Tianshui Zhongxing Bio-Technology Co.Ltd(002772)
Internal control assurance report
Zhonghuan zhuanzi (2022) No. 0810005
catalogue
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Description of assurance report
Notes on matters related to internal control 1
Internal control assurance report
Zhonghuan zhuanzi (2022) No. 0810005 Tianshui Zhongxing Bio-Technology Co.Ltd(002772) all shareholders:
We have accepted the entrustment to review the confirmation of the management of Tianshui Zhongxing Bio-Technology Co.Ltd(002772) (hereinafter referred to as ” Tianshui Zhongxing Bio-Technology Co.Ltd(002772) “) on the effectiveness of internal control related to the financial statements as of December 31, 2021 Tianshui Zhongxing Bio-Technology Co.Ltd(002772) the responsibility of the management is to establish and improve the internal control and maintain its effectiveness. At the same time, it shall make a determination on the effectiveness of the internal control related to the financial statements as of December 31, 2021 and ensure the authenticity and integrity of the determination. Our responsibility is to express assurance opinions on the effectiveness of Tianshui Zhongxing Bio-Technology Co.Ltd(002772) internal control related to financial statements as of December 31, 2021.
We have carried out the assurance business in accordance with the standards for other assurance business of Chinese certified public accountants No. 3101 – assurance business other than the audit or review of historical financial information and with reference to the guidance on internal control audit. The above provisions require us to plan and execute the assurance work to obtain reasonable assurance on whether the information of the assurance object is free from material misstatement. In the assurance process, we have implemented other procedures, including understanding, testing and evaluating the establishment and implementation of the internal control system, as well as other procedures we deem necessary. We believe that our assurance work provides a reasonable basis for expressing opinions.
Internal control has inherent limitations, and there is the possibility of misstatement and undetected due to error or fraud. In addition, changes in circumstances may lead to inappropriate internal control or reduce the degree of compliance with control policies and procedures. Therefore, the effective internal control on December 31, 2021 does not guarantee that it will be effective in the future. According to the internal control evaluation results, it is speculated that the effectiveness of internal control in the future has certain risks.
In our opinion, Tianshui Zhongxing Bio-Technology Co.Ltd(002772) has maintained effective internal control related to the financial statements in all material aspects as of December 31, 2021.
This assurance report is only for the purpose of disclosure in the annual report of Tianshui Zhongxing Bio-Technology Co.Ltd(002772) 2021, and shall not be used for any other purpose.
Zhongshen Zhonghuan Certified Public Accountants (special general partnership) Chinese certified public accountant:
An suqiang
Chinese certified public accountant:
Yang Yichen
Wuhan, China March 23, 2022
Assurance report page 1 of 1
Tianshui Zhongxing Bio-Technology Co.Ltd(002772)
Notes on matters related to internal control
1、 Basic information of the company
Tianshui Zhongxing Bio-Technology Co.Ltd(002772) (hereinafter referred to as “the company” or “the company”) is a joint stock limited company jointly established by Tao Jun, Tian De, Jiaxing Jiaze Kunwu Jiuding Investment Holdings Co.Ltd(600053) Center (limited partnership), Suzhou Yongle Kunwu Jiuding Investment Holdings Co.Ltd(600053) Center (limited partnership), Tianjin Jiufeng equity investment fund partnership (limited partnership) and six other natural persons after being approved and registered by Tianshui Administration for Industry and Commerce on March 27, 2012.
Registered address of the company: Gansu Tianshui national agricultural science and Technology Park, the headquarters is the same as the registered place;
Unified social credit code / Registration No.: 916205007788855832;
Legal representative of the company: Liu Liang;
Business scope of the company: production and sales of edible fungi, medicinal fungi and their accessories, research and development, application, research and promotion of microbial technology, bioengineering technology and new agricultural technology, and production, processing and sales of agricultural and sideline local products.
The company has comprehensive department, human resources department, finance department, sales department, production department, material department, technology department and other departments. The main management organization of the company is in Tianshui City, Gansu Province.
When the company was established, the total share capital was 100 million shares, with a par value of 1 yuan per share; On April 10, 2012, the company held the first extraordinary general meeting of shareholders in 2012 and agreed to issue 510000 new shares. After the capital increase, the total share capital of the company was 100.51 million shares; On April 27, 2012, the company held the second extraordinary general meeting of shareholders in 2012 and agreed to issue 111678 million new shares. After the capital increase, the total share capital of the company was 1116778 million shares.
With the approval of zjffz (2015) No. 1183 document of China Securities Regulatory Commission, the company issued 37250000 RMB ordinary shares to the public through Shenzhen Stock Exchange on June 23, 2015, with a total share capital of 148927800 shares. The company’s shares were listed and traded on Shenzhen Stock Exchange on June 26, 2015.
The total number of incentive shares of the listed company increased from 14899000 shares to 155682000 shares on the date of listing in 2016.
On April 15, 2016, the company implemented the 2015 profit distribution plan, and the capital reserve formed by the issuance of shares at a premium when the company was listed was converted into a total of 1638206 million shares. After the conversion, the total number of shares of the company increased from 1558268 million shares to 3196474 million shares.
On July 18, 2016, the reply on approving Tianshui Zhongxing Bio-Technology Co.Ltd(002772) non-public offering of shares (zjxk [2016] No. 1329) issued by China Securities Regulatory Commission approved that the company’s non-public offering of shares should not exceed 72035143 shares,
According to the above reply, the company issued 53683333 new shares to 7 investors on August 11, 2016, which were listed on Shenzhen Stock Exchange on August 22, 2016.
After the completion of this non-public offering, the total number of shares of the company has changed from 319647400 shares before the issuance to 373330700 shares.
At the 42nd meeting of the second board of directors held on March 5, 2018, the company deliberated and approved the proposal on adjusting the repurchase price of restricted shares and repurchasing and canceling some restricted shares. One restricted stock incentive object of the company resigned for personal reasons and did not meet the incentive conditions. The board of directors agreed that according to the relevant provisions of Tianshui Zhongxing Bio-Technology Co.Ltd(002772) restricted stock incentive plan (Draft) and so on, Repurchase and cancel the restricted shares granted but not unlocked. A total of 14360 restricted shares were repurchased and cancelled this time. After the cancellation, the total number of shares of the company was changed from 373330700 shares to 373316300 shares.
With the approval of the “zjxk [2017] No. 2002” document of the China Securities Regulatory Commission, the company publicly issued 9.2 million convertible corporate bonds (hereinafter referred to as “convertible bonds”) with a face value of 100 yuan each and a total issuance amount of 920 million yuan on December 13, 2017. With the consent of “SZS [2017] No. 848” document of Shenzhen Stock Exchange, the company’s 920 million yuan convertible bonds have been listed and traded on Shenzhen Stock Exchange since January 3, 2018. The bonds are referred to as “Zhongxing convertible bonds” for short and the bond code is “128026”. In accordance with relevant laws and regulations and the prospectus for Tianshui Zhongxing Bio-Technology Co.Ltd(002772) public offering of convertible corporate bonds, convertible corporate bonds have been converted into shares since June 19, 2018. In the second quarter of 2018, the number of “Zhongxing convertible bonds” converted into shares was 4884; In the third quarter of 2018, the number of “Zhongxing convertible bonds” converted into shares was 9228; In the fourth quarter of 2018, the number of shares converted by “Zhongxing convertible bonds” was 2819, and the total number of shares converted above was 16931. After the conversion, the total number of shares of the company changed from 373316300 to 373333300.
On December 21, 2018, the company held the 9th meeting of the 3rd board of directors and deliberated and approved the proposal on repurchase and cancellation of restricted shares granted but not unlocked to incentive objects who have not met the incentive conditions and the proposal on termination of the implementation of restricted stock incentive plan and repurchase and cancellation of restricted shares granted but not unlocked. A total of 5652669 restricted shares were repurchased and cancelled, After the cancellation, the total number of shares of the company changed from 373333300 shares to 367680600 shares.
In the first quarter of 2019, the number of “Zhongxing convertible bonds” converted into shares was 4691; In the second quarter of 2019, the number of “Zhongxing convertible bonds” converted into shares was 2904; In the third quarter of 2019, the number of “Zhongxing convertible bonds” converted into shares was 2840; In the fourth quarter of 2019, the number of shares converted by “Zhongxing convertible bonds” was 7365, and the total number of shares converted above was 17800. After the conversion, the number of shares of the company was changed to 367698400.
In the first quarter of 2020, the number of “Zhongxing convertible bonds” converted into shares was 5090; In the second quarter, the number of “Zhongxing convertible bonds” converted into shares was 1039; In the third quarter, the number of “Zhongxing convertible bonds” converted into shares was 9669; In the fourth quarter, “Zhongxing convertible bonds” converted 2905 shares. The total number of shares converted above was 18703, and the number of shares of the company was changed to 367717100 after the conversion.
In the first quarter of 2021, the number of “Zhongxing convertible bonds” converted into shares was 2093; In the second quarter, the number of shares converted by “Zhongxing convertible bonds” was 38269317 shares. In the third quarter, “Zhongxing convertible bonds” converted 6655560 shares; In the fourth quarter, the number of “Zhongxing convertible bonds” converted into shares was 8194; After the conversion, the number of shares of the company was changed to 412652300.
The company held the 7th Meeting of the 4th board of directors, the 5th meeting of the 4th board of supervisors on November 4, 2021 and the 1st extraordinary general meeting of 2021 on November 22, 2021, deliberated and approved the proposal on changing the purpose and cancellation of the remaining shares of (phase I) repurchased shares, and agreed to cancel 5230475 remaining shares of (phase I) repurchased shares in the special securities account for repurchases, Accounting for 1.27% of the total share capital of the company. After this cancellation, the total share capital of the company will be reduced by 5230475 shares and the registered capital will be reduced by 5230475 yuan. After the cancellation, the total number of shares of the company was changed from 412652300 shares to 407421800 shares.
The company and its subsidiaries (hereinafter referred to as “the group”) are mainly engaged in the production and sales of edible fungi, medicinal fungi and their accessories, and the research and development of microbial technology, bioengineering technology and new agricultural technology, belonging to the agricultural planting industry.
Operation period: from November 18, 2008 to November 17, 2098.
The ultimate controller of the group is Tao Jun, a natural person.
The company has comprehensive department, human resources department, finance department, marketing department, production department, procurement department, quality management department and other departments. The company’s main management organization and production and operation site are in Tianshui City, Gansu Province.
The company has 15 subsidiaries, namely: Shaanxi Zhongxing high tech Biotechnology Co., Ltd., a wholly-owned subsidiary, located in Yangling Demonstration Zone, Shaanxi Province; Shaanxi Tianshui Zhongxing Bio-Technology Co.Ltd(002772) Technology Co., Ltd., a holding subsidiary, holds 95% of the shares and is located in Yangling Demonstration Zone, Shaanxi Province; Shandong Tianshui Zhongxing Bio-Technology Co.Ltd(002772) Technology Co., Ltd., a wholly-owned subsidiary, is located in Ningjin County, De Zhou City, Shandong Province; Jiangsu Zhongyou Xinghe fungus Technology Co., Ltd., a wholly-owned subsidiary, is located in Suining County, Xuzhou City, Jiangsu Province; Xinxiang Xinghe Biotechnology Co., Ltd., a wholly-owned subsidiary obtained through the merger of enterprises not under the same control, is located in Huixian City, Xinxiang City, Henan Province; Meishan Changhong Agricultural Biotechnology Co., Ltd., a wholly-owned subsidiary obtained through the merger of enterprises not under the same control; Anyang Tianshui Zhongxing Bio-Technology Co.Ltd(002772) Technology Co., Ltd., a wholly-owned subsidiary, is located in Tangyin County, Anyang City, Henan Province; Jilin Tianshui Zhongxing Bio-Technology Co.Ltd(002772) Technology Co., Ltd., a wholly-owned subsidiary, is located in Yongji County, Jilin Province; Wuwei Tianshui Zhongxing Bio-Technology Co.Ltd(002772) Technology Co., Ltd., a wholly-owned subsidiary, is located in Liangzhou District, Wuwei City, Gansu Province; Anhui Tianshui Zhongxing Bio-Technology Co.Ltd(002772) Technology Co., Ltd., a wholly-owned subsidiary, is located in Dingyuan County, Chuzhou City, Anhui Province; A wholly owned subsidiary, Wuhe Tianshui Zhongxing Bio-Technology Co.Ltd(002772) Technology Co., Ltd., located in Wuhe County, Bengbu City, Anhui Province, is a wholly owned subsidiary of Hubei Tianshui Zhongxing Bio-Technology Co.Ltd(002772) Technology Co., Ltd., located in Yunmeng County, Xiaogan City, Hubei province. Its wholly owned subsidiary, Jiangsu Zhongxing Cci Capital Ltd, is located in Suining County, Xuzhou City, Jiangsu province. Tianshui Zhongan Biotechnology Co., Ltd., a wholly-owned subsidiary, is located in Maiji District, Tianshui City, Gansu Province; Tianshui Zhongshun Industrial Co., Ltd., a wholly-owned subsidiary, is located in Qinzhou District, Tianshui City, Gansu Province.
The company and its subsidiaries (hereinafter referred to as “the group”) are mainly engaged in edible fungi
