Huatai United Securities Co., Ltd
About Hualan Biological Engineering Inc(002007) vaccine Co., Ltd
Verification opinions on using some idle raised funds for cash management
Huatai United Securities Co., Ltd. (hereinafter referred to as “Huatai United Securities” or “sponsor”) is the sponsor of Hualan Biological Engineering Inc(002007) vaccine Co., Ltd. (hereinafter referred to as “Hualan vaccine” or “company”) for initial public offering and continuous supervision of listing on GEM, In accordance with the measures for the administration of securities issuance and listing recommendation business, the guidelines for the supervision of listed companies No. 2 – regulatory requirements for the management and use of raised funds by listed companies, the Listing Rules of GEM stocks of Shenzhen Stock Exchange, the guidelines for the self-discipline supervision of listed companies of Shenzhen Stock exchange No. 2 – standardized operation of GEM listed companies and other provisions, Careful due diligence has been conducted on the matters that Hualan vaccine plans to use some idle raised funds for cash management. The specific verification is as follows: I. Basic information of raised funds
According to the reply on Approving the registration of initial public offering shares of Hualan Biological Engineering Inc(002007) vaccine Co., Ltd. (zjxk [2022] No. 2) issued by China Securities Regulatory Commission, Hualan vaccine publicly issued 40.01 million RMB common shares (A shares) to the public, with an issuance price of 56.88 yuan / share and a total raised capital of 227576880000 yuan, After deducting the issuance expenses of RMB 3156569607 (including tax), the net amount of funds actually raised is RMB 224420310393. Dahua Certified Public Accountants (special general partnership) has verified the capital availability of the company’s initial public offering on February 14, 2022 and issued the capital verification report (Dahua Yan Zi [2022] China Greatwall Technology Group Co.Ltd(000066) ).
2、 Use plan of raised funds
According to the prospectus of Hualan Biological Engineering Inc(002007) vaccine Co., Ltd. for initial public offering and listing on GEM (hereinafter referred to as the “prospectus”), the funds raised by the company will be used for the following projects:
Unit: Yuan
No. total project investment and expected investment amount of raised funds
1 influenza vaccine development and industrialization and existing product supply guarantee 1375160 Ping An Bank Co.Ltd(000001) 08426420000 capacity building project
2 development and industrialization of freeze-dried rabies vaccine for human use 86 million.00 86 million.00
3. Multi linked bacterial vaccine development and industrialization construction project 274250 China Vanke Co.Ltd(000002) 7425000000
No. total project investment and expected investment amount of raised funds
4 development and industrialization project of new pneumonia vaccine 795.9 million.00760810000
5 new vaccine R & D platform construction project 295210 China Vanke Co.Ltd(000002) 8970510000
Total 2826520 China Vanke Co.Ltd(000002) 49502740000
According to the disclosure in the prospectus, the company will invest in the construction in accordance with the principle of overall arrangement and in combination with the priorities of the project, the time when the raised funds are in place and the progress of the project. After the raised funds are in place, if the actual net amount of funds raised this time is lower than the project investment fund demand, the insufficient part will be raised by the company itself. If the time when the raised funds are in place is inconsistent with the requirements of the project progress, the company will invest the self raised funds in advance according to the actual progress of the project, and replace the self raised funds invested in advance after the raised funds are in place.
3、 Cash management using some idle raised funds this time
(I) purpose of cash management
As the construction of the project invested by the raised funds has a certain period, according to the construction progress of the project invested by the raised funds, some of the raised funds are idle in the recent stage. In order to improve the use efficiency of the company’s raised funds, on the premise of not affecting the investment plan and safety of the raised funds, and not affecting the company’s normal production and operation, the rational use of some idle raised funds for cash management can increase the company’s capital income and better protect the interests of the company’s shareholders.
(II) cash management limit and term
The company plans to use the idle raised funds of no more than RMB 1 billion for cash management on the premise of ensuring that the construction of investment projects with raised funds and the normal production and operation of the company will not be affected. The service life is valid within 12 months from the date of deliberation and approval by the board of directors. Within the above quota and period, the funds can be recycled and used on a rolling basis.
(III) types of cash management products
The company will strictly control risks in accordance with relevant regulations, and purchase with high safety, good liquidity and low risk without affecting the normal progress of the investment plan of raised funds Financial products that meet the capital preservation requirements (including but not limited to structural deposits, time deposits, large certificates of deposit, agreed deposits, other capital preservation financial products, call deposits, fixed income certificates, agreed deposits, etc.).
The above financial products are not used for pledge and guarantee, and the special settlement account for financial products is not used for non raised funds or other purposes. If the special settlement account for financial products is opened or cancelled, the company will timely report to Shenzhen stock exchange for filing and announcement.
(IV) implementation mode
Within the limit and time limit, authorize the chairman or his authorized person to exercise the decision-making power of cash management and sign relevant contract documents, which shall be implemented and followed up by the company’s financial department.
(V) description of association relationship
The company plans to purchase investment products from financial institutions that do not have a related relationship. The use of idle raised funds for cash management this time will not constitute a related party transaction.
(VI) distribution of cash management income
The proceeds obtained from the company’s cash management with some idle raised funds will be managed and used in strict accordance with the requirements of China Securities Regulatory Commission, Shenzhen Stock Exchange and relevant rules and regulations of the company.
(VII) information disclosure
The company will timely fulfill the obligation of information disclosure in accordance with the requirements of relevant laws and regulations such as the Listing Rules of gem shares of Shenzhen Stock Exchange, the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 2 – standardized operation of listed companies on GEM, etc.
4、 Investment risk and risk control measures
(I) investment risk
1. Although the cash management products to be purchased by the company belong to the category of medium and low-risk investment, the financial market is greatly affected by the macro-economy, and it is not excluded that the investment is affected by market fluctuations;
2. The company will intervene timely and appropriately according to the economic situation and changes in the financial market, so it is difficult to reliably predict the actual income of short-term investment;
3. Operation and monitoring risks of relevant staff.
(II) risk control measures
1. When using idle raised funds to purchase investment products, the company will strictly abide by the principle of prudent investment, select low-risk investment varieties with high safety and good liquidity, and will not be used for high-risk investments such as securities investment, and will not buy bank financial products with stocks, their derivatives and unsecured bonds as investment targets;
2. The management and financial department of the company will timely analyze and track the investment direction and project progress of cash management products. If they find or judge that there are risk factors that may affect the safety of the company’s funds, they will timely take corresponding preservation measures to control investment risks;
3. The Audit Department of the company is responsible for comprehensively inspecting the cash management products, reasonably predicting the possible risks and benefits of various investments according to the principle of prudence, and reporting to the board of directors in a timely manner;
4. The independent directors and the board of supervisors of the company have the right to supervise and inspect the use of funds, and can hire professional institutions to audit when necessary;
5. The company will timely perform relevant information disclosure obligations in accordance with the relevant provisions of Shenzhen Stock Exchange. 5、 Impact on the company’s operation
The company’s use of some idle raised funds for cash management this time is carried out on the premise of ensuring the safety of the investment plan and raised funds, and will not affect the normal production and operation of the company, nor will it affect the normal construction of the company’s investment projects with raised funds and the normal use of raised funds, There is no change or disguised change in the purpose of the raised funds. At the same time, using some idle raised funds for cash management can increase the company’s capital income, improve the use efficiency of raised funds, and seek more return on investment for the company and shareholders.
6、 Review procedures and relevant opinions for implementation
(I) deliberations of the board of directors
At the 11th meeting of the first board of directors on March 2, 2022, the company deliberated and approved the proposal on using part of the idle raised funds for cash management, and agreed that the company should use the idle raised funds of no more than RMB 1 billion for cash management. The service life is valid within 12 months from the date of deliberation and approval by the board of directors. Within the above amount and period, Funds can be recycled and used on a rolling basis.
(II) deliberation of the board of supervisors
At the 11th meeting of the first session of the board of supervisors on March 2, 2022, the company deliberated and approved the proposal on using part of the idle raised funds for cash management, and agreed to use the idle raised funds of no more than RMB 1 billion for cash management. The service life is valid within 12 months from the date of deliberation and approval by the board of directors. Within the above amount and period, Funds can be recycled and used on a rolling basis.
(III) opinions of independent directors
Independent directors believe that the use of some idle raised funds for cash management this time, Comply with relevant normative documents such as the guidelines for the supervision of listed companies No. 2 – regulatory requirements for the management and use of raised funds by listed companies, the Listing Rules of GEM stocks of Shenzhen Stock Exchange, the guidelines for the self-discipline supervision of listed companies of Shenzhen Stock Exchange No. 2 – standardized operation of GEM listed companies, and the provisions of the company’s measures for the administration of raised funds. Without affecting the construction progress of the raised funds and the normal operation of the company, the rational use of idle raised funds for cash management is conducive to improving the use efficiency of the company’s funds, increasing the return of funds, and obtaining more returns for the company and shareholders, without damaging the interests of the company and minority shareholders. This matter has fulfilled the necessary approval and verification procedures, and there is no situation of changing the use purpose of the raised funds in a disguised form, which will not affect the normal progress of the investment plan of the raised funds. We agree that the company uses some idle raised funds for cash management.
7、 Verification opinions of the recommendation institution
After verification, Huatai United Securities believes that the company’s use of some idle raised funds for cash management is conducive to improving the efficiency of fund use, and there is no situation of changing the purpose of raised funds and damaging the interests of shareholders in a disguised manner. The use of some idle raised funds for cash management has been deliberated and approved by the board of directors and the board of supervisors of the company. The independent directors have also expressed their independent opinions with explicit consent and fulfilled the necessary legal procedures, Comply with the measures for the administration of securities issuance and listing recommendation business, the guidelines for the supervision of listed companies No. 2 – regulatory requirements for the management and use of raised funds by listed companies, the Listing Rules of GEM stocks of Shenzhen Stock Exchange, and the guidelines for the self-discipline supervision of listed companies of Shenzhen Stock exchange No. 2 – standardized operation of GEM listed companies And other relevant laws and regulations and exchange rules.
In conclusion, the sponsor has no objection to the cash management of Hualan vaccine using some idle raised funds.
