Shanghai Shanghai Fosun Pharmaceutical (Group) Co.Ltd(600196) (Group) Co., Ltd
Internal control evaluation report in 2021
All shareholders of Shanghai Shanghai Fosun Pharmaceutical (Group) Co.Ltd(600196) (Group) Co., Ltd.:
In accordance with the provisions of the basic norms of enterprise internal control and its supporting guidelines and other internal control regulatory requirements (hereinafter referred to as the enterprise internal control standard system), combined with the internal control system and evaluation methods of Shanghai Shanghai Fosun Pharmaceutical (Group) Co.Ltd(600196) (Group) Co., Ltd. (hereinafter referred to as the “company”), on the basis of daily and special supervision of internal control, We evaluated the effectiveness of the internal control of the group (i.e. the company and its holding subsidiaries / units, the same below) as of December 31, 2021 (the benchmark date of the internal control evaluation report). I Important statement
It is the responsibility of the board of directors of the company to establish, improve and effectively implement internal control, evaluate its effectiveness and truthfully disclose the internal control evaluation report in accordance with the provisions of the enterprise internal control standard system. The board of supervisors shall supervise the establishment and implementation of internal control by the board of directors. The management is responsible for organizing and leading the daily operation of the enterprise’s internal control. The board of directors, the board of supervisors, the directors, supervisors and senior management of the company guarantee that the contents of the report are free of any false records, misleading statements or major omissions, and shall bear individual and joint legal liabilities for the authenticity, accuracy and completeness of the report.
The purpose of this report is to ensure that the group’s internal strategic development, financial management and related information are legal and complete, and to improve the effectiveness of the group’s internal management. Due to the inherent limitations of internal control, it can only provide reasonable assurance for the realization of the above objectives. In addition, as changes in circumstances may lead to inappropriate internal control or reduced compliance with control policies and procedures, there is a certain risk to speculate the effectiveness of internal control in the future according to the internal control evaluation results. II Internal control evaluation conclusion 1 On the benchmark date of the internal control evaluation report, does the company have any major defects in the internal control of financial reporting
□ yes √ no
2. Evaluation conclusion of internal control over financial reporting
√ valid □ invalid
According to the identification of major defects in the group’s internal control over financial reporting, there are no major defects in the internal control over financial reporting on the benchmark date of the internal control evaluation report. The board of Directors believes that the group has maintained effective internal control over financial reporting in all major aspects in accordance with the requirements of the enterprise internal control standard system and relevant regulations. 3. Whether major defects in internal control over non-financial reporting are found
□ yes √ no
According to the identification of major defects in the company’s internal control over non-financial reports, the company found no major defects in the company’s internal control over non-financial reports on the benchmark date of the internal control evaluation report.
4. Factors affecting the evaluation conclusion of internal control effectiveness from the benchmark date of internal control evaluation report to the date of issuance of internal control evaluation report □ applicable √ not applicable
There are no factors affecting the evaluation conclusion of the effectiveness of internal control from the base date of the internal control evaluation report to the date of issuance of the internal control evaluation report. 5. Whether the internal control audit opinion is consistent with the company’s evaluation conclusion on the effectiveness of internal control over financial reporting
√ yes □ No 6 Whether the disclosure of major defects in internal control of non-financial reports in the internal control audit report is consistent with the disclosure of the company’s internal control evaluation report √ yes □ no III Internal control evaluation (I) Scope of internal control evaluation
The company determines the main units, businesses and matters included in the evaluation scope and high-risk areas in accordance with the risk-oriented principle. 1. The main units included in the evaluation scope include: several holding subsidiaries / units in the drug manufacturing and R & D, medical services, medical diagnosis and medical devices of the company 2 Proportion of units included in the scope of evaluation:
Proportion of indicators (%)
The ratio of the total assets of the units included in the evaluation scope to the total assets of the company’s consolidated financial statements is 89.51
The total operating income of the units included in the evaluation scope accounted for 98.85% of the total operating income in the company’s consolidated financial statements
3. The main operations and matters included in the scope of evaluation include:
The main businesses and matters of each evaluation unit include: procurement business, sales business, project management, fund management, asset management, R & D business, financial report, etc. 4. High risk areas of focus mainly include:
Procurement business, engineering project management, sales management, etc. 5. The above units, businesses and matters included in the evaluation scope and high-risk areas cover the main aspects of the company’s operation and management. Is there any major omission
□ yes √ No 6 Is there a statutory exemption
□ yes √ No 7 Other explanatory matters
nothing
（2） Basis of internal control evaluation and identification standard of internal control defects
The company organizes and carries out internal control evaluation according to the enterprise internal control standard system and regulatory requirements, various internal management regulations of the company, etc. 1. Whether the specific identification standard of internal control defects is adjusted with that of previous years
□ yes √ no
The board of directors of the company distinguished the internal control over financial reporting from the internal control over non-financial reporting according to the identification requirements for major defects, important defects and general defects in the enterprise internal control standard system, combined with the factors such as the size, industry characteristics, risk preference and risk tolerance of the group, and studied and determined the specific identification standards for internal control defects applicable to the company, which were consistent with those in previous years. 2. Identification standard of internal control defects in financial reporting
The quantitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Index name major defect quantitative standard important defect quantitative standard general defect quantitative standard
The amount of misstatement accounts for ≥ 0.5% of the total assets, misstatement 0.5% of the total assets, and misstatement 0.3% of the total assets
Proportion of total assets ≥ 0.3% of total assets
The amount of misstatement accounts for more than 5% of the total profit, misstatement 5% of the total profit, and misstatement 3.5% of the total profit
Proportion of total profit ≥ 3.5% of total profit
Description: None
The qualitative criteria for the evaluation of internal control defects in financial reporting determined by the company are as follows:
Qualitative standard of defect nature
(a) The directors, supervisors and senior managers of the company have major fraud;
(b) Major internal control defects that have been found and reported to the board of directors and management of the company have not been corrected after a reasonable time;
Major defects (c) the company’s certified public accountant found that there were major misstatements in the current financial statements in the annual audit, but the internal control failed to find such misstatements in the process of operation;
(d) Correcting the published financial statements due to major accounting errors;
(e) Other major defects that may affect the correct judgment of report users
If an internal control defect, alone or in combination with other defects, has a reasonable possibility to prevent important defects in a timely manner or find and correct misstatements in the financial statements that, although not reaching or exceeding the level of importance, should still attract the attention of the board of directors and management, the defect is recognized as an important defect.
General defects that do not constitute major defects and important defects are recognized as general defects.
Note: none 3 Identification standard of internal control defects in non-financial reporting
The quantitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
Index name major defect quantitative standard important defect quantitative standard general defect quantitative standard
Direct property loss accounts for 0.5% of direct property loss ≥ total direct property loss of assets total direct property loss of assets 0.5% of total assets, and ≥ 0.3% of total assets
0.3%
Direct property loss accounts for 5% of the proportion of direct property loss ≥ total profit, direct property loss total profit, direct property loss total profit, and ≥ 3.5% of total profit
3.5%
Description: None
The qualitative criteria for the evaluation of internal control defects in non-financial reporting determined by the company are as follows:
Qualitative standard of defect nature
(a) Serious violation of laws and regulations;
Major defect (b) the overall lack of system has caused or may cause the control failure of the company;
(c) Serious loss of senior managers or key positions, affecting the normal business activities of the company;
(d) The supervision of internal control by the audit committee of the board of directors and the internal audit institution of the company is invalid.
If an internal control defect, alone or in combination with other defects, has a reasonable possibility to prevent important defects in a timely manner or find and correct misstatements in non-financial statements that, although not reaching or exceeding the materiality level, should still attract the attention of the board of directors and management, the defect is recognized as an important defect.
General defects that do not constitute major defects and important defects are recognized as general defects.
Note: none (III) Identification and rectification of internal control defects 1 Identification and rectification of internal control defects in financial reporting 1.1 Major defects
Whether the company has major defects in internal control over financial reporting during the reporting period □ yes √ no 1.2 Important defects
Whether the company has significant defects in internal control over financial reporting during the reporting period □ yes √ no 1.3 General defect
In view of the general defects of internal control over financial reporting found in the process of internal control evaluation, the group has rectified most of the general defects during the reporting period. 1.4 After the above rectification, on the benchmark date of the internal control evaluation report, does the company have any major defects in the internal control of financial reporting that have not been rectified □ yes √ no 1.5 After the above rectification, on the benchmark date of the internal control evaluation report, whether the company has any important defects in the internal control of financial reporting that have not been rectified □ yes √ No 2 Identification and rectification of internal control defects in non-financial reporting 2.1 Major defects
Whether the group found any major defects in internal control over non-financial reporting during the reporting period □ yes √ no 2.2 Important defects
During the reporting period, did the group find any significant defects in the internal control of non-financial reporting
2.3. General defect
In view of the general defects of internal control over non-financial reporting found in the process of internal control evaluation, the group has rectified most of the general defects during the reporting period. 2.4. After the above rectification, on the benchmark date of the internal control evaluation report, does the company find any major defects in the non-financial reporting internal control that have not been rectified □ yes √ no 2.5 After the above rectification, on the benchmark date of the internal control evaluation report, whether the company finds any important defects in non-financial reporting internal control that have not been rectified □ yes √ no IV Description of other major matters related to internal control 1 Rectification of internal control defects in the previous year □ applicable √ not applicable 2 Operation of internal control in this year and improvement direction in the next year
□ not applicable √ 3 Description of other major events
□ applicable √ not applicable
Chairman (authorized by the board of directors): Wu Yifang Shanghai Shanghai Fosun Pharmaceutical (Group) Co.Ltd(600196) (Group) Co., Ltd. March 22, 2022
