Sinolink Securities Co.Ltd(600109)
About Chongqing Lummy Pharmaceutical Co.Ltd(300006)
Verification opinions of internal control evaluation report in 2021
Sinolink Securities Co.Ltd(600109) (hereinafter referred to as ” Sinolink Securities Co.Ltd(600109) “) as the sponsor of Chongqing Lummy Pharmaceutical Co.Ltd(300006) (hereinafter referred to as ” Chongqing Lummy Pharmaceutical Co.Ltd(300006) ” or “the company”) issuing shares to specific objects in 2021, carefully checked the internal control of Chongqing Lummy Pharmaceutical Co.Ltd(300006) 2021 in accordance with the provisions of relevant laws, regulations and normative documents. The details are as follows: I. Basic information of the company’s internal control in 2021
1. Internal control environment
(1) Corporate governance
In accordance with relevant laws, regulations, normative documents and the articles of association, the company has established a corporate governance structure with clear rights and responsibilities, each performing its own duties and mutual checks and balances, with the general meeting of shareholders as the highest authority, the board of directors as the decision-making body, the board of supervisors as the supervisory body and the managers as the executive body. At the same time, in order to ensure the operation efficiency and professionalism of the board of directors in the major decision-making process, the board of directors of the company has set up four special committees, including audit committee, strategy committee, salary and assessment committee and Nomination Committee, forming a scientific and effective corporate governance system.
(2) Organizational structure
In terms of organizational structure, the company has set up functional departments such as internal audit department, securities department, sales department, production department, procurement and supply department, quality department, administration department, personnel department, general manager’s office, finance department, technology center, Sichuan University Joint Laboratory and registration department. The functions of each department are clear and can effectively implement the decisions of the company’s management.
(3) Internal audit
The company has established an internal audit department, which is responsible to the audit committee of the board of directors and carries out audit work independently according to the provisions of the internal audit system. For details of the company’s internal audit in 2021, please refer to “II. 5. Implementation of internal audit system” in this verification opinion.
According to the labor law, the company has established a relatively perfect personnel management system for employee employment, training, education, assessment, reward and punishment, promotion and elimination, forming a scientific and effective personnel management mechanism; At the same time, with the mission of “providing innovative, excellent and effective drugs and technologies for human health” and the core values of “self-discipline, care, trust and hard work”, the company has formed a positive corporate culture.
2. Risk assessment
According to the industry characteristics and the company’s development strategy, by collecting relevant information, the company identified the main risks brought by covid-19 epidemic, such as operation risk, industry policy risk, technology development risk, drug price reduction risk, foreign investment risk, product quality and safety risk, and made effective risk response to the above risks by using the strategies of risk avoidance, risk reduction, risk sharing and risk tolerance in the process of production and operation.
3. Control activities
According to the risk assessment results and various internal control systems, the company has taken incompatible job separation control, authorization approval control, accounting system control, property protection control, budget control, operation analysis, performance evaluation control and other measures to control the risk within an acceptable range.
4. Information and communication
The company strictly abides by the information and communication systems such as information disclosure management system, internal notification system of major information and insider registration system, and makes full use of information means to ensure the legal compliance, timeliness and effectiveness of information communication and promote the effective operation of all internal control links. Effectively communicated with relevant investors and regulators. 5. Internal supervision
In 2021, the board of supervisors, the audit committee and the internal audit department of the company earnestly performed their supervision and responsibilities in accordance with relevant laws, regulations, normative documents and the provisions of the company’s system, and actively safeguarded the interests of all shareholders and the company. 2、 Implementation of important internal control systems of the company in 2021
1. Implementation of raised funds management system
In order to standardize the management and application of the company’s raised funds and protect the legitimate rights and interests of all shareholders, the company has formulated the raised funds management system, which further specifies the storage, approval, use, change, management and supervision of the raised funds.
In 2021, the company strictly implemented the special account storage system of raised funds, effectively implemented the supervision agreement of raised funds, and the storage and use of raised funds were in line with relevant laws, regulations and normative documents such as Shenzhen Stock Exchange gem stock listing rules, Shenzhen Stock Exchange listed companies self regulatory guidance No. 2 – standardized operation of GEM listed companies, As well as the provisions and requirements of the company’s management system for raised funds, there is no illegal use or disguised change of the purpose of raised funds and damage to the interests of shareholders. The actual use of the company’s raised funds is consistent with the disclosure.
2. Implementation of foreign investment management system
The company has formulated the foreign investment management system, which defines the decision-making procedures and authority allocation of major investment, as well as the implementation and supervision of decision-making, studies whether the investment project is in line with the company’s development strategy and feasibility, reviews the results of feasibility study, and makes decisions according to the approval procedures.
In 2021, the company’s major foreign investment performed the corresponding internal decision-making procedures and timely disclosed information in accordance with the articles of association and foreign investment management system.
3. Implementation of external guarantee management system
In order to safeguard the interests of investors, standardize the company’s guarantee behavior and control the operation risk of the company’s assets, the company has formulated the external guarantee management system according to relevant laws, regulations and normative documents, which clearly stipulates the review, approval procedures, management and information disclosure of external guarantees.
In 2021, all external guarantees of the company were provided to entities within the scope of consolidated statements, and there was no external guarantee for controlling shareholders, actual controllers and their related parties.
4. Implementation of related party transaction management system
The company has formulated the related party transaction management system, which stipulates the company’s related party transaction principles, related parties and related relationships, procedures of related party transactions, related party transaction items to be disclosed, etc.
In 2021, the related party transactions related to the daily operation of the company were mainly the purchase of drug promotion services from the associated enterprise Chongqing Laimei Shanghe Medical Technology Co., Ltd. and the sales of products to Hunan huipan Medical Technology Co., Ltd. At the same time, the company also provides house leasing and charges rent to affiliated enterprises Chongqing Laimei Shanghe Medical Technology Co., Ltd. and Hunan Maiou Medical Technology Co., Ltd. The amount of the above connected transactions is small, which does not meet the standard of meeting the obligations of deliberation and information disclosure of the board of directors of the company.
In 2021, due to the needs of business development, the company signed the loan extension agreement with Guangxi Wuzhou Zhongheng Group Co.Ltd(600252) after the deliberation and approval of the 10th meeting of the 5th board of directors and the first extraordinary general meeting of shareholders in 2021, extending the company’s two loans totaling 110 million yuan from Guangxi Wuzhou Zhongheng Group Co.Ltd(600252) in 2020 for 6 months respectively, and the annual interest rate and guarantee method of the loan remain unchanged.
By the end of 2021, the company had fully repaid the above related borrowings.
After the deliberation and approval of the 45th meeting of the 4th board of directors, the 2nd meeting of the 5th board of directors and the 2nd extraordinary general meeting of shareholders in 2020, the company issued 24367000 ordinary shares in RMB to the controlling shareholder Guangxi Wuzhou Zhongheng Group Co.Ltd(600252) and its related parties Nanning Zhongheng Tongde pharmaceutical industry investment fund partnership (limited partnership) and Guangxi guangtou Guohong health industry fund partnership (limited partnership) in March 2021, The total amount of funds raised is 1084331500 yuan.
In 2021, other related party transactions of the company were mainly related parties providing guarantees for the company’s financing, paying the remuneration of directors, supervisors and senior managers, etc. the above related party transactions met the provisions of relevant laws, regulations, normative documents and relevant systems of the company, met the actual production and operation needs of the company, and did not harm the interests of the company and shareholders.
5. Implementation of information disclosure management system
The company has formulated internal control system documents such as information disclosure management system, accountability system for major errors in annual report information disclosure, annual report working procedures of audit committee, annual report working procedures of independent directors, working system of secretary of the board of directors, investor relations management system, etc Detailed provisions have been made on file management and accountability.
In 2021, the company’s information disclosure followed the provisions of relevant laws, regulations, normative documents and the company’s information disclosure management system, and disclosed relevant announcements, special reports and system documents in accordance with the principles of openness, impartiality, fairness and timeliness.
6. Implementation of internal audit system
The board of directors of the company has set up an audit committee, which has set up an internal audit department, formulated the work regulations of the audit committee of the board of directors and the internal audit system, and designated full-time personnel to supervise and inspect the business activities, the design and implementation of the internal control system and the effectiveness of the internal control. The internal audit department reports the internal control defects found in the supervision and inspection in accordance with the company’s internal audit procedures, puts forward corresponding improvement suggestions and treatment opinions, and has the right to directly report the major internal control defects found in the supervision and inspection to the board of directors and its audit committee, so as to ensure the implementation of internal control and the normal operation of business activities. In 2021, the audit committee and the internal audit department of the company exercised their functions and powers in accordance with the work regulations of the audit committee of the board of directors, the internal audit system and other relevant regulations, which improved the quality of the company’s financial information, ensured the audit quality and effectively safeguarded the interests of shareholders.
7. Sales and collection management control
The company has set up a sales department to be fully engaged in sales business such as selling goods and providing labor services and sales logistics management. The sales and collection management system formulated defines the rights and responsibilities of relevant posts and mutual restriction requirements. The measures formulated cover the links from customer credit investigation and evaluation to final collection and write off of bad debts.
In 2021, the sales department and financial department of the company managed the sales and payment collection according to the internal system formulated by the company, so as to ensure the business development and financial safety of the company and control the credit risk faced by the company. 8. Control of R & D activities
The company has set up a R & D Technology Center for full-time product R & D, and formulated the R & D management system to clarify the process and approval procedures of scientific research projects from new drug screening, project approval application, project R & D, project intermediate evaluation and adjustment, project conclusion, and production technology transfer; And formulated management measures such as product registration, patent application and protection, and technical confidentiality.
In 2021, while adhering to the path of independent R & D and innovation and increasing R & D investment, according to the R & D management system, the company strengthened the control of R & D activities in the whole process before, during and after the event to control the company’s technology development risks.
9. Internal control of subsidiaries
The company has formulated the management system of holding subsidiaries, appointed directors, supervisors and important senior managers to the subsidiaries, and ensured that the subsidiaries operate in accordance with the company law and other relevant laws and regulations, and strictly abide by the articles of association and other relevant provisions.
In 2021, according to the regulations of the management system of holding subsidiaries, the company standardized the business activities of subsidiaries through regular reports, implementation of business assessment, internal audit and other management means, and maintained good information communication, so as to achieve effective supervision of subsidiaries. 3、 Rectification of internal control defects
During the reporting period, the company has no internal control defects that meet major or important qualitative and quantitative standards. The company carefully summarized and analyzed the general problems in the reporting period, timely formulated and implemented the rectification plan, further improved the company’s internal control management system, standardized the company’s operation and improved the company’s anti risk ability. 4、 Chongqing Lummy Pharmaceutical Co.Ltd(300006) board of directors’ evaluation conclusion on internal control
According to the identification of major defects in the company’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 company has maintained effective internal control over financial reporting in all major aspects in accordance with the requirements of the enterprise’s internal control standard system and relevant regulations. 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.
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、 Accountant’s assurance opinion
Sichuan Huaxin (Group) certified public accountants firm (special general partnership) issued “chuanhuaxinzhuan (2022) No. 0110” Chongqing Lummy Pharmaceutical Co.Ltd(300006) internal control assurance report, which holds that the company maintained effective internal control related to accounting statements in all major aspects on December 31, 2021 in accordance with the basic norms for enterprise internal control (CK [2008] No. 7) and relevant regulations of the Ministry of finance. 6、 Sinolink Securities Co.Ltd(600109) verification opinions on the evaluation of the company’s internal control
After verification, Sinolink Securities Co.Ltd(600109) believes that in 2021, Chongqing Lummy Pharmaceutical Co.Ltd(300006) can continuously improve the company’s internal control system in accordance with the provisions of relevant laws, regulations and normative documents, and the level of internal control has been further improved. The existing internal control system meets the requirements of relevant laws and regulations and securities regulatory authorities, and maintains effective internal control related to the company’s business and management in all major aspects.
The 2021 internal control evaluation report prepared by the board of directors of the company truly and objectively reflects the construction and implementation of the company’s internal control system, and Sinolink Securities Co.Ltd(600109) has no objection to the 2021 internal control evaluation report prepared by Chongqing Lummy Pharmaceutical Co.Ltd(300006) the board of directors.
(there is no text on this page, which is the signature page of Sinolink Securities Co.Ltd(600109) verification opinions on 3 Shenzhen Huaqiang Industry Co.Ltd(000062) 021 annual internal control evaluation report) sponsor representatives: Yan Huatong and Wang Xiaojiang
Sinolink Securities Co.Ltd(600109) March 24, 2022
