Announcement on Retrospective Adjustment of Financial Data for Business Combination Under Common Control
The company and its board of directors guarantee the truthfulness, accuracy, and completeness of the information disclosed, and are free from false representations, misleading statements, or material omissions.
I. Reason for Retrospective Adjustment of Financial Statements
In December 2025, Shandong Lanxin Health Technology Co., Ltd. (hereinafter referred to as "Lanxin Health Technology"), a subsidiary of Lanxin Medical Co., Ltd. (hereinafter referred to as "the Company"), acquired 80% of the equity of Zibo Hongda Thermal Power Co., Ltd. (hereinafter referred to as "Hongda Thermal Power") for RMB 400 million. Upon completion of the transaction, Lanxin Health Technology holds 80% of Hongda Thermal Power's equity and obtains its control. Hongda Thermal Power is included in the Company's consolidated financial statements. Hongda Thermal Power and Lanxin Health Technology, which are included in the consolidated statements, have been under the actual control of Mr. Li Zhenping, the actual controller of the Company, both before and after the combination. Since this control is not temporary, this transaction constitutes a business combination under common control. The date of combination is determined as December 31, 2025.
According to the requirements of "Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investment," "Accounting Standards for Business Enterprises No. 20 - Business Combinations," and "Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements," for a controlling interest business combination under common control, the reporting entity formed after the combination should be regarded as having existed as a whole since the ultimate controlling party began to implement control. This is reflected in its consolidated financial statements, where the reporting entity composed of the parent and subsidiaries after the combination should continuously calculate its asset scale and operating results. When preparing consolidated financial statements, regardless of when this combination occurs within the reporting period, the consolidated income statement and consolidated cash flow statement should reflect the profits and losses and cash flow realized by the reporting entity composed of the parent and subsidiaries from the beginning of the consolidated period to the end of the reporting period. Correspondingly, the retained earnings item in the consolidated balance sheet should reflect the retained surplus reserve and undistributed profits that the parent and subsidiaries should have realized if they had operated as a whole until the end of the reporting period. For a controlling interest business combination under common control, when preparing consolidated financial statements for the consolidated period, the beginning balance of the consolidated balance sheet should be adjusted, and relevant items in the comparative statements should also be adjusted, as if the reporting entity formed after the combination had existed in prior periods.
II. Impact of Retrospective Adjustment on the Financial Position, Operating Results, and Cash Flows of the Consolidated Financial Statements for the Comparative Period
Since Hongda Thermal Power has been under the control of the ultimate controlling party, Mr. Li Zhenping, since December 31, 2024, the Company only retrospectively adjusts the balance sheet as of December 31, 2024, and does not need to adjust the income statement for 2024.
The comparative financial statement data restated due to the Company's business combination with Hongda Thermal Power under common control is as follows: