Shenzhen Salubris Pharmaceuticals Co.Ltd(002294)
Audit report
Dxsz [2022] No. 500048
Daxin certified public accountants LLP
Wuyige certified public accountants LLP telephone: + 86 (10) 8233055822 / F, Xueyuan International Tower, No. 1 Zhichun Road, Haidian District, Beijing Fax: + 86 (10) 82327668 No.1 Zhichun Road, Haidian dist, 22nd floor, College International Building. Website: Internet: www.daxincpa com. cn. Postal Code: Beijing, China 100083
audit report
Dxsz [2022] No. 500048 Shenzhen Salubris Pharmaceuticals Co.Ltd(002294) all shareholders:
1、 Audit opinion
We have audited the financial statements of Shenzhen Salubris Pharmaceuticals Co.Ltd(002294) (hereinafter referred to as “the company”), 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 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 your company as of December 31, 2021 and the operating results and cash flows of your company and the parent 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. In accordance with the code of professional ethics for Chinese certified public accountants, we are independent of your company 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 V (43) of the financial statements, the main business income of your company in 2021 was 3.020 billion yuan, accounting for 98.73% of the consolidated operating income. Your company’s income mainly comes from sales in China, and you have fulfilled your obligations in the contract,
Wuyige certified public accountants 22 / F, Haidian District, No. 8286, Haidian international road, fax: 3286, Haidian District, Beijing com. cn. Postal Code: Beijing, China 100083
That is, when the customer obtains the control of relevant goods or services, the revenue shall be recognized according to the transaction price apportioned to the performance obligation.
As revenue is the key performance indicator of your company and has a significant impact on the overall financial statements of the company, we recognize revenue as a key audit event.
2. Audit response
(1) Carry out control test on your company’s internal control cycle of sales and collection, evaluate the effectiveness of control design, and implement test procedures to determine whether relevant controls have been effectively implemented;
(2) Communicate with the management of your company, understand the impact of the company’s market environment and marketing strategy on the company’s performance and recovery of accounts receivable, and evaluate the rationality of sales performance growth;
(3) Implement substantive analysis procedures for sales revenue, including analysis of Income Fluctuation and gross profit margin in different months during the reporting period, as well as comparative analysis with the previous year;
(4) Implement detail test and check the supporting documents related to sales revenue recognition, including sales contract, delivery order, etc; (5) Combined with the audit of accounts receivable, select the main customers to implement the independent letter confirmation procedure for the sales volume in the reporting period, and analyze its authenticity in combination with the collection after the reporting period;
(6) Check the supporting documents for revenue recognition before and after the balance sheet date, check the collection and return after the period, and evaluate whether the sales revenue is recognized in an appropriate period.
(II) impairment test of intangible assets
1. Item description
In 2018, your company obtained the control rights of Suzhou Huanchen Medical Technology Co., Ltd. (hereinafter referred to as “Suzhou Huanchen”) and Yalun Biotechnology (Beijing) Co., Ltd. (hereinafter referred to as “Yalun biotechnology”) and incorporated them into the consolidated statements of the company. As described in note V, (XVIII) notes 2 and 3 of intangible assets, as of December 31, 2021, the book value of intangible assets (patent right, non patented technology and trademark right) of Suzhou Huanchen and Yalun biology was 183630400 yuan, and the impairment provision was 120857300 yuan in the current period.
According to the relevant provisions of the accounting standards for business enterprises, if there are signs of impairment of long-term assets such as intangible assets on the balance sheet date, the impairment test shall be carried out. If the impairment test results show that the recoverable amount of the asset is lower than its book value, the impairment provision shall be withdrawn according to the difference and included in the impairment loss.
Wuyige certified public accountants LLP telephone: + 86 (10) 8233055822 / F, Xueyuan International Tower, No. 1 Zhichun Road, Haidian District, Beijing Fax: + 86 (10) 82327668 No.1 Zhichun Road, Haidian dist, 22nd floor, College International Building. Website: Internet: www.daxincpa com. cn. Postal Code: Beijing, China 100083
Due to the complex impairment test process of intangible assets, the calculation of the present value of estimated future cash flow requires the management to make significant judgments and assumptions. Due to the significant amount of the above intangible assets and the management needs to make significant judgments, we determine the impairment of intangible assets as a key audit event.
2. Audit response
(1) Understand and test the effectiveness of your company’s internal control design and implementation related to intangible assets;
(2) Review whether the management determines whether the impairment test method of intangible assets is appropriate;
(3) Review whether the accuracy of the division of asset groups by the management is consistent with that at the time of acquisition, the accuracy, integrity and relevance of the data used by the management in the impairment test, and review the consistency of relevant information in the impairment test;
(4) Evaluate the independence, objectivity, experience, qualification and professional competence of external evaluation institutions;
(5) Discuss with the management and the experts of the external evaluation institution the rationality of the key evaluation assumptions, parameter selection and cash flow discount rate used in the impairment test of intangible assets;
(6) Check whether the information related to the impairment of intangible assets is properly presented and disclosed in the financial statements and notes. 4、 Other information
The management of your company (hereinafter referred to as the management) is responsible for other information. Other information includes the information covered in your 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
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.
Wuyige certified public accountants LLP telephone: + 86 (10) 82330558
Xueyuan International Tower, 22 / F, No. 1, Zhichun Road, Haidian District, Beijing Fax: + 86 (10) 82327668
No.1zhichun Road, Haidian dist, 22nd floor, College International Building. Website: www.daxincpa com. cn.
Postal Code: Beijing, China 100083
In preparing the financial statements, the management is responsible for assessing the company’s ability to continue as a going concern, disclosing matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate the company, terminate the operation or has no other realistic choice.
The management is responsible for supervising the financial reporting process of your 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:
(I) 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.
(II) understand the internal control related to audit to design appropriate audit procedures.
(III) evaluate the appropriateness of accounting policies selected by the management and the rationality of accounting estimates and related disclosures.
(IV) draw a conclusion on the appropriateness of the management’s use of the going concern assumption. 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 your 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 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 your company to be unable to continue its business. (V) evaluate the overall presentation, structure and content of the financial statements, and evaluate whether the financial statements fairly reflect relevant transactions and events.
Wuyige certified public accountants LLP telephone: + 86 (10) 8233055822 / F, Xueyuan International Tower, No. 1 Zhichun Road, Haidian District, Beijing Fax: + 86 (10) 82327668 No.1 Zhichun Road, haidia, 22nd floor, College International Building
