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Blue Star Adisseo : 2020-008 Announcement on Appointment of Auditor and Internal Control Auditor for the year 2020

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03/20/2020 | 06:48am EDT

Stock Code: 600299

Stock Name: Adisseo

No.: 2020-008

Bluestar Adisseo Company

Announcement on Appointment of Auditor and

Internal Control Auditor for the year 2020

The board of directors and all directors guarantee that this announcement does not contain any false statement, misleading statement or material omission, and assume personal and joint liability for the authenticity, accuracy and integrity of this announcement.

Subject of this announcement:

  • Name of the accounting firm to be appointed: KPMG Huazhen LLP;
  • The proposal has to be submitted to the shareholders' general meeting for review.
  1. Introduction of the accounting firm

1. Background information

  1. Basic information
    KPMG Huazhen was established in Beijing on 18 August 1992. It was approved by the Ministry of Finance of the People's Republic of China to be converted into a special general partnership accounting firm on 5 July 2012 and was renamed KPMG Huazhen LLP. KPMG Huazhen LLP obtained an industrial and commercial business licence on 10 July 2012 and commenced operations on 1 August 2012.
    KPMG Huazhen LLP's head office is located in Beijing. Its registered address is the 8th floor of Building No. 2 East of Oriental Plaza, No. 1 East Chang'an Street, Dongcheng District, Beijing.
    The business scope of KPMG Huazhen LLP under its business licence includes: audit of financial statements of an enterprise and issuing audit reports; verification of the capital contributions of an enterprise and issuing capital verification reports; providing audit service in enterprise mergers, splits or liquidations and issuing relevant reports; audit of annual final financial accounts of capital construction; agency bookkeeping; accounting consulting, tax consulting, management consulting, accounting training; and other businesses prescribed in laws and regulations.
    KPMG Huazhen LLP currently has 12 branch offices operating in 12 cities: Shanghai, Guangzhou, Shenzhen, Chengdu, Xiamen, Qingdao, Foshan, Shenyang, Nanjing, Hangzhou, Tianjin, and Xi'an. KPMG Huazhen LLP has not undergone any merger or split since its establishment in 1992 and all branches were established by the firm itself.
    KPMG Huazhen LLP has a strong quality control system and internal management system in place, and implemented these policies and procedures consistently applied to the head office and all branch offices in all aspects of technical standards, quality control, human resources, finance, business operation and IT management. The allocation of resources of the head office and all branch offices are unified within the firm.

The business qualifications of KPMG Huazhen LLP include:

  • Business Licence (Unified Social Credit Code: 91110000599649382G)
  • Accounting Firm Practicing Certificate (Accounting Firm Number: 11000241)
  • Auditing qualifications for H-share enterprises, etc.

KPMG Huazhen LLP formerly hold the Securities and Futures Related Business Qualification approved by the Ministry of Finance of People's Republic of China and the China Securities Regulatory Commission. KPMG Huazhen LLP has provided securities related professional services for many years. The firm conducted a total of 33 engagements for 2018 annual audit for A Share listed companies.

In addition, KPMG Huazhen LLP is an accounting firm registered with the United States Public Company Accounting Oversight Board (US PCAOB) and the United Kingdom's Financial Reporting Council (UK FRC) to conduct relevant audit services.

KPMG Huazhen LLP is a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative. KPMG is a global network of professional services firms providing audit, tax and advisory services, and operates in 147 countries and territories and has over 219,000 people working in member firms around the world.

  1. Staff information
    The Senior Partner of KPMG Huazhen LLP from 1 April 2015 is Zou Jun, a Chinese national, with the qualification of Chinese Certified Public Accountant ("Chinese CPA").
    As at 31 December 2019, KPMG Huazhen LLP had a total of 5,393 people, including 149 partners, a net increase of 14 partners compared with 31 December 2018.
    As at 31 December 2019, KPMG Huazhen LLP had 869 Chinese CPAs, among which over 600 Chinese CPAs previously engaged in providing securities related services. There was a net increase of 83 Chinese CPAs compared with 31 December 2018.
  2. Business scale
    The audited total revenue of KPMG Huazhen LLP for the most recent year was higher than RMB 3 billion, including audit revenue of approximately RMB 2.8 billion. The revenue of securities related services for the year was approximately RMB 1.1 billion which was composed of mainland China statutory securities services related revenue of about RMB 500 million and other securities related services revenue of about RMB 600 million. The year-end net assets of KPMG Huazhen LLP exceeded RMB 400 million.
    Audit services were provided to approximately 4,000 companies during the year which included 33 annual audit engagements for A Share listed companies. The total fees derived from annual audits of mainland China listed companies amounted to RMB 340 million. The main industries of these mainland China listed companies include financial services, manufacturing, transportation, warehousing and postal services, wholesale and retail, and electric power, heat, gas and water production and supply, etc. The year-end average assets of those mainland China listed companies amounted to RMB 1,386.233 billion.
    KPMG Huazhen LLP has relevant audit experience in the industry of BlueStar Adisseo

Company.

  1. Investor protection capability
    KPMG Huazhen LLP possesses good capability on investor protection. The firm has accrued professional risk funds and purchases professional insurance and pays premiums each year by the head office according to relevant laws and regulations, covering the head office and all branch offices. As the professional risk funds have been fully accrued in previous years and professional insurance has been purchased each year, no additional professional risk fund was accrued in 2019. The sum of purchased cumulative compensation limit of professional insurance and accrued professional risk funds of KPMG Huazhen LLP exceeds RMB 80 million, which satisfies the requirements of relevant supervisory regulations.
    KPMG Huazhen LLP is able to legally bear the civil claims' liabilities which may result from an audit failure.
  2. Independence and integrity records
    There is no violation of independence required in the China Code of Ethics for Certified Public Accountants by KPMG Huazhen LLP and its personnel.
    Over the past 3 years, KPMG Huazhen LLP and its personnel had not been subject to any criminal penalties, administrative penalties, or self-regulatory measures by regulatory bodies due to practice quality or violation of the China Code of Ethics for Certified Public Accountants.
    KPMG Huazhen LLP was subject to two warning decisions issued by two branches of China Securities Regulatory Commission in 2018, including (i) Decision on Administrative Supervisory Measure of China Securities Regulatory Commission Fujian Bureau [2018] No. 28; and (ii) Decision on Administrative Supervisory Measures of China Securities Regulatory Commission Yunnan Bureau [2018] No. 14. The above issued warning decisions are considered administrative supervisory measures which do not constitute administrative penalties. According to relevant laws and regulations, these administrative supervisory measures do not prevent KPMG Huazhen LLP from undertaking or executing securities related services and other services.

2. Information regarding the engagement team members

  1. Staff information
    Core engagement team members of KPMG Huazhen LLP for the 2020 annual audit of BlueStar Adisseo Company are as follows:
    • Engagement partner and signing certified public accountant
      The engagement partner is Chen Yuhong. She has the qualification of Chinese CPA. Chen Yuhong will be the signing CPA for this engagement. Chen Yuhong joined KPMG Huazhen LLP as a full-time employee in 1992 and is now an audit partner of KPMG Huazhen LLP. Chen Yuhong has been working for the firm for more than 30 years and has been an audit partner for more than 15 years. Chen Yuhong has engaged in providing securities related services for more than 30 years. No part time employment.
      The co-signing CPA for this engagement is Lin Ying. She has the qualification of Chinese CPA. Lin Ying joined KPMG Huazhen LLP as a full-time employee in 2003

and is now an audit partner/senior manager/manager of KPMG Huazhen LLP. Lin Ying has been working for the firm for more than 17 years and has been an audit partner/senior manager/manager for more than 3 years. Lin Ying has engaged in providing securities related services for more than 10 years. No part time employment.

    • Quality control reviewer
      The engagement quality control reviewer is Zhang Jingjing. She has the qualification of Chinese CPA. Zhang Jingjing joined KPMG Huazhen LLP as a full-time employee in 1996 and is now an audit partner of KPMG Huazhen LLP. Zhang Jingjing has been working for the firm for more than 23 years and has been an audit partner for more than 12 years. Zhang Jingjing has engaged in providing securities related services for more than 20 years. No part time employment.
  1. Independence and integrity records for the above-mentioned members
    Over the past 3 years, the above-mentioned team members had not been subject to any criminal penalties, administrative penalties, administrative supervisory measures or self- regulatory measures by regulatory bodies due to practice quality or violation of the China Code of Ethics for Certified Public Accountants.

3. Audit fees

KPMG Huazhen's audit fees are determined based on factors such as the responsibilities involved in the engagement, and the complexity, work requirements, working conditions and hours required for the engagement, as well as the professional knowledge and experience of the employees at all levels who will actually participate in the engagement.

The audit fees for financial auditing and internal control in year 2019 are RMB 5.18 million and 1.74 million. For FY2020, the board of directors was authorized to determine service fees for this appointment, depending on the service scope, the workload and other factors. The audit fees for 2020 will be based on the audit fees for 2019 and will be determined through consultation with KPMG Huazhen in accordance with fair and reasonable pricing principles, the nature and complexity of audit service. The relevant decision-making procedures will be conducted as well.

II. Procedures of Appointment of Auditor and Internal Control Auditor

  1. Bluestar Adisseo Company (the "Company") deliberated and passed the proposal of appointment of auditor and internal control auditor for the year 2020 in the 9th meeting of the 7th session of the board held on 20th March 2020, by 8 votes in favor, 0 objection, and 0 abstention.
    According to the Articles of Association of Bluestar Adisseo Company, and the resolution of the audit committee of the board, the board proposes to continue to engage KPMG Huazhen LLP as the Company's 2020 annual auditor for financial and internal control auditing. The Board also proposes to authorize the board of directors to determine service fees for this appointment, depending on the service items, the workload and other factors.
  2. The independent directors have approved this proposal in advance and issued opinion: KPMG Huazhen LLP has qualifications for businesses related to securities and futures and is able to manage the Company's annual financial and internal control auditing. We agree to appoint this entity as the Company's 2020 annual financial and internal control auditor and agree to authorize the board of directors to determine service fees for this appointment, depending on the service items, the workload and other factors. This appointment of annual

financial and internal control auditor will not prejudice the benefits of the Company and shareholders, especially the benefits of the medium and small shareholders. We agree to submit this proposal to the shareholder's general meeting for deliberation.

3. The audit committee has approved this proposal in advance and issued opinion:

KPMG Huazhen LLP has qualifications for businesses related to securities and futures, has great independence and integrity record with capability of investor protection. It is always diligent and responsible, able to effectively communicate with the members of the audit committee, compose and conduct the annual audit plan, and fully qualified for the company's annual financial and internal control auditing. We agree to appoint this entity as the Company's 2020 annual financial and internal control auditor. This appointment will not prejudice the benefits of the Company and shareholders, especially the benefits of the medium and small shareholders. We agree to submit this proposal to the board for deliberation.

The proposal has to be submitted to the 2019 annual shareholders' general meeting for review.

It is hereby announced.

Bluestar Adisseo Company

20th March 2020

(In case of discrepancies between the English version and the Chinese version of this announcement, the Chinese version, officially published and disclosed, shall prevail.)

Disclaimer

Blue Star Adisseo Co. Ltd. published this content on 21 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 March 2020 11:47:04 UTC

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