*ST Jin Yu (000803): Reply To Audit Opinion

Sichuan Jinyu Motor City (Group) Limited by Share Ltd's reply to the CSRC's merger and reorganization audit committee's audit opinion

China Securities Regulatory Commission:

In May 28, 2020, by the twenty-second working conference of the Sichuan listed company's merger and reorganization Review Committee in 2020, the Jinyu Automobile City (Group) Limited by Share Ltd (hereinafter referred to as "Jinyu Che Cheng", "listed companies" and "company") issued shares and paid cash to purchase assets and raise matching funds. According to the audit opinion of the merger and reorganization committee of the listed company, the listed company and the independent financial adviser discussed and verified the audit opinions of the merger and reorganization committee, and made supplementary disclosures on the relevant documents of the company's major asset reorganization application documents. Without special explanation, the words and abbreviations mentioned in this feedback reply have the same meaning as the words or abbreviations defined in the definition of "redefinition" in the restructured report.

Audit opinion 1: applicants are requested to disclose the strategic arrangements for the long-term development of listed companies after the completion of the acquisition. The independent financial adviser is required to make clear comments.

Reply:

First, after the completion of the acquisition, the long-term strategic arrangements for the future development of listed companies.

(1) overall arrangement for long-term development strategy

After the completion of the acquisition, the main business of the listed company will focus on promoting the application of its own core technology and equipment in the field of organic waste recycling. The operation of kitchen waste disposal project, the production and sale of organic waste disposal equipment and the comprehensive utilization of biomass energy will become the main development direction of listed companies.

The listed companies will enhance the technology level and market competitiveness of organic waste disposal equipment with the requirements of "standardization, scale and intellectualization". At the same time, the operation efficiency of the garbage disposal project will be continuously improved by stabilizing and optimizing the processing technology. In the practice of "green water mountain, Jinshan Yinshan", the company will continue to make profits and safeguard the fundamental interests of the company and its shareholders. Benefit.

(two) development planning arrangements in recent two years

1, business development plan

(1) in the economically developed areas of the country, we should develop a harmless and resourceful disposal project for kitchen and kitchen waste, and accumulate long-term and stable profit resources through food waste collection, transportation, disposal and resource-based products.

(2) vigorously develop organic waste disposal equipment manufacturing and sales business, improve standardization of complete equipment manufacturing process, expand equipment sales channels, improve market share level.

(3) on the basis of expanding and strengthening the kitchen waste disposal project and the business of organic waste disposal equipment, we will actively develop the complete set of equipment for pyrolysis and carbonization of agricultural and forestry wastes and the biomass polygeneration business.

2. Research and development plan

(1) listed companies will increase investment in R & D, introduce and train excellent R & D talents, enhance R & D strength, and build a multifunctional R & D platform integrating research and development, experiment and testing.

(2) in terms of reserve technology R & D, we will explore the potential research and development potential market demand through in-depth study of the technology development trend of organic waste recycling, and reserve innovative and leading-edge original technologies for the company, and turn them into application products when the market demand is relatively mature.

The company's existing product application technology, through continuous technological improvement, further improves the added value of product technology, improves product quality, and ensures the technical leadership of the company's products.

(3) listed companies will focus on R & D of main industries, and strive to add new patent applications every year. At the same time, the company will continue to focus on advanced technology patents in related fields at home and abroad, and purchase timely patent technology that is suitable for company needs. In addition, the company will further improve its technical archives and confidentiality system, and do a good job in protecting intellectual property rights.

(4) the listed companies will actively cooperate with the top universities and research institutes in China to promote the formulation of industry standards and ensure the leading position of technology.

3. Human resources development plan

With the expansion of the business and assets of listed companies, human resources as an important factor to support the company's continuous development, the listed companies will focus on the core objectives of GPI (Growth growth, Profit profit and Innovation innovation), through external recruitment and internal training, and establish effective incentive mechanism and competitive salary system, so as to cultivate outstanding business capabilities. A rational echelon of knowledge age structure is the basis for long-term sustainable development of the company.

4. Financing plan

After the completion of the acquisition, the listed companies will quickly enter the domestic waste disposal market, and the demand for capital will further increase. The listed companies will combine funds in the form of bank loans and capital market financing to promote the rapid and healthy development of the company, combined with the actual situation of the company's business development and the medium and long-term development strategy arrangement.

Two, intermediaries verification opinions

After verification, independent financial advisers believe that after the completion of this transaction, the main business of listed companies will focus on promoting the application of their own core technology and equipment in the field of organic waste recycling, and the operation of food waste disposal projects, production and sale of organic waste disposal equipment and comprehensive utilization of biomass energy will become the main direction of development of listed companies. In this regard, listed companies have formulated a more clear business development plan, R & D promotion plan, human resources development plan and financing plan, etc., the future development strategy is clear and feasible, and can promote the steady development of listed companies.

Three. Supplementary disclosure

The above contents are further disclosed in the "Ninth Section Management Discussion and analysis" of the restructuring report "five, this time."

It is easy to analyze the impact of financial indicators and non-financial indicators on the listed companies' sustainable management capabilities, future development prospects, earnings per share and so on. "(two) the analysis of the impact of this transaction on the future development of listed companies", "4, the future development plan of listed companies".

Audit opinion 2: applicants are requested to disclose the control measures for the underlying assets after the acquisition is completed. The independent financial adviser is required to make clear comments.

Reply:

1. After the completion of the acquisition, the listed companies will take control measures against the underlying assets.

After the completion of the acquisition, the listed companies will enter the kitchen waste disposal market. The assets and business scope and scope of the listed companies will further expand or expand. In order to effectively improve the integration and control efficiency of the underlying assets, the listed companies have formulated a series of control measures in the aspects of institutions, finance, personnel, business and assets. The details are as follows:

(1) institutional control measures

After the completion of the acquisition, the ten party board will be composed of 3 directors. The listed company has the right to nominate 2 directors, the performance commitment party shall have the right to nominate 1 directors, and 1 supervisors shall be nominated by the listed companies. After the completion of the transaction, the listed companies can effectively control the ten party board of directors, and the nominated supervisors can effectively play the supervisory role. At the same time, listed companies will help the ten party ring to build a corporate governance structure that meets the requirements of listed companies and market development, and supervise and supervise the ten party ring to establish a scientific and standardized internal management system and strengthen the management of ten party ring energy.

(two) financial control measures

After the completion of the acquisition, the ten party circular financial controller is recommended by the listed company. After the approval of the board of directors of the ten party ring, it can effectively control the financial management of the ten party ring. At the same time, the ten party ring can strictly abide by the management system of listed companies, including but not limited to subsidiary management system, financial system, approval authority system, related transaction management system and internal control system. The financial system and OA of ten party ring should be connected to the unified management system of listed companies, and carry out daily management according to the unified management standards of listed companies. Accounting calculation. Listed companies will carry out overall financial control according to the requirements of corporate governance, control financial risks and raise heavy assets.

The overall efficiency of fund utilization after the group. Listed companies will also control their internal control effectiveness according to their internal control system.

(three) personnel control measures

After the acquisition is completed, the ten party rings will be fully incorporated into the human resources management system of listed companies. The listed companies will have unified control over the existing staff of the ten party ring, and use their own rich management experience, through innovation and improve the performance appraisal mechanism, and encourage the backbone of the business to improve the attractiveness of the talents. At the same time, Mr. Wang Kaijun, the incumbent director of the listed company, is a famous expert in the field of organic solid waste disposal in China. Mr. Xie Xin, the president of the municipal solid waste disposal field, has rich experience in the municipal utility industry. It can effectively control the business development of the future listed companies, and effectively integrate and control the business and management of the ten party ring businesses.

At the same time, the ten party ring can actually control the core employees who are committed to themselves and urge the ten party ring energy (the list of core employees can be decided by the new board of directors after the date of delivery). Within 60 months from the date of the asset delivery date, without the written consent of the listed company, they can not voluntarily quit and should sign the labor contract approved by the listed company with the ten party ring. Those who violate the above commitments should pay the penalty to the ten party for 2 times the annual salary of the previous year.

In addition, the ten party ring can actually control the core employees who are committed to themselves and urge the ten party ring energy (the list of core employees can be decided by the new board of directors after the date of delivery). Within the 24 months after the expiration of the ten Party's ring and its tenure of office, without the written consent of the listed company, its own close relatives and their actual control entities can not be in the ten party ring (the package of the ten party ring). Its subsidiaries, listed companies and their subsidiaries are engaged in the same, similar or competitive business with the ten party; they shall not serve in enterprises or organizations that are competitive with the ten party ring and listed companies, and shall also sign the "competition restriction agreement" approved by the listed companies with the ten party ring. Those who violate the above commitments shall be entitled to the income generated by the violation of the provisions of this Agreement and shall be able to pay for the ten party annex to the ten party ring and pay the penalty fee of 2 times the annual salary of the preceding year. The ten party ring will be able to give certain compensation in accordance with industry practice.

(four) business control measures

After the completion of the acquisition, the listed companies and the ten party ring will bring into play the synergy effect of the two sides' market channels and customer resources, so as to realize the complementary advantages of all sides and enhance the overall value of the company. The listed companies give full autonomy to the ten party Ring Road kitchen waste disposal projects and landfill gas utilization projects.

Provide support for stable operation of existing businesses. At the same time, the listed companies will make full use of their own platform advantages, financial capital advantages and management advantages to provide sufficient support for the expansion of the ten Party's new energy business, so as to enhance the market competitiveness of the ten party ring's existing core business, thereby improving the overall operational efficiency and profitability of the listed companies. Specifically, for the existing ten party ring construction projects, construction and operation projects, the listed companies will supervise the implementation of standardized management of the target companies. For major projects to be invested in the future, the listed companies will strictly examine and approve the authority, manage the unified management of the listed companies' management, and strictly control the risks of foreign investment.

(five) control measures in respect of assets

After the completion of the acquisition, the ten party ring can serve as a subsidiary and independent corporate entity of the listed company. It will continue to maintain the independence of assets and continue to own its legal person property, so as to ensure that the ten party ring can have assets and supporting facilities matching its business operations. Based on past management experience of asset elements, listed companies can guide the ten party ring to further optimize the allocation of resources and improve the efficiency of asset utilization. At the same time, the ten party ring will carry out decision-making and information disclosure procedures in strict accordance with the relevant regulations of the China Securities Regulatory Commission, Shenzhen Stock Exchange and the relevant articles and management systems of the listed companies' articles in terms of asset purchase, use, disposal, related transaction and guarantee. To sum up, listed companies have formulated a series of control measures in many aspects, such as organization, finance, personnel, business and assets, so as to ensure effective integration of listed companies.

Two, intermediaries verification opinions

After verification, independent financial advisers believe that after the completion of the acquisition, the listed company intends to take a series of control measures in many aspects such as organization, finance, personnel, business and assets, so as to ensure effective integration of listed companies.

Three. Supplementary disclosure

The above contents are further disclosed in the "Ninth Section Management Discussion and analysis" of the restructured report, five, the analysis of the impact of the transaction on the financial indicators and non-financial indicators of the listed companies' going concern ability, future development prospects, current earnings per share, etc., "(two) the analysis of the impact of this transaction on the future development prospects of listed companies", "3, the consolidation party after the completion of the transaction". Case.

Audit opinion 3: applicants are requested to supplement the safeguard measures to avoid future competition. The independent financial adviser is required to make clear comments. Reply:

I. safeguards against future competition

(1) the north water control group has made a supplementary commitment to avoid future competition with the listed companies.

According to interviews and public information inquiries, the operation of Gao An food waste, the Huairou food waste project and the Kunming kitchen waste project operated by the enterprises in the North control group are the same or similar to those of the target company. In view of the Gao An Tun food waste project and the Huairou kitchen waste project belonging to the subsidiary part of the municipal solid waste incineration power generation project operated by the North control group, it is different from the operation mode and production process of the existing kitchen waste project of the target company. Therefore, the enterprises affiliated to the North control group do not have competition relationship with the target company.

The Kunming kitchen waste disposal project is an independent operation of the kitchen waste harmless and resourceful project. Although it has no direct competition with the target company, in order to better safeguard the interests of the listed company, the north water control group has issued a special commitment for the project. The details are as follows:

"In order to support your company's development, we agree to control the Kunming Qing Yuan run environmental protection technology Co., Ltd. (hereinafter referred to as" Kunming run Tong ") and actually run the Kunming food and kitchen project. If you request the company to make a written request, if the relevant request is approved by the franchisee of the Kunming kitchen project, our company agrees to follow the" People's Republic of China "project. Laws and regulations such as the company law and related regulations on the management of state owned property rights transactions of the company shall be transferred after the performance of the relevant decision-making procedures. "Kunming run shares" held by the company shall be transferred.

(two) the listed companies' controlling shareholders, the North controlled clean energy group, the Nanchong development and the North control group have issued a strong binding force on avoiding competition commitments.

1. The controlling shareholder of the listed company, the North controlled clean energy group, and Nanchong's commitment to the same industry competition.

To avoid possible competition with the listed companies, the controlling shareholders of the listed companies, the North controlled clean energy group and Nanchong development have issued letters of commitment.

(1) other enterprises that control or exert significant influence on the enterprise / company and the company or the company do not currently own and operate businesses that are directly or indirectly competing with the business under Jinyu car city.

(2) during the period when the company / company is the controlling shareholder of Jinyu car city, the enterprise / company and the company / company will pass the legal procedure to enable the enterprise or company to control or exert significant influence on other businesses that will not directly engage in any direct or indirect competition in business with Jinyu city.

(3) during the period when the company / company is the controlling shareholder of Jinyu car city, if the business or company or the other company or the company controls or exerts a significant influence on the future products or services that may directly or indirectly compete with the main products or services of Jinyu City, the company / company agrees or promotes the enterprise or the company to control or exert significant influence on it. He agreed that Jinyu car city had the right to purchase the assets related to the products or services owned by the company or all the shares owned by the enterprise in the relevant enterprises, or to transfer the competitive business opportunities to Jinyu car city or transfer to the third party whose relationship was not related after obtaining the consent of the third party.

2, the North control group's commitment to competition in the industry.

In April 2019, when North King Yu Yang launched the tender offer for Jinyu car city, the North control group has issued a commitment to avoid competition in the same industry. The details are as follows: 1. As of the date of issuance of this letter of commitment, the controlling party of the undertaking party and the undertaking party has not engaged in any industry related to the competition between the listed company and its subsidiaries in any way (including, but not limited to, self run, joint venture or joint venture). Business. 2, in addition to the listed company and its subsidiary companies, the controlling party of the undertaking party and the undertaking party will not add any business activities similar to or even identical to the listed companies and their subsidiaries after the completion of the transaction in any way (including, but not limited to, self financing, joint ventures or joint ventures). If the future business opportunities of the controlling party and the controlling party are competing with the listed companies, the companies that are controlled by the undertaking party and the undertaking party will notify the listed companies, and undertake that commercial and reasonable measures will be taken to avoid competition with the listed companies. "

After the completion of this transaction, in order to better fulfill the above commitments, in April 2020, the North controlled group issued a special statement confirming that the above commitments should be strictly carried out according to the following contents: (1) actively support the independent operation and standardized management of Jinyu City, and do not take advantage of the status of shareholders to interfere with its business decisions; (2) follow the relevant commitments, and in accordance with the laws and regulations governing state-owned assets, and Subordinate companies, articles of association and other regulatory requirements, exercise shareholder rights, support Jinyu city development, protect the interests of shareholders of listed companies.

According to the eighty-fourth provision of the securities law, the issuer and its controlling shareholder, the actual controller, the director, the supervisor and the senior managerial personnel shall make public commitments. Failure to fulfill commitments to investors

If losses are made, the liability for compensation shall be borne according to law. " The above legal provisions can effectively restrict the content of the above commitments.

Two, intermediaries verification opinions

After verification, independent financial advisers believe that the controlling shareholders of listed companies, the North controlled clean energy group, the Nanchong development, the North control water group and the North control group have made a commitment to avoid competition in the same industry. The relevant commitments are practical and feasible, and can safeguard the legitimate rights and interests of listed companies.

Three. Supplementary disclosure

The above contents are disclosed in the "eighth compliance analysis of the two transaction", "two", and this transaction is in line with the provisions of the forty-third provisions of the reorganization management measures. (two) this transaction is beneficial to the listed companies to standardize related party transactions and avoid competition in the same industry and enhance their independence.

Sichuan Jinyu Automobile City (Group) Limited by Share Ltd

June 4, 2020