Sinomach Precision Industry Co.Ltd(002046) : special instructions on the use of raised funds in the year

About Sinomach Precision Industry Co.Ltd(002046)

Deposit and use of raised funds in 2021

Assurance report of special report

Xksbz [2022] No. zg10877 Sinomach Precision Industry Co.Ltd(002046) all shareholders:

We have accepted the entrustment to carry out reasonable assurance on the attached special report on the deposit and use of raised funds of Sinomach Precision Industry Co.Ltd(002046) (hereinafter referred to as "the company") in 2021 (hereinafter referred to as "the special report on raised funds").

1、 Responsibilities of the board of directors

The responsibility of the board of directors of your company is to comply with the guidelines for the supervision of listed companies No. 2 - regulatory requirements for the management and use of raised funds by listed companies (revised in 2022) (CSRC announcement [2022] No. 15) of China Securities Regulatory Commission Prepare a special report on raised funds in accordance with the relevant provisions of the guidelines for self-regulation and supervision of listed companies of Shenzhen Stock Exchange No. 1 - standardized operation of listed companies on the main board and the guidelines for self-regulation and supervision of listed companies of Shenzhen Stock Exchange No. 2 - announcement format. This responsibility includes designing, implementing and maintaining the internal control related to the preparation of the special report on raised funds to ensure that the special report on raised funds is true, accurate and complete without false records, misleading statements or major omissions.

2、 Responsibilities of Certified Public Accountants

Our responsibility is to publish the assurance conclusion of the special report on raised funds on the basis of the implementation of the assurance work.

3、 Job overview

We have carried out the assurance business in accordance with the provisions of other assurance business standards for Chinese certified public accountants No. 3101 - assurance business other than audit or review of historical financial information. The standards require us to abide by the code of professional ethics, plan and implement the assurance work, so as to determine whether the special report on raised funds is in accordance with the regulatory guidelines for listed companies No. 2 - regulatory requirements for the management and use of raised funds of listed companies (revised in 2022) (CSRC announcement [2022] No. 15) of China Securities Regulatory Commission in all major aspects The preparation of the relevant provisions of the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 1 - standardized operation of listed companies on the main board and the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 2 - announcement format truthfully reflect the deposit and use of your company's raised funds in 2021 in all major aspects and obtain reasonable assurance. In the process of carrying out the assurance work, we have implemented the procedures we consider necessary, including inquiry, inspection of accounting records and so on. We believe that our assurance work provides a reasonable basis for issuing assurance conclusions.

4、 Assurance conclusion

We believe that your company's special report on the deposit and use of raised funds in 2021 is in accordance with the regulatory guidelines for listed companies No. 2 - regulatory requirements for the management and use of raised funds by listed companies (revised in 2022) (CSRC announcement [2022] No. 15) of China Securities Regulatory Commission in all major aspects The preparation of the relevant provisions of the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 1 - standardized operation of listed companies on the main board and the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 2 - announcement format truthfully reflects the deposit and use of the raised funds of your company in 2021.

5、 Report usage restrictions

This report is only for the purpose of disclosing the 2021 annual report of your company, and shall not be used for any other purpose. China Certified Public Accountants of Lixin Certified Public Accountants (special general partnership):

Shanghai, China Certified Public Accountant:

April 11, 2002

Sinomach Precision Industry Co.Ltd(002046)

Special report on the deposit and use of raised funds in 2021

According to the guidelines for the supervision of listed companies No. 2 - regulatory requirements for the management and use of raised funds by listed companies (revised in 2022) (CSRC announcement [2022] No. 15) According to the relevant provisions of the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 1 - standardized operation of listed companies on the main board and the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 2 - announcement format, the company makes the following special report on the deposit and use of raised funds in 2021:

1、 Basic information of raised funds

(I) funds raised from non-public offering in 2016

Approved by the CSRC's zjxk [2015] No. 3134 document, the company privately issued 13043478 ordinary shares (A shares) in February 2016 at an issue price of 8.05 yuan / share. The total funds raised this time were 105 million yuan. After deducting the issuance expenses of 4.2614 million yuan, the net amount of funds actually raised was 1007386 million yuan. As of february282016, all the above raised funds have been in place and have been verified and confirmed by Lixin Certified Public Accountants (special general partnership) with the capital verification report of "Xin Kuai Shi Bao Zi [2016] No. 710135".

As of December 31, 2021, the use of the raised funds is as follows:

Project amount (10000 yuan)

Net raised funds 1007386 less: amount used in previous years 371367, amount used in 2021 0.00 plus: interest income of raised funds minus net handling charges 44.99, balance of raised funds not used 640518 less: cash management amount 139200 temporarily replenish working capital 500000 balance of raised funds account 13.18

(II) supporting funds raised in 2018

With the approval of zjxk [2017] No. 1795 document of China Securities Regulatory Commission, the company privately issued 61210970 ordinary shares (A shares) in January 2018 at an issue price of 8.96 yuan / share. A total of 548450300 yuan of supporting funds were raised this time. After deducting 136617 million yuan of issuance expenses, the net amount of funds actually raised was 534788600 yuan.

As of January 9, 2018, all the above raised funds have been in place, which has been verified and confirmed by Lixin Certified Public Accountants (special general partnership) with the capital verification report of "Xin Kuai Shi Bao Zi [2018] No. zg10006".

As of December 31, 2021, the use of the raised funds is as follows:

Project amount (10000 yuan)

The total amount of raised funds is 5484503 less: the amount used in previous years is 3012817, and the amount used in 2021 is 1145979 plus: the net amount of interest income of raised funds minus handling charges is 271942, and the balance of unused raised funds 1597649 less: cash management amount 200000 temporary supplementary working capital amount 1360000 raised capital account balance 376.49

2、 Management of raised funds

In order to standardize the management and use of raised funds and protect the rights and interests of investors, the company formulated the management system for the use of raised funds in accordance with the company law, the securities law, the stock listing rules of Shenzhen Stock Exchange and other laws and regulations, which was reviewed and revised at the fifth meeting of the seventh board of directors on October 28, 2021. (I) management of funds raised by non-public offering in 2016

On March 24, 2016, the company signed the tripartite supervision agreement on raised funds with Luoyang Changchun Branch of ICBC and Debon securities.

On May 3, 2017, because the company hired Huarong Securities Co., Ltd. (hereinafter referred to as "Huarong securities") as the independent financial consultant for the company to issue shares to purchase assets and raise supporting funds in 2017, the company cancelled the recommendation agreement signed with Debon securities, and on the same day, the company signed the tripartite supervision agreement on raised funds with Luoyang Changchun Branch of ICBC and Huarong securities.

The first extraordinary general meeting of shareholders in 2021 held on February 5, 2021 deliberated and approved the proposal on changing the raised funds to invest in the construction of "Yibin science and Technology Industrial Park (phase I) project", and agreed to invest all the raised funds not yet used in the 2016 non-public offering into the "Yibin science and Technology Industrial Park (phase I) project" of Luoyang Bearing Research Institute Co., Ltd. Since the user of the raised funds was changed from Sinomach Precision Industry Co.Ltd(002046) to Luoyang Bearing Research Institute Co., Ltd., Luoyang Bearing Research Institute Co., Ltd. opened a storage account with account number 17050212292 Hubei Radio & Television Information Network Co.Ltd(000665) 6 in Industrial And Commercial Bank Of China Limited(601398) Luoyang Changchun sub branch to store the raised funds. On June 22, 2021, the company, Luoyang Bearing Research Institute Co., Ltd., Industrial And Commercial Bank Of China Limited(601398) Luoyang Changchun sub branch and Huarong securities signed the tripartite supervision agreement on raised funds. There is no significant difference between the above agreement and the model tripartite supervision agreement, and it has been effectively implemented.

Monetary unit: RMB 10000

Bank name account number initial deposit amount deadline balance storage method Industrial And Commercial Bank Of China Limited(601398) Luoyang Changchun 17050212292 Hubei Radio & Television Information Network Co.Ltd(000665) 61007386 13.18 current account

Sub branch

Total - 1007386 13.18——

The company held the second meeting of the seventh board of directors on April 23, 2021, which deliberated and passed the proposal on using temporarily idle raised funds for cash management. The board of directors agreed that the company would use temporarily idle raised funds of no more than RMB 110 million for cash management on the premise of ensuring that the construction of raised funds would not be affected. Within the limit, the funds could be used on a rolling basis. Accordingly, the company uses the temporarily idle raised funds for cash management. On December 31, 2021, the special settlement account for products opened for cash management is as follows:

Monetary unit: RMB 10000

Bank name account number closing date balance storage method

China Industrial And Commercial Bank Of China Limited(601398) Luoyang Changchun sub branch 17050212292 Hubei Radio & Television Information Network Co.Ltd(000665) 6139200 7-day rolling

Total - 139200——

(II) management of supporting funds raised in 2018

On February 7, 2018, the company, Zhengzhou abrasive grinding Institute Co., Ltd., Huarong securities and China Construction Bank Corporation(601939) Zhengzhou Railway Sub Branch signed the tripartite supervision agreement on raised funds; Zhengzhou abrasive grinding Research Institute Co., Ltd

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