Audit report
Hxsz [2022] No. 21011860019 By-Health Co.Ltd(300146) all shareholders:
1、 Audit opinion
We have audited the financial statements of By-Health Co.Ltd(300146) (hereinafter referred to as " By-Health Co.Ltd(300146) "), including the consolidated and parent company's balance sheet as of December 31, 2021, the consolidated and parent company's income statement, consolidated and parent company's cash flow statement, consolidated and parent company's statement of changes in shareholders' equity and notes to relevant financial statements in 2021.
In our opinion, the attached financial statements are prepared in accordance with the provisions of the accounting standards for business enterprises in all material aspects and fairly reflect the financial position of By-Health Co.Ltd(300146) 2021 as of December 31, 2021 and the operating results and cash flow of 2021.
2、 Basis for forming audit opinions
We conducted our audit in accordance with the auditing standards for Chinese certified public accountants. The "responsibilities of certified public accountants for the audit of financial statements" in the audit report further expounds our responsibilities under these standards. In accordance with the code of professional ethics for Chinese certified public accountants, we are independent of By-Health Co.Ltd(300146) , and have fulfilled other responsibilities in terms of professional ethics. We believe that the audit evidence we have obtained is sufficient and appropriate, which provides a basis for our audit opinion.
3、 Key audit matters
The key audit matters are the most important matters that we consider to audit the current financial statements according to our professional judgment. The response to these matters is based on the overall audit of the financial statements and the formation of audit opinions. We will not express separate opinions on these matters.
(I) revenue recognition
1. Item description
As stated in note III (XXVIII) "revenue recognition method" and note V (XX) "operating revenue and operating cost" of the financial statements, since the increase of revenue is the performance evaluation index of By-Health Co.Ltd(300146) stock option incentive plan, and there are inherent risks that may manipulate revenue to achieve specific goals or expectations, we recognize revenue recognition as a key audit matter.
2. Audit response
Our main audit procedures for revenue recognition include but are not limited to:
(1) Test the design and operation effectiveness of By-Health Co.Ltd(300146) sales and collection related internal control;
(2) Check the relevant terms of major customer contracts and the revenue recognition methods of Listed Companies in the same industry, and evaluate whether the revenue recognition meets the requirements of accounting standards;
(3) Obtain the sales contract signed with the customer and verify the key terms of the contract, such as delivery and acceptance; Payment and settlement; Exchange and return policies, sales rebate policies, sales points policies, etc., and audit and review the exchange and return, sales rebate and sales points occurred in the current period and accrued at the end of the period; (4) Regularly check the authenticity of the original shipping orders, sales invoices and bank statements of customers, and check the authenticity of the delivery documents and sales invoices of goods;
(5) For online sales, obtain the platform order flow, platform fund flow and platform statement of the company's main e-commerce platform, and recheck with the company's book revenue recognition;
(6) Check the industrial and commercial registration data of major customers through open channels to confirm that there is no association between major customers and By-Health Co.Ltd(300146) company; Interview major customers to understand the business dealings between By-Health Co.Ltd(300146) and customers;
(7) Implement analytical review procedures, compare and analyze the changes of main customers' income in month, year, products and customers, and analyze the changes of sales price, cost and gross profit of main products;
(8) Audit sample letters to customers to confirm sales and arrears balance;
(9) Perform a cut-off test on the operating revenue to confirm whether the revenue recognition is recorded in the correct accounting period.
(II) goodwill impairment test
1. Item description
As stated in note V (XIX) "goodwill" to the financial statements, as of December 31, 2021, the original value of goodwill was 2.075 billion yuan, the provision for goodwill impairment was 955 million yuan, and the net book value of goodwill was 1.12 billion yuan, accounting for 8.64% of the total assets in the consolidated statements. As the impairment test of goodwill needs to evaluate the present value of the estimated future cash flow of the relevant asset group, which involves the significant judgment and estimation of the management, we regard the impairment test of goodwill as a key audit matter.
2. Audit response
(1) Evaluate and test the key internal control related to goodwill impairment test;
(2) Evaluate the calculation table of the recoverable amount of the asset group where the goodwill belongs prepared by the management, compare the financial data contained in the calculation table with the actual operation data, future operation plan and budget approved by the management, and evaluate the rationality of the data in the calculation table;
(3) Obtain the evaluation report related to goodwill impairment test and evaluate the work of valuation experts, including: evaluating the independence and professional competence of appraisers, evaluating the relevance and rationality of the work results or conclusions of valuation experts, and the consistency between the work results or conclusions and other audit evidence. The work of valuation experts involves the use of important assumptions and methods, The relevance and rationality of these assumptions and methods under specific circumstances, and evaluate the rationality of the parameters cited in the test;
(4) By referring to the industry practice, this paper evaluates the appropriateness of the valuation method used by the management in the cash flow forecast, and recalculates the recoverable amount of the asset group related to the goodwill impairment test. We compare the recoverable amount of the asset group related to the goodwill impairment test with the book value of the asset group (including goodwill) to judge whether it is necessary to make provision for goodwill impairment.
(III) integrity of sales expenses
1. Item description
As stated in note V (42) "sales expenses", the sales expenses in the consolidated statements in 2021 are 2.478 billion yuan, accounting for 33.35% of the operating revenue. Due to the significant amount of sales expenses and the inherent risk of their integrity, the integrity of sales expenses is taken as the key audit item.
2. Audit response
Our main audit procedures for the integrity of sales expenses include:
(1) Test the internal control related to the integrity of sales expenses and confirm the design and operation effectiveness of relevant internal control;
(2) Implement analytical review procedures, compare and analyze the proportion and changes of various sales expense details in each month, and analyze the rationality of the changes;
(3) Select samples to check the advertising contract and review the allocation calculation of advertising expenses;
(4) Check the marketing agreements with major e-commerce platforms, obtain the monthly bills or capital flow of major e-commerce platforms, and review the occurrence and integrity of platform fees and platform marketing fees;
(5) Analyze the integrity of sales expenses, wages and benefits in combination with the post payment of salesperson's wages and salaries;
(6) Carry out the cut-off test of sales expenses and pay attention to whether there are major cross period situations.
4、 Other information
By-Health Co.Ltd(300146) Management (hereinafter referred to as management) is responsible for other information. Other information includes the information covered in By-Health Co.Ltd(300146) 2021 annual report, but does not include the financial statements and our audit report.
Our audit opinion on the financial statements does not cover other information, and we will not issue any form of assurance conclusion on other information.
In combination with our audit of the financial statements, our responsibility is to read other information and consider whether other information is materially inconsistent with the financial statements or the information we have learned in the audit process, or there seems to be material misstatement.
Based on the work we have performed, if we determine that there is a material misstatement in other information, we should report that fact. In this regard, we have nothing to report.
5、 Responsibilities of management and governance for financial statements
By-Health Co.Ltd(300146) the management (hereinafter referred to as the management) is responsible for preparing the financial statements in accordance with the provisions of the accounting standards for business enterprises to achieve a fair reflection, and designing, implementing and maintaining necessary internal control so that the financial statements are free from material misstatement caused by fraud or error.
When preparing the financial statements, the management is responsible for evaluating the going concern ability of By-Health Co.Ltd(300146) and disclosing the matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate By-Health Co.Ltd(300146) , terminate the operation or has no other realistic choice.
The management is responsible for supervising the financial reporting process of By-Health Co.Ltd(300146) .
6、 Responsibilities of certified public accountants for the audit of financial statements
Our goal is to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement due to fraud or error, and issue an audit report containing audit opinions. Reasonable assurance is a high-level assurance, but it does not guarantee that the audit performed in accordance with the audit standards will always be found when a major misstatement exists. Misstatement may be caused by fraud or error. If it is reasonably expected that the misstatement alone or in summary may affect the economic decisions made by the users of the financial statements based on the financial statements, the misstatement is generally considered to be significant. In the process of carrying out the audit work in accordance with the audit standards, we use professional judgment and maintain professional doubt. At the same time, we also carry out the following work:
(1) Identify and assess the risks of material misstatement of financial statements due to fraud or error, design and implement audit procedures to deal with these risks, and obtain sufficient and appropriate audit evidence as the basis for issuing audit opinions. Since fraud may involve collusion, forgery, intentional omission, misrepresentation or override of internal control, the risk of failing to find major misstatement caused by fraud is higher than that caused by error.
(2) Understand the internal control related to audit in order to design appropriate audit procedures, but the purpose is not to express an opinion on the effectiveness of internal control.
(3) Evaluate the appropriateness of accounting policies selected by the management and the rationality of accounting estimates and related disclosures.
(4) Draw conclusions on the appropriateness of management's use of going concern assumptions. At the same time, according to the audit evidence obtained, draw a conclusion on whether there are major uncertainties in the matters or circumstances that may lead to major doubts about By-Health Co.Ltd(300146) going concern ability. If we conclude that there is significant uncertainty, the auditing standards require us to draw the attention of statement users to the relevant disclosures in the financial statements in the audit report; If the disclosure is insufficient, we should express a non unqualified opinion. Our conclusions are based on the information available as of the date of the audit report. However, future events or circumstances may cause By-Health Co.Ltd(300146) unable to continue to operate.
(5) Evaluate the overall presentation, structure and content of the financial statements, and evaluate whether the financial statements fairly reflect relevant transactions and events.
(6) Obtain sufficient and appropriate audit evidence on the financial information of entities or business activities in By-Health Co.Ltd(300146) in order to express an audit opinion on the financial statements. We are responsible for guiding, supervising and implementing the group audit, and take full responsibility for the audit opinions.
We communicated with the management on the planned audit scope, schedule and major audit findings, including the internal control defects that we identified in the audit.
We also provide a statement to the management that we have complied with the professional ethics requirements related to independence, and communicate with the management all relationships and other matters that may reasonably be considered to affect our independence, as well as relevant preventive measures (if applicable).
From the matters communicated with the management, we determine which matters are the most important for the audit of the current financial statements, thus constituting key audit matters. We describe these matters in the audit report, unless laws and regulations prohibit the public disclosure of these matters, or in rare cases, if the negative consequences of communicating a matter in the audit report are reasonably expected to exceed the benefits in the public interest, we determine that we should not communicate the matter in the audit report.
Huaxing certified public accountants, Chinese Certified Public Accountants:
(special general partnership) (project partner)
Chinese certified public accountant:
Fuzhou, China March 4, 2002
Notes to financial statements
(the following amounts are in RMB unless otherwise specified)
1、 Basic information of the company
(I) Company Profile
Registered address: No. 19, Xinghan Road, Sanzao Science and Technology Industrial Park, Jinwan District, Zhuhai City, Guangdong Province.
Headquarters office address: No. 3, Kehui Jingu 3rd Street, No. 99, science Avenue, Science City, Guangzhou, Guangdong Province.
Main business activities: the company belongs to the manufacturing industry of dietary nutritional supplements, mainly engaged in the production and sales of dietary nutritional supplements.
Approval date of financial report: March 4, 2022.
(II) scope of consolidated financial statements
For details of subsidiaries included in the consolidated financial statements of the company in the current period, see note VII, "equity in other entities". See note VI, "change of consolidation scope" for the change of consolidation scope this year.
2、 Preparation basis of financial statements
(I) preparation basis
On the basis of going concern, the company recognizes and measures the actual transactions and events in accordance with the accounting standards for business enterprises - Basic Standards and other specific accounting standards, application guidelines, standard interpretation and other relevant provisions (hereinafter collectively referred to as the accounting standards for business enterprises), On this basis, the financial statements are prepared in combination with the provisions of the rules for the preparation of information disclosure of companies offering securities to the public No. 15 - General Provisions on financial reports (revised in 2014) of the China Securities Regulatory Commission.
(II) going concern
The company has the ability of sustainable operation for at least 12 months from the end of the reporting period, and there are no major events affecting the ability of sustainable operation.
3、 Important accounting policies and accounting estimates
Tips on specific accounting policies and accounting estimates:
The company is mainly engaged in the production and sales of dietary nutritional supplements. According to the actual production and operation characteristics and the provisions of relevant accounting standards for business enterprises, the company has formulated several specific accounting policies and accounting estimates for transactions and events such as revenue recognition. See note III (XXVIII) description of revenue for details.
(I) statement of compliance with accounting standards for business enterprises
The financial statements prepared by the company comply with the requirements of the accounting standards for business enterprises and truly and completely reflect the company's financial status, operating results, changes in shareholders' equity, cash flow and other relevant information.
(II) accounting period
The accounting year of the company starts from January 1 to December 31 of the Gregorian calendar.
(III) business cycle
The company takes 12 months as a business cycle.
(IV) recording currency
The company takes RMB as the bookkeeping base currency.
(V) accounting treatment methods for business combinations under the same control and not under the same control
1. Business combination under the same control: the assets and liabilities obtained by the company in the business combination shall be calculated according to the assets of the combined party on the combination date
