Audit report
Hxsz [2022] No. 21012420016 Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) all shareholders:
1、 Audit opinion
We have audited the financial statements of Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) (hereinafter referred to as ” Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) “), 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 relevant 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 consolidated and parent company’s financial position as of December 31, 2021 and the consolidated and parent company’s operating results and cash flow 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 Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) , 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.
The key audit matters identified in our audit are as follows:
(I) inventory falling price reserves
1. Item description
Refer to the accounting policy of inventory falling price reserves described in “III. important accounting policies and accounting estimates”, “Xi” and “v. notes to main items of consolidated financial statements”, “V” in the notes to the financial statements.
As of December 31, 2021, the company’s inventory balance was 16380565947 yuan and the inventory falling price reserve was 1318835738 yuan. Inventories are measured at the lower of cost and net realizable value. Due to the significant amount of inventory, the measurement of inventory falling price reserves has a significant impact on the financial statements, and the determination of net realizable value in the process of withdrawing inventory falling price reserves involves the judgment of the management, so we determine the measurement of inventory falling price reserves as a key audit event.
2. Audit response
Our main audit procedures are as follows:
(1) Evaluated the design and implementation of internal control related to inventory falling price reserves;
(2) Obtain the inventory list, supervise the inventory, and check the quantity and condition of the inventory; (3) Obtain the detailed inventory list and analyze the net realizable value of inventory in combination with the company’s sales policy and product status;
(4) Obtain Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) inventory depreciation reserve calculation table, and recheck the net realizable value of inventory and the amount of inventory impairment provision determined by the company’s management.
(II) recognition and measurement of long-term equity investment
1. Item description
Refer to the long-term equity investment accounting policy described in “III. important accounting policies and accounting estimates”, “XV” of the notes to the financial statements and the long-term equity investment described in “v. notes to main items of the consolidated financial statements”, “VII” of the notes to the financial statements.
As of December 31, 2021, the book value of the company’s long-term equity investment was 24819324904 yuan, accounting for 23.20% of the total assets. In view of the large investment amount of important associates and their high proportion in the total assets, we identified the recognition and measurement of long-term equity investment as a key audit event.
2. Audit response
Our main audit procedures are as follows:
(1) Evaluated the design and implementation of internal control related to investment;
(2) Obtain investment related contracts and documents, industrial and commercial archives of invested enterprises and other materials to verify the correctness of the confirmation of long-term equity investment;
(3) Implement audit procedures for important associated enterprises and review the correctness of follow-up measurement of long-term equity investment;
(4) Understand the operation and industry environment of the invested enterprise, and judge whether there is any sign of impairment of long-term equity investment;
(5) Evaluate the independence, competence and objectivity of external valuation experts;
(6) Assess the reasonableness of the valuation methods, key assumptions and judgments adopted by the management in the impairment test;
(7) Review the impairment test process of the management and evaluate the reliability of the test results.
4、 Other information
Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) Management (hereinafter referred to as management) is responsible for other information. Other information includes the information covered in the annual report of Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) 2021, 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
Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) the management is responsible for preparing the financial statements in accordance with 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 due to fraud or error.
When preparing the financial statements, the management is responsible for evaluating the going concern ability of Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) and disclosing matters related to going concern (if applicable), and applying the going concern assumption, unless the management plans to liquidate Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) company, terminate operation or have no other realistic options.
The management is responsible for supervising the financial reporting process of Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) .
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) the purpose of the audit is to understand the effectiveness of the internal control procedure, but not to express the audit opinion.
(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 Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) going concern ability. 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 not sufficient, we should give 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 result in Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) inability to continue as a going concern.
(V) evaluate the overall presentation, structure and content of the financial statements, and evaluate whether the financial statements fairly reflect relevant transactions and events.
(VI) obtain sufficient and appropriate audit evidence for the financial information of the entity or business activities in Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) to express an audit opinion on the financial statements. We are responsible for guiding, supervising and implementing the group audit, and take full responsibility for the audit opinions.
We communicated with the management on the planned audit scope, schedule and major audit findings, including the internal control defects that we identified in the audit.
We also provide a statement to the management that we have complied with the professional ethics requirements related to independence, and communicate with the management all relationships and other matters that may reasonably be considered to affect our independence, as well as relevant preventive measures (if applicable).
From the matters communicated with the management, we determine which matters are the most important for the audit of the current financial statements, thus constituting key audit matters. We describe these matters in the audit report, unless laws and regulations prohibit the public disclosure of these matters, or in rare cases, if the negative consequences of communicating a matter in the audit report are reasonably expected to exceed the benefits in the public interest, we determine that we should not communicate the matter in the audit report.
Huaxing certified public accountants, Chinese Certified Public Accountants:
(special general partnership) (project partner)
Chinese certified public accountant:
Fuzhou, China April 14, 2002
Notes to financial statements
(the following amounts are in RMB unless otherwise specified)
1、 Basic information of the company (I) overview of the company
Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) (hereinafter referred to as “the company”) was originally a blonde maternity and children’s products manufacturing factory in Shengping District, Shantou City. It is a collectively owned enterprise established in August 1996. In April, 2004, after being approved and defined by Shantou Shengping Jinxin industry and Trade Development Co., Ltd. and Shantou Jinping Xinfu sub district office, Shantou Shengping Jinfa maternity and children’s products manufacturing factory was an affiliated collective owned enterprise, and agreed to be decoupled and restructured into a limited liability company, with the name changed to Shantou Jinfa maternity and children’s products Co., Ltd.
In December 2010, through the resolution of the shareholders’ meeting of the company, all the original shareholders of Shantou blonde women’s and children’s products Co., Ltd. were the initiators to restructure Shantou blonde women’s and children’s products Co., Ltd. and initiated the establishment of Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) , which was converted into Jinfa Labi Maternity & Baby Articles Co.Ltd(002762) share capital of 51000000 shares in the proportion of 2.05:1 based on the audited net assets of 10456861845 yuan as of October 31, 2010, The change registration was handled at Shantou Administration for Industry and Commerce on December 24, 2010.
In June 2015, according to the deliberation and approval of the general meeting of shareholders of the company and the approval decision of the document “zjxk [2015] No. 965” of China Securities Regulatory Commission, the company issued 17 million ordinary shares (A shares) in RMB for the first time, with a par value of 1.00 yuan per share and an issue price of 26.00 yuan per share. After the issuance, the registered capital of the company increased to 68 million yuan. In August 2015, according to the resolution of the 2014 annual general meeting of shareholders, based on the total share capital of 68 million shares on June 5, 2015 after the completion of the initial public offering, the company converted the capital reserve into share capital and increased 7.5 shares for every 10 shares to all shareholders. After the conversion, the registered capital of the company was changed to 119 million yuan; In July 2016, according to the resolution of the 2015 annual general meeting of shareholders, the company converted the capital reserve into share capital based on the company’s total share capital of 119 million shares on December 31, 2015, and increased 7 shares for every 10 shares to all shareholders. After the conversion, the registered capital of the company was changed to 202.3 million yuan, and the change registration was handled at Shantou Administration for Industry and Commerce in July 2016.
In July 2017, according to the proposal on the company’s 2017 restricted stock incentive plan (Draft) and its summary deliberated and approved by the general meeting of shareholders The proposal on the management measures for the implementation and assessment of the company’s 2017 restricted stock incentive plan and the proposal on submitting to the general meeting of shareholders to authorize the board of directors to handle the company’s 2017 restricted stock incentive plan (holding subsidiary) have a total of 27 incentive objects to issue 1480000 additional restricted shares (with a par value of 1 yuan per share) at a price of 12.35 yuan per share , the registered capital was increased by RMB 148000000, and the registered capital after change was RMB 20378000000. The industrial and commercial change registration was completed on February 26, 2018.
According to the proposal on 2017 annual profit distribution plan approved at the general meeting of shareholders on april232018, the company distributed cash of RMB 1.50 (tax included) to all shareholders for every 10 shares based on the total share capital of 203.78 million shares, and converted the capital reserve into share capital, adding 7.5 shares to all shareholders for every 10 shares. After the conversion, the total share capital of the company was increased to 356615 million shares, and the industrial and commercial change registration was completed on July 14, 2018.
On November 6, 2018, the company held the 22nd Meeting of the third board of directors and the 17th meeting of the third board of supervisors, and deliberated and adopted the proposal on terminating the implementation of the 2017 restricted stock incentive plan and repurchasing and canceling all restricted shares granted but not lifted, It is agreed that the company will terminate the implementation of the 2017 restricted stock incentive plan and buy back and cancel 2590000 shares (including 192500 shares of restricted stocks granted to 2 resigned incentive objects but not lifted) of all restricted stocks granted to 27 incentive objects, accounting for 100% of the total number of restricted stocks granted to the company in the 2017 restricted stock incentive plan. The company held the 2nd meeting of 2018 on November 22, 2018
