Hengdi Pharmaceutical: 2025 Accounting Firm Performance Evaluation Report
Hubei Hengdi Pharmaceutical Co., Ltd.
2025 Accounting Firm Performance Evaluation Report
Hubei Hengdi Pharmaceutical Co., Ltd. (hereinafter referred to as the "Company") hired Daxin Accounting Firm (Special General Partnership) (hereinafter referred to as "Daxin") as the company's 2025 annual report auditor. According to the "Administrative Measures for the Selection and Engagement of Accounting Firms by State-owned Enterprises and Listed Companies" promulgated by the Ministry of Finance, the State-owned Assets Supervision and Administration Commission of the State Council, and the China Securities Regulatory Commission, the company will evaluate Daxin's performance in the audit process in 2025.
1. Qualification conditions
Dasin was founded in 1985 and converted into a special general partnership in March 2012. It is headquartered in Beijing and its registered address is Room 2206, Floor 22, No. 1 Zhichun Road, Haidian District, Beijing. The chief partner is Mr. Xie Zemin. As of December 31, 2025, Dasin had a total of 3,914 employees, including 182 partners and 1,053 certified public accountants. Among CPAs, more than 500 have signed securities service business audit reports.
Business revenue in 2024 is 1.575 billion yuan, providing services to more than 10,000 companies. Among the business income, the audit business income is 1.378 billion yuan and the securities business income is 405 million yuan. There are 221 audit clients for the annual reports of listed companies in 2024 (including H shares), with average assets of 19.544 billion yuan and total fees of 282 million yuan. Mainly distributed in the manufacturing industry, information transmission, software and information technology service industry, electricity, heat, gas and water production and supply industry, scientific research and technical service industry, water conservancy, environment and public facilities management industry. The company has 145 audit clients of listed companies in the same industry.
The basic information of Daxin’s project partners, signing certified public accountants and project quality control reviewers for the company’s 2025 audit project is as follows:
Signing project partner: Pan Yangzhou, became a certified public accountant in 2014, started auditing listed companies in 2012, started practicing at Dasin in 2012, and started providing auditing services to the company in 2023. The audit reports of listed companies signed in the past three years include the annual audit reports of Hubei Hengdi Pharmaceutical Co., Ltd. and other companies.
Signing Certified Public Accountant: Yang Hong, became a certified public accountant in 2014. He began to engage in the audit of listed companies in 2012. He began practicing at Dasin in 2012 and began to provide audit services to the company in 2025. The audit reports of listed companies signed in the past three years include the audit reports of Hubei Hengdi Pharmaceutical Co., Ltd. and other companies.
Project quality control reviewer: Xiao Xianmin, who became a certified public accountant in 2006, began to engage in audit quality review of listed companies in 2010, and started practicing at Dasin in 2005. The audit reports of listed companies reviewed in the past three years include the annual audit reports of listed companies such as Hubei Hengdi Pharmaceutical Co., Ltd.
2. Practice records
In the past three years, Dasin Firm has been subject to 0 criminal penalties, 10 administrative penalties, 16 administrative supervision measures, and 18 self-regulatory supervision measures and disciplinary sanctions due to its professional conduct. In the past three years, 67 employees received 0 criminal penalties, 25 administrative penalties, 34 administrative supervision measures, and 46 self-regulatory supervision measures and disciplinary sanctions due to their professional behavior in the past three years.
In the past three years, the signing project partners, signing certified public accountants and quality review personnel have not been subject to criminal penalties for professional conduct, administrative penalties, supervisory and management measures from the China Securities Regulatory Commission, dispatched agencies, and industry authorities, or self-regulatory measures and disciplinary sanctions from self-regulatory organizations such as stock exchanges and industry associations.
3. Quality management level
(1) Professional technical consultation
Daxin has formulated professional and technical consulting procedures to provide a reference for professional judgment on related issues during business execution, and has set up a professional and technical consulting department to be responsible for consulting activities at the firm level. Consultation at the project team level is mainly handled by project partners and personnel with corresponding experience. During the 2025 audit process, Daxin provided the company with timely and effective consultation and feasible solutions for major accounting audit matters related to the company.
(2) Resolution of differences in professional opinions
Daxin has formulated a disagreement resolution procedure to resolve disagreements between different personnel, including: disagreements within the project team, within the quality review department, between the project team and the quality review department and professional and technical consulting department, etc. It was clarified that the principles of “quality first, bottom-up, responsibility-bearing decisions, and democratic centralization” should be followed when resolving differences. The Quality Management Committee is the highest decision-making body for resolving differences on major matters. No report shall be issued until the differences of opinion are resolved. During the 2025 audit process, Daxin reached consensus on all major accounting audit matters of the company, and there were no unresolved differences of opinion.
(3) Project quality review
Daxin project quality review implements hierarchical and classified management. The head office, regional business headquarters and branches have set up quality review institutions. The quality review institutions need to conduct independent reviews of the A, B, and C category business items stipulated in the "Measures for the Classification Management of Audit Business Items". If necessary, they can conduct independent reviews of all business items. The chief auditor leads the project quality review work. The report shall not be issued until the project team has implemented the review opinions. During the 2025 annual audit, the quality review staff discussed major matters with project partners and other project team members, and put forward review opinions on key issues, report and note disclosure issues, etc. The project team responded to the feedback in writing in a timely manner and provided relevant evidence of implementation.
(4) Monitoring and rectification
In order to promote the project team to continuously improve business quality and form an organizational culture of continuous quality improvement, Daxin has established firm-wide unified monitoring and rectification procedures in accordance with the provisions of Accounting Firm Quality Management Guidelines No. 5101 and 5102. It conducts daily evaluations and regular inspections of the quality management system and business project quality, determines the situations found in monitoring inspections and identifies defects, evaluates the severity and breadth of the identified defects, investigates the root causes of the identified defects, and designs, implements and evaluates targeted rectification measures. Hold relevant personnel accountable according to the accountability mechanism. During the 2025 annual audit, Dasin’s various quality management measures were effectively implemented, no quality management defects were identified, and project team members were not held accountable for quality issues.
4. Work plan
During the 2025 annual audit process, Daxin identified major business risks and important audit areas based on the company's actual situation, formulated detailed and reasonable audit work plans in the planning, pre-review, final review, report issuance, and work summary stages, and communicated with the company's management and audit committee in a timely manner.
In the audit planning stage, through understanding the company, the audit plan for 2025 is formulated, including the overall audit strategy and specific audit plan.
During the on-site pre-review stage, the company will be reminded of risk matters that may have an impact on the financial report results and matters that may affect the progress of the annual report. Communicate and connect with the company on the annual report audit plan, overall time schedule, etc. At the same time, we provide professional opinions on major accounting issues and disputes and actively coordinate and resolve them.
In the on-site final review stage, after the company forms an unaudited report, the audit project team will go to the site as planned to perform audit procedures, obtain audit evidence, prepare audit working papers, conduct on-site communication with the company on the accounting adjustments involved, and prepare a first draft of the audit report.
In the report issuance stage, the project team compiles the audit working papers, performs the independent quality control review procedures within the firm, and issues a formal audit report.
In the work summary stage, problems discovered during the audit process as well as opinions and suggestions put forward are collected to form a work summary report.
5. Manpower and other resource allocation
Daxin has equipped a professional audit team for the 2025 audit work, and the core team members all have many years of experience in auditing listed companies. The project partner is an experienced partner, and the project site leader is a senior audit project manager. Dasin's back-end support team includes experts in many fields such as taxation, information systems, internal control, risk management, financial instruments and sustainable development services, providing full support for audit services. Daxin invested sufficient audit power and time in the audit work to provide guarantees in terms of progress, quality, resources, etc., and met the company's annual report disclosure time requirements.
6. Information Security Management
The company clearly stipulated Daxin's responsibilities and obligations in information security management in the employment contract. Daxin has formulated systems such as the "Information Security Management Measures" and "Network Platform Information Management Measures", and has dedicated personnel responsible for information security work. Daxin's information system adopts a private cloud deployment method. The server is set up in the country and the data information is stored in the country, which complies with national security and confidentiality regulations. In 2022, Daxin obtained the "National Information Security Assessment Information Security Service Level 1 Qualification Certificate" issued by the China Information Security Assessment Center.
7. Risk-taking ability level
The cumulative compensation limit of the occupational insurance purchased by Dasin and the occupational risk fund accrued exceed RMB 200 million. The occupational risk fund accrual and occupational insurance purchase comply with relevant regulations and have good investor protection capabilities.
Based on the above information, after evaluation, the company believes that as the 2025 audit institution, Daxin's qualifications and quality management level meet the requirements. The members of the project team meet the independence requirements and have the necessary professional level. During the audit process, they were diligent and responsible, expressed opinions fairly, and completed the 2025 audit-related work well.
Board of Directors of Hubei Hengdi Pharmaceutical Co., Ltd.
March 30, 2026