Securities code: Lingnan Eco&Culture-Tourism Co.Ltd(002717) securities abbreviation: Lingnan Eco&Culture-Tourism Co.Ltd(002717) Announcement No.: 2022034 Lingnan Eco&Culture-Tourism Co.Ltd(002717)
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.
Lingnan Eco&Culture-Tourism Co.Ltd(002717) (hereinafter referred to as “the company”) held the 46th meeting of the 4th board of directors and the 38th meeting of the 4th board of supervisors on April 29, 2022, deliberated and adopted the proposal on changes in accounting policies, and the independent directors expressed their independent opinions on the proposal.
According to the relevant provisions of the Listing Rules of Shenzhen Stock Exchange, the self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 1 – standardized operation of listed companies on the main board and other relevant provisions, this accounting policy change is made in accordance with the requirements of national accounting standards and regulations. Within the decision-making authority of the board of directors of the company, it is not necessary to submit it to the general meeting of shareholders for deliberation. The details are announced as follows:
1、 Overview of this accounting policy change
1. Reason for change
In January 2021, the Ministry of Finance issued the interpretation of accounting standards for Business Enterprises No. 14, which defined the provisions on the presentation and relevant accounting treatment of government and social capital cooperation (PPP) project contracts by social capital parties, as well as the accounting treatment of changes in the definite basis of cash flow of relevant contracts caused by the reform of benchmark interest rate. According to the provisions of the Ministry of finance, relevant PPP project contracts that have been implemented before December 31, 2020 and have not been completed by the implementation date of the interpretation of accounting standards for Business Enterprises No. 14 shall be subject to accounting treatment and retroactive adjustment in accordance with the interpretation of accounting standards for Business Enterprises No. 14. For businesses related to the benchmark interest rate reform before December 31, 2020, retroactive adjustment shall be made.
2. Change date
According to the requirements of the Ministry of finance, the company will implement the interpretation of accounting standards for Business Enterprises No. 14 from January 1, 2021.
3. Accounting policies adopted before change
Before the change of accounting policies, the company implemented the accounting standards for business enterprises – Basic Standards and various specific accounting standards, the application guide of accounting standards for business enterprises, the announcement on the interpretation of accounting standards for business enterprises and other relevant regulations issued by the Ministry of finance.
4. Accounting policies adopted after change
After this accounting policy change, the company will implement the interpretation of accounting standards for Business Enterprises No. 14 issued by the Ministry of Finance in January 2021, and other unchanged parts will still be implemented in accordance with the relevant standards and other relevant provisions issued by the Ministry of Finance in the early stage.
The main changes in the interpretation of accounting standards for Business Enterprises No. 14 include:
(1) Accounting treatment of government and social capital cooperation (PPP) project contracts by social capital parties
① 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.
② 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.
③ The borrowing costs incurred in the construction of PPP project assets shall be accounted for by the social capital party in accordance with the accounting standards for Business Enterprises No. 17 – borrowing costs. For the part recognized as intangible assets in items 4 and 5 of this part, the social capital party shall capitalize the relevant borrowing costs when they meet the capitalization conditions, and carry forward them to intangible assets when the PPP project assets reach the expected usable state. Except for the above circumstances, other borrowing costs shall be expensed by the social capital party.
④ According to the PPP project contract, the social capital party has the right to collect fees from the objects who obtain public goods and services during the operation of the project, but if the amount of fees is uncertain, this right does not constitute an unconditional right to receive cash. When the PPP project assets reach the expected usable state, the consideration amount of relevant PPP project assets or the recognized construction income amount shall be recognized as intangible assets, Accounting treatment shall be conducted in accordance with the accounting standards for Business Enterprises No. 6 – intangible assets.
⑤ According to the PPP project contract, if the social capital party meets the conditions for the right to receive cash (or other financial assets) of a determinable amount during the operation of the project, it shall be recognized as accounts receivable when the social capital party has the right to receive the consideration (the right only depends on the factors of time lapse), and accounting treatment shall be carried out in accordance with the accounting standards for Business 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.
⑥ If the relevant PPP project contracts that have been implemented before December 31, 2020 and have not been completed as of the implementation date of this interpretation are not subject to accounting treatment in accordance with the above provisions, retroactive adjustment shall be made; If retroactive adjustment is not feasible, this 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 this interpretation, and shall not adjust the information of comparable periods.
(2) Accounting treatment for the change of the basis for determining the cash flow of relevant contracts caused by the reform of benchmark interest rate
The interpretation of accounting standards for Business Enterprises No. 14 further defines the accounting treatment of changes in the basis for determining the contractual cash flow of financial assets or financial liabilities caused by the reform of benchmark interest rate and lease changes caused by the reform of benchmark interest rate.
2、 Impact of this accounting policy change on the company
According to the relevant provisions of the interpretation of accounting standards for Business Enterprises No. 14 on the connection between the old and new standards, the company has disclosed the accounting statements in accordance with the requirements of the interpretation of accounting standards for Business Enterprises No. 14 since January 1, 2021, and does not retroactively adjust the comparable figures in 2020. The change of accounting policies will not affect the relevant financial indicators such as the owner’s equity and net profit of the company in 2020.
The change of accounting policy is carried out by the company in accordance with the relevant regulations and requirements issued by the Ministry of finance. The change of accounting policy can more objectively and fairly reflect the company’s financial status and operating results, and comply with the provisions of relevant laws and regulations and the actual situation of the company.
The change of accounting policy is not expected to have a significant impact on the company’s financial position, operating results and cash flow, and there is no damage to the interests of the company and shareholders.
3、 Explanation of the board of directors on the rationality of this accounting policy change
On April 29, 2022, the company held the 46th meeting of the 4th board of directors, which deliberated and adopted the proposal on accounting policy change with 8 affirmative votes, 0 negative votes and 0 abstention votes. The board of directors of the company considered that the change of accounting policy is the corresponding change made by the company according to the requirements of the change of national accounting policy, which meets the relevant regulations, and the changed accounting policy meets the relevant regulations and can be more objective and practical 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 independent directors expressed their independent opinions on the matter. This accounting policy change does not need to be submitted to the general meeting of shareholders for deliberation.
4、 Opinions of independent directors
The independent directors believe that the accounting policy change is the corresponding change made by the company according to the requirements of the national accounting policy change, which is in line with the provisions of relevant laws and regulations. The decision-making procedure of this accounting policy change complies with the provisions of relevant laws, regulations and the articles of association. The changed accounting policy can more objectively and truly reflect the financial status and operating results of the company, and there is no damage to the rights and interests of the company and all shareholders. We agree with the above matters.
5、 Opinions of the board of supervisors
The board of supervisors of the company believes that this accounting policy change is a corresponding change made by the company according to the requirements of the national accounting policy change, which complies with the relevant provisions, can more objectively and fairly reflect the company’s financial situation and operating results, complies with the relevant provisions of the state and the actual situation of the company, its decision-making procedures comply 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 all shareholders. Therefore, we agree to the change of the company’s accounting policy.
6、 Documents for future reference
1. Resolution of the 46th meeting of the 4th board of directors;
2. Resolution of the 38th meeting of the 4th board of supervisors;
3. Independent opinions of independent directors on matters related to the 46th meeting of the Fourth Board of directors. It is hereby announced.
Lingnan Eco&Culture-Tourism Co.Ltd(002717) board of directors April 30, 2022
