Securities code: Hynar Water Group Co.Ltd(300961) securities abbreviation: Hynar Water Group Co.Ltd(300961) Announcement No.: 2022021
Hynar Water Group Co.Ltd(300961)
Announcement on changes in accounting policies
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.
Hynar Water Group Co.Ltd(300961) (hereinafter referred to as “the company” or ” Hynar Water Group Co.Ltd(300961) “) the 30th meeting of the second board of directors and the 23rd Meeting of the second board of supervisors deliberated and adopted the proposal on changes in accounting policies. This change in accounting policies is a corresponding change made by the company in accordance with the interpretation of accounting standards for Business Enterprises No. 14 and interpretation of accounting standards for Business Enterprises No. 15 issued by the Ministry of finance, and does not need to be submitted to the general meeting of shareholders for deliberation, The details are hereby announced as follows:
1、 Overview of changes in accounting policies
(I) reason and time of change
1. The Ministry of finance of the people’s Republic of China (hereinafter referred to as the “Ministry of finance”) issued the notice on printing and distributing the interpretation of accounting standards for Business Enterprises No. 14 (CAI Kuai [2021] No. 1) (hereinafter referred to as the “Interpretation No. 14”) on February 2, 2021 to explain the accounting treatment of government social capital cooperation (PPP) project contracts and PPP project contracts that meet the corresponding conditions, The construction income shall be recognized in accordance with the accounting standards for Business Enterprises No. 14 – income. In August 2021, the Ministry of Finance issued a question and answer on the implementation of accounting treatment of PPP project, further clarifying the relevant accounting treatment principles.
2. On December 31, 2021, the Ministry of Finance issued the interpretation of accounting standards for Business Enterprises No. 15 (CAI Kuai [2021] No. 35, hereinafter referred to as “Interpretation No. 15”), and the content of “relevant presentation on centralized fund management” in Interpretation No. 15 shall be implemented as of the date of promulgation, From January 1, 2022, the contents of “Interpretation No. 15” on the accounting treatment of the external sales of products or by-products produced before the fixed assets reach the expected usable state or in the process of R & D “and” judgment on loss contracts “shall be implemented.
2、 Details of this accounting policy change and its impact on the company
(I) Interpretation No. 14 mainly includes the following contents:
1. Clarify the definition and characteristics of the applicable PPP project contract. It refers to the contract concluded between the social capital party and the government party on PPP project cooperation in accordance with laws and regulations. The contract shall comply with “dual characteristics” and “dual control” at the same time. The franchise project agreement that meets the “double characteristics” and “double control” of the interpretation but is not included in the project database of the national PPP comprehensive information platform shall be subject to accounting treatment and retroactive adjustment in accordance with the interpretation.
2. If the social capital party provides construction services (including construction, reconstruction and expansion, the same below) or contracts to other parties, it shall determine whether its identity is the main responsible person or agent in accordance with the accounting standards for Business Enterprises No. 14 – income, conduct accounting treatment and confirm the contract assets.
3. If the social capital party provides multiple services (such as both asset construction services and operation and maintenance services after the completion of the PPP project) according to the PPP project contract, it shall identify the individual performance obligations in the contract in accordance with the accounting standards for Business Enterprises No. 14 – income, and apportion the transaction price to each performance obligation according to the relative proportion of the individual selling price of each performance obligation.
4. When the amount of the intangible assets constituting the PPP project is determined as the amount of the right to use the PPP project capital or services, but the amount of the intangible assets constituting the PPP project shall not be recognized as the amount of the social assets that can be charged according to the conditions of the PPP project. During the period of the project, the amount of the intangible assets that can be used by the construction party shall not be recognized as the amount of the PPP project capital; During the operation period of the project, if the conditions for the right to receive cash (or other financial assets) of a determinable amount are met, the accounts receivable shall be recognized when the social capital party has the right to receive the consideration (the right only depends on the factors of time lapse), and the accounting treatment shall be carried out in accordance with the accounting standards for Enterprises No. 22 – recognition and measurement of financial instruments. The social capital party shall recognize the difference between the consideration amount of relevant PPP project assets or the recognized construction income amount and the cash (or other financial assets) entitled to receive a determinable amount as intangible assets when the PPP project assets reach the expected usable state.
5. In order to keep the PPP project assets in a certain service capacity or in a certain use state before being handed over to the government, if the services provided by the social capital party according to the PPP project contract do not constitute a single performance obligation, the expected expenditure shall be accounted for in accordance with the accounting standards for Business Enterprises No. 13 – contingencies.
If the adjustment has not been made according to the provisions of the PPP contract and has not been completed before December 31, 2020, the adjustment shall be made retroactively according to the relevant accounting standards; If retroactive adjustment is not feasible, the interpretation shall be applied from the beginning of the earliest period of retroactive adjustment. The social capital party shall adjust the amount of retained earnings and other relevant items in the financial statements at the beginning of the year on the date of implementation of the interpretation, and shall not adjust the information of the comparable period.
According to the provisions of Interpretation No. 14 and in combination with the actual implementation of the company’s PPP project, the company has adjusted the business specified in Interpretation No. 14 newly added between January 1, 2021 and the implementation date of Interpretation No. 14 according to Interpretation No. 14, and retroactively adjusted the relevant PPP project contracts that are implemented before December 31, 2020 and have not been completed before the implementation date. The company will implement the cumulative impact of the interpretation, adjust the amount of retained earnings and other relevant items in the financial statements at the beginning of the year (January 1, 2021) on the implementation date of the interpretation, and will not adjust the information of comparable periods. The impact of the company’s implementation of the above standards on the financial statements during the reporting period is as follows:
Unit: Yuan
Cumulative impact amount of the project on December 31, 2020 January 1, 2021 construction in progress 59667691586 -558848230343782868552 intangible assets 499347974074697984957996914646986 other non current assets 50949624089049734559414469695
Total assets: 110111985233 — 110111985233
Note: the above table only presents the affected financial statement items, and the unaffected financial statement items are not included. Therefore, the disclosed subtotal and total cannot be recalculated according to the figures presented in the above table.
(II) Interpretation No. 15 mainly includes the following contents:
The Interpretation No. 15 specifies the accounting treatment related to the external sales of products or by-products (hereinafter referred to as trial operation sales) before the fixed assets reach the expected usable state or during the research and development process, mainly including the following contents:
1. For trial operation sales, enterprises shall, in accordance with the provisions of accounting standards for Business Enterprises No. 14 – revenue and accounting standards for Business Enterprises No. 1 – inventory, respectively, account for the income and costs related to trial operation sales and record them into the current profits and losses. The net amount of the income related to trial operation sales after offsetting the relevant costs shall not be used to offset the cost of fixed assets or R & D expenses.
2. Before the relevant products or by-products produced by the trial operation are sold, those that meet the provisions of the accounting standards for Business Enterprises No. 1 – inventory shall be recognized as inventory, and those that meet the relevant asset recognition conditions in other relevant accounting standards for business enterprises shall be recognized as relevant assets.
3. The expenses incurred for testing whether the fixed assets can operate normally belong to the necessary expenses before the fixed assets reach the expected usable state, and shall be included in the cost of the fixed assets in accordance with the relevant provisions of the accounting standards for Business Enterprises No. 4 – fixed assets.
4. An enterprise shall, in accordance with the accounting standards for Business Enterprises No. 1 – inventory, accounting standards for Business Enterprises No. 14 – income, accounting standards for Business Enterprises No. 30 – presentation of financial statements and other provisions, judge whether the trial operation sales belong to the daily activities of the enterprise, and present the relevant income and costs of the trial operation sales in the financial statements respectively in terms of daily activities and non daily activities. Those belonging to daily activities are listed in the items of “operating income” and “operating cost”, and those belonging to non daily activities are listed in the items of “income from asset disposal”. At the same time, the enterprise shall separately disclose the relevant income and cost amount of trial operation sales, the specific reporting items and the important accounting estimates used in determining the relevant costs of trial operation sales in the notes.
5. The enterprise shall make retroactive adjustment in accordance with the provisions of this interpretation for the trial operation sales between the beginning of the earliest period for the presentation of the financial statements for the first time to the date of implementation of this interpretation; If the retroactive adjustment is not feasible, the enterprise shall apply the provisions of this interpretation from the beginning of the earliest period of retroactive adjustment, and disclose the specific reasons for the failure of retroactive adjustment in the notes.
3、 Opinions of independent directors
After verification, the independent directors believe that the change of accounting policy is a reasonable change and adjustment in accordance with the provisions of relevant documents of the Ministry of finance, in line with the relevant provisions of the Ministry of finance, China Securities Regulatory Commission, Shenzhen Stock Exchange and other regulatory bodies, in line with the provisions of relevant laws, regulations and accounting standards for business enterprises. The company’s change of accounting policy can be objective and reasonable It is in the interests of the company and all shareholders to fairly reflect the company’s financial situation and operating results. This review procedure complies with the provisions of relevant laws and regulations and the articles of association, and there is no damage to the interests of the company and shareholders, especially the interests of minority shareholders. Therefore, we unanimously agree on the accounting policy change of the company.
4、 Opinions of the board of supervisors of the company
The board of supervisors of the company believes that the change of the company’s accounting policies can objectively and fairly reflect the company’s financial situation and operating results. The decision-making procedure complies with the provisions of relevant laws and regulations and the articles of association, and is in line with the interests of the company and all shareholders.
5、 Documents for future reference
1. Resolution of the 30th meeting of the second board of directors
2. Resolution of the 23rd Meeting of the second board of supervisors
It is hereby announced.
Hynar Water Group Co.Ltd(300961) board of directors April 27, 2022
