Securities Code: 603950 Securities Abbreviation: Changyuan Donggu Announcement No.: 2021-013

Xiangyang Changyuan Donggu Industrial Co., Ltd.

Announcement on the Renewal of Accounting Firm

Important Content Tips:

50. The company intends to renew the engagement of ZhongShen ZhongHuan Certified Public Accountants LLP as the company's auditing agency for the 2021 fiscal year, to provide the company with financial audits and internal control audits.

I. Basic Information of the Intended Accounting Firm

(I) Institutional Information

1. Basic Information

(1) Establishment Date: ZhongShen ZhongHuan was founded in 1987 and is one of the first large accounting firms in the country to obtain national approval for securities, futures-related business qualifications and financial business audit qualifications. In November 2013, it was reorganized into a special general partnership in accordance with the relevant requirements of the Ministry of Finance.

(2) Internal Governance Structure and Organizational System: ZhongShen ZhongHuan adheres to the core values of "Global Wisdom, Integrity in Action". ZhongShen ZhongHuan has established a sound internal governance structure and organizational system. The highest authority of the firm is the partnership meeting, the decision-making body is the partnership management committee, and there are several professional committees, including: Strategic Development and Business Planning Management Committee, Risk Management and Quality Control Committee, Human Resources and Remuneration Assessment Committee, Finance and Budget Management Committee, International Affairs Coordination Committee, Professional Technology and Information Committee, etc. It has established a management headquarters in Beijing, multiple regional operation centers across the country, and a service network covering most parts of the country. It has 36 branches in major provinces and large and medium-sized cities in China, including Wuhan, Beijing, Yunnan, Hunan, Guangzhou, Shanghai, Tianjin, Chongqing, Guangxi, Sichuan, Shanxi, Jiangxi, Hebei, Henan, Shenzhen, Zhuhai, Dongguan, Foshan, Hainan, Fujian, Xiamen, Zhejiang, Jiangsu, Shandong, Weifang, Anhui, Heilongjiang, Liaoning, Jilin, Dalian, Shaanxi, Xi'an, Guizhou, Xinjiang, Inner Mongolia and Hong Kong, etc. The firm implements comprehensive unified management by the head office in quality control, personnel management, business management, technical standards, and information management. The head office has several special and special business departments and technical support departments, including management consulting department, IT information audit department, financial business department, international business department, quality control department, professional standard training department, market and project management department, information department, human resources department, professional ethics supervision department, etc.

(3) Registered Address: 2-9th Floor, No. 169 Donghu Road, Wuchang District, Wuhan City, Hubei Province.

(4) Business Qualifications: ZhongShen ZhongHuan has obtained the accounting firm business qualification issued by the Hubei Provincial Department of Finance (Certificate No.: 42010005), is one of the first batch of large accounting firms in the country to obtain national approval for securities, futures-related business qualifications and financial business audit qualifications, has the US listed company audit business qualification issued by the Public Company Accounting Oversight Board (PCAOB) of the United States, and has obtained the filing qualification for security and confidentiality conditions for consulting services involving military industry secrets.

(5) Whether it has ever engaged in securities services: Yes, since obtaining the securities and futures-related business license for accounting firms in 1993, ZhongShen ZhongHuan has been engaged in securities services.

(6) Relevant information of the branch institution undertaking the company's audit business: The company's audit business is specifically undertaken by ZhongShen ZhongHuan Certified Public Accountants LLP Hainan Branch (hereinafter referred to as "ZhongShen ZhongHuan Hainan Branch"). ZhongShen ZhongHuan Hainan Branch was changed from ZhongShen Asia Pacific Certified Public Accountants LLP Hainan Branch in August 2015 by a newly established method. Its predecessor was Haikou Accounting Firm, and the person in charge was Lei Xiaoling. ZhongShen ZhongHuan Hainan Branch has obtained the accounting firm branch business certificate issued by the Hainan Provincial Department of Finance (Certificate No.: 420100054601), and its registered address is Bao'an Jiangnancheng Marketing Center, No. 66 Heping Avenue, Meilan District, Haikou City, Hainan Province. At the end of 2019, it had more than 100 employees, including 30 certified public accountants. Since its establishment, it has been engaged in securities services and has provided annual report audit services for more than ten listed companies.

(7) Number of listed company audit clients in the same industry in 2019: 6.

2. Personnel Information

(1) Chief Partner: Shi Wenxian.

(2) Number of partners at the end of 2020: 185.

(3) Number of certified public accountants at the end of 2020 and changes in the past year: 1,537.

(4) Whether certified public accountants have engaged in securities services and their number at the end of 2020: Yes, more than 794 certified public accountants engaged in securities services at the end of 2020.

(5) Total number of employees at the end of 2019: 4,834.

3. Business Scale

(1) Business revenue in 2019: 147,197.37 million yuan, audit business revenue 128,898.69 million yuan, securities business revenue 29,501.20 million yuan.

(2) Annual report audit of listed companies:

Number of listed companies in 2019: 160.

Total fees for listed companies in 2019: 16,032.08 million yuan.

Main industries of listed companies in 2019: Manufacturing, real estate, electricity, heat, gas and water production and supply, agriculture, forestry, animal husbandry and fishery, wholesale and retail, information transmission, software and information technology services, etc. ZhongShen ZhongHuan has audit experience in the company's industry.

4. Investor Protection Capability

ZhongShen ZhongHuan purchases professional liability insurance every year according to the scale of business revenue, and supplements the accrual of professional risk funds, with a cumulative compensation limit of 600 million yuan, which has not been used yet and can bear the civil liability for audit failure. ZhongShen ZhongHuan's professional risk fund accrual and professional insurance purchase comply with relevant regulations.

5. Independence and Integrity Record

ZhongShen ZhongHuan does not have any circumstances that violate the requirements for independence in the "Code of Professional Ethics for Chinese Certified Public Accountants"; ZhongShen ZhongHuan has not been subject to criminal penalties, administrative penalties, self-regulatory measures, and disciplinary actions in the past 3 years. In the past 3 years, it has been subject to 20 supervisory management measures due to its professional conduct, and has completed the rectification as required and submitted rectification reports to the CSRC in various places.

(II) Project Team Member Information

1. Personnel Information

(1) Project Partner: Lu Jian, Became a certified public accountant in 2010, started working on listed company audits in 2010, started practicing at this firm in 2015, and started providing audit services for this company in 2018; listed company audit reports signed in the past three years include Hainan Natural Rubber Industry Group Co., Ltd., and Kangzhi Pharmaceutical Co., Ltd., etc.

(2) Project Quality Control Review Partner: Li Ling, Became a certified public accountant in 2000, started working on listed company audits in 2000, started practicing at this firm in 2015, and started providing audit services for this company in 2018; listed company audit reports reviewed in the past three years include Hainan Natural Rubber Industry Group Co., Ltd., Kangzhi Pharmaceutical Co., Ltd., Luoniushan Co., Ltd., Hainan Ye Dao (Group) Co., Ltd., Caesars (China) Culture Co., Ltd., and Northeast Electric Power Development Co., Ltd., etc. 。

(3) Intended signing CPA: Fu Rao ， Became a certified public accountant in 2014, started working on listed company audits in 2015, started practicing at this firm in 2015, and started providing audit services for this company in 2018; listed company audit reports signed in the past three years include Kangzhi Pharmaceutical Co., Ltd. 。

2. Independence and integrity record of the above-mentioned personnel

(1) Project partners, quality control reviewers, and intended signing CPAs, etc. There is no violation of the independence requirements of the "China Certified Public Accountant Code of Professional Ethics".

(2) In the past 3 years, project partners, quality control reviewers, and intended signing CPAs have not been subject to criminal penalties, administrative penalties, administrative regulatory measures, or disciplinary actions.

(III) Audit Fees

The total audit fee for this period is 770,000 yuan, including 500,000 yuan for annual report audit and 270,000 yuan for internal control audit, which is the same as the audit fee for the previous period.

II. Procedures followed by the appointed accounting firm

(I) Performance and review opinions of the board of directors' audit committee

The company's board of directors' audit committee has conducted a thorough understanding and review of Zhongshen Zonghuan, and conducted a full assessment of its professional capabilities, investor protection capabilities, independence, and integrity, and believes that Zhongshen Zonghuan can implement audit work in accordance with the independent audit standards for Chinese certified public accountants, follows independent, objective, and fair professional ethics, has the qualifications to engage in securities-related businesses, and its practice meets the qualification requirements for providing audit services to the company. It agrees to appoint Zhongshen Zonghuan Certified Public Accountants LLP as the company's 2021 annual financial report and internal control audit institution, with an audit fee of 500,000 yuan for this year's financial report audit and 270,000 yuan for internal control audit. It agrees to submit this matter to the 18th meeting of the third board of directors for deliberation and approval.

(II) Opinion of Independent Directors

Since its appointment, Zhongshen Zonghuan Certified Public Accountants LLP has provided good services to the company, and can independently complete the audit work in accordance with laws, regulations, and relevant policies, and the audit reports issued to the company objectively and fairly reflect the company's financial status and operating results. We have conducted a thorough assessment of Zhongshen Zonghuan Certified Public Accountants LLP's professional competence, investor protection capabilities, integrity, and independence, and believe that Zhongshen Zonghuan can implement audit work in accordance with the independent audit standards for Chinese certified public accountants, follows independent, objective, and fair professional ethics, has the qualifications to engage in securities-related businesses, and its practice meets the qualification requirements for providing audit services to the company. We agree to submit the proposal to continue to hire Zhongshen Zonghuan Certified Public Accountants LLP to provide annual audit services for 2021 to the company's 2020 annual general meeting of shareholders for deliberation. We agree to appoint Zhongshen Zonghuan Certified Public Accountants LLP as the company's 2021 annual financial report and internal control audit institution, and agree to submit this matter to the company's shareholders' meeting for deliberation and approval.

(III) Deliberation of the Board of Directors

On March 22, 2021, the company held its 18th meeting of the third board of directors, which deliberated and passed the "Proposal on the Appointment of Accounting Firms and Internal Control Audit Institutions for 2021", agreeing to continue to appoint Zhongshen Zonghuan Certified Public Accountants LLP as the company's 2021 annual financial report and internal control audit institution. This proposal needs to be submitted to the shareholders' meeting for deliberation and approval.

(IV) The matter of appointing the accounting firm this time still needs to be submitted to the company's shareholders' meeting for deliberation, and will take effect from the date of approval by the company's shareholders' meeting.

This is hereby announced.

Xiangyang Changyuan Donggu Industrial Co., Ltd.

Board of Directors

2021 March 24