Audit Report
Tianjian Shen [2026] No. 7-109
To all shareholders of Hualin Securities Co., Ltd.:
I. Audit Opinion
We have audited the financial statements of Hualin Securities Co., Ltd. (hereinafter referred to as "Hualin Securities"), which comprise the consolidated and parent company balance sheets as of December 31, 2025, the consolidated and parent company income statements, consolidated and parent company cash flow statements, and consolidated and parent company statements of changes in owners' equity for the year ended December 31, 2025, and related notes to the financial statements.
In our opinion, the accompanying financial statements, in all material respects, have been prepared in accordance with the requirements of the Accounting Standards for Business Enterprises, and fairly present the consolidated and parent company financial position of Hualin Securities as of December 31, 2025, and the consolidated and parent company results of operations and cash flows for the year ended December 31, 2025.
II. Basis for Audit Opinion
We conducted our audit in accordance with the Standards for Auditing of Certified Public Accountants in China. Our responsibilities under those standards are further described in the "Responsibilities of the Certified Public Accountant for the Audit of Financial Statements" section of our report. We are independent of Hualin Securities in accordance with the Code of Professional Ethics for Certified Public Accountants and the Independent Standards for Certified Public Accountants No. 1 – Requirements for Independence in Financial Statement Audits and Reviews, and we have fulfilled our other ethical responsibilities. We have complied with the independence requirements for auditing entities of public interest.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters.
(I) Assessment of Provisions
- Description of the Matter
Refer to Note III (Twenty-six) and Note V (I) 31 to the financial statements.
As of December 31, 2025, Hualin Securities had made provisions for litigation related to the Red Expo Exhibition Trust Beneficiary Rights Asset Support Plan amounting to RMB 258 million, representing 3.56% of total owners' equity.
Due to the significant accounting estimates and judgments required by management in the recognition and measurement of provisions, and the significant impact of the accuracy of Hualin Securities' provisions on its financial position and operating results, this matter was identified as a key audit matter.
- Audit Response
Our audit procedures performed in relation to the assessment of provisions included, but were not limited to, the following: