Huabao Flavours & Fragrances Co.Ltd(300741) 2021 financial statements and audit report
Huabao Flavours & Fragrances Co.Ltd(300741) 2021 financial statement and audit report
Content page audit report 1 - 5 financial statements
Consolidated balance sheet 1 - 2 company balance sheet 3 - 4 consolidated income statement 5 - 6 company income statement 7 consolidated cash flow statement 8- 9 cash flow statement of the company 10 - 11 consolidated statement of changes in shareholders' equity 12 - 13 statement of changes in shareholders' equity of the company 14 - 15 notes to financial statements 16 - 121 supplementary information 1 - 2
audit report
PwC ztsz (2022) No. 10051 (Page 1 of 5) Huabao Flavours & Fragrances Co.Ltd(300741) all shareholders:
1、 Audit opinion
（1） Contents of our audit
We have audited the financial statements of Huabao Flavours & Fragrances Co.Ltd(300741) (hereinafter referred to as " Huabao Flavours & Fragrances Co.Ltd(300741) company"), including the consolidated and company's balance sheet as of December 31, 2021, the consolidated and company's income statement, consolidated and company's cash flow statement, consolidated and company's statement of changes in shareholders' equity and notes to financial statements in 2021.
（2） Our opinion
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 consolidated and financial position of Huabao Flavours & Fragrances Co.Ltd(300741) company as of December 31, 2021 and the consolidated and operating results and cash flow of the company in 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. We believe that the audit evidence we have obtained is sufficient and appropriate, which provides a basis for our audit opinion.
In accordance with the code of professional ethics for Chinese certified public accountants, we are independent of Huabao Flavours & Fragrances Co.Ltd(300741) company and have fulfilled other responsibilities in terms of professional ethics.
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.
The key audit event identified in our audit is goodwill impairment.
PwC ztsz (2022) No. 10051 (page 2 of 5) III. key audit matters (Continued)
Key audit matters how do we deal with key audit matters in the audit
Goodwill impairment: as shown in note IV (16) to the financial statements, Huabao - we understand, evaluate and test the internal joint-stock companies and their subsidiaries related to the impairment of goodwill in the previous years. By considering the degree of estimation uncertainty and the goodwill generated by their acquisition, the level of inherent risk factors in December 2021, such as complexity Subjectivity, changing the book value on the 31st day into RMB and being sensitive to management bias or fraud, the inherent risk of misstatement is greatly reduced by the deducted goodwill of RMB 1194550741; The value reserve amount is RMB 36365587
- yuan By comparing the forecast in the model of the previous year with the actual business performance of the current year, we evaluate the rationality of the forecast made by the management according to the financial statements of Huabao Flavours & Fragrances Co.Ltd(300741) company; The accounting policies described in note II (17) and the important accounting estimates described in note II (25) of the financial statements - we evaluate the recognition of the asset group and the appropriate calculation and judgment of goodwill allocation, and subtract the fair value of the asset from the liquidity; The higher one between the net amount after disposal expenses and the present value of the expected future cash flow of the assets - we obtain the evaluation report issued by the independent evaluation agency hired by the management as the recoverable amount, at least annually; Whether it is necessary to make provision for impairment.
After evaluation - we evaluate the independence and professional competence of the independent evaluation organization, and the management evaluates it based on the ability and objectivity of predicting future cash flow; To determine the recoverable amount of the asset group and the portfolio of asset groups containing goodwill based on the present value, which is considered unnecessary - with the assistance of internal experts, we evaluated the impairment provision for goodwill adopted by the management. The appropriateness of goodwill impairment test methods for cash in the future; In the calculation of flow present value, the management adopts
Key assumptions include: - we have compared the gross profit margin and revenue growth rate used in the future cash flow forecast (including the growth rate and revenue growth rate in the forecast period with the historical gross profit margin and stable periodic growth rate of Huabao Flavours & Fragrances Co.Ltd(300741) company), and considered the market trend;
Gross profit margin
Pre tax discount rate - by comparing industry and market data, referring to the situation of comparable companies due to the significant amount of goodwill and the companies involved in the impairment assessment (such as capital structure), and in combination with the specific situation of each asset group, asset and management's major judgment group combination on the future operation, we recalculate each asset group and its assets and estimates. We take the impairment of goodwill as the weighted average capital cost of the relevant asset group combination, To evaluate management key audit matters. The rationality of the pre tax discount rate adopted;
PwC ztsz (2022) No. 10051 (page 3 of 5) III. key audit matters (Continued)
Key audit matters how do we deal with key audit matters in the audit
- we evaluated the sensitivity analysis of the management on key assumptions (including revenue growth rate in the forecast period, revenue growth rate in the stable period, gross profit margin and pre tax discount rate);
- we also considered whether the judgment made in the selection of data may indicate management bias;
- we tested the calculation accuracy in the calculation of the present value of future cash flow;
- we assessed the adequacy of the disclosures relating to impairment of goodwill. Based on the results of the above audit, we find that the management
Significant judgments made by the management in the goodwill impairment assessment can
Supported by the evidence we have obtained.
4、 Other information
The management of Huabao Flavours & Fragrances Co.Ltd(300741) company is responsible for other information. Other information includes the information covered in the 2021 annual report of Huabao Flavours & Fragrances Co.Ltd(300741) company, 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 the Audit Committee for the financial statements
Huabao Flavours & Fragrances Co.Ltd(300741) the management of the company 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.
PwC ztsz (2022) No. 10051 (page 4 of 5) v. responsibilities of the management and the Audit Committee for the financial statements (Continued)
When preparing the financial statements, the management is responsible for evaluating the sustainable operation ability of Huabao Flavours & Fragrances Co.Ltd(300741) company, disclosing matters related to sustainable operation (if applicable), and applying the assumption of sustainable operation, unless the management plans to liquidate Huabao Flavours & Fragrances Co.Ltd(300741) company, terminate operation or have no other realistic choice.
The audit committee is responsible for supervising the financial reporting process of Huabao Flavours & Fragrances Co.Ltd(300741) company.
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 risk of material misstatement of financial statements due to fraud or error; The audit evidence shall be taken as the basis for the audit, and the audit opinions shall be adequately designed and implemented to deal with these audit risks. 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 the sustainable operation ability of Huabao Flavours & Fragrances Co.Ltd(300741) company. 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
