major subsidiaries - continued
(3) Significant financial information of significant non-wholly-owned subsidiary
Unit: RMB
| Full name of subsidiary | 31/12/2024 | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Universal Ample Technology | 623,536,817.72 | 214,715,115.46 | 838,251,933.18 | 190,392,824.91 | 151,761,932.34 | 342,154,757.25 |
Unit: RMB
| Full name of subsidiary | 31/12/2023 (restated) | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Universal Ample Technology | 900,784,013.66 | 206,754,422.46 | 1,107,538,436.12 | 452,683,153.84 | 254,000,185.66 | 706,683,339.50 |
Unit: RMB
| Full name of subsidiary | Amount incurred in the current period | Amount incurred in the prior period | ||||||
| Operating income | Net loss | Total comprehensive income | Cash flows from operating activities | Operating income | Net profit | Total comprehensive income | Cash flows from operating activities | |
| Universal Ample Technology | 1,300,617,484.36 | (33,433,882.49) | (68,634,807.25) | (174,436,777.86) | 242,475,011.15 | 19,505,225.77 | 19,505,225.77 | (79,156,990.92) |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(VI) EQUITY IN OTHER ENTITIES - continued
2. Equity in joint ventures or associates
(1) Significant associates
| Name of joint venture | Principal operation place | Place of incorporation | Nature of business | Proportion of shareholding (%) | Accounting treatments for investments in joint ventures or associates | |
| Direct | Indirect | |||||
| I. Associate | ||||||
| M-Universe | Singapore | 1 Marina Boulevard #28-00, Singapore | Production and sales | - | 42.23 | Equity method |
(2) Major financial information of significant associates
Unit: RMB
| M-Universe | ||
| 31/12/2024/Amount incurred in the current year | 31/12/2023/Amount incurred in the prior year | |
| Current assets | 1,220,705,334.40 | 1,114,604,499.00 |
| Including: Cash and cash equivalent | 194,122,742.00 | 163,539,543.00 |
| Non-current assets | 523,399,712.56 | 506,122,125.29 |
| Total assets | 1,744,105,046.96 | 1,620,726,624.29 |
| Current liabilities | 485,224,188.40 | 411,136,569.60 |
| Non-current Liabilities | 51,490,661.38 | 76,408,317.54 |
| Total liabilities | 536,714,849.78 | 487,544,887.14 |
| Minority interests | - | 1,239,472.50 |
| Equity attributable to shareholders of the Company | 1,207,390,197.18 | 1,131,942,264.65 |
| Share of net assets calculated based on shareholding proportion | 509,880,880.27 | 478,019,218.36 |
| Carrying amount of equity investments in associates | 509,880,880.27 | 478,019,218.36 |
| Fair value of equity investments in joint ventures where there is quoted price | N/A | N/A |
| Operating income | 1,510,123,066.10 | 1,236,501,118.60 |
| Net profit | 89,992,799.83 | 34,458,252.29 |
| Net profit attributable to owners of the Company | 89,992,799.83 | 34,458,252.29 |
| Other comprehensive income attributable to owners of the Company, net of tax | (16,236,058.30) | (18,131,079.59) |
| Total comprehensive income attributable to owners of the Company | 73,756,741.53 | 16,327,172.70 |
| Dividends declared from associates in the current period (Note (V). 11) | 6,884,831.63 | 11,274,179.59 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(VI) EQUITY IN OTHER ENTITIES - continued
2. Equity in joint ventures or associates - continued
(3) Summary financial information of insignificant joint ventures and associates
Unit: RMB
| Joint ventures: MUtek Electronics | 31/12/2024/Amount incurred in the current year | 31/12/2023/Amount incurred in the prior year |
| Total book value of investment | 2,709,233.30 | 3,547,050.76 |
| The sum of the following items in proportion to their shareholding | (681,438.59) | (2,540,207.83) |
| Net loss | (681,438.59) | (2,540,207.83) |
| Other comprehensive income | - | - |
| Total comprehensive income | (681,438.59) | (2,540,207.83) |
| Associates: Questyle Audio Technology Co., Ltd. | ||
| Total book value of investment | 3,902,360.54 | 16,705,272.48 |
| The sum of the following items in proportion to their shareholding | (3,459,733.12) | (3,294,727.52) |
| Net loss | (3,459,733.12) | (3,294,727.52) |
| Other comprehensive income | - | - |
| Total comprehensive income | (3,459,733.12) | (3,294,727.52) |
(4) There are no significant limitations over the ability of joint ventures or associates to transfer funds to the
Group.
(5) According to the Joint Investment Contract signed by UGSI and Merry Electronics, UGSI proposed to
contribute TWD 191,100,000.00 to MUtek Electronics. As at 31 December 2024, the Group actuallycontributed TWD 29,400,000.00, and the contribution not yet paid in full is TWD 161,700,000.00,equivalent to RMB 35,454,149.15.
(6) The Group has no contingent liabilities relating to investments in joint ventures and associates.
3. Business combinations not involving enterprises under common control
The Group acquired 100% equity interest in Hirschmann on 27 October 2023 at a purchase price ofUSD48,000,000.00, adjusted accordingly based on the actual net liabilities and working capital level of theunderlying business at the date of settlement. The appraisal of the identifiable net assets of the underlying businesshad not been completed by the end of 2023, and the fair value of each identifiable asset, liability and contingentliability acquired in the merger and the cost of the business combination could only be determined provisionally.In 2023 the Group recognized and measured the merger of Hirschmann on a provisional value basis.
In 2024, the Group obtained the appraisal report on the identifiable net assets of Hirschmann from Ernst & YoungFinancial Management Consulting Services Co., Ltd., then restated the fair value of each identifiable asset,liability and contingent liability acquired in the acquisition. At the same time, the equity purchase price wasadjusted to RMB66,537,456.26 based on the actual net liabilities and working capital level of the underlyingbusiness as at the date of settlement.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(VI) EQUITY IN OTHER ENTITIES - continued
3. Business combinations not involving enterprises under common control - continued
Merge costs and goodwill
Unit: RMB
| Merge costs | Hirschmann |
| Initial provisional acquisition price | 446,362,010.60 |
| Add: Adjusted equity purchase price for this year | 66,537,456.26 |
| Merge costs | 512,899,466.86 |
| Less: Share of fair value of net identifiable assets acquired | 508,250,915.86 |
| Goodwill | 4,648,551.00 |
Unit: RMB
| Hirschmann | ||
| Provisional value | Fair value at date of acquisition | |
| Assets: | ||
| Cash and bank balances | 26,211,422.10 | 26,211,422.10 |
| Accounts receivable | 181,962,085.32 | 183,435,259.71 |
| Other receivables | 42,539,867.71 | 107,243,312.19 |
| Inventories | 230,345,061.40 | 238,897,219.04 |
| Other current assets | 14,245,115.45 | 14,245,115.45 |
| Fixed assets | 114,827,267.69 | 127,977,592.60 |
| Construction in progress | 37,070,089.15 | 37,070,089.15 |
| Right-of-use assets | 31,791,453.90 | 31,791,453.90 |
| Deferred tax assets | 197,583.82 | 197,583.82 |
| Other non-current assets | 2,834,969.80 | 2,834,969.80 |
| Liabilities: | ||
| Accounts payable | 81,721,936.87 | 81,721,936.87 |
| Employee benefits payable | 40,628,473.17 | 40,628,473.17 |
| Taxes payable | 683,575.88 | - |
| Other payables | 28,609,362.31 | 28,609,362.31 |
| Non-current liabilities due within one year | 20,107,248.25 | 20,107,248.25 |
| Lease liabilities | 11,684,205.66 | 11,684,205.66 |
| Long-term employee benefits payable | 42,393,319.88 | 44,165,406.11 |
| Provisions | 9,968,311.94 | 9,968,311.94 |
| Deferred income | 52,332.69 | 52,332.69 |
| Deferred tax liabilities | 953,470.96 | 24,715,824.90 |
| Net assets | 445,222,678.73 | 508,250,915.86 |
| Less: Minority interests | - | - |
| Net assets acquired | 445,222,678.73 | 508,250,915.86 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(VII) Government grants
1. Liabilities items involving government grants
Unit: RMB
| Item | 31/12/2023 | Increase in the year | Amount recognized in other income of the year | Other changes (Note 1) | Exchange differences arising on translation of financial statements denominated in foreign currencies | 31/12/2024 | Asset-related / Income-related |
| Deferred income | |||||||
| Technology reform item for ultra-thin communication module deep intelligent production line | 27,180,218.62 | - | 3,835,772.63 | (5,700,000.00) | - | 17,644,445.99 | Asset-related |
| Government grants for the sixth batch of high quality special projects (technological transformation) | 7,642,897.18 | - | 2,904,506.81 | - | - | 4,738,390.37 | Asset-related |
| Display and touch chip module technology research and development and industrialization projects | 7,165,273.19 | - | 1,732,343.87 | - | - | 5,432,929.32 | Asset-related |
| Government grant income from matching funds for key transformation projects for the automation of the production of smart wearable products | 6,180,750.00 | - | 2,355,750.00 | - | - | 3,825,000.00 | Asset-related |
| Suzhou industrial enterprises effective investment award projects | 3,834,106.68 | 2,640,000.00 | 1,376,460.93 | - | - | 5,097,645.75 | Asset-related |
| 2022 Provincial Special project fund for Intelligent Manufacturing Demonstration Plant | 3,753,496.93 | - | 1,080,803.98 | - | - | 2,672,692.95 | Asset-related |
| Government grants for the twelfth batch of high quality special projects (technological transformation) | 1,297,672.90 | - | 243,702.95 | - | - | 1,053,969.95 | Asset-related |
| Kunshan Bureau of Industry and Information Technology Suzhou Smart Factory government subsidy | 717,624.31 | - | 207,204.72 | - | - | 510,419.59 | Asset-related |
| Upgrading subsidies for Poland technology | 329,512.17 | - | 303,005.94 | - | (26,506.23) | - | Asset-related |
| Industrialization technology upgrading project | 5,389.96 | - | 5,389.96 | - | - | - | Asset-related |
| Ultra-high resolution TWS earphone chip module technology research and development and industrialization projects | - | 20,000,000.00 | 489,375.55 | - | - | 19,510,624.45 | Asset-related |
| Tunisia investment subsidy projects | - | 6,768,595.97 | 4,692,888.13 | - | (168,398.01) | 1,907,309.83 | Asset-related |
| High-speed Wi-Fi technical improvement projects | - | 4,350,000.00 | 959,466.51 | - | - | 3,390,533.49 | Asset-related |
| Special development fund for the project on improvement of mobile module of UWB spatial perception technology in the Free Trade Zone in 2024 | - | 3,874,260.00 | 64,416.77 | - | - | 3,809,843.23 | Asset-related |
| Intelligent transformation projects of the production line of USI | - | 2,780,000.00 | 44,729.04 | - | - | 2,735,270.96 | Asset-related |
| Total | 58,106,941.94 | 40,412,855.97 | 20,295,817.79 | (5,700,000.00) | (194,904.24) | 72,329,075.88 |
Note 1: The Company was reassessed in 2024 and failed to meet the subsidy requirement of the project
"technology reform item for ultra-thin communication module deep intelligent production line", and hasreturned government grants of RMB 5,700,000.00.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(VII) Government grants - continued
2. Government grants included in profit or loss for the period
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year |
| Other income | ||
| Economic grants for the headquarters of Zhangjiang Science City Construction Management Office | 13,000,000.00 | - |
| Government grants for 2023 Free Trade Zone projects | 3,989,580.00 | - |
| French government grants for science and technology research | 3,549,267.78 | 3,773,695.98 |
| Social security subsidy | 3,137,473.71 | 2,478,720.29 |
| Supporting funds for securing and nurturing businesses | 2,500,000.00 | 4,595,500.00 |
| Individual tax service fee refund | 1,601,613.80 | 976,302.15 |
| One-off training allowance for workers | 1,300,700.00 | 379,550.00 |
| Special subsidies for local education surcharge in Pudong New Area | 1,028,880.00 | - |
| Subsidy for named class of Kunshan | 1,006,000.00 | 616,000.00 |
| Job stabilization subsidy | 1,002,860.21 | 658,745.00 |
| Awards for first breakthrough in energy level upgrade project in smart factory and awards for smart factory | 1,000,000.00 | - |
| Financial subsidies for employee training | 928,560.00 | - |
| Special development fund for National Independent Innovation Demonstration Zone | 531,000.00 | - |
| Compliance assessment project on maturity standard of intelligent manufacturing capability in 2023 | 500,000.00 | - |
| Municipal energy saving technical improvement supporting funds | 240,000.00 | 474,500.00 |
| Special subsidies for business development | 64,333.00 | 673,700.00 |
| Industry and Trade Development Bureau subsidy | - | 28,122,309.00 |
| Development support fund | - | 13,080,000.00 |
| First demonstration and extension of application-new generation communication | - | 3,250,000.00 |
| Import interest subsidies | - | 3,233,353.00 |
| Kunshan City Bureau of Commerce provincial processing trade subsidies | - | 1,279,400.00 |
| Healthy development of foreign trade enterprises and stabilization of the total size fund | - | 1,206,100.00 |
| Government grants for zero-carbon factories | - | 1,000,000.00 |
| Government subsidies for production during the pandemic | - | 850,000.00 |
| Special subsidies for enterprise industry scale upgrade | - | 800,000.00 |
| Special subsidies for the promotion of investment and upgrading of industrial energy level | - | 700,000.00 |
| Special subsidies for provincial business development | - | 303,100.00 |
| Others | 2,824,378.56 | 2,984,508.97 |
| Sub-total | 39,593,697.06 | 71,813,784.39 |
| Amortization of government grants related to assets (Note (VII), 1) | 20,295,817.79 | 17,582,752.34 |
| Total | 59,889,514.85 | 89,396,536.73 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS
The Group's major financial instruments include cash and bank balances, held-for-trading financial assets, notesreceivable, accounts receivable, other receivables, non-current assets due within one year, long-term receivables,other equity instrument investment, other non-current financial assets, certain other non-current assets,borrowings, derivative financial liabilities, accounts payable, other payables, certain non-current liabilities duewithin one year, long-term payables and other non-current liabilities, etc. Details of these financial instrumentsare disclosed in Note (V). Risks associated with these financial instruments and the policies on how to mitigatethese risks are set out below. Management manages and monitors these exposures to ensure the risks are monitoredat a certain level.
Unit: RMB
| 31/12/2024 | 31/12/2023 (restated) | |
| Financial assets | ||
| Measured at FVTPL | ||
| Held-for-trading financial assets | 42,291,303.91 | 245,558,007.22 |
| Other non-current financial assets | 201,093,233.84 | 193,994,862.05 |
| Sub-total | 243,384,537.75 | 439,552,869.27 |
| Measured at fair value through other comprehensive income | ||
| Other equity instrument investments | 22,769,795.62 | 38,935,237.58 |
| Sub-total | 22,769,795.62 | 38,935,237.58 |
| Measured at amortized cost | ||
| Cash and bank balances | 12,487,357,842.47 | 11,218,698,389.32 |
| Notes receivable | 79,450,682.42 | 65,545,008.33 |
| Accounts receivable | 10,255,502,444.64 | 10,025,329,076.47 |
| Other receivables | 134,298,737.44 | 275,674,265.31 |
| Non-current assets due within one year | 130,008.72 | 123,989.32 |
| Long-term receivables | 13,787,074.59 | 13,647,410.80 |
| Other non-current assets | 21,740,962.14 | 9,576,400.85 |
| Sub-total | 22,992,267,752.42 | 21,608,594,540.40 |
| Total financial assets | 23,258,422,085.79 | 22,087,082,647.25 |
| Financial liabilities | ||
| Measured at FVTPL | ||
| Derivative financial liabilities | 4,775,306.67 | 173,872.64 |
| Measured at amortized cost | ||
| Short-term borrowings | 3,676,702,163.10 | 4,378,428,691.47 |
| Accounts payable | 11,055,392,929.15 | 10,574,123,769.47 |
| Other payables | 691,283,564.96 | 977,155,628.96 |
| Non-current liabilities due within one year | 52,288,580.46 | 3,397,080,190.74 |
| Long-term borrowings | 29,872,115.04 | 47,385,951.10 |
| Bonds payable | 3,467,944,609.76 | - |
| Long-term payables | 18,348,682.49 | 25,526,297.84 |
| Other non-current liabilities | 1,317,464.14 | 1,046,909.26 |
| Sub-total | 18,993,150,109.10 | 19,400,747,438.84 |
| Total financial liabilities | 18,997,925,415.77 | 19,400,921,311.48 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
The Group adopts sensitivity analysis technique to analyze how the profit and loss for the period and shareholders'equity would have been affected by reasonably possible changes in the relevant risk variables. As it is unlikelythat risk variables will change in an isolated manner, and the interdependence among risk variables will havesignificant effect on the amount ultimately influenced by the changes in a single risk variable, the following arebased on the assumption that the change in each risk variable is on a stand-alone basis.
1. Risk management objectives and policies
The Group's risk management objectives are to achieve a proper balance between risks and yield, minimize theadverse impacts of risks on the Group's operation performance, and maximize the benefits of the shareholders andother stakeholders. Based on these risk management objectives, the Group's basic risk management strategy is toidentify 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 aremonitored 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 exposureto the currency risk is primarily associated with USD and EUR. The Group's subsidiaries located in China havesome purchases, sales and financing activities denominated in USD and EUR while other principal activities aredenominated and settled in RMB; The Group's subsidiaries located in Taiwan have some purchases and salesdenominated in USD and EUR while other principal activities are denominated and settled in TWD; The Group'ssubsidiaries located in Japan have some purchases and sales denominated in USD while other principal activitiesare denominated and settled in JPY; The Group's subsidiaries located in Hong Kong have some financingactivities denominated in EUR while other principal activities are denominated and settled in USD; The Group'ssubsidiary, USI Poland, located in Europe has some purchases and sales denominated in USD and EUR whileother principal activities are denominated and settled in USD; The Group's other subsidiaries located in Europehave principal activities denominated and settled in EUR; The Group's subsidiaries located in America andMexico have activities denominated and settled in USD. As at 31 December 2024 and 31 December 2023, thebalance 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 denominatedin foreign currencies may have impact on the Group's performance.
Unit: RMB’000
| Item | 31/12/2024 | 31/12/2023 |
| USD | ||
| Cash and bank balances | 4,923,918 | 2,315,210 |
| Accounts receivable | 6,740,319 | 6,504,581 |
| Other receivables | 14,416 | 22,056 |
| Short-term borrowings | (124,018) | (389,150) |
| Accounts payable | (7,439,111) | (6,960,691) |
| Other payables | (200,319) | (288,760) |
| Sub-total | 3,915,205 | 1,203,246 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
1.1 Market risk - continued
1.1.1 Currency risk - continued
Unit: RMB’000
| Item | 31/12/2024 | 31/12/2023 |
| EUR | ||
| Cash and bank balances | 25,083 | 21,596 |
| Accounts receivable | 31,934 | 43,735 |
| Other receivables | 188 | 176 |
| Short-term borrowings | (2,546,076) | (3,024,904) |
| Accounts payable | (386) | (22,594) |
| Other payables | (1,492) | (19,276) |
| Sub-total | (2,490,749) | (3,001,267) |
The Group closely monitors the effects of changes in the foreign exchange rates on the Group's currency riskexposures, and uses foreign currency forward contracts to reduce part of the currency exposures.
Sensitivity analysis on currency risk
On the basis of the assumption that all hedges of net investments in foreign operations are highly effective, whereall other variables are held constant, reasonably possible changes in the foreign exchange rate may have thefollowing pre-tax effect on the profit or loss for the year and shareholders' equity:
Unit: RMB’000
| Item | Change in exchange rate | 2024 | 2023 | ||
| Effect on profit | Effect on shareholders' equity | Effect on profit | Effect on shareholders' equity | ||
| USD | 5% appreciation against RMB | 105,541 | 105,541 | (11,645) | (11,645) |
| USD | 5% depreciation against RMB | (105,541) | (105,541) | 11,645 | 11,645 |
| USD | 5% appreciation against TWD | 95,650 | 95,650 | 69,348 | 69,348 |
| USD | 5% depreciation against TWD | (95,650) | (95,650) | (69,348) | (69,348) |
| USD | 5% appreciation against EUR | 21,112 | 21,112 | 46,627 | 46,627 |
| USD | 5% depreciation against EUR | (21,112) | (21,112) | (46,627) | (46,627) |
| USD | 5% appreciation against PLN | - | - | 1,621 | 1,621 |
| USD | 5% depreciation against PLN | - | - | (1,621) | (1,621) |
| USD | 5% appreciation against JPY | 2 | 2 | 2 | 2 |
| USD | 5% depreciation against JPY | (2) | (2) | (2) | (2) |
| USD | 5% appreciation against GBP | 160 | 160 | 53 | 53 |
| USD | 5% depreciation against GBP | (160) | (160) | (53) | (53) |
| EUR | 5% appreciation against RMB | 457 | 457 | 390 | 390 |
| EUR | 5% depreciation against RMB | (457) | (457) | (390) | (390) |
| EUR | 5% appreciation against TWD | (187) | (187) | (87) | (87) |
| EUR | 5% depreciation against TWD | 187 | 187 | 87 | 87 |
| EUR | 5% appreciation against PLN | - | - | 2,109 | 2,109 |
| EUR | 5% depreciation against PLN | - | - | (2,109) | (2,109) |
| EUR | 5% appreciation against GBP | (85) | (85) | 3 | 3 |
| EUR | 5% depreciation against GBP | 85 | 85 | (3) | (3) |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
1.1 Market risk - continued
1.1.2. Interest rate risk - risk of changes in cash flows
The Group's cash flow interest rate risk of financial instruments relates primarily to variable-rate bank borrowings(see Note (V) 24 for details). The Group closely monitors the effects of changes in the interest rates on the Group'sinterest rate risk exposures. It is the Group's policy to keep its borrowings at floating rate of interests with no otherarrangements such as interest rate swaps.
Sensitivity analysis on interest rate risk
Where all other variables are held constant, reasonably possible changes in the interest rate may have the followingpre-tax effect on the profit or loss for the year and shareholders' equity:
Unit: RMB’000
| Item | Changes in interest rate | 2024 | 2023 | ||
| Effect on profit | Effect on shareholders' equity | Effect on profit | Effect on shareholders' equity | ||
| Financial instruments at floating interest rate | 1% appreciation | (13,712) | (13,712) | (16,623) | (16,623) |
| Financial instruments at floating interest rate | 1% depreciation | 13,712 | 13,712 | 16,623 | 16,623 |
1.1.3. Other price risk
The price risk of the group mainly arises from trading equity instrument investment and other equity instrumentinvestment. The group reduces the price risk of equity instrument investment by holding a variety of equitysecurities portfolio. As at the end of the period, the Group's investments in equity instruments held by the Groupincluded listed companies, therefore, the Group is directly or indirectly exposed to the risk of fluctuations inmarket prices of securities. If the market prices of the securities of the Group's investments in equity instrumentsheld directly and indirectly by the Group at the end of the year had increased or decreased by 5% while all othervariables remained unchanged, the Group's shareholders' equity and profit or loss at the end of the year wouldhave been increased or decreased by RMB1,138,489.78 (without taking into account of the effect of income tax)(2023: RMB1,946,761.88).
1.2 Credit risk
As at 31 December 2024, the Group's maximum exposure to credit risk which will cause a financial loss to theGroup 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), long-termreceivables (Note (V). 10), other non-current assets (Note (V). 22) and non-current financial assets at FVTPL thatare not included in the impairment assessment (Note (V). 13). As at the balance sheet date, the carrying amountof 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 thatadequate provision for credit loss is made for relevant financial assets. In this regard, the management of theGroup considers that the Group's credit risk is significantly reduced.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(VIII) RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS - continued
1. Risk management objectives and policies - continued
1.2 Credit risk - continued
The credit risk on cash and bank balances is limited because they are deposited with banks with high credit ratings.
As of 31 December 2024, the balance of bank acceptance bills held by the Group was RMB 79,450,682.42, ofwhich all accepting banks were banks with high credit rating. Therefore, the management of the Group believesthat the credit risk of relevant bank acceptance bills is low.
As at 31 December 2024, the balance of accounts receivable of the Group's top 5 customers was RMB5,475,109,550.83 (31 December 2023: RMB 5,084,392,042.35), accounting for 53.09% (31 December 2023:
50.50%) of the Group's accounts receivable. Except for that, the Group has no other significant credit riskexposures concentrated on a single financial asset or a portfolio of financial assets with similar characteristics.
1.3. Liquidity risk
In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalentsdeemed adequate by the management to finance the Group's operations and mitigate the effects of fluctuations incash flows. The management monitors the utilization of bank borrowings and ensures compliance with loancovenants.
The following is the maturity analysis for liabilities held by the Group which is based on undiscounted remainingcontractual obligations:
Unit: RMB
| Within 1 year | 1-5 years | Over 5 years | Total | |
| Short-term borrowings | 3,685,403,232.22 | - | - | 3,685,403,232.22 |
| Accounts payable | 11,055,392,929.15 | - | - | 11,055,392,929.15 |
| Other payables | 805,175,805.23 | - | - | 805,175,805.23 |
| Long-term borrowings | 16,543,239.04 | 32,105,055.64 | - | 48,648,294.68 |
| Long-term payables | 6,227,234.95 | 18,681,704.84 | - | 24,908,939.79 |
| Bonds payable | 44,848,466.00 | 3,718,972,796.00 | - | 3,763,821,262.00 |
| Other non-current liabilities | - | 1,317,464.14 | - | 1,317,464.14 |
| Derivative financial liabilities | 4,775,306.67 | - | - | 4,775,306.67 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(IX) DISCLOSURE OF FAIR VALUE
1. Closing fair value of assets and liabilities measured at fair value
Unit: RMB
| Item | 31/12/2024 | |||
| Level 1 | Level 2 | Level 3 | Total | |
| I. Continuous fair value measurement | ||||
| (I) Financial assets at FVTPL | ||||
| 1. Derivative financial assets | - | 42,291,303.91 | - | 42,291,303.91 |
| 2. Fund investment | - | - | 138,877,865.84 | 138,877,865.84 |
| 3. Equity instrument investment | - | - | 62,215,368.00 | 62,215,368.00 |
| (II) Financial assets at FVTOCI | ||||
| 1. Equity instrument investment | - | - | 22,769,795.62 | 22,769,795.62 |
| Total assets continuously measured at fair value | - | 42,291,303.91 | 223,863,029.46 | 266,154,333.37 |
| (III) Financial liabilities at FVTPL | ||||
| 1. Derivative financial liabilities | - | 4,775,306.67 | - | 4,775,306.67 |
| Total liabilities continuously measured at fair value | - | 4,775,306.67 | - | 4,775,306.67 |
2. 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 2024 | Valuation technique | Inputs | |
| Derivative financial assets (Note (V), 2) | 42,291,303.91 | Method of discounted cash flow analysis | Forward exchange rate, discounted rate |
| Derivative financial liabilities (Note (V), 25) | 4,775,306.67 | Method of discounted cash flow analysis | Forward exchange rate, discounted rate |
3. 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 2024 | Valuation technique | Significant unobservable inputs | |
| Fund investment (Note (V), 13) | 138,877,865.84 | Asset-based approach, Market approach | Liquidity discount, PER, PBR |
| Equity instrument investments (Note (V), 12 & 13) | 84,985,163.62 | Asset-based approach, Market approach | Liquidity discount, PER, PBR |
4. Reconciliation between opening and closing carrying amounts for continuous level 3 fair value
measurement items
Unit: RMB
| Item | 1 January 2024 | Recognized in profit or loss | Recognized in other comprehensive income | Translation of financial statements denominated in foreign currencies | Purchase /Increase | Settlement | 31 December 2024 | Changes in unrealized gains or losses for assets held at the end of the reporting period |
| (I) Financial assets at FVTPL | ||||||||
| 1. Financial products | - | 58,584,884.00 | - | - | 14,156,000,000.00 | 14,214,584,884.00 | - | - |
| 2. Accounts receivable factoring | 223,401,570.22 | - | - | (3,468,374.06) | 264,623,385.41 | 484,556,581.57 | - | - |
| 3. Fund investment | 170,511,081.52 | (8,816,448.91) | - | 1,828,152.08 | 9,000,000.00 | 33,644,918.85 | 138,877,865.84 | (11,940,767.83) |
| 4. Equity instrument investment (Note) | 23,483,780.53 | (5,158,658.83) | - | 152,000.00 | 44,224,800.00 | 486,553.70 | 62,215,368.00 | (5,645,212.53) |
| (II) Financial assets at FVTOCI | ||||||||
| Other equity instruments | 38,935,237.58 | - | 6,597,018.45 | (1,932,873.71) | - | 20,829,586.70 | 22,769,795.62 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(IX) DISCLOSURE OF FAIR VALUE - continued
5. There are no changes in valuation techniques in the year.
6. 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, otherreceivables, other current assets, non-current assets due within one year, long-term receivables, short-termborrowings, 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 theircarrying amount approximates to the fair value of these assets and liabilities.
(X) Related party relationship and transactions
1. Parent company of the Company
| Name of the parent company | Place of incorporation | Nature of business | Registered capital | Proportion to the Company's ownership interest held by the parent company (%) | Proportion to the Company's voting power held by the parent company (%) |
| USI Enterprise Limited | Room A, 7/F, Yuen Long Technology Centre, No. 11 Wang Yip Street West, Yuen Long, New Territories, Hong Kong | Investment holding | USD 210,900,000.00 | 76.86 | 77.10 |
The ultimate controlling party of the Company is ASE Investment Holding Limited, which is listed on the TaiwanStock Exchange with the listing code as 3711. It is also listed on the New York Stock Exchange in the UnitedStates with the listing code as ASX.
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.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(X) Related party relationship and transactions - continued
4. Other related parties of the Company
| Names of other related parties | Relationship between other related parties and the Company |
| USI Inc. | Indirect holding company |
| ASE (Shanghai) Inc. | The same ultimate holding company |
| ASE Inc. | The same ultimate holding company |
| ASE Assembly & Test (Shanghai) Limited | The same ultimate holding company |
| ASE (US) Inc. | The same ultimate holding company |
| ASE Electronics Inc. | The same ultimate holding company |
| ISE Labs, Inc. | The same ultimate holding company |
| Advanced Semiconductor Engineering (China) Ltd. | The same ultimate holding company |
| ASE Corporate Services (Shanghai) Limited | The same ultimate holding company |
| ASE Marketing & Service Japan Co., Ltd. | The same ultimate holding company |
| SHANGHAI DINGXU PROPERTY MANAGEMENT CO., LTD | The same ultimate holding company |
| Wuxi Tongzhi Microelectronics Co., Ltd. | The same ultimate holding company |
| ISE labs, China. Ltd. | The same ultimate holding company |
| Siliconware Precision Industries Co., Ltd. | The same ultimate holding company |
| DECELECT SOISSONS (Note 2) | Company with key management serving as the director |
| DECELECT SAINT VIT (Note 2) | Company with key management serving as the director |
| ASDI Assistance Direction (Note 2) | Company with key management serving as the director |
| ASE Cultural & Educational Foundation | Company with key management serving as the director |
| Taitech Precision Electronic (Kunshan) Co., Ltd. | Subsidiary of an associate |
| Memtech Development (H.K.) Co., Limited | Subsidiary of an associate |
| Dongguan Memtech Electronics Co., Ltd. | Subsidiary of an associate |
| Nantong Memtech Technologies Co., Ltd. | Subsidiary of an associate |
| Jian Memtech Precision Electronic Co., Ltd. | Subsidiary of an associate |
| Memtech (Vietnam) Technologies Co., Ltd. | Subsidiary of an associate |
| SUMA-USI Electronics Co., Ltd. (Note 1) | Joint ventures |
Note 1: In 2023, Universal Global Technology (Kunshan) Co., Ltd., the Company's subsidiary, sold all of its
shares in SUMA-USI Electronics Co., Ltd. to an independent third party. In 2024, it was not the relatedparty of the Company.
Note 2: Since April 2023, the Company’s key management no longer served as the directors of DECELECT
SOISSONS, DECELECT SAINT VIT and ASDI Assistance Direction. Pursuant to the Listing Rules,those companies were the related parties of the Company for a period of twelve months from the effectivedate of the aforesaid arrangements. From April 2024, those companies were not the related parties of theCompany.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(X) Related party relationship 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
| Related party | Details of related party transaction | Amount incurred in the current year | Amount incurred in the prior year |
| Taitech Precision Electronic (Kunshan) Co., Ltd. | Purchase of materials | 52,745,156.28 | 46,368,452.98 |
| ASE Electronics Inc. | Purchase of materials | 28,130,881.94 | 29,677,474.40 |
| Memtech Development (H.K.) Co., Limited | Purchase of materials | 15,677,562.47 | 17,046,337.06 |
| Jian Memtech Precision Electronic Co., Ltd. | Purchase of materials | 8,030,790.35 | 1,875,659.20 |
| Dongguan Memtech Electronics Co., Ltd. | Purchase of materials | 3,023,688.84 | 13,019,265.84 |
| Nantong Memtech Technologies Co., Ltd. | Purchase of materials | 876,598.37 | 1,150,835.88 |
| ASE Inc. | Purchase of materials | 444,856.23 | 912,483.25 |
| Memtech (Vietnam) Technologies Co., Ltd. | Purchase of materials | 178,939.85 | 119,720.21 |
| DECELECT SAINT VIT | Purchase of materials | - | 526,761.46 |
| SUMA-USI Electronics Co., Ltd. | Purchase of materials | N/A | 2,836.49 |
| Total | 109,108,474.33 | 110,699,826.77 | |
| ASE Inc. | Receipt of services | 899,714,198.56 | 873,041,344.61 |
| ASE Corporate Services (Shanghai) Limited | Receipt of services | 36,024,692.21 | 4,390,614.74 |
| USI Inc. | Receipt of services | 14,616,069.52 | - |
| Siliconware Precision Industries Co., Ltd | Receipt of services | 7,678,215.44 | 2,808,188.73 |
| USI Enterprise Limited | Receipt of services | 3,833,948.30 | 3,606,371.52 |
| SHANGHAI DINGXU PROPERTY MANAGEMENT CO., LTD | Receipt of services | 1,995,231.21 | 2,025,901.89 |
| ASE Marketing & Service Japan Co., Ltd. | Receipt of services | 1,047,162.37 | 725,317.20 |
| ASE Cultural & Educational Foundation | Receipt of services | 549,463.76 | - |
| Jian Memtech Precision Electronic Co., Ltd. | Receipt of services | 172,798.21 | - |
| Dongguan Memtech Electronics Co., Ltd. | Receipt of services | 28,451.39 | 66,000.00 |
| ASE (US) Inc. | Receipt of services | 2,478.59 | 36,860.41 |
| Taitech Precision Electronic (Kunshan) Co., Ltd. | Receipt of services | 495.00 | 190,517.92 |
| ASE (Shanghai) Inc. | Receipt of services | - | 32,385,810.78 |
| SUMA-USI Electronics Co., Ltd. | Receipt of services | N/A | 171,799.14 |
| Memtech Development (H.K.) Co., Limited | Receipt of services | - | 22,988.95 |
| Total | 965,663,204.56 | 919,471,715.89 |
The above transactions are executed at the prices agreed on by both parties.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(X) Related party relationship 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
| Related party | Details of related party transaction | Amount incurred in the current year | Amount incurred in the prior year |
| ASE Inc. | Sales of goods | 266,809,005.50 | 6,222,160.06 |
| DECELECT SOISSONS | Sales of goods | - | 103,537.96 |
| SUMA-USI Electronics Co., Ltd. | Sales of goods | N/A | 9,140.27 |
| Total | 266,809,005.50 | 6,334,838.29 | |
| ASE Inc. | Provision of services | 22,237,941.09 | 17,647,309.98 |
| USI Inc. | Provision of services | 4,875,345.20 | - |
| ISE labs, China. Ltd. | Provision of services | 1,008,545.54 | 959,723.55 |
| Taitech Precision Electronic (Kunshan) Co., Ltd. | Provision of services | - | 211,137.44 |
| SUMA-USI Electronics Co., Ltd. | Provision of services | N/A | 13,580.00 |
| Total | 28,121,831.83 | 18,831,750.97 |
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
| Name of lessee | Type of leased assets | Lease income recognized in the current year | Lease income recognized in the prior year |
| ASE Inc. | Plant | 1,393,881.61 | 3,534,211.90 |
| ISE Labs, Inc. | Leasing of business premises | 675,576.14 | 1,896,397.55 |
| Wuxi Tongzhi Microelectronics Co., Ltd. | Machinery and equipment | - | 19,359.06 |
| Total | 2,069,457.75 | 5,449,968.51 |
The above transactions are executed at the prices agreed on by both parties.
Leases where the Group is the lessee
Unit: RMB
| Name of lessor | Type of leased assets | Rent paid | Interest expenses incurred on lease liabilities | Right-of-use assets increased | |||
| Amount for the current year | Amount for the prior year | Amount for the current year | Amount for the prior year | Amount for the current year | Amount for the prior year | ||
| ASE Assembly & Test (Shanghai) Limited | Leasing of business premises | 14,531,859.72 | 15,087,539.74 | 1,711,886.60 | 2,392,528.09 | - | - |
| Advanced Semiconductor Engineering (China) Ltd. | Leasing of business premises | 16,148,148.36 | 16,148,148.36 | 442,734.61 | 781,229.60 | - | - |
| USI Inc. | Leasing of business premises | 31,503,647.01 | 32,069,145.12 | 1,260,177.62 | 1,890,692.32 | - | - |
| ISE Labs, Inc. | Leasing of business premises | 389,065.04 | 371,833.44 | 26,850.95 | 35,276.85 | - | - |
| Total | 62,572,720.13 | 63,676,666.66 | 3,441,649.78 | 5,099,726.86 | - | - | |
The above transactions are executed at the prices agreed on by both parties.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(X) Related party relationship and transactions - continued
5. Related party transactions - continued
(3) Assets transfer with related parties
Unit: RMB
| Related party | Details of related party transaction | Amount incurred in the current year | Amount incurred in the prior year |
| Siliconware Precision Industries Co., Ltd | Sales of fixed assets | 6,768,750.00 | - |
| ISE labs, China. Ltd. | Sales of fixed assets | 920,532.11 | - |
| Total | 7,689,282.11 | - | |
| Taitech Precision Electronic (Kunshan) Co., Ltd. | Purchase of fixed assets | 14,882,333.00 | 4,603,350.00 |
| Jian Memtech Precision Electronic Co., Ltd. | Purchase of fixed assets | 896,907.00 | - |
| Dongguan Memtech Electronics Co., Ltd. | Purchase of fixed assets | 97,912.80 | - |
| Total | 15,877,152.80 | 4,603,350.00 |
The above transactions are executed at the prices agreed on by both parties.
(4) Interest expenses with related parties
Unit: RMB
| Related party | Details of related party transaction | Amount incurred in the current year | Amount incurred in the prior year |
| USI Enterprise Limited | Interest expenses on convertible bonds | 38,777,856.86 | 46,206,386.54 |
(5) Compensation for key management personnel
Unit: RMB
| Item name | Amount incurred in the current year | Amount incurred in the prior year |
| Compensation for key management personnel | 28,248,523.85 | 28,238,630.96 |
6. Amounts due from / to related parties
(1) Amounts due from related parties
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 | ||
| Book value | Provision for loss | Book value | Provision for loss | ||
| Accounts receivable | ASE Inc. | 148,092,697.66 | - | 4,205,124.03 | - |
| Accounts receivable | ISE Labs, Inc. | - | - | 158,851.95 | - |
| Total | 148,092,697.66 | - | 4,363,975.98 | - | |
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 | ||
| Book value | Provision for loss | Book value | Provision for loss | ||
| Prepayments | Siliconware Precision Industries Co., Ltd | 331,656.13 | - | - | - |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(X) Related party relationship and transactions - continued
6. Amounts due from / to related parties - continued
(1) Amounts due from related parties - continued
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 | ||
| Book value | Provision for loss | Book value | Provision for loss | ||
| Other receivables | Siliconware Precision Industries Co., Ltd | 6,828,980.00 | - | - | - |
| Other receivables | ISE labs, China. Ltd. | 252,051.29 | - | 141,696.00 | - |
| Other receivables | USI Inc. | 37,571.53 | - | 24,642.40 | - |
| Other receivables | ASE Inc. | 20,958.07 | - | 439,240.89 | - |
| Other receivables | ASDI Assistance Direction | N/A | - | 29,366,894.59 | - |
| Total | 7,139,560.89 | - | 29,972,473.88 | - | |
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 | ||
| Book value | Provision for loss | Book value | Provision for loss | ||
| Other non-current assets | Advanced Semiconductor Engineering (China) Ltd. | 1,371,575.33 | - | 1,384,151.73 | - |
| Other non-current assets | ASE Assembly & Test (Shanghai) Limited | 409,781.71 | - | 401,473.74 | - |
| Other non-current assets | ISE Labs, Inc. | 24,399.16 | - | 23,995.34 | - |
| Other non-current assets | ASE Inc. | - | - | 680,474.35 | - |
| Total | 1,805,756.20 | - | 2,490,095.16 | - | |
(2) Amounts due to related parties
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 |
| Accounts payable | ASE Inc. | 250,339,086.91 | 283,616,382.55 |
| Accounts payable | Taitech Precision Electronic (Kunshan) Co., Ltd. | 39,346,125.44 | 23,465,072.03 |
| Accounts payable | USI Inc. | 11,346,994.32 | 11,834,518.15 |
| Accounts payable | Memtech Development (H.K.) Co., Limited | 9,272,367.23 | 4,323,660.34 |
| Accounts payable | ASE Electronics Inc. | 5,094,908.56 | 6,726,853.62 |
| Accounts payable | Jian Memtech Precision Electronic Co., Ltd. | 4,505,391.07 | 1,928,215.49 |
| Accounts payable | Dongguan Memtech Electronics Co., Ltd. | 2,375,791.10 | 5,773,388.48 |
| Accounts payable | Siliconware Precision Industries Co., Ltd | 611,824.82 | 782,215.65 |
| Accounts payable | USI Enterprise Limited | 337,587.84 | 288,411.43 |
| Accounts payable | Nantong Memtech Technologies Co., Ltd. | 169,210.54 | 131,479.58 |
| Accounts payable | Memtech (Vietnam) Technologies Co., Ltd. | 126,748.90 | 70,031.61 |
| Accounts payable | ASE (US) Inc. | - | 31,244.61 |
| Total | 323,526,036.73 | 338,971,473.54 |
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 |
| Other payables | ASE Corporate Services (Shanghai) Limited | 2,660,949.05 | 4,476,073.82 |
| Other payables | ISE Labs, Inc. | 768,975.50 | - |
| Other payables | Memtech Development (H.K.) Co., Limited | 282,768.00 | 659,923.10 |
| Other payables | SHANGHAI DINGXU PROPERTY MANAGEMENT CO., LTD | 182,208.25 | 285,740.90 |
| Other payables | ASE Inc. | 54,148.15 | 421,373.94 |
| Other payables | USI Inc. | 5,744.58 | 10,518.52 |
| Other payables | ASE (Shanghai) Inc. | - | 748,323.19 |
| Other payables | Dongguan Memtech Electronics Co., Ltd. | - | 33,335.00 |
| Total | 3,954,793.53 | 6,635,288.47 |
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 |
| Long-term payables | USI Inc. | 18,348,682.49 | 25,526,297.84 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(X) Related party relationship and transactions - continued
6. Amounts due from / to related parties - continued
(2) Amounts due to related parties - continued
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 |
| Bonds payable | USI Enterprise Limited | 785,428,252.70 | 967,638,439.87 |
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 |
| Lease liabilities | USI Inc. | 51,263,696.49 | 85,282,357.96 |
| Lease liabilities | ASE Assembly & Test (Shanghai) Limited | 31,669,194.59 | 44,489,167.71 |
| Lease liabilities | Advanced Semiconductor Engineering (China) Ltd. | 31,648,619.22 | 14,745,019.34 |
| Total | 114,581,510.30 | 144,516,545.01 |
7. Related party commitments
As at 31 December 2024, there are no related party commitments.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XI) SHARE-BASED PAYMENTS
1. Summary of share-based payments
Unit: share
| 2024 | Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2015 (Note 1) | Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2019 (Note 2) | Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2020 (Note 3) | Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2023 (Note 4) | Employee Share Ownership Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2023 (Note 5) | |
| Total number of the Company's equity instruments outstanding at the beginning of the year | 11,649,080 | 3,364,000 | 297,000 | 14,418,000 | 372,000 | |
| Total number of the Company's equity instruments granted during the year | - | - | - | - | 5,722,397 | |
| Total number of the Company's equity instruments vested during the period | 342,655 | 2,664,220 | - | 902,393 | - | |
| Total number of the Company's equity instruments lapsed during the period | 245,500 | 699,780 | 297,000 | 7,576,000 | 3,175,809 | |
| Total number of the Company's equity instruments outstanding at the end of the year | 11,060,925 | - | - | 5,939,607 | 2,918,588 | |
| Total number of equity instruments exercisable at the end of the year | 11,060,925 | - | - | 5,939,607 | - | |
| Range of exercise prices and remaining contractual life of the Company's stock options outstanding at the end of the year | Exercise prices of stock options | RMB 15.54 | N/A | N/A | RMB 14.27 | RMB 14.54 (granted in 2023) RMB 14.35 (granted in 2024) |
| Remaining contractual life | About 1 year | N/A | N/A | About 2 years | About 2 years | |
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 mobilizethe enthusiasm of the Company's middle-level managers and employees, effectively combine theinterests of shareholders, the Company and the personal interests of operators, and to make all partiesjointly focus on the long-term development of the Company, the Company formulated the "Stock OptionIncentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd." to grant qualified employees acertain number of stock options to subscribe for the Company's general shares. During the service periodof the employees granted stock options for the Group, the fair value of the corresponding equityinstruments shall be included in the costs or expenses of the Group on a straight-line basis during thevesting 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 Scientific Industrial (Shanghai) Co., Ltd. | Universal Scientific Industrial (Shanghai) Co., Ltd. | 25 November 2015 | 25 November 2015 to 24 November 2020 | 25 November 2017 to 24 November 2025 |
The optionee of the stock options can exercise the right in proportions according to the following timepoints after being granted the stock options for two years and meeting the performance assessment atthe company and individual level.
| Accumulated maximum vested proportion | |
| 2 years after the grant date | 40% |
| 3 years after the grant date | 60% |
| 4 years after the grant date | 80% |
| 5 years after the grant date | 100% |
If the stock options are not exercised 10 years after the grant date, the options will lapse. If the incentiverecipient leaves the Company due to resignation or layoffs, the stock options that have been approved toexercise but have not been exercised by the incentive recipient shall be terminated and the unapprovedoptions will be null and void on the date thereof. If the incentive recipient leaves the Company due toretirement, the incentive recipient shall continue to retain the exercise right for the stock options thathave been approved to exercise but have not been exercised, and the options that have not been approvedto exercise shall be invalidated on the date thereof.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XI) SHARE-BASED PAYMENTS - continued
1. Summary of share-based payments - continued
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 theCompany's directors (excluding independent directors), senior managers, core managers, middle-levelmanagers and core business (technical) staff, and to effectively combine the interests of shareholders, theCompany and the personal interests of the core team, as well as to make all parties jointly focus on thelong-term development of the Company, the Company formulated the Stock Option Incentive Plan ofUniversal Scientific Industrial (Shanghai) Co., Ltd. to grant qualified employees a certain number ofstock options to subscribe for the Company's general shares. During the service period of the employeesgranted stock options for the Group, the fair value of the corresponding equity instruments shall beincluded in the costs or expenses of the Group on a straight-line basis during the vesting period, and thecapital reserve shall be increased accordingly.
According to the 2019 Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co.,Ltd., from the date of announcement of the draft incentive plan to the date when the incentive objectcompletes 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 optionswill be adjusted accordingly. The Eleventh Meeting of the Sixth Session of the Board of Directors heldon 23 April 2024 approved the proposal on adjusting and canceling some rights and interests related tothe first grant of stock option incentive plan in 2019, and the exercise price was adjusted from RMB
11.98 per share to RMB 11.71 per share.
| Plan No. | Granted by | Grant date | Vesting period | Exercise period |
| Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. | Universal Scientific Industrial (Shanghai) Co., Ltd. | 28 November 2019 | 28 November 2019 to 27 November 2023 | 28 November 2021 to 27 November 2024 |
The optionee of the stock options can exercise the right in proportions according to the following timepoints after being granted the stock options for two years and meeting the performance assessment atthe company and individual level.
| Accumulated maximum vested proportion | |
| 2 years after the grant date | 40% |
| 3 years after the grant date | 70% |
| 4 years after the grant date | 100% |
If the stock options are not exercised 5 years after the grant date, the options will lapse. If the incentiverecipient leaves the Company due to resignation or layoffs, the stock options that have been approved toexercise but have not been exercised by the incentive recipient shall be terminated and the unapprovedoptions will be null and void on the date thereof. If the incentive recipient leaves the Company due toretirement, the incentive recipient shall continue to retain the exercise right for the stock options thathave been approved to exercise but have not been exercised, and the options that have not been approvedto exercise shall be invalidated on the date thereof.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XI) SHARE-BASED PAYMENTS - continued
1. Summary of share-based payments - continued
Note 3: 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 theCompany's directors (excluding independent directors), senior managers, core managers, middle-levelmanagers and core business (technical) staff, and to effectively combine the interests of shareholders, theCompany and the personal interests of the core team, as well as to make all parties jointly focus on thelong-term development of the Company, the Company formulated the Stock Option Incentive Plan ofUniversal Scientific Industrial (Shanghai) Co., Ltd. to grant qualified employees a certain number ofstock options to subscribe for the Company's general shares. During the service period of the employeesgranted stock options for the Group, the fair value of the corresponding equity instruments shall beincluded in the costs or expenses of the Group on a straight-line basis during the vesting period, and thecapital reserve shall be increased accordingly.
According to the 2019 Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co.,Ltd., from the date of announcement of the draft incentive plan to the date when the incentive objectcompletes 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 optionswill be adjusted accordingly. The Eleventh Meeting of the Sixth Session of the Board of Directors heldon 23 April 2024 approved the proposal on adjusting and canceling some rights and interests related tothe first grant of stock option incentive plan in 2019, and the exercise price of the portion of the grantreserved was adjusted from RMB 20.46 per share to RMB 20.19 per share.
| Plan No. | Granted by | Grant date | Vesting period | Exercise period |
| Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. | Universal Scientific Industrial (Shanghai) Co., Ltd. | 9 September 2020 | 9 September 2020 to 8 November 2023 | 9 November 2021 to 8 November 2024 |
The optionee of the stock options can exercise the right in proportions according to the following timepoints after being granted the stock options for 14 months and meeting the performance assessment atthe 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 fail to be exercised by the incentive recipient will be lapsed after the end of eachexercise period of the stock options. If the incentive recipient leaves the Company due to resignation orlayoffs, the stock options that have been approved to exercise but have not been exercised by theincentive recipient shall be terminated and the unapproved options will be null and void on the datethereof. If the incentive recipient leaves the Company due to retirement, the incentive recipient shallcontinue to retain the exercise right for the stock options that have been approved to exercise but havenot been exercised, and the options that have not been approved to exercise shall be invalidated on thedate thereof.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XI) SHARE-BASED PAYMENTS - continued
1. Summary of share-based payments - continued
Note 4: In October 2023, in order to establish and improve the Company's long-term incentive, assessment and
restraint mechanism, to attract and retain excellent talents, to fully mobilize the enthusiasm of theCompany's middle-level managers and core business and technical staff, and to effectively combine theinterests of shareholders, the Company and the personal interests of the core team, as well as to make allparties jointly focus on the long-term development of the Company, the Company formulated the StockOption Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. to grant qualified employeesa certain number of stock options to subscribe for the Company's general shares. During the serviceperiod of the employees granted stock options for the Group, the fair value of the corresponding equityinstruments shall be included in the costs or expenses of the Group on a straight-line basis during thevesting period, and the capital reserve shall be increased accordingly.
According to the 2023 Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co.,Ltd., from the date of announcement of the draft incentive plan to the date when the incentive objectcompletes 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 optionswill be adjusted accordingly. The Eleventh Meeting of the Sixth Session of the Board of Directors heldon 23 April 2024 approved the proposal on adjusting and canceling some rights and interests related tothe first grant of stock option incentive plan in 2023, and the exercise price was adjusted from RMB
14.54 per share to RMB 14.27 per share.
| Plan No. | Granted by | Grant date | Vesting period | Exercise period |
| Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. | Universal Scientific Industrial (Shanghai) Co., Ltd. | 13 October 2023 | 13 October 2023 to 13 October 2025 | 14 October 2024 to 13 October 2026 |
The optionee of the stock options can exercise the right in proportions according to the following timepoints after being granted the stock options for 12 months and meeting the performance assessment atthe company and individual level.
| Accumulated maximum vested proportion | |
| 12 months after the grant date | 50% |
| 24 months after the grant date | 100% |
The stock options that fail to be exercised by the incentive recipient will be lapsed after the end of eachexercise period of the stock options. If the incentive recipient leaves the Company due to resignation,downsizing, non-renewal of employment contract, termination of employment contract or employmentagreement by negotiation, or dismissal by the Company, the stock options that have been approved toexercise but have not been exercised by the incentive recipient shall be terminated, and the unapprovedoptions will be invalidated on the date thereof. If the incentive recipient retires normally in accordancewith national laws and regulations and the Company's regulations, the incentive recipient shall continueto retain the exercise right for the stock options that have been approved to exercise but have not beenexercised, and the options that have not been approved to exercise shall be invalidated on the date thereof.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XI) SHARE-BASED PAYMENTS - continued
1. Summary of share-based payments - continued
Note 5: In November 2023, in order to enrich the salary system of employees, establish and improve the benefit
sharing mechanism between workers and owners, realize the consistency of the interests of the Company,shareholders and employees, and promote all parties to jointly focus on the long-term development ofthe Company, so as to bring more efficient and lasting returns to shareholders; to further improve thecorporate governance structure, improve the Company's long-term and effective incentive and restraintmechanism, and ensure the long-term and stable development of the Company; to implement thedevelopment strategies of the Company, effectively mobilize the enthusiasm of employees, and retainexcellent key management, technical and business talents, and motivate employees to create value forthe Company and enhance the competitiveness of the Company in the industry, the Company formulatedthe Employee Share Ownership Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2023 togrant the qualified core talents with a certain number of stock options to subscribe for the general sharesof the Company.
| Plan No. | Granted by | Grant date | Vesting period | Exercise period |
| Employee Share Ownership Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. - Granted in 2023 | Universal Scientific Industrial (Shanghai) Co., Ltd. | 23 November 2023 | 23 November 2023 to 23 November 2025 | 23 November 2024 to 23 November 2026 |
| Employee Share Ownership Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. - Granted in 2024 | Universal Scientific Industrial (Shanghai) Co., Ltd. | 16 January 2024 | 16 January 2024 to 16 January 2026 | 16 January 2025 to 16 January 2027 |
The optionee of the stock options can exercise the right in proportions according to the following timepoints after being granted the stock options for 12 months and meeting the performance assessment atthe company and individual level.
| Accumulated maximum vested proportion | |
| 12 months after the grant date | 50% |
| 24 months after the grant date | 100% |
Incentive recipients, who are disqualified from participation due to material violation of laws andregulations, non-competition behavior, voluntary resignation, layoffs by the Company, non-renewal oflabor contracts and employment agreements upon expiration, negotiated termination of labor contractsor employment agreements, or dismissal from the Company, shall have their corresponding shareswithdrawn by the Management Committee, and the shares corresponding to their withdrawn shares shallbe sold in the secondary market, and the Management Committee shall distribute the shares to the holdersaccording to the lower of the amount obtained after the sale of such shares and the consideration paid forthe underlying shares corresponding to the shares held by the holders under the Employee StockOwnership Plan, and the Management Committee shall be responsible for determining the principles ofdistribution of the excess portion, if any, and shall further distribute the same to the holders. TheManagement Committee shall be responsible for determining the principles of allocation and furtherdistribution of the excess portion, if any. If a holder retires in accordance with the Company's regulations,its rights and interests in the Employee Stock Ownership Plan shall remain unchanged.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XI) SHARE-BASED PAYMENTS - continued
2. Equity-settled share-based payments
Unit: RMB
| Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2015 | Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2019 | Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2020 | Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2023 | Employee Share Ownership Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2023 - Granted in 2023 | Employee Share Ownership Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2023 - Granted in 2024 | |
| The basis of determining the number of equity instruments expected to be vested | When the optionee reaches the exercise period in the stock options plan and meets the performance assessment at the company and individual level, and the corresponding equity instrument is that expected to be vested | When the optionee reaches the exercise period in the stock options plan and meets the performance assessment at the company and individual level, and the corresponding equity instrument is that expected to be vested | When the optionee reaches the exercise period in the stock options plan and meets the performance assessment at the company and individual level, and the corresponding equity instrument is that expected to be vested | When the optionee reaches the exercise period in the stock options plan and meets the performance assessment at the company and individual level, and the corresponding equity instrument is that expected to be vested | When the optionee reaches the exercise period in the stock options plan and meets the performance assessment at the company and individual level, and the corresponding equity instrument is that expected to be vested | When the optionee reaches the exercise period in the stock options plan and meets the performance assessment at the company and individual level, and the corresponding equity instrument is that expected to be vested |
| Reasons for the significant difference between the estimate in the current year and that in the prior year | None | None | None | On the balance sheet date, the Company estimates the number of equity instruments expected to be vested according to the best estimate of the Company's management, and considers the impact of performance and other relevant factors in determining the estimate. | None | N/A |
| Amounts of equity-settled share-based payments accumulated in capital reserve | 139,923,402.85 | 107,201,000.00 | 7,087,000.00 | 26,135,000.00 | - | - |
| Total expenses recognized arising from equity-settled share-based payments | - | - | - | 17,755,000.00 | - | - |
Method of determining the fair value of equity instruments: Fair values are calculated by using Black-ScholesModel, Binomial Tree Model and etc., the inputs to the model at the grant date are as follows:
| Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2015 | Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2019 | Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2020 | Stock Option Incentive Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2023 | Employee Share Ownership Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2023 - Granted in 2023 | Employee Share Ownership Plan of Universal Scientific Industrial (Shanghai) Co., Ltd. in 2023 - Granted in 2024 | |
| Weighted average share price | RMB 15.54 | RMB 13.34 | RMB 21.65 | RMB 14.54 | RMB 14.54 | RMB 14.35 |
| Weighted average exercise price | RMB 15.54 | RMB 13.34 | RMB 21.65 | RMB 14.54 | RMB 14.54 | RMB 14.35 |
| Expected volatility | 40.33%~45.00% | 45.07%~51.80% | 48.14%~53.57% | 38.51%~39.09% | 36.56%~38.77% | 35.02%~37.02% |
| Expected life | 6 years ~7.5 years | 3 years ~5 years | 2.17 years ~4.17 years | 1 year ~2 years | 1 year ~2 years | 1 year ~2 years |
| Risk-free interest rate | 3.06%~3.13% | 2.80%-2.97% | 2.80%-2.99% | 2.35%-2.45% | 2.33%-2.44% | 2.11%-2.27% |
| Expected dividend yield | 0.87% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
Expected volatility is calculated based on the volatility of the share prices of similar companies during the pastcertain years. Expected life used in the model is based on the best estimate of management after the adjustmentsof 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.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XII) COMMITMENTS AND CONTINGENCIES
1. Significant commitments
(1) Capital commitments
Unit: RMB’000
| 31/12/2024 | 31/12/2023 | |
| 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 | 601,228 | 359,557 |
| - External investment commitment (Note (VI), 2) | 35,454 | 193,499 |
| Total | 636,682 | 553,056 |
Note: For the commitment of foreign investment, according to the partnership agreement signed between the
Company and Suzhou Yaotu Equity Investment Partnership, the investee, the Company is required topay a total subscription amount of RMB30,000,000.00, and as at 31 December 2023, the Group had paidRMB21,000,000.00 in total, but remained a subscription amount of RMB 9,000,000.00, unpaid. As at 31December 2024, the Group has fully paid RMB30,000,000.00 in total.
For the commitment of foreign investment, according to the partnership agreement signed between UGSIand Merry Electronics, UGSI is required to pay a total subscription amount of TWD 191,100,000.00. Asat 31 December 2023, the Group had paid TWD 29,400,000.00, equivalent to RMB 7,044,079.28 in total;but remained a subscription amount of TWD 161,700,000.00, equivalent to RMB 37,299,221.30, unpaid.As at 31 December 2024, the Group remains a subscription amount of TWD 161,700,000.00, equivalentto RMB 35,454,149.15, unpaid.
For the commitment of foreign investment, according to the Share and Asset Purchase Agreement signedwith UGT, Ample Trading and Hirschmann, UGT and Ample Trading are required to pay a totalsubscription amount of USD48,000,000.00, which will be paid in cash after adjusting accordingly for theactual net liabilities and working capital levels of the underlying business as of the settlement date(including the purchase price adjustment). As at 31 December 2023, the Group had paidUSD41,400,000.00 in total, equivalent to RMB297,177,480.00, but remained USD6,600,000.00 andUSD14,183,000.00, in respect of adjustments to the provisional estimate of the purchase price, equivalentto RMB147,199,754.10, unpaid. As at 31 December 2024, the Group has paid the equity purchase pricebased on the final transaction price, please refer to Note (VI) 3 for details.
2. Contingencies
The Group has no significant contingencies to be disclosed.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XIII) EVENTS AFTER THE BALANCE SHEET DATE
1. Profit appropriation
As proposed by the resolution of the Seventeenth Meeting of the Sixth Session of the Board of Directors of theCompany held on 28 March 2025, a cash dividend of RMB 2.30 (including tax) per 10 shares will be distributedon the basis of the total share capital at the equity registration date less the number of the shares repurchased bythe Company from special accounts, with no bonus issue and no increase in share capital. The above proposalregarding dividends distribution is yet to be approved in a shareholders' meeting.
(XIV) OTHER SIGNIFICANT EVENTS
1. Segment information
(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 Chinese mainland), Europe and other countries/regions. At the sametime, the products are divided into communication products, consumer electronics products, cloud and storageproducts, industrial products, automotive electronics products and other products according to categories in eachregion. These report segments are recognized on the basis of manufacturing location and product category. TheGroup's management periodically evaluates the operating results of these reporting segments to make decisionsabout resources to be allocated to the segments and assess their performance.
Segment information is disclosed in accordance with the accounting policies and measurement criteria adoptedby each segment when reporting to management. The measurement criteria are consistent with the accountingand measurement criteria in the preparation of the financial statements. Due to the changes in significantaccounting policies, the Group restated the previous data.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XIV) OTHER SIGNIFICANT EVENTS - continued
1. Segment information - continued
(2) Financial information of reporting segments
2024:
Unit: RMB’000
| Chinese mainland | APAC | European region | Other countries/regions | Inter-segment offsetting | Total | |||||||||||||
| Operating income | Operating costs | Sub-total of the segment | Operating income | Operating costs | Sub-total of the segment | Operating income | Operating costs | Sub-total of the segment | Operating income | Operating costs | Sub-total of the segment | Operating income | Operating costs | Sub-total of the segment | Operating income | Operating costs | Total of the segment | |
| Communication products | 14,926,891 | 13,738,506 | 1,188,385 | 6,193,192 | 5,969,700 | 223,492 | 6,679 | 11,940 | (5,261) | 15,939 | 16,395 | (456) | (76,376) | (275,260) | 198,884 | 21,066,325 | 19,461,281 | 1,605,044 |
| Consumer electronic products | 15,825,344 | 14,423,073 | 1,402,271 | 4,394,659 | 4,124,712 | 269,947 | 105,688 | 83,195 | 22,493 | 112,161 | 109,570 | 2,591 | (1,235,063) | (1,121,378) | (113,685) | 19,202,789 | 17,619,172 | 1,583,617 |
| Cloud and storage products | 2,767,723 | 2,239,819 | 527,904 | 3,803,217 | 3,379,444 | 423,773 | 235,246 | 206,695 | 28,551 | 907,572 | 807,720 | 99,852 | (1,617,177) | (1,621,531) | 4,354 | 6,096,581 | 5,012,147 | 1,084,434 |
| Industrial products | 2,579,368 | 2,262,239 | 317,129 | 3,322,535 | 2,983,104 | 339,431 | 2,001,417 | 1,851,622 | 149,795 | 1,646,407 | 1,602,570 | 43,837 | (2,431,687) | (2,413,347) | (18,340) | 7,118,040 | 6,286,188 | 831,852 |
| Automotive electronic products | 1,111,320 | 984,105 | 127,215 | 521,724 | 426,858 | 94,866 | 1,999,115 | 1,637,073 | 362,042 | 2,352,963 | 2,464,835 | (111,872) | (13,609) | (15,990) | 2,381 | 5,971,513 | 5,496,881 | 474,632 |
| Medical products | 8,500 | 7,145 | 1,355 | - | - | - | 324,417 | 310,618 | 13,799 | 960 | 1,042 | (82) | - | - | - | 333,877 | 318,805 | 15,072 |
| Others | 272,858 | 235,793 | 37,065 | 555,497 | 218,275 | 337,222 | 536,661 | 491,481 | 45,180 | 77,403 | 12,724 | 64,679 | (616,869) | (224,794) | (392,075) | 825,550 | 733,479 | 92,071 |
| Principal operating income/cost of the segment | 37,492,004 | 33,890,680 | 3,601,324 | 18,790,824 | 17,102,093 | 1,688,731 | 5,209,223 | 4,592,624 | 616,599 | 5,113,405 | 5,014,856 | 98,549 | (5,990,781) | (5,672,300) | (318,481) | 60,614,675 | 54,927,953 | 5,686,722 |
| Other operating income/cost of the segment | 81,062 | 1,413 | 79,649 | 5,705 | 1,213 | 4,492 | 44,696 | 168 | 44,528 | 5,070 | - | 5,070 | (60,557) | (1,134) | (59,423) | 75,976 | 1,660 | 74,316 |
| Total operating income/cost of the segment | 37,573,066 | 33,892,093 | 3,680,973 | 18,796,529 | 17,103,306 | 1,693,223 | 5,253,919 | 4,592,792 | 661,127 | 5,118,475 | 5,014,856 | 103,619 | (6,051,338) | (5,673,434) | (377,904) | 60,690,651 | 54,929,613 | 5,761,038 |
| Less: Taxes and levies | 122,648 | 1,423 | (4,257) | 18,159 | - | 137,973 | ||||||||||||
| Selling expenses | 199,887 | 101,780 | 120,697 | 57,763 | (70,780) | 409,347 | ||||||||||||
| Administrative expenses | 418,959 | 570,709 | 348,960 | 190,796 | (158,910) | 1,370,514 | ||||||||||||
| Research and development expenses | 1,251,446 | 567,356 | 181,959 | 43,217 | (136,428) | 1,907,550 | ||||||||||||
| Financial expenses | (85,302) | 194,781 | 24,208 | 185,790 | (6,826) | 312,651 | ||||||||||||
| Including: Interest expenses | 184,991 | 154,824 | 61,014 | 150,251 | (160,071) | 391,009 | ||||||||||||
| Interest income | 243,161 | 168,066 | 41,348 | 5,101 | (153,392) | 304,284 | ||||||||||||
| Add: Other income | 50,271 | 1 | 13,161 | - | - | 63,433 | ||||||||||||
| Investment income | 57,235 | 152,285 | 3,943 | - | - | 213,463 | ||||||||||||
| Including: Income from investments in associates and joint ventures | (3,460) | 37,323 | - | - | - | 33,863 | ||||||||||||
| Gains (losses) from changes in fair values | (4,176) | 4,516 | (2,801) | - | - | (2,461) | ||||||||||||
| Gains (losses) on impairment of credit | (12,372) | (612) | (6,064) | (13,752) | - | (32,800) | ||||||||||||
| Gains (losses) from assets impairment | (47,921) | 40,199 | (3,092) | 11,127 | - | 313 | ||||||||||||
| Gains (losses) from disposal of assets | 2,207 | 4,483 | 841 | - | - | 7,531 | ||||||||||||
| Operating profit | 1,818,579 | 458,046 | (4,452) | (394,731) | (4,960) | 1,872,482 | ||||||||||||
| Net profit | 1,647,075 | 363,124 | (21,811) | (319,292) | (24,927) | 1,644,169 | ||||||||||||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XIV) OTHER SIGNIFICANT EVENTS - continued
1. Segment information - continued
(2) Financial information of reporting segments - continued
2023 (restated):
Unit: RMB’000
| Chinese mainland | APAC | European region | Other countries/regions | Inter-segment offsetting | Total | |||||||||||||
| Operating income | Operating costs | Sub-total of the segment | Operating income | Operating costs | Sub-total of the segment | Operating income | Operating costs | Sub-total of the segment | Operating income | Operating costs | Sub-total of the segment | Operating income | Operating costs | Sub-total of the segment | Operating income | Operating costs | Total of the segment | |
| Communication products | 15,115,896 | 13,832,652 | 1,283,244 | 6,919,039 | 6,663,962 | 255,077 | 25,692 | 28,535 | (2,843) | 12,537 | 11,815 | 722 | (273,894) | (433,639) | 159,745 | 21,799,270 | 20,103,325 | 1,695,945 |
| Consumer electronic products | 15,367,363 | 14,030,758 | 1,336,605 | 5,014,228 | 4,731,103 | 283,125 | 253,066 | 237,459 | 15,607 | 8,606 | 9,907 | (1,301) | (1,389,074) | (1,280,779) | (108,295) | 19,254,189 | 17,728,448 | 1,525,741 |
| Cloud and storage products | 2,440,817 | 2,014,154 | 426,663 | 3,489,246 | 3,103,827 | 385,419 | 260,752 | 249,621 | 11,131 | 397,270 | 359,214 | 38,056 | (1,209,306) | (1,208,004) | (1,302) | 5,378,779 | 4,518,812 | 859,967 |
| Industrial products | 3,154,753 | 2,767,518 | 387,235 | 3,072,600 | 2,659,156 | 413,444 | 2,698,637 | 2,498,302 | 200,335 | 1,446,391 | 1,366,465 | 79,926 | (2,207,921) | (2,289,745) | 81,824 | 8,164,460 | 7,001,696 | 1,162,764 |
| Automotive electronic products | 1,121,896 | 994,657 | 127,239 | 480,844 | 483,590 | (2,746) | 1,035,302 | 847,060 | 188,242 | 2,515,140 | 2,409,986 | 105,154 | (15,742) | (12,737) | (3,005) | 5,137,440 | 4,722,556 | 414,884 |
| Medical products | 11,061 | 8,077 | 2,984 | - | - | - | 365,496 | 344,804 | 20,692 | 330 | 298 | 32 | (859) | (2,333) | 1,474 | 376,028 | 350,846 | 25,182 |
| Others | 252,218 | 284,980 | (32,762) | 491,059 | 192,478 | 298,581 | 348,394 | 186,910 | 161,484 | 97,724 | 39,441 | 58,283 | (569,722) | (167,022) | (402,700) | 619,673 | 536,787 | 82,886 |
| Principal operating income/cost of the segment | 37,464,004 | 33,932,796 | 3,531,208 | 19,467,016 | 17,834,116 | 1,632,900 | 4,987,339 | 4,392,691 | 594,648 | 4,477,998 | 4,197,126 | 280,872 | (5,666,518) | (5,394,259) | (272,259) | 60,729,839 | 54,962,470 | 5,767,369 |
| Other operating income/cost of the segment | 92,202 | 256 | 91,946 | 7,317 | 3,064 | 4,253 | 27,683 | 57 | 27,626 | 5,925 | - | 5,925 | (71,056) | - | (71,056) | 62,071 | 3,377 | 58,694 |
| Total operating income/cost of the segment | 37,556,206 | 33,933,052 | 3,623,154 | 19,474,333 | 17,837,180 | 1,637,153 | 5,015,022 | 4,392,748 | 622,274 | 4,483,923 | 4,197,126 | 286,797 | (5,737,574) | (5,394,259) | (343,315) | 60,791,910 | 54,965,847 | 5,826,063 |
| Less: Taxes and levies | 80,262 | 1,396 | 8,750 | 5,362 | - | 95,770 | ||||||||||||
| Selling expenses | 211,048 | 103,199 | 46,499 | 45,427 | (64,888) | 341,285 | ||||||||||||
| Administrative expenses | 388,977 | 558,040 | 258,798 | 137,623 | (128,010) | 1,215,428 | ||||||||||||
| Research and development expenses | 1,269,426 | 561,706 | 84,819 | 27,182 | (135,929) | 1,807,204 | ||||||||||||
| Financial expenses | 76,879 | 72,008 | (21,291) | 89,795 | (5,362) | 212,029 | ||||||||||||
| Including: Interest expenses | 217,844 | 166,903 | 51,501 | 117,275 | (153,307) | 400,216 | ||||||||||||
| Interest income | 249,048 | 113,907 | 16,453 | 5,425 | (148,305) | 236,528 | ||||||||||||
| Add: Other income | 83,570 | 28 | 6,624 | - | - | 90,222 | ||||||||||||
| Investment income | 57,352 | 44,098 | 41,250 | - | - | 142,700 | ||||||||||||
| Including: Income from investments in associates and joint ventures | (3,259) | 12,012 | - | - | - | 8,753 | ||||||||||||
| Gains (losses) from changes in fair values | (10,763) | 17,116 | (33,461) | - | - | (27,108) | ||||||||||||
| Gains (losses) on impairment of credit | 1,390 | 1,906 | (23,198) | (2,078) | - | (21,981) | ||||||||||||
| Gains (losses) from assets impairment | (5,065) | (110,374) | (52,304) | 907 | - | (166,836) | ||||||||||||
| Gains (losses) from disposal of assets | 5,397 | 66 | 871 | - | - | 6,334 | ||||||||||||
| Operating profit | 1,728,443 | 293,644 | 184,480 | (19,763) | (9,126) | 2,177,678 | ||||||||||||
| Net profit | 1,566,374 | 287,650 | 177,129 | (46,269) | (35,175) | 1,949,709 | ||||||||||||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XIV) OTHER SIGNIFICANT EVENTS - continued
1. Segment information - continued
(2) Financial information of reporting segments - continued
31/12/2024
Unit: RMB’000
| Chinese mainland | APAC | European region | Other countries/ regions | Inter-segment offsetting | Total | |
| Total assets of the segment (Note) | 23,824,166 | 10,438,309 | 4,826,782 | 4,232,453 | (3,981,614) | 39,340,096 |
| Total liabilities of the segment | 12,790,772 | 6,660,011 | 2,169,275 | 3,821,773 | (3,585,210) | 21,856,621 |
31/12/2023 (restated)
Unit: RMB’000
| Chinese mainland | APAC | European region | Other countries/ regions | Inter-segment offsetting | Total | |
| Total assets of the segment (Note) | 21,476,625 | 15,750,225 | 4,254,971 | 4,920,666 | (7,618,395) | 38,784,092 |
| Total liabilities of the segment | 11,645,024 | 12,121,625 | 2,605,005 | 3,816,469 | (7,983,203) | 22,204,920 |
Note: The assets of the aforementioned segments do not include investments in other equity instruments, other
non-current financial assets, and deferred tax assets. The liabilities of the aforementioned segments donot include deferred tax liabilities.
Amount incurred in the current period
Unit: RMB’000
| Chinese mainland | APAC | European region | Other countries /regions | Inter-segment offsetting | Total | |
| Depreciation and amortization | 645,500 | 297,022 | 281,027 | 100,498 | - | 1,324,047 |
| Income tax expenses | 174,772 | 95,072 | 43,974 | (111,002) | 6,831 | 209,647 |
Amount incurred in the prior period
Unit: RMB’000
| Chinese mainland | APAC | European region | Other countries /regions | Inter-segment offsetting | Total | |
| Depreciation and amortization | 641,175 | 269,762 | 242,047 | 71,765 | - | 1,224,749 |
| Income tax expenses | 141,985 | 10,195 | 56,732 | 25,648 | 5,419 | 239,979 |
External revenue by geographical area of source and non-current assets by geographical location of assets
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year |
| External revenue from Chinese mainland | 1,574,155,855.45 | 2,174,577,497.88 |
| External revenue outside Chinese mainland | 59,116,495,242.65 | 58,617,332,039.99 |
| Total | 60,690,651,098.10 | 60,791,909,537.87 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XIV) OTHER SIGNIFICANT EVENTS - continued
1. Segment information - continued
(2) Financial information of reporting segments - continued
Unit: RMB
| Item (Note) | 31/12/2024 | 31/12/2023(restated) |
| Non-current assets located in Chinese mainland | 2,937,949,867.88 | 3,298,431,664.02 |
| Non-current assets located in Mexico | 1,435,328,170.09 | 1,083,804,720.92 |
| Non-current assets located in Taiwan, China | 795,449,320.67 | 977,522,778.25 |
| Non-current assets located in France | 676,491,321.00 | 534,212,172.84 |
| Non-current assets located in the Vietnam | 634,784,543.25 | 533,589,551.93 |
| Non-current assets located in Hong Kong | 324,882,958.69 | 485,962,476.30 |
| Non-current assets located in Germany | 289,749,200.45 | 285,178,572.26 |
| Non-current assets located in Poland | 277,240,390.09 | 204,342,401.10 |
| Non-current assets located in the United States | 165,426,859.03 | 125,234,459.05 |
| Non-current assets located in Hungary | 87,694,425.22 | 71,587,791.19 |
| Non-current assets located in Tunisia | 71,773,990.72 | 82,403,660.30 |
| Non-current assets located in the United Kingdom | 26,208,078.91 | 28,262,810.99 |
| Non-current assets located in the Czech Republic | 19,991,281.42 | 23,853,881.03 |
| Non-current assets located in Japan | 510,673.32 | 920,188.70 |
| Total | 7,743,481,080.74 | 7,735,307,128.88 |
Note: The above non-current assets exclude 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
| Customer name | Amount incurred in the current year | Amount incurred in the prior year | ||
| Total operating income | Proportion in total operating income (%) | Total operating income | Proportion in total operating income (%) | |
| Company C | 19,433,583,828.36 | 32.02 | 17,131,143,558.73 | 28.18 |
| Company D | 5,908,015,451.62 | 9.73 | 7,582,474,674.51 | 12.47 |
| Total | 25,341,599,279.98 | 41.75 | 24,713,618,233.24 | 40.65 |
Inter-segment transfers are measured on the basis of actual transaction prices. Segment revenue and segmentexpenses are determined on the basis of actual revenue and expenses of each segment. Segment assets andliabilities are allocated according to the attributable assets employed by a segment in its operating activities andthe attributable liabilities resulting from the operating activities of a segment.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XV) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS
1. Notes receivable
(1) Categories of notes receivable
Unit: RMB
| Category | 31/12/2024 | 31/12/2023 |
| Bank acceptances | 66,017,318.26 | 49,427,125.85 |
(2) As at 31 December 2024, the Company had no notes receivable that have been pledged as security.
(3) As at 31 December 2024, the Company had no notes receivable that have been endorsed or discounted
and were not yet matured at the balance sheet date.
(4) As at 31 December 2024, 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 creditrisk was expected to exist.
(5) As at 31 December 2024, the Company had no notes receivable that have been actually written off.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XV) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued
2. Accounts receivable
(1) Disclosure of accrual method for credit loss
As part of the Company's credit risk management, the expected credit losses on accounts receivable are assessedusing the aging analysis approach. According to the Company's assessment on credit risk, there is no significantdifference in the losses among different customer groups, and the aging reflects the solvency of customers whenthe receivables are due.
At 31 December 2024, the credit risk and expected credit losses on accounts receivable were as follows:
Unit: RMB
| Aging | 31/12/2024 | |||
| Expected average loss rate (%) | Book value | Bad debt provision | Carrying amount | |
| Within the credit term | 0.01 | 3,219,723,890.88 | 207,306.16 | 3,219,516,584.72 |
| 1-30 days overdue | 0.13 | 207,614,212.98 | 276,778.59 | 207,337,434.39 |
| 31-60 days overdue | 3.99 | 7,966,685.56 | 318,008.39 | 7,648,677.17 |
| 61-90 days overdue | 40.99 | 3,935.47 | 1,613.29 | 2,322.18 |
| 91-180 days overdue | - | - | - | - |
| More than 180 days overdue | - | - | - | - |
| Total | 0.02 | 3,435,308,724.89 | 803,706.43 | 3,434,505,018.46 |
At 31 December 2023, the credit risk and expected credit losses on accounts receivable were as follows:
Unit: RMB
| Aging | 31/12/2023 | |||
| Expected average loss rate (%) | Book value | Bad debt provision | Carrying amount | |
| Within the credit term | 0.00 | 2,759,534,669.89 | 22,387.86 | 2,759,512,282.03 |
| 1-30 days overdue | 0.01 | 112,113,841.06 | 14,592.63 | 112,099,248.43 |
| 31-60 days overdue | 0.39 | 279,158.03 | 1,078.52 | 278,079.51 |
| 61-90 days overdue | 0.87 | 13,884.93 | 120.82 | 13,764.11 |
| 91-180 days overdue | - | - | - | - |
| More than 180 days overdue | 100.00 | 42.67 | 42.67 | - |
| Total | 0.00 | 2,871,941,596.58 | 38,222.50 | 2,871,903,374.08 |
The expected average loss rate mentioned above is based on the historical actual credit loss rates and the currentconditions as well as the forecast of future economic conditions. In 2024, the Company's valuation method andsignificant assumptions remain unchanged.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XV) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued
2. Accounts receivable - continued
(2) Changes in bad debt provision for accounts receivable
Unit: RMB
| Category | 31/12/2023 | Changes for the year | 31/12/2024 | |
| Provision for the year | Write-off | |||
| Bad debt provision assessed using aging matrix | 38,222.50 | 765,483.93 | - | 803,706.43 |
(3) There are no accounts receivable that have been actually written off in the year.
(4) Top five accounts receivable at 31 December 2024 categorized by debtor
Unit: RMB
| Company name | Accounts receivable at 31 December 2024 | Proportion to total accounts receivable at 31 December 2024 (%) | Provision for bad debt at 31 December 2024 |
| Company D | 892,676,182.96 | 25.99 | 57,476.13 |
| Company C | 867,888,527.91 | 25.26 | 55,880.14 |
| Company G | 435,320,704.82 | 12.67 | 28,028.70 |
| Company Q | 336,667,984.74 | 9.80 | 21,676.81 |
| Company R | 140,550,058.47 | 4.09 | 9,049.50 |
| Total | 2,673,103,458.90 | 77.81 | 172,111.28 |
(5) As at 31 December 2024, there is no accounts receivable recognized due to the transfer of financial assets.
(6) As at 31 December 2024, there is no amount of assets and liabilities arising from transfer of accounts
receivable and continuing involvement.
3. Other receivables
(1) Disclosure of other receivables by aging
Unit: RMB
| Aging | 31/12/2024 | ||
| Amount | Bad debt provision | Proportion of provision (%) | |
| Within 1 year | 643,273,134.04 | - | - |
(2) Classification by the nature of other receivables
Unit: RMB
| Nature of other receivables | Book value at 31 December 2024 | Book value at 31 December 2023 |
| Cash pooling receivables from related- party | 627,536,000.00 | 687,443,000.00 |
| Receivables from related parties for equipment transfers | 6,866,692.14 | - |
| Advances for third parties | 5,848,753.72 | 11,239,025.85 |
| Amounts due from related parties | 1,175,641.72 | 29,624,196.07 |
| Advance payments for employees | 764,515.41 | 710,649.65 |
| Principal of investment receivable | 594,607.64 | - |
| Receivables from third parties for equipment transfers | 35,798.23 | - |
| Others | 451,125.18 | 4,087,665.01 |
| Total | 643,273,134.04 | 733,104,536.58 |
(3) At 31 December 2024, no allowance for expected credit losses has been made and no allowance for
expected credit losses has been reversed or recovered as the Company determines the credit loss on otherreceivables on individual basis and there is minor probability that the Company's other receivables willnot be recovered.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XV) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued
4. Long-term equity investments
Details of long-term equity investments:
Unit: RMB
| Name of investee | Accounting methodology | 31/12/2023 | Changes for the year | 31/12/2024 | Proportion to ownership interest held in investee (%) | Proportion to voting power held in investee (%) | Explanation of the inconsistency between the proportions of the ownership interest and the voting power in the investee | Cash dividends for this year | ||||
| Increase in the year | Decrease in the yea | Gains or losses arising from investments | Increase from stock option grants (Note) | Impairment provision | ||||||||
| Universal Global Technology Co., Limited | Cost method | 3,307,661,849.78 | 316,028,200.00 | - | - | 79,129.10 | - | 3,623,769,178.88 | 100 | 100 | N/A | - |
| USI Electronics (Shenzhen) Co., Ltd. | Cost method | 396,399,359.67 | - | - | - | 956,424.94 | - | 397,355,784.61 | 50 | 100 | The remaining 50% equity interest is held by Universal Global Technology Co., Limited, the Company's wholly-owned subsidiary. | - |
| Universal Global Technology (Kunshan) Co., Ltd. | Cost method | 269,297,247.62 | - | - | - | 1,184,609.14 | - | 270,481,856.76 | 100 | 100 | N/A | - |
| Universal Global Technology (Shanghai) Co., Ltd. | Cost method | 1,351,405,968.65 | - | - | - | 1,186,936.59 | - | 1,352,592,905.24 | 100 | 100 | N/A | - |
| Universal Global Electronics (Shanghai) Co., Ltd. | Cost method | 50,000,000.00 | - | - | - | - | - | 50,000,000.00 | 100 | 100 | N/A | - |
| Universal Global Scientific Industrial Co., Ltd. | N/A | 152,324,663.24 | - | - | - | 10,560,944.43 | - | 162,885,607.67 | N/A | N/A | The 100% equity interest is held by Universal Global Technology Co., Limited, the Company's wholly-owned subsidiary. | - |
| Universal Global Technology (Huizhou) Co., Ltd. | Cost method | 796,100,268.37 | - | - | - | 589,337.16 | - | 796,689,605.53 | 100 | 100 | N/A | - |
| FAFG | Cost method | 393,342,321.82 | - | - | - | - | - | 393,342,321.82 | 10.42 | 100 | The remaining 89.58% equity interest is held by Universal Global Technology Co., Limited, the Company's wholly-owned subsidiary. | - |
| Questyle Audio Technology Co., Ltd. | Equity method | 16,705,272.48 | - | - | (3,459,733.12) | - | (9,343,178.82) | 3,902,360.54 | 6.67 | 33.33 | See Note V.11 for details | - |
| Total | 6,733,236,951.63 | 316,028,200.00 | - | (3,459,733.12) | 14,557,381.36 | (9,343,178.82) | 7,051,019,621.05 | - | ||||
Note: The amount refers to the cumulative amount related to share-based payments settled under equity arising from the stock option incentive plan offered by the Company
to relevant personnel of Universal Global Technology Co., Limited, Universal Global Technology (Huizhou) Co., Ltd., USI Electronics (Shenzhen) Co., Ltd., UniversalGlobal Technology (Kunshan) Co., Ltd., Universal Global Technology (Shanghai) Co., Ltd. and UGSI.
As at 31 December 2024, the ability of the investee, in which the Company holds long-term equity investments, to transfer funds to the Company is not restricted.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XV) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued
5. Operating income and operating costs
(1) Details of operating income and operating costs
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year | ||
| Income | Costs | Income | Costs (restated) | |
| Principal operating activities | 21,942,023,457.25 | 20,016,489,569.49 | 19,672,244,261.31 | 17,928,403,534.67 |
| Other operating activities | 7,241,061.39 | 29,157.23 | 4,791,760.38 | 116,571.67 |
| Total | 21,949,264,518.64 | 20,016,518,726.72 | 19,677,036,021.69 | 17,928,520,106.34 |
(2) Analysis of principal operating income and principal operating costs by product categories:
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year | ||
| Principal operating income | Principal operating costs | Principal operating income | Principal operating costs (restated) | |
| Communication products | 14,156,689,612.87 | 13,085,836,678.43 | 13,985,075,540.53 | 12,854,145,906.44 |
| Consumer electronic products | 6,758,838,013.06 | 6,136,975,843.09 | 4,686,934,977.87 | 4,318,789,072.02 |
| Automotive electronic products | 561,998,219.44 | 493,564,463.58 | 499,366,698.83 | 458,272,964.04 |
| Cloud and storage products | 414,378,292.45 | 256,736,818.92 | 456,149,216.68 | 269,492,190.63 |
| Others | 50,119,319.43 | 43,375,765.47 | 44,717,827.40 | 27,703,401.54 |
| Total | 21,942,023,457.25 | 20,016,489,569.49 | 19,672,244,261.31 | 17,928,403,534.67 |
(3) Other operating income and other operating costs:
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year | ||
| Other operating income | Other operating costs | Other operating income | Other operating costs | |
| Scrap income | 7,095,918.45 | - | 4,468,634.64 | - |
| Others | 145,142.94 | 29,157.23 | 323,125.74 | 116,571.67 |
| Total | 7,241,061.39 | 29,157.23 | 4,791,760.38 | 116,571.67 |
6. Investment income
Details of investment income
Unit: RMB
| Item | Amount incurred in the current year | Amount incurred in the prior year |
| Losses on long-term equity investments accounted for under the equity method | (3,459,733.12) | (3,294,727.52) |
| Investment income on disposal of held-for-trading financial assets | 16,375,459.81 | 29,018,935.63 |
| Cash dividends of subsidiaries | - | 300,000,000.00 |
| Total | 12,915,726.69 | 325,724,208.11 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XV) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued
7. Supplementary information to the cash flow statement
(1) Supplementary information to the cash flow statement
Unit: RMB
| Supplementary Information | 2024 | 2023 |
| 1. Reconciliation of net profit to cash flow from operating activities: | ||
| Net profit | 829,231,279.04 | 1,047,209,221.43 |
| Add: Impairment losses (gains) of assets | 15,060,813.56 | (762,694.28) |
| Impairment losses (gains) of credit | 765,483.93 | (3,685,934.28) |
| Depreciation of fixed assets | 339,825,221.52 | 331,922,920.67 |
| Depreciation of right-of-use assets | 12,232,069.48 | 12,886,975.02 |
| Amortization of intangible assets | 1,685,448.26 | 1,420,371.19 |
| Amortization of long-term prepaid expenses | 10,230,256.93 | 13,092,303.33 |
| Amortization of deferred income | (7,126,104.37) | (8,889,150.58) |
| Gains on disposal of fixed assets, intangible assets and other long-term assets | (692,982.05) | (3,442,727.96) |
| Losses on retirement of fixed assets | 77,111.11 | - |
| Losses on changes in fair values | 5,988,719.20 | 13,609,149.40 |
| Financial expenses | 125,710,411.77 | 229,400,529.75 |
| Investment income | (12,915,726.69) | (325,724,208.11) |
| Share-based payments settled by equity | 3,197,618.64 | 3,436,886.04 |
| Decrease (increase) in deferred tax assets | (4,879,069.74) | 6,167,068.06 |
| Decrease (increase) in inventories | (116,260,380.26) | 744,059,042.87 |
| Decrease (increase) in receivables from operating activities | (565,177,174.84) | 23,253,741.74 |
| Increase in payables from operating activities | 616,332,650.17 | 235,110,740.64 |
| Net cash flow from operating activities | 1,253,285,645.66 | 2,319,064,234.93 |
| 2. Significant investing and financing activities that do not involve cash receipts and payments: | ||
| Acquisition of long-term assets with debt | 63,545,966.35 | 29,548,537.73 |
| Increase in right-of-use assets | 1,198,052.08 | 6,540,598.59 |
| Convertible corporate bonds due within one year | 37,230,089.82 | 3,364,142,096.72 |
| 3. Net changes in cash and cash equivalents: | ||
| Cash at the end of the year | 3,171,249,867.11 | 3,166,517,228.25 |
| Less: Cash at the beginning of the year | 3,166,517,228.25 | 2,382,458,769.33 |
| Add: Closing balance of cash equivalents | - | - |
| Less: Opening balance of cash equivalents | - | - |
| Net increase in cash and cash equivalents | 4,732,638.86 | 784,058,458.92 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XV) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued
7. Supplementary information to the cash flow statement - continued
(2) Composition of cash and cash equivalents
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 |
| I. Cash | 3,171,249,867.11 | 3,166,517,228.25 |
| Including: Cash on hand | - | - |
| Bank deposits that can be readily withdrawn on demand | 3,171,249,867.11 | 3,166,517,228.25 |
| II. Cash equivalents | - | - |
| III. Closing balance of cash and cash equivalents | 3,171,249,867.11 | 3,166,517,228.25 |
(3) Cash and bank balances not included in cash and cash equivalents
Unit: RMB
| Item | 31/12/2024 | 31/12/2023 | Reasons |
| Cash and bank balances | 4,327,939.79 | - | Interest receivable on demand bank deposits |
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 jointventures of the Company are set out in Note (VI), 2. The details of other related parties are set out in Note (X),4.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XV) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued
8. Related party relationship and transactions - continued
(2) Related party transactions
(2.1) Sales and purchase of goods, provision and receipt of services
Purchase of goods/receipt of services
Unit: RMB
| Related party | Details of related party transaction | Amount incurred in the current year | Amount incurred in the prior year |
| Universal Global Technology Co., Limited | Purchase of materials | 489,774,135.11 | 487,984,241.65 |
| Universal Global Industrial Co., Ltd. | Purchase of materials | 61,260,754.83 | 556,170.63 |
| ASE Electronics Inc. | Purchase of materials | 4,144,954.49 | 6,397,414.33 |
| Universal Scientific Industrial De México S.A. De C.V. | Purchase of materials | 2,039,941.52 | 2,084,595.41 |
| Universal Global Technology (Kunshan) Co., Ltd. | Purchase of materials | 1,557,780.80 | 2,356,645.35 |
| Universal Global Technology (Shanghai) Co., Ltd. | Purchase of materials | 46,770.31 | 64,831.28 |
| FINANCI?RE AFG S.A.S. | Purchase of materials | 44,068.05 | - |
| Taitech Precision Electronic (Kunshan) Co., Ltd. | Purchase of materials | 21,910.86 | - |
| Universal Global Technology (Huizhou) Co., Ltd. | Purchase of materials | 18,180.37 | 21,872.33 |
| ASE Inc. | Purchase of materials | 42.60 | 579,589.26 |
| Total | 558,908,538.94 | 500,045,360.24 | |
| Universal Global Scientific Industrial Co., Ltd. | Commissions | 56,325,128.17 | 44,775,763.39 |
| Universal Global Scientific Industrial Co., Ltd. | Test service fee | 49,808,155.80 | 44,775,763.39 |
| ASE Corporate Services (Shanghai) Limited | Receipt of services | 26,070,229.17 | 3,193,692.63 |
| Universal Global Technology Co., Limited | Receipt of services | 20,257,669.80 | 19,874,185.00 |
| USI Science and Technology (Shenzhen) Co., Ltd. | Receipt of services | 6,037,735.90 | 4,339,622.69 |
| Universal Global Technology (Shanghai) Co., Ltd. | Receipt of services | 4,880,882.50 | 11,795,403.60 |
| SHANGHAI DINGXU PROPERTY MANAGEMENT CO., LTD | Receipt of services | 1,995,231.21 | 2,025,901.89 |
| Asteelflash Suzhou Co., Ltd. | Receipt of services | 1,412,023.16 | 1,316,749.53 |
| ASE (Shanghai) Inc. | Receipt of services | - | 22,324,382.22 |
| USI Japan Co., Ltd. | Receipt of services | - | 20,439.18 |
| Total | 166,787,055.71 | 154,441,903.52 |
The above transactions are executed at the prices agreed on by both parties.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XV) NOTES TO MAJOR ITEMS IN THE 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
| Related party | Details of related party transaction | Amount incurred in the current year | Amount incurred in the prior year |
| Universal Global Industrial Co., Ltd. | Sales of goods | 1,254,570,561.89 | 1,037,257,474.99 |
| ASE Inc. | Sales of goods | 258,806,405.49 | 96,752.87 |
| Universal Global Technology (Shanghai) Co., Ltd. | Sales of goods | 87,612,481.93 | 86,461,083.52 |
| Universal Global Technology (Kunshan) Co., Ltd. | Sales of goods | 2,834,399.38 | 846,713.73 |
| Universal Scientific Industrial De México S.A. De C.V. | Sales of goods | 1,216,186.48 | 559,747.07 |
| Universal Scientific Industrial Vietnam Company Limited | Sales of goods | 862,502.52 | 1,295,848.43 |
| Asteelflash Suzhou Co., Ltd. | Sales of goods | 145,749.20 | - |
| Universal Global Technology (Huizhou) Co., Ltd. | Sales of goods | 53,066.20 | 312,956.68 |
| FINANCI?RE AFG S.A.S. | Sales of goods | - | 184,746.74 |
| Universal Global Technology Co., Limited | Sales of goods | - | 13,291.12 |
| Total | 1,606,101,353.09 | 1,127,028,615.15 | |
| Universal Global Technology (Kunshan) Co., Ltd. | Provision of services | 10,586,337.21 | 10,385,172.24 |
| ASE Inc. | Provision of services | 7,380,813.02 | - |
| FINANCI?RE AFG S.A.S. | Provision of services | 3,232,221.45 | 3,564,683.59 |
| ISE labs, China. Ltd. | Provision of services | 1,008,545.54 | 959,723.55 |
| Universal Scientific Industrial De México S.A. De C.V. | Provision of services | 557,439.06 | 215,475.53 |
| Universal Scientific Industrial Vietnam Company Limited | Provision of services | 56,798.10 | 348,144.77 |
| Universal Global Industrial Co., Ltd. | Provision of services | 4,327.00 | - |
| Universal Global Technology (Shanghai) Co., Ltd. | Provision of services | - | 301,499.81 |
| Total | 22,826,481.38 | 15,774,699.49 |
The above transactions are executed at the prices agreed on by both parties.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XV) NOTES TO MAJOR ITEMS IN THE 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
| Name of lessee | Type of leased assets | Lease income recognized in the current year | Lease income recognized in the prior year |
| Universal Global Technology (Shanghai) Co., Ltd. | Machinery and equipment | 29,157.23 | - |
| Wuxi Tongzhi Microelectronics Co., Ltd. | Machinery and equipment | - | 19,359.06 |
| Total | 29,157.23 | 19,359.06 |
The above transactions are executed at the prices agreed on by both parties.
Leases where the Company is the lessee
Unit: RMB
| Name of lessor | Type of leased assets | Right-of-use assets leased in this year | Lease interest for the current year |
| ASE Assembly & Test (Shanghai) Limited | Leasing of business premises | - | 1,711,886.60 |
The above transactions are executed at the prices agreed on by both parties.
Unit: RMB
| Name of lessor | Type of leased assets | Right-of-use assets leased in prior year | Lease interest for the prior year |
| ASE Assembly & Test (Shanghai) Limited | Leasing of business premises | - | 2,392,528.09 |
The above transactions are executed at the prices agreed on by both parties.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XV) NOTES TO MAJOR ITEMS IN THE 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
| Related party | Annual interest rate | Amount incurred in the current year | Amount at the end of the current year | |
| Amount lent | Amount collected (Note) | Amount | ||
| Lent to - Cash pool trading (Note) | ||||
| Universal Scientific Industrial De México S.A. De C.V. | One month Term SOFR +40 basis points | 284,496,000.00 | 280,268,000.00 | 287,536,000.00 |
| Universal Global Technology Co., Limited | 2.20% | 510,000,000.00 | 524,135,000.00 | 340,000,000.00 |
| Universal Global Technology (Huizhou) Co., Ltd. | 2.20% | 150,000,000.00 | 200,000,000.00 | - |
Note: The amount repaid from cash pool trading for the year include exchange differences at the period end.
Unit: RMB
| Related party | Annual interest rate | Amount incurred in the prior year | Amount at the end of the prior year | |
| Amount lent | Amount collected (Note) | Amount | ||
| Lent to - Cash pool trading (Note) | ||||
| Universal Scientific Industrial Vietnam Company Limited | One month Term SOFR +40 basis points | - | 313,407,000.00 | - |
| Universal Scientific Industrial De México S.A. De C.V. | One month Term SOFR +40 basis points | 358,524,000.00 | 284,154,000.00 | 283,308,000.00 |
| Universal Global Technology Co., Limited | One month Term SOFR +40 basis points | 359,252,000.00 | 5,117,000.00 | 354,135,000.00 |
| Universal Global Technology (Huizhou) Co., Ltd. | 2.40% | 100,000,000.00 | 550,000,000.00 | 50,000,000.00 |
Note: The amount repaid from cash pool trading for the year include exchange differences at the period end.
The interest income for 2024 is RMB 28,140,093.18 (2023: RMB 28,239,145.20), and the interest not receivedat the end of the year is RMB 0 (31 December 2023: RMB 760,833.33).
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., USIElectronics (Shenzhen) Co., Ltd., Universal Global Technology Co., Limited, Universal GlobalTechnology (Kunshan) Co., Ltd., Universal Global Technology (Huizhou) Co., Ltd., Universal ScientificIndustrial Vietnam Company Limited and Universal Scientific Industrial De México S.A. De C.V. areparticipants.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XV) NOTES TO MAJOR ITEMS IN THE 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
| Related party | Details of related party transaction | Amount incurred in the current year | Amount incurred in the prior year |
| Universal Global Industrial Co., Ltd. | Purchase of fixed assets | 23,556,749.46 | - |
| Universal Global Technology (Shanghai) Co., Ltd. | Purchase of fixed assets | 12,504,933.30 | 16,418,450.70 |
| Taitech Precision Electronic (Kunshan) Co., Ltd. | Purchase of fixed assets | 276,000.00 | - |
| Universal Global Technology (Kunshan) Co., Ltd. | Purchase of fixed assets | 27,470.30 | - |
| Universal Global Technology (Huizhou) Co., Ltd. | Purchase of fixed assets | 6,183.33 | 6,987.16 |
| Total | 36,371,336.39 | 16,425,437.86 | |
| Siliconware Precision Industries Co., Ltd | Sales of fixed assets | 6,768,750.00 | - |
| Universal Global Technology (Shanghai) Co., Ltd. | Sales of fixed assets | 4,038,012.27 | 2,485,862.82 |
| Universal Global Scientific Industrial Co., Ltd. (Note) | Sales of fixed assets | 2,195,754.46 | 4,435,846.69 |
| Universal Global Technology (Kunshan) Co., Ltd. | Sales of fixed assets | 1,449,656.00 | - |
| ISE labs, China. Ltd. | Sales of fixed assets | 920,532.11 | - |
| Universal Scientific Industrial Vietnam Company Limited | Sales of fixed assets | 751,711.69 | 28,061,445.85 |
| Total | 16,124,416.53 | 34,983,155.36 |
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
| Related party | Details of related party transaction | Amount incurred in the current year | Amount incurred in the prior year |
| USI Enterprise Limited | Interest expenses on convertible bonds | 38,777,856.86 | 46,206,386.54 |
(2.6) Compensation for key management personnel
Unit: RMB
| Item name | Amount incurred in the current year | Amount incurred in the prior year |
| Compensation for key management personnel | 28,248,523.85 | 28,238,630.96 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XV) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued
8. Related party relationship and transactions - continued
(2) Related party transactions - continued
(2.7) Others
The Company offers stock option incentive plan for relevant personnel of USI Electronics (Shenzhen) Co., Ltd.,Universal Global Technology (Kunshan) Co., Ltd., Universal Global Technology (Shanghai) Co., Ltd., UniversalGlobal Scientific Industrial Co., Ltd., Universal Global Technology (Huizhou) Co., Ltd. and Universal GlobalTechnology Co., Limited. See Note (XV), 4 for details.
(3) Amounts due from / to related parties
(3.1) Amounts due from related parties
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 |
| Book value | Book value | ||
| Accounts receivable | Universal Global Industrial Co., Ltd. | 282,730,277.61 | 397,763,118.99 |
| Accounts receivable | ASE Inc. | 140,550,057.87 | 78,150.65 |
| Accounts receivable | Universal Global Technology (Shanghai) Co., Ltd. | 15,554,304.92 | 10,412,340.68 |
| Accounts receivable | Universal Scientific Industrial De México S.A. De C.V. | 445,371.70 | 294,391.83 |
| Accounts receivable | Universal Global Technology (Kunshan) Co., Ltd. | 297,440.49 | 353,956.15 |
| Accounts receivable | Universal Global Technology (Huizhou) Co., Ltd. | 4,133.96 | 18,639.90 |
| Accounts receivable | Universal Scientific Industrial Vietnam Company Limited | 827.61 | 1,157,559.23 |
| Accounts receivable | Asteelflash Suzhou Co., Ltd. | - | 117,167.51 |
| Total | 439,582,414.16 | 410,195,324.94 |
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 |
| Book value | Book value | ||
| Other receivables | Universal Global Technology Co., Limited (Note) | 340,000,000.00 | 354,135,000.00 |
| Other receivables | Universal Scientific Industrial De México S.A. De C.V. (Note) | 287,536,000.00 | 283,308,000.00 |
| Other receivables | Siliconware Precision Industries Co., Ltd | 6,828,980.00 | - |
| Other receivables | FINANCI?RE AFG S.A.S. | 890,642.76 | 1,058,863.66 |
| Other receivables | ISE labs, China. Ltd. | 252,051.29 | 141,696.00 |
| Other receivables | Universal Scientific Industrial Vietnam Company Limited | 37,712.14 | 27,650,228.43 |
| Other receivables | Universal Global Technology (Shanghai) Co., Ltd. | 32,947.67 | 2,410.64 |
| Other receivables | Universal Global Technology (Huizhou) Co., Ltd. (Note) | - | 50,760,833.33 |
| Other receivables | Universal Global Technology (Kunshan) Co., Ltd. | - | 10,164.01 |
| Total | 635,578,333.86 | 717,067,196.07 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XV) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS - continued
8. Related party relationship and transactions - continued
(3) Amounts due from / to related parties - continued
(3.1) Amounts due from related parties - continued
Note: The Company entered into a cash pool entrustment loan agreement with the bank for entrusted loans in
which the Company is the leading party and Universal Global Technology (Shanghai) Co., Ltd., USIElectronics (Shenzhen) Co., Ltd., Universal Global Technology Co., Limited, Universal GlobalTechnology (Kunshan) Co., Ltd., Universal Global Technology (Huizhou) Co., Ltd., Universal ScientificIndustrial Vietnam Company Limited and Universal Scientific Industrial De México S.A. De C.V. areparticipants.
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 |
| Book value | Book value | ||
| Other non-current assets | ASE Assembly & Test (Shanghai) Limited | 409,781.71 | 401,473.74 |
(3.2) Amounts due to related parties
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 |
| Accounts payable | Universal Global Technology Co., Limited | 117,692,013.37 | 197,113,366.75 |
| Accounts payable | Universal Global Industrial Co., Ltd. | 59,663,412.30 | 304,137.66 |
| Accounts payable | Universal Scientific Industrial De México S.A. De C.V. | 1,268,524.85 | 916,294.01 |
| Accounts payable | ASE Electronics Inc. | 847,261.43 | 1,166,743.89 |
| Accounts payable | Universal Global Technology (Kunshan) Co., Ltd. | 231,113.49 | 1,706,236.34 |
| Accounts payable | Universal Global Technology (Huizhou) Co., Ltd. | 1,704.91 | 7,749.50 |
| Accounts payable | Universal Global Technology (Shanghai) Co., Ltd. | 836.20 | - |
| Accounts payable | FINANCI?RE AFG S.A.S. | 826.67 | - |
| Accounts payable | Universal Global Scientific Industrial Co., Ltd. | - | 7,154,263.62 |
| Accounts payable | ASE Inc. | - | 574,406.96 |
| Total | 179,705,693.22 | 208,943,198.73 |
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 |
| Other payables | Universal Global Scientific Industrial Co., Ltd. | 14,172,735.70 | 7,154,263.61 |
| Other payables | USI Science and Technology (Shenzhen) Co., Ltd. | 4,200,000.00 | 200,000.00 |
| Other payables | ASE Corporate Services (Shanghai) Limited | 1,922,413.32 | 3,193,692.63 |
| Other payables | Universal Global Technology Co., Limited | 1,703,650.80 | 1,664,434.50 |
| Other payables | Asteelflash Suzhou Co., Ltd. | 553,145.65 | 342,750.25 |
| Other payables | SHANGHAI DINGXU PROPERTY MANAGEMENT CO., LTD | 182,208.25 | 285,740.90 |
| Other payables | Universal Global Technology (Shanghai) Co., Ltd. | - | 3,609,020.56 |
| Other payables | ASE (Shanghai) Inc. | - | 534,976.11 |
| Total | 22,734,153.72 | 16,984,878.56 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XV) NOTES TO MAJOR ITEMS IN THE COMPANY’S FINANCIAL STATEMENTS- continued
8. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS - continued
(3) Amounts due from / to related parties - continued
(3.2) Amounts due to related parties - continued
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 |
| Lease liabilities | ASE Assembly & Test (Shanghai) Limited | 31,669,194.59 | 44,489,167.71 |
Unit: RMB
| Item name | Related party | 31/12/2024 | 31/12/2023 |
| Bonds payable | USI Enterprise Limited | 785,428,252.70 | 967,638,439.87 |
(XVI) 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, including those charged off for which provision for impairment of assets has been made | 5,101,711.12 | See Notes (V), 59 and 61 for details |
| Government grants recognized in profit or loss (other than government grants which are closely related to the Company's business, in line with the national regulations, enjoyed under established standards and have a continuous impact on the Company's profit or loss) | 39,593,697.06 | See Notes (V), 54 for details |
| Profit or loss on changes in the fair value of financial assets and financial liabilities held by non-financial enterprises and profit or loss on disposal of financial assets and financial liabilities, other than those used in the effective hedging activities relating to normal operating business | 177,139,794.65 | See Notes (V), 55 and 56 for details |
| Reversal of provision for impairment on receivables subject to impairment testing on an individual basis | 6,111,269.30 | See Notes (V), 4 for details |
| One-time costs incurred by enterprises due to the fact that the relevant business activities are no longer sustainable, such as expenses for relocating employees | (708,810.03) | |
| Other non-operating income or expenses other than the above | (16,235,503.49) | See Notes (V), 60 and 61 for details |
| Less: Income tax effects | 9,611,574.91 | |
| Effects attributable to minority interests | (351,701.59) | |
| Total | 201,742,285.29 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2024
(XVI) SUPPLEMENTARY INFORMATION - continued
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. inaccordance with Information Disclosure and Presentation Rules for Companies Making Public Offering ofSecurities No. 9 - Calculation and Disclosure of Return on Net Assets and Earnings per Share (Revised 2010)issued by China Securities Regulatory Commission.
Unit: RMB
| Profit for the reporting year | Weighted average return on net assets (%) | EPS | |
| Basic EPS | Diluted EPS | ||
| Net profit attributable to ordinary shareholders of the Company | 9.52% | 0.76 | 0.75 |
| Net profit after deduction of non-recurring profits or losses attributable to ordinary shareholders of the Company | 8.36% | 0.66 | 0.66 |