CITIC Securities Co., Ltd.
Audit Opinion on the Use of Partial Idle Raised Funds and Own Funds for Cash Management by Shijiazhuang Pharmaceutical Group Co., Ltd.
As the sponsor of Shijiazhuang Pharmaceutical Group Co., Ltd. (hereinafter referred to as "Shijiazhuang Pharmaceutical" or "the Company"), CITIC Securities Co., Ltd. (hereinafter referred to as "CITIC Securities" or "the Sponsor") has conducted a thorough and prudent review of the Company's use of partial idle raised funds and own funds for cash management, in accordance with the "Administrative Measures for Securities Issuance and Listing Sponsorship Business," the "Shenzhen Stock Exchange GEM Stock Listing Rules," the "Shenzhen Stock Exchange Listed Company Self-Regulatory Management Guide No. 2 - Norms for the Operation of GEM Listed Companies," and the "Supervision Rules for Listed Company Raised Funds," etc. The review findings and opinions are as follows:
I. Basic Situation of Raised Funds
The Company, with the approval of the China Securities Regulatory Commission (hereinafter referred to as "CSRC") in the "Approval on Approving the Initial Public Offering of Shares of Shijiazhuang Pharmaceutical Group Xinoway Pharmaceutical Co., Ltd." (Zhengjian Permit [2019] No. 288), and with the consent of the Shenzhen Stock Exchange (hereinafter referred to as "SZSE") in the "Notice on the Listing of RMB Ordinary Shares of Shijiazhuang Pharmaceutical Group Xinoway Pharmaceutical Co., Ltd. on the GEM" (Shenzhen Listing [2019] No. 133), listed and traded its RMB ordinary shares on the GEM of the SZSE on March 22, 2019. The Company issued 50,000,000 RMB ordinary shares (A shares) in its initial public offering, with an issue price of RMB 24.47 per share. The total raised funds amounted to RMB 1,223,500,000.00. After deducting issuance expenses of RMB 81,090,790.53, the net raised funds amounted to RMB 1,142,409,209.47. The raised funds were transferred to the Company's special account for raised funds on March 19, 2019.
The arrival of the aforementioned raised funds was audited and verified by Zhongxing Caiguanghua Certified Public Accountants (Special General Partnership), which issued the "Capital Verification Report" (Zhongxing Caiguanghua Verification Letter [2019] No. 110001) on March 19, 2019. The Company has adopted a special account deposit system for the raised funds, and has signed the "Tripartite Supervision Agreement for Raised Funds" with the account-opening bank and the sponsor.
II. Overview of Raised Fund Investment Projects
The investment projects for the raised funds and the plan for their use, as disclosed in the "Prospectus of Shijiazhuang Pharmaceutical Group Xinoway Pharmaceutical Co., Ltd. for Initial Public Offering of Shares and Listing on the GEM" (hereinafter referred to as the "Prospectus"), are as follows:
| Project Name | Total Investment (RMB Million) | Proposed Raised Fund Investment (RMB Million) |
|---|---|---|
| Health Food and Special Medical Food Production Project | 46,165.52 | 42,318.50 |
| Health Product R&D Center Construction Project | 33,635.56 | 30,832.67 |
| Marketing System Construction Project | 19,810.55 | 18,159.71 |
| New Health Product Soft Capsule Industrialization Project | 18,000.00 | 16,500.04 |
| Energy Saving and Emission Reduction Technology Upgrade Project for Caffeine Series Products | 6,430.00 | 6,430.00 |
| Total | 124,041.63 | 114,240.92 |