Securities code: 600520 securities for short: Tongfeng Electronic Announcement Number: Lin 2020-036

Anhui Tongfeng Electronics Co., LTD
Announcement on the implementation of new revenue standards and changes in relevant accounting policies

The board of directors and all the directors of the Company warrant that there is no false record, misleading statement or material omission in the content of this announcement, and bear individual and joint liability for the authenticity, accuracy and completeness of the content.

Important content Tips:

●The adjustment made by Anhui Tongfeng Electronics Co., LTD. (hereinafter referred to as the "Company") in accordance with the relevant contents of the amendment Notice of the Ministry of Finance, PRC (hereinafter referred to as the "Ministry of Finance") does not involve the correction of accounting errors or changes in accounting estimates. This change of accounting policy does not affect the company's profit and loss, total assets, net assets and other financial indicators, and has no significant impact on the company's operating results and cash flow.

On August 24, 2020, the Company held the 12th meeting of the eighth Board of Directors and the ninth meeting of the eighth Board of Supervisors, deliberating and passing the Motion on implementing the new Revenue Standards and changing the relevant accounting policies. The details are as follows:

I. Overview of the accounting policy change

On July 5, 2017, the Ministry of Finance issued the Notice on the revision and issuance of the Accounting Standards for Business Enterprises No. 14 - Revenue (Finance and Accounting [2017] No. 22) (hereinafter referred to as the "New Revenue Standards"), requiring both domestic and foreign listed enterprises and overseas listed enterprises using international financial reporting Standards or business accounting standards to prepare financial statements. As of January 1, 2018; Other domestic listed enterprises, as of January 1, 2020. The Company will implement the new revenue guidelines as of January 1, 2020 as required by relevant laws and regulations.

Ii. Main contents of the accounting policy change

Before the change: The Company implemented the Accounting Standards for Business Enterprises No. 14 - Income (hereinafter referred to as the "original income Standard") promulgated by the Ministry of Finance in 2006, and took the risk-reward transfer as the judgment standard for the time point of revenue recognition. Corporate revenue is recognized when the following conditions are met: the major risks and rewards of commodity ownership have been transferred to the buyer, the amount of revenue and related costs can be measured reliably, the related economic benefits are likely to flow into the business, and the company does not retain the continuing management rights usually associated with ownership, nor does it exercise effective control over the goods sold.

After the change: the company implements the new revenue criteria, and integrates the original revenue criteria and construction contract criteria into the unified revenue recognition model; Taking the transfer of control rights instead of the transfer of risk reward as the criterion of income recognition time; Clearer guidance is provided for the aggregate treatment of contracts containing multiple trading arrangements; For certain specific transactions (or events) revenue recognition and measurement has given clear provisions.

Date of Change: As a listed enterprise in China, the Company will implement the new revenue criteria from January 1, 2020.

Iii. The impact of the accounting policy change on the Company

1. After the implementation of the new revenue criteria, the advance proceeds of the consolidated balance sheet of the Company on January 1, 2020 are adjusted to decrease by RMB 5,422,056.63, while the contract liabilities are adjusted to increase by RMB 5,422,056.63; The adjustment of advance proceeds from the balance sheet of the parent company decreased by 26,147,095.31 yuan, and the adjustment of contract liabilities increased by 26,147,095.31 yuan.

2. The change in accounting policies is the corresponding change made by the company according to the latest accounting standards revised by the Ministry of Finance. In terms of the convergence provisions, the cumulative impact of the first implementation of the new income standards only adjusts the amount of retained earnings and other related items in financial statements at the beginning of the year when the new income standards are first implemented, and does not adjust the information of comparable periods.

3. After the change, the accounting policies can reflect the company's financial position and operating results more objectively and fairly, in line with relevant laws and regulations and the actual situation of the company.

4. The company has reassessed the recognition and measurement, accounting and presentation of the company's main contract income in accordance with the new accounting standards, and has no significant impact on the company's financial position, operating results and cash flow, nor does it harm the interests of the company and shareholders.

This change in accounting policy is a reasonable change in accordance with the relevant documents and regulations of the Ministry of Finance, in accordance with the relevant regulations of the Ministry of Finance, the China Securities Regulatory Commission and the Shanghai Stock Exchange, which can more objectively and fairly reflect the financial position and operating results of the Company, and is in line with the interests of the Company and all shareholders.

Iv. Decision-making procedures for the change of accounting policies

(1) Opinions of the Board of Directors

The twelfth meeting of the eighth Board of Directors of the Company was held on August 24, 2020, and the proposal on implementing New Revenue Standards and changing relevant Accounting policies was approved. The Board of directors believed that: This change in accounting policy is a reasonable change in accordance with the relevant documents and regulations of the Ministry of Finance, in accordance with the relevant regulations of the Ministry of Finance, the China Securities Regulatory Commission and the Shanghai Stock Exchange, which can more objectively and fairly reflect the financial position and operating results of the Company, and is in line with the interests of the Company and all shareholders. The board of directors agreed to the company's accounting policy changes.

(2) Opinions of the Board of Supervisors

The Company held the ninth meeting of the eighth Board of Supervisors on August 24, 2020, deliberating and passing the Motion on Implementing the New Revenue Standards and changing the relevant Accounting Policies. The Board of Supervisors believed that: The change of the company's accounting policies is a reasonable change and adjustment in accordance with the provisions of the relevant documents of the Ministry of Finance. The implementation of the new accounting policies is conducive to objectively and fairly reflecting the company's financial position and operating results. The relevant decision-making procedure is in accordance with relevant laws and regulations, normative documents and the Articles of Association of the Company, and there is no harm to the interests of the company and all shareholders, especially minority shareholders. The Board of Supervisors agrees with the company's accounting policy changes.

(3) Opinions of independent directors

The independent directors of the company have expressed their independent opinions on the accounting policy changes, specifically as follows:

1. The change of accounting policies is a reasonable change according to the new income standards newly revised and released by the Ministry of Finance and combined with the actual situation of the company.

2. The changed accounting policies of the Company comply with the relevant regulations of the Ministry of Finance, China Securities Regulatory Commission and Shanghai Stock Exchange, which can objectively and fairly reflect the company's current financial position and operating results and have no significant impact on the company's financial position, operating results and cash flow.

3. The decision-making and disclosure procedures of this accounting policy change are in line with relevant regulations, and there is no harm to the interests of the company and all shareholders, especially minority shareholders.

To sum up, we agree with the company's accounting policy changes.

V. File directory for reference

1. Resolution of 12th meeting of 8th Board of Directors of the Company;

2. Resolution of the ninth meeting of the Eighth Board of Supervisors of the Company;

3. Opinions of independent directors confirmed by signature of independent directors.

This is to announce.