Audit Report
Rongcheng Shenzi [2026] No. 100Z4655
To the Shareholders of Beijing Simcere Xiangrui Biopharmaceutical Co., Ltd.:
I. Audit Opinion
We have audited the pro forma financial statements of Beijing Simcere Xiangrui Biopharmaceutical Co., Ltd. (hereinafter referred to as the "Company" or "Simcere Xiangrui"), which comprise the pro forma balance sheet as of December 31, 2025, the pro forma income statement for the year 2025, and notes to the pro forma financial statements.
In our opinion, the accompanying pro forma financial statements have been prepared in all material respects in accordance with the Accounting Standards for Business Enterprises and the basis of preparation described in Note II to the pro forma financial statements, and fairly present the pro forma financial position of Simcere Xiangrui as of December 31, 2025, and its pro forma operating results for the year 2025.
II. Basis for Audit Opinion
We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants of China. Our responsibilities under those standards are further described in the "Certified Public Accountant's Responsibilities for the Audit of Pro Forma Financial Statements" section of this report. We are independent of Simcere Xiangrui in accordance with the Code of Ethics for Certified Public Accountants of China and the independence standards for audits of public interest entities, and we have fulfilled our other ethical responsibilities. 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 2025 pro forma financial statements. These matters were addressed in the context of our audit of the pro forma financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
(I) Revenue Recognition
- Matter Description
Simcere Xiangrui is primarily engaged in the production and sale of in vitro diagnostic reagents. Its operating revenue for 2025 was 585.5097 million RMB. Given the significant amount of revenue and its status as a key performance indicator, and considering the inherent risk of misstatement regarding whether revenue is based on genuine transactions and recorded in the appropriate accounting period, we identified revenue recognition as a key audit matter. Please refer to Note V, 31. Operating Revenue and Operating Costs of the financial statements.
- Audit Response
In our audit of this significant matter, we performed the following key procedures:
(1) Understood, evaluated, and tested the design and operating effectiveness of key internal controls related to revenue recognition;
(2) Selected samples to inspect sales contracts, identified terms and conditions related to the transfer of control of goods, and evaluated whether the company's revenue recognition timing complied with the requirements of the Accounting Standards for Business Enterprises;
(3) Obtained details of sales and service contracts, selected samples of recorded revenue transactions based on materiality, and verified them against supporting documents such as sales contracts, delivery receipts, customs declarations, warehouse outbound orders, sales invoices, and sales collection vouchers to evaluate whether the related revenue recognition complied with the Accounting Standards for Business Enterprises and the company's accounting policies, and to confirm the authenticity of the revenue;
(4) Implemented confirmation procedures for major customers, confirming accounts receivable balances and transaction amounts during the reporting period;
(5) Performed cut-off tests on revenue transactions recorded before and after the balance sheet date to confirm the completeness of revenue;
(6) Performed analytical procedures on subsequent collections to further substantiate the operating revenue of the reporting period;
(7) Performed analytical reviews of revenue changes during the reporting period to analyze the reasonableness of revenue fluctuations.