Zhejiang Gongdong Medical Technology Co.Ltd(605369) : Zhejiang Gongdong Medical Technology Co.Ltd(605369) : Announcement on changes in accounting policies

Securities code: Zhejiang Gongdong Medical Technology Co.Ltd(605369) securities abbreviation: Zhejiang Gongdong Medical Technology Co.Ltd(605369) Announcement No.: 2021018 Zhejiang Gongdong Medical Technology Co.Ltd(605369)

Announcement on changes in accounting policies

The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents.

Important content tips:

This accounting policy change is a corresponding change made by Zhejiang Gongdong Medical Technology Co.Ltd(605369) (hereinafter referred to as “the company”) in accordance with the relevant accounting standards for business enterprises revised by the Ministry of Finance and the relevant provisions on the implementation of Q & A. It does not need to be submitted to the board of directors, the board of supervisors and the general meeting of shareholders for deliberation.

This change will not have a significant impact on the company’s financial situation, operating results and cash flow, and will not damage the interests of the company and shareholders. Among them, the implementation of “new leasing standards” and “standard Interpretation No. 15” has no impact on the company’s financial statements; The implementation of “new accounting treatment of transportation expenses” requires retroactive adjustment of the financial statements of the previous year. 1、 Implementation of new lease guidelines

(I) overview of changes in accounting policies

1. Reasons for changes in accounting policies

On december7,2018, the Ministry of Finance issued the revised accounting standards for Business Enterprises No. 21 – leasing (hereinafter referred to as the “new leasing standards”). The new leasing standards require enterprises listed both at home and abroad, as well as enterprises listed abroad and preparing financial statements using international financial reporting standards or accounting standards for business enterprises, to be implemented as of January 1, 2019; Other enterprises that implement the accounting standards for business enterprises shall be implemented as of January 1, 2021. The company will implement the new lease criteria as of January 1, 2021 (hereinafter referred to as the first implementation date).

2. Accounting policies adopted before change

For the accounting policies adopted before the change, see the relevant contents of 42 “lease” in “accounting estimates of important accounting policies” in Section 10 “financial report” of the company’s 2020 annual report.

3. Accounting policies adopted after change

For the accounting policies adopted after the change, see the relevant contents of 42 “lease” in “important accounting policies and accounting estimates” in Section 10 “financial report” of the company’s 2021 annual report.

(II) main contents of this accounting policy change

1. Under the new lease standards, except for short-term leases and low value asset leases, the lessee will no longer distinguish between financial leases and operating leases. All leases will adopt the same accounting treatment, and the right to use assets and lease liabilities must be recognized.

2. For the right to use assets, if the lessee can reasonably determine that it obtains the ownership of the leased assets at the expiration of the lease term, depreciation shall be accrued within the remaining service life of the leased assets. If it is impossible to reasonably determine that the ownership of the leased asset can be obtained at the expiration of the lease term, depreciation shall be accrued within the shorter of the lease term and the remaining service life of the leased asset. At the same time, the lessee shall determine whether the right of use assets are impaired, and accounting treatment shall be carried out for the identified impairment losses.

3. For lease liabilities, the lessee shall calculate the interest expense of the lease liabilities in each period of the lease term and record it into the current profits and losses.

4. For short-term leases and low value asset leases, the lessee may choose not to recognize the right of use assets and lease liabilities, and include them in the relevant asset costs or current profits and losses according to the straight-line method or other systematic and reasonable methods in each period of the lease term.

(III) impact of this accounting policy change on the company

1. For contracts existing before the first execution date, the company chooses not to re evaluate whether they are leases or include leases.

2. The implementation of the new leasing standards has no impact on the financial statements of the company on January 1, 2021.

3. The lease contract with the company as the lessor shall be subject to accounting treatment in accordance with the new lease standards from the first execution date. 2、 Interpretation of implementation Standards No. 15

(I) overview of changes in accounting policies

1. Reasons for changes in accounting policies

On December 30, 2021, the Ministry of Finance issued the notice on printing and distributing the interpretation of accounting standards for Business Enterprises No. 15 (CAI Kuai [2021] No. 35) (hereinafter referred to as “the interpretation of Standards No. 15”), which stipulates the relevant presentation contents of centralized fund management, which shall come into force as of the date of promulgation.

The company will implement the standard Interpretation No. 15 from December 31, 2021.

2. Accounting policies adopted before change

Before the change of accounting policies, the company implemented the accounting standards for business enterprises – basic standards, various specific accounting standards, application guidelines of accounting standards for business enterprises, interpretation announcement of accounting standards for business enterprises and other relevant regulations issued by the Ministry of finance.

3. Accounting policies adopted after change

According to relevant laws and regulations, if the funds of the parent company and member units are centrally and uniformly managed through internal settlement centers and financial companies, the list of requirements in standard Interpretation No. 15 shall be followed.

(II) main contents of this accounting policy change

Where an enterprise implements centralized and unified management of the funds of the parent company and member companies through internal settlement centers and financial companies in accordance with relevant laws and regulations, the member companies shall list the funds collected by the member companies into the accounts of the group’s parent company in the “other receivables” item of the balance sheet, or according to the principle of importance and in combination with the actual situation of the enterprise, Add the item of “centralized management of funds receivable” above the item of “other receivables” and list it separately; The parent company shall be listed in the “other payables” item of the balance sheet. The funds borrowed from other members of the group shall be listed in the “balance sheet” of the member company; The parent company shall be listed in the “other receivables” item of the balance sheet.

For the funds directly deposited into the financial company by the member unit that are not collected into the account of the group parent company, the member unit shall list them in the “monetary funds” item of the balance sheet. According to the principle of importance and in combination with the actual situation of the enterprise, the member unit can also add an item of “including: funds deposited into the financial company” under the “monetary funds” item for separate listing; The financial company shall be listed in the “deposit taking” item of the balance sheet. For the funds borrowed directly from the finance company without the account of the group parent company, the member unit shall list them in the “short-term loan” item of the balance sheet; The financial company shall list it in the item of “granting loans and advances” in the balance sheet.

(III) impact of this accounting policy change on the company

The change of accounting policy has no impact on the company’s financial statements. 3、 Implement new accounting treatment of transportation expenses

(I) overview of changes in accounting policies

1. Reasons for changes in accounting policies

In November 2021, the accounting department of the Ministry of Finance issued 6 questions and answers for the implementation of the fifth batch of accounting standards for business enterprises in 2021, of which question 5 was clear: “according to the accounting standards for Business Enterprises No. 14 – Revenue (Accounting and accounting)

According to the relevant provisions of [2017] No. 22), generally, the transportation activities before the control of the enterprise’s goods or services is transferred to the customer and in order to perform the customer’s contract do not constitute a single performance obligation, and the relevant transportation costs shall be regarded as the contract performance costs, amortized on the same basis as the recognition of the revenue of goods or services, and included in the current profit and loss.

The contract performance cost shall be carried forward and included in the title of “main business cost” or “other business cost” when recognizing the revenue of goods or services, and shall be listed in the item of “operating cost” in the income statement. ” (hereinafter referred to as “new accounting treatment of transportation expenses”)

On November 24, 2021, the guidelines for the application of regulatory rules – accounting category 2 issued by China Securities Regulatory Commission also re emphasized the accounting treatment of transportation expenses. Since January 1st, 2021, the company has listed the relevant transportation costs incurred for the performance of customer sales contracts in the “operating costs” item of the income statement, and made retrospective adjustments to the 2020 financial statements.

2. Accounting policies adopted before change

Before the change of accounting policy, the company listed the transportation costs incurred in performing the customer sales contract in the “sales expenses” item.

3. Accounting policies adopted after change

After this accounting policy change, the company listed the transportation costs incurred in performing the customer sales contract in the “operating cost” item in accordance with the relevant implementation Q & A regulations of the accounting department of the Ministry of finance.

(II) main contents of this accounting policy change

For the transportation costs incurred before the control of goods is transferred to the customer and in order to perform the customer’s sales contract, the company reclassifies them from sales expenses to operating costs.

(III) impact of this accounting policy change on the company

According to the above provisions, the company adjusted the transportation expenses that did not constitute a single performance obligation originally reported in the sales expenses to the operating cost, and retroactively adjusted the 2020 financial statements.

The main impact of this accounting policy change on the company’s consolidated income statement in 2020 is as follows:

Project 2020

After adjustment, the amount of change is changed.

Operating cost 41879168159192119925243800367411

Selling expenses 5132722394 -19211992523211523142

The main impact on the company’s consolidated cash flow statement in 2020 is as follows:

Top note: change amount before change.

Cash paid for purchasing goods and receiving labor services 36413031165192119925238334230417

The main impact of paying other cash related to operating activities from 590 Arcplus Group Plc(600629) 8 to 1921199252 and 3984807046 on the parent company’s profit statement in 2020 is as follows:

Project 2020

Top note: change amount before change.

Operating cost 41908139338192119925243829338590

Selling expenses 5132722394 -19211992523211523142

The main impact on the parent company’s cash flow statement in 2020 is as follows:

Project 2020

After adjustment, the amount of change is changed.

Cash paid for purchasing goods and receiving labor services 36405869233192119925238327068485

It is hereby announced to pay other cash related to operating activities from 5810908579 to 1921199252 and 3889709327.

Zhejiang Gongdong Medical Technology Co.Ltd(605369) board of directors April 18, 2022

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