Yu Diamond: verification opinions on the completion of capital investment projects

China Merchants Securities Co., Ltd. (hereinafter referred to as “China Merchants Securities” or “Sponsorship Agency”) is the sponsor institution of Zhengzhou Huajing Diamond Co., Ltd. (hereinafter referred to as “Yu Diamond” or “Company”), which is the initial public offering of shares and listed on the GEM. , according to the "Administrative Measures for Securities Issuance and Listing Sponsorship", "Shenzhen Stock Exchange GEM Listing Rules" (2012 Revision), "Shenzhen Stock Exchange GEM Listed Companies Standard Operation Guidelines" and other relevant regulations, raised funds for Henan Diamond The investment project was closed and the funds raised from the balance were used for verification of the company's projects under construction. The verification opinions were as follows:

1. Verification work carried out by the sponsor institution

The sponsor institution consults the fundraising account to inspect the fundraising investment project and the fundraising proceeds from the fundraising project for the project under construction, the board of directors regarding the fundraising investment project and the fundraising for the fundraising In the proposal documents of the company's projects under construction and the independent opinions issued by the independent directors, the rationality, necessity and effectiveness of the fundraising investment project settlement and the use of the raised funds for the company's projects under construction were verified.

As of August 31, 2013, the company raised funds to invest in “300 million carats of high-grade synthetic diamond project”, “Zhengzhou Synthetic Diamond and Products Engineering Technology Research Center Expansion Project”, and over-raised funds investment project with an annual output of 340 million yuan. The Clarion grade diamond project has reached the intended use status of the project.

According to the "Shenzhen Stock Exchange Listing Rules" (2012 Revision), "Shenzhen Stock Exchange GEM Listed Companies Standard Operation Guidelines" and "Zhengzhou Huajing Diamond Co., Ltd. Fund Management Measures" and other provisions, combined with the company's actual situation, The company plans to implement the above projects and plans to use the balance funds for the company's construction project “annual production of 1.02 billion carats of high-grade synthetic diamond project”.

Second, the basic situation of raised funds

(1) The situation of raised funds is in place

Approved by the China Securities Regulatory Commission on the approval of Zhengzhou Huajing Diamond Co., Ltd. for the initial public offering of shares and listing on the GEM (Zheng Jian Li [2010] No. 267), Zhengzhou

Huajing Diamond Co., Ltd. (hereinafter referred to as “Company” or “Company”) publicly issued 38 million shares (with a par value of RMB 1 per share) to the public at an issue price of RMB 21.32 per share and a total proceeds of RMB 810,160,000.00. After deducting the underwriting and sponsorship fees of RMB 55,711,200.00, the raised funds were RMB 754,448,800.00, which was remitted by the company's lead underwriter, China Merchants Securities Co., Ltd., to the company's special fundraising account on March 22, 2010. After deducting other issuance fees such as attorney fees and audit fees of RMB 8,427,000.00, the net proceeds from the initial public offering of the company amounted to RMB 745,021,800.00. The above-mentioned funds were in place and verified by Zhongqin Wanxin Certified Public Accountants Co., Ltd., and the capital verification report of Zhongqin Yanzi [2010] No. 03005 was issued. The company has adopted a special account storage system for raised funds.

According to the Ministry of Finance's "Notice on the Implementation of the 2010 Annual Report of Listed Companies and Non-Listed Enterprises Implementing Enterprise Accounting Standards" (Accounting [2010] No. 25), the company will account for the expenses incurred in issuing equity securities. The final confirmed issue fee was RMB 57,700,200.00, and the net proceeds were RMB 752,459,800.00.

(II) Management of raised funds

According to the "Company Law", "Securities Law", "Shenzhen Stock Exchange GEM Listing Rules" (revised in 2012), "Guidelines for the Standard Operation of Listed Companies on the Growth Enterprise Market of Shenzhen Stock Exchange", etc., combined with the actual situation of the company The company has formulated the "Measures for the Management of the Use of Raised Funds", established special account storage for the raised funds, and strictly complied with the examination and approval procedures, supervised the management and use of the raised funds, and guaranteed the special funds.

The company (including the wholly-owned subsidiary Zhengzhou Synthetic Diamond and Products Engineering Technology Research Center Co., Ltd.) and the sponsor institution China Merchants Securities Co., Ltd. signed the agreement with Bank of China Zhengzhou High-tech Development Zone Sub-branch, Luoyang Bank Zhengzhou Branch and CITIC Bank Zhengzhou Agricultural Road Branch. The "Tripartite Supervision Agreement on Raised Funds" will deposit the funds raised in the fundraising account opened by the above-mentioned banks. The use and balance of funds will be supervised by the sponsor institutions and banks.

III. Use of funds and balances of completed fundraising projects

(1) Raised funds investment project - an annual output of 300 million carats of high-grade synthetic diamond project

The annual output of 300 million carats of high-grade synthetic diamond project is a high-grade synthetic diamond production line invested and constructed by the company using HJ-650 synthetic diamond synthesis equipment independently developed. The implementation of the project will help increase the company's production capacity and consolidate and expand the market share of the company's products. The project plans to use the raised funds of 194.5 million yuan.

On June 4, 2010, the 11th meeting of the first board of directors of the company reviewed and approved the “Proposal on Matters Related to Over-raised Funds”, and agreed to use the company’s over-raised funds of RMB 17,941,400 for an annual output of 300 million carats of high-grade man-made. Diamond project.

As of August 31, 2013, the annual output of 300 million carats of high-grade synthetic diamond project has reached the expected usable status. The project has used a total of RMB 21,199,000 and raised funds of RMB 2,402,200.

(II) Raised funds investment project——Zhengzhou City Artificial Diamond and Products Engineering Technology Research Center Expansion Project

The expansion project of Zhengzhou Synthetic Diamond and Products Engineering Technology Research Center is to increase the research and development and testing methods of new products, attract high-tech talents and enhance the competition of core technologies by purchasing advanced experimental equipment, testing instruments and construction and research and development buildings at home and abroad. A determined investment project. The project was implemented by Zhengzhou City Synthetic Diamond and Products Engineering Technology Research Center, a wholly-owned subsidiary, and promised to use the raised funds of 30 million yuan.

On March 18, 2011, the company's 2010 Annual General Meeting of Shareholders reviewed and approved the “Proposal on Changing the Project of Zhengzhou Synthetic Diamond and Products Engineering Technology Research Center Expansion Project”, agreeing that the company plans to use the research and development building construction and ancillary expenses of 6.69 million. All of them are used to add advanced R&D and monitoring equipment.

As of August 31, 2013, the Zhengzhou City Synthetic Diamond and Products Engineering Technology Research Center expansion project has reached the expected usable status, with a total use of raised funds of RMB 10,116,000 (116,000 yuan is the interest expense of the fundraising account).

(III) Super-raised funds investment projects – an annual output of 340 million carats of high-grade diamond projects

On September 16, 2010, the 13th meeting of the first board of directors of the company reviewed and approved the “Proposal on the Use of Super-raised Funds”. According to the demand situation of the artificial diamond market and the actual production capacity of the company, the company plans to use the over-raised funds 17,403.00. 10,000 yuan to build an annual output of 340 million carats of high-grade diamond projects.

As of August 31, 2013, the annual output of 340 million carats of high-grade diamond projects has reached the expected usable status. The project has used raised funds of RMB 710,160,600 and savings of RMB 3,909,400.

All the above three projects have reached the expected usable status. According to the resolution of the 19th meeting of the second board of directors of the company, the company will implement the above three projects.

Fourth, the reasons for the fund balance of the fundraising project have been completed

The company's three fund-raising projects have committed a total investment of 416,644,100 yuan, the project has invested a total of 412,246,400 yuan, and the funds raised are 6,917,700 yuan. The savings amount is 1.49% of the amount of the promised investment. There is no significant difference. The raised funds totaled a total balance of 87.105 million yuan (including interest income).

The main reasons for the balance of raised funds are as follows:

1. The company fully combines its own technical advantages, experience and existing equipment configuration, optimizes the project links under the premise of full utilization of resources, and reduces some equipment purchases;

2. The company further strengthened the project cost control, supervision and management on the premise of ensuring the quality of the project, saving some project expenses.

V. The necessity of using surplus funds to invest in projects under construction

In order to better utilize the efficiency of fundraising, improve the efficiency of capital use, maximize the interests of shareholders, and ensure the construction progress of the 1.02 billion carat high-grade synthetic diamond project, the company plans to use the fund raising project balance of 87.105 million yuan. The company's annual output of 1.02 billion carats of high-grade synthetic diamond projects, reducing the amount of bank loans. After the above-mentioned RMB 87.105 million is invested in the 1.02 billion-carat high-grade synthetic diamond project, the financial cost of the construction period can be saved by RMB 579,200.

6. Opinions of independent directors

The company's independent directors issued the following independent opinions:

1. As of August 31, 2013, the company raised funds to invest in “300 million carats of high-grade synthetic diamond project”, “Zhengzhou Synthetic Diamond and Products Engineering Technology Research Center Expansion Project”, and “over-raised funds investment project” The 3.4 billion carat high-grade diamond project has reached the expected usable status, and the accumulated use of raised funds is RMB 41,024,400, and the raised funds totaled RMB 87,100,500 (including interest income). Agree to the above project completion.

2. The company uses the raised funds of the raised funds project to invest in the 1.02 billion carat high-grade synthetic diamond project under construction, which is conducive to improving the efficiency of the use of raised funds, reducing financial costs, improving operational efficiency, meeting the company's development needs, and will not harm the company. Shareholders' interests, the company agreed to invest the above-mentioned funds raised from the fundraising project in the “1.02 billion carat high-grade synthetic diamond project”.

Seven, the advice of the sponsor institution

After verification, the sponsor institution believes that the company's fund-raising investment project settlement and the use of the raised funds for the company's projects under construction are in line with the actual situation of the company's market environment and cost control needs, which is conducive to timely control of investment risks and improve the efficiency of the use of raised funds. It meets the needs of safeguarding the interests of the company and meets the needs of safeguarding the interests of all shareholders. It complies with relevant laws and regulations such as the “Company Law” and the “Guidelines for the Standard Operation of Listed Companies of the Shenzhen Stock Exchange” and the “Articles of Association”.

Sponsor representative:

Yang Yulin

Yu Guoqing

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