Fullink Technology Co.Ltd(301067) : Announcement on changes in accounting policies of the company

Securities code: Fullink Technology Co.Ltd(301067) securities abbreviation: Fullink Technology Co.Ltd(301067) Announcement No.: 2022018 Fullink Technology Co.Ltd(301067)

Announcement on changes in accounting policies of the company

The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.

Fullink Technology Co.Ltd(301067) (hereinafter referred to as “the company”) made corresponding changes to the company’s accounting policies in accordance with the document provisions of the notice on revising and Issuing the accounting standards for Business Enterprises No. 21 – leasing (CK [2018] No. 35) issued by the Ministry of finance. This change will not have a significant impact on the company’s financial position, operating results and cash flow.

The company changed some accounting policies according to the requirements of relevant documents of the Ministry of Finance and the specific situation of the company. On April 15, 2022, the 14th meeting of the second board of directors and the 12th meeting of the second board of supervisors held by the company considered and adopted the proposal on the change of the company’s accounting policies. The relevant information is hereby announced as follows:

1、 Overview of this accounting change

1. Reason and date of change of accounting policy

On December 7, 2018, the Ministry of Finance issued the notice on revising and Issuing the accounting standards for Business Enterprises No. 21 – leasing (CK [2018] No. 35) (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. According to the above provisions, the company will implement the new leasing standards from January 1, 2021.

2. Accounting policies adopted by the company before change

Before this change, 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 by the company after change

After this accounting policy change, the company will implement the relevant provisions of the accounting standards for Business Enterprises No. 21 – leasing revised and issued by the Ministry of Finance on December 7, 2018. Other unchanged parts shall still be implemented in accordance with the accounting standards for business enterprises – basic standards, various specific accounting standards, the application guide of accounting standards for business enterprises, the interpretation announcement of accounting standards for business enterprises and other relevant provisions issued by the Ministry of Finance in the early stage.

2、 Main contents of this accounting policy change

The amendments to the new leasing standards mainly include:

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 account for the identified impairment losses;

3. The interest of the lessee shall be included in the current profit and loss during the lease liability period;

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.

3、 Impact of this accounting policy change on the company

The company will conduct accounting treatment in accordance with the new leasing standards from January 1, 2021, and will not adjust the information of the comparable period according to the relevant connection provisions, which will not have a significant impact on the company’s financial status, operating results and cash flow, and there is no situation that will damage the interests of the company and all shareholders, especially minority shareholders. The specific impacts are as follows:

1. The main impact of the implementation of the new leasing standards on the company’s financial statements on January 1, 2021 is as follows:

Balance sheet

Project new lease criteria

Adjustment effect on December 31, 2020 January 1, 2021

Fixed assets 3556332767 -1599003293396432438

Balance sheet

Impact of the adjustment of the new leasing standards on December 31, 2020 and January 1, 2021

Right of use assets – 3933478786

Non current liabilities due within one year 64583700796463845861047545

Lease liabilities – 2977114612

2. The unpaid minimum lease payments in major operating leases disclosed in the financial statements of the company in 2020 are 4248886469 yuan, and the present value discounted at the incremental borrowing rate on the first execution date is 3838162157 yuan. The difference between the discounted amount and the lease liabilities related to the original operating lease included in the balance sheet on the first execution date is 0.00 yuan.

The weighted average of the company’s incremental borrowing interest rate adopted for the lease liabilities included in the balance sheet on the first execution date is 4.36%.

3. Simplified treatment of operating leases before the first execution date

For lease contracts completed within 12 months after the first execution date, the company adopts a simplified method and does not recognize the right of use assets and lease liabilities;

The above simplified treatment has no significant impact on the company’s financial statements.

4、 Approval procedure

1. Deliberations of the board of directors

The 14th meeting of the second board of directors was held on April 15, 2022, and the proposal on the change of accounting policies of the company was reviewed and approved. All participants expressed their consent. This proposal does not need to be submitted to the general meeting of shareholders for deliberation.

2. Deliberation of the board of supervisors

The 12th meeting of the second board of supervisors held by the company on December 15, 2022 deliberated and adopted the proposal on the change of the company’s accounting policies. The board of supervisors of the company believes that this accounting policy change is a reasonable change made by the company in accordance with the relevant regulations and requirements issued by the Ministry of finance. This accounting policy change complies with the provisions of relevant laws, regulations and accounting standards for business enterprises, and the review procedures comply with the relevant laws, regulations, rules, normative documents and the articles of association. There is no situation that damages the interests of the company and shareholders, especially small and medium-sized shareholders.

3. Opinions of independent directors

After review, the independent directors agreed that the change of the company’s accounting policy is a reasonable change and adjustment in accordance with the relevant provisions of the Ministry of finance. The implementation of the change of accounting policy can objectively and fairly reflect the company’s financial situation and operating results, and there is no situation that damages the interests of the company and all shareholders, especially minority shareholders. The decision-making procedures of this accounting policy change comply with the provisions of relevant laws, regulations, normative documents and the articles of association, and will not have a significant impact on the company’s financial statements.

5、 Documents for future reference

1. Resolutions of the 14th meeting of the second board of directors of the company;

2. Resolutions of the 12th meeting of the second board of supervisors of the company;

3. Independent opinions of independent directors on matters related to the 14th meeting of the second board of directors.

It is hereby announced.

Fullink Technology Co.Ltd(301067) board of directors April 15, 2022

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