意见反馈 手机随时随地看行情

公司公告

苏常柴B:2017年半年度财务报告(英文版)2017-08-25  

						               CHANGCHAI COMPANY, LIMITED
                  SEMI-Financial Report 2017


I. Audit Report

Has this semi-annual report been audited?
□ Yes √ No
The semi-annual financial report has not been audited.

II. Financial Statements

Currency unit for the statements in the notes to these financial statements: RMB

1. Consolidated Balance Sheet

Prepared by Changchai Company, Limited
                                                 June 30, 2017
                                                                                                  Unit: RMB
                                Item                                   Closing balance      Opening balance
Current Assets:
   Monetary funds                                                          708,692,252.73      670,703,802.02
   Settlement reserves
   Intra-group lendings
  Financial assets measured by fair value with the changes be
                                                                                     0.00                0.00
included in the current gains and losses
  Derivative financial assets                                                        0.00                0.00
   Notes receivable                                                        261,056,165.98      501,070,279.01
   Accounts receivable                                                     745,551,114.30      359,279,821.69
   Accounts paid in advance                                                 29,426,739.29       15,483,475.43
   Premiums receivable
   Reinsurance premiums receivable
   Receivable reinsurance contract reserves
   Interest receivable                                                               0.00                0.00
  Dividend receivable                                                                0.00                0.00
   Other accounts receivable                                                13,647,674.27        4,165,674.62
   Financial assets purchased under agreements to resell
   Inventories                                                             448,832,816.34      494,046,458.44
  Assets divided available for sale                                                  0.00                0.00
   Non-current assets due within 1 year                                              0.00                0.00

                                                                                                                1
  Other current assets                                                 19,228,929.49      39,669,983.12
Total current assets                                                 2,226,435,692.40   2,084,419,494.33
Non-current assets:
  Loans by mandate and advances granted
  Available-for-sale financial assets                                 771,090,000.00     820,072,500.00
  Held-to-maturity investments                                                   0.00               0.00
  Long-term accounts receivable                                                  0.00               0.00
  Long-term equity investment                                                    0.00     21,006,230.03
  Investing property                                                   53,968,518.83      55,072,689.23
  Fixed assets                                                        587,331,046.88     553,678,938.87
  Construction in progress                                             69,532,401.98      89,781,047.21
  Engineering materials                                                          0.00               0.00
  Disposal of fixed assets                                                       0.00               0.00
  Production biological assets
  Oil-gas assets
  Intangible assets                                                   104,897,072.15      99,915,137.62
  R&D expense                                                                    0.00               0.00
  Goodwill                                                                       0.00               0.00
  Long-term deferred expenses                                                    0.00               0.00
  Deferred income tax assets                                              911,229.42         911,229.42
  Other non-current assets                                                       0.00               0.00
Total of non-current assets                                          1,587,730,269.26   1,640,437,772.38
Total assets                                                         3,814,165,961.66   3,724,857,266.71
Current liabilities:
  Short-term borrowings                                                23,000,000.00      10,000,000.00
  Borrowings from Central Bank
  Customer bank deposits and due to banks and other financial
institutions
  Intra-group borrowings
  Financial liabilities measured by fair value with the changes be
                                                                                 0.00               0.00
 included in the current gains and losses
  Derivative financial liabilities                                               0.00               0.00
  Notes payable                                                       389,020,800.00     276,090,000.00
  Accounts payable                                                    582,942,259.00     605,424,726.65
  Accounts received in advance                                         71,687,056.39      40,890,620.69
  Financial assets sold for repurchase
  Handling charges and commissions payable
  Employee’s compensation payable                                     32,383,280.13      58,549,908.90
  Tax payable                                                           1,741,002.84       9,622,332.76
  Interest payable                                                               0.00               0.00
  Dividend payable                                                      9,016,790.91       3,891,433.83
  Other accounts payable                                              213,754,436.42     204,446,810.56

                                                                                                           2
  Reinsurance premiums payable
  Insurance contract reserves
  Payables for acting trading of securities
  Payables for acting underwriting of securities
  Liabilities divided available for sale                                     0.00                 0.00
  Non-current liabilities due within 1 year                                  0.00                 0.00
  Other current liabilities                                          3,438,589.12         2,454,381.75
Total current liabilities                                        1,326,984,214.81     1,211,370,215.14
Non-current liabilities:
  Long-term borrowings                                                       0.00                 0.00
  Bonds payable                                                              0.00
  Of which: preferred shares
  Perpetual capital securities
  Long-term payables                                                         0.00                 0.00
  Long-term payroll payables                                                 0.00
  Specific payables                                                          0.00                 0.00
  Estimated liabilities                                                      0.00
  Deferred income                                                   60,525,045.27        61,057,232.08
  Deferred income tax liabilities                                 102,602,325.00        109,949,700.00
  Other non-current liabilities                                              0.00
Total non-current liabilities                                     163,127,370.27        171,006,932.08
Total liabilities                                                1,490,111,585.08     1,382,377,147.22
Owners’ equity
  Share capital                                                   561,374,326.00        561,374,326.00
  Other equity instruments                                                   0.00                 0.00
  Of which: preferred shares
  Perpetual capital securities
  Capital reserves                                                164,328,665.43        164,328,665.43
  Less: Treasury stock
  Other comprehensive income                                      581,413,175.00        623,048,300.00
  Specific reserves                                                 11,715,417.22        11,715,417.22
  Surplus reserves                                                311,880,248.88        311,880,248.88
  Provisions for general risks
  Retained profits                                                674,203,863.74        651,365,935.39
Total equity attributable to owners of the Company               2,304,915,696.27     2,323,712,892.92
Minority interests                                                  19,138,680.31        18,767,226.57
Total owners’ equity                                            2,324,054,376.58     2,342,480,119.49
Total liabilities and owners’ equity                            3,814,165,961.66     3,724,857,266.71

Legal representative: Shi Xinkun                     Person-in-charge of the accounting work: Zhang Xin

Chief of the accounting division: Jiang He


                                                                                                          3
2. Balance Sheet of the Company

                                                                                  Unit: RMB
                                Item                   Closing balance      Opening balance
Current assets:
  Monetary funds                                          670,572,518.97       637,109,762.94
  Financial assets at fair value through profit/loss                 0.00                0.00
  Derivative financial assets                                        0.00                0.00
  Notes receivable                                        259,104,652.98       500,870,279.01
  Accounts receivable                                     661,325,595.53       308,800,670.90
  Accounts paid in advance                                  3,683,481.08         9,845,904.32
  Interest receivable                                                0.00                0.00
  Dividends receivable                                               0.00                0.00
  Other accounts receivable                                 2,230,562.08         3,694,673.93
  Inventories                                             332,563,603.44       430,345,089.36
  Assets held for sale                                               0.00                0.00
  Non-current assets due within one year                             0.00                0.00
  Other current assets                                      1,226,185.68        24,225,031.87
Total current assets                                    1,930,706,599.76     1,914,891,412.33
Non-current assets:
  Available-for-sale financial assets                     763,890,000.00       812,872,500.00
  Held-to-maturity investments                                       0.00                0.00
  Long-term accounts receivable                                      0.00                0.00
  Long-term equity investments                            231,752,730.03       205,472,730.03
  Investment property                                      53,968,518.83        55,072,689.23
  Fixed assets                                            480,490,322.91       450,042,747.40
  Construction in progress                                 69,532,401.98        89,781,047.21
  Engineering materials                                              0.00                0.00
  Disposal of fixed assets                                           0.00                0.00
  Productive living assets
  Oil-gas assets
  Intangible assets                                        76,271,207.08        78,558,644.37
  R&D expenses                                                       0.00                0.00
  Goodwill                                                           0.00                0.00
  Long-term deferred expense                                         0.00                0.00
  Deferred income tax assets                                  911,229.42           911,229.42
  Other non-current assets                                           0.00
Total non-current assets                                1,676,816,410.25     1,692,711,587.66
Total assets                                            3,607,523,010.01     3,607,602,999.99
Current liabilities:

                                                                                                4
  Short-term borrowings                                                 0.00
  Financial liabilities at fair value through profit/loss               0.00
  Derivative financial liabilities                                      0.00
  Notes payable                                              389,020,800.00     251,220,000.00
  Accounts payable                                           493,997,139.79     596,734,009.07
  Accounts received in advance                                69,375,145.21      37,250,941.51
  Payroll payable                                             26,071,177.66      52,498,428.10
  Taxes payable                                                  561,258.71       6,587,374.37
  Interest payable                                                      0.00               0.00
  Dividends payable                                            8,368,537.05       3,243,179.97
  Other accounts payable                                     210,410,727.69     194,596,980.96
  Liabilities held for sale                                             0.00
  Non-current liabilities due within one year                           0.00               0.00
  Other current liabilities                                             0.00
Total current liabilities                                   1,197,804,786.11   1,142,130,913.98
Non-current liabilities:
  Long-term borrowings                                                  0.00               0.00
  Bonds payable                                                         0.00
     Of which: Preference shares
                    Perpetual bonds
  Long-term payables                                                    0.00               0.00
  Long-term payroll payable                                             0.00
  Special payables                                                      0.00               0.00
  Provisions
  Deferred income                                             60,525,045.27      61,057,232.08
  Deferred income tax liabilities                            102,602,325.00     109,949,700.00
  Other non-current liabilities                                         0.00
Total non-current liabilities                                163,127,370.27     171,006,932.08
Total liabilities                                           1,360,932,156.38   1,313,137,846.06
Owners’ equity:
  Share capital                                              561,374,326.00     561,374,326.00
  Other equity instruments                                              0.00               0.00
     Of which: Preference shares
                    Perpetual bonds
  Capital reserve                                            183,071,147.70     183,071,147.70
  Less: Treasury shares
  Other comprehensive income                                 581,413,175.00     623,048,300.00
  Special reserve                                             11,715,417.22      11,715,417.22
  Surplus reserve                                            311,880,248.88     311,880,248.88
  Retained earnings                                          597,136,538.83     603,375,714.13
Total owners’ equity                                       2,246,590,853.63   2,294,465,153.93
Total liabilities and owners’ equity                       3,607,523,010.01   3,607,602,999.99

                                                                                                  5
3. Consolidated Income Statement

                                                                                            Unit: RMB
                                 Item                          January-June 2017     January-June 2016
1. Operating revenues                                             1,308,106,180.92     1,163,660,721.69
Including: Sales income                                           1,308,106,180.92     1,163,660,721.69
        Interest income

        Premium income

        Fee and commission income

2. Operating costs                                                1,287,121,365.15     1,130,064,900.87
Including: Cost of sales                                          1,141,392,321.88       984,594,264.43
        Interest expenses

        Fee and commission expenses

        Surrenders

        Net claims paid

        Net amount provided as insurance contract reserve

        Expenditure on policy dividends

        Reinsurance premium

        Taxes and surtaxes                                            7,032,129.00         2,017,527.41
       Selling expenses                                             55,815,356.13         59,518,474.60
       Administrative expenses                                      73,398,067.51         78,488,615.70
       Finance costs                                                   333,451.36         -4,811,135.29
       Asset impairment loss                                          9,150,039.27        10,257,154.02
Add: Profit on fair value changes (“-” means loss)                          0.00                 0.00
     Investment income (“-” means loss)                             9,358,126.62         1,901,135.64
     Including: Share of profit/loss of associates and joint
ventures
     Exchange gains (“-” means loss)

     Other gains

3. Operating profit (“-” means loss)                              30,342,942.39         35,496,956.46
     Add: Non-operating income                                      21,773,323.41         10,636,194.05
        Including: Profit on disposal of non-current assets             94,440.43          6,113,117.21
     Less: Non-operating expense                                      6,394,655.18         4,147,840.72


                                                                                                          6
        Including: Loss on disposal of non-current assets                       18,709.80            32,408.99
4. Total profit (“-” means loss)                                         45,721,610.62         41,985,309.79
     Less: Corporate income tax                                              5,670,998.75         6,581,748.12
5. Net profit (“-” means loss)                                            40,050,611.87        35,403,561.67
     Net profit attributable to owners of the Company                      39,679,158.13         35,018,142.36
     Minority interests’ income                                              371,453.74            385,419.31
6. Other comprehensive income net of tax                                   -41,635,125.00       -49,761,550.00
    Other comprehensive income net of tax attributable to
owners of the Company                                                      -41,635,125.00       -49,761,550.00

        6.1 Other comprehensive income that will not be
reclassified into profit/loss                                                        0.00                 0.00

          6.1.1 Changes in net liabilities or assets with a defined
benefit plan upon re-measurement
          6.1.2 Share of other comprehensive income of investees
that cannot be reclassified into profit/loss under the equity method
        6.2 Other comprehensive income to be subsequently
reclassified into profit/loss                                              -41,635,125.00       -49,761,550.00

           6.2.1 Share of other comprehensive income of investees
that will be reclassified into profit/loss under the equity method
          6.2.2 Profit/loss on         fair   value   changes    of
available-for-sale financial assets                                        -41,635,125.00       -49,761,550.00

         6.2.3 Profit/loss on reclassifying held-to-maturity
investments into available-for-sale financial assets
           6.2.4 Effective profit/loss on cash flow hedges

           6.2.5 Currency translation differences

           6.2.6 Other
    Other comprehensive income net of tax attributable to
minority interests
7. Total comprehensive income                                               -1,584,513.13       -14,357,988.33
     Attributable to owners of the Company                                  -1,955,966.87       -14,743,407.64
     Attributable to minority interests                                       371,453.74            385,419.31
8. Earnings per share

     8.1 Basic earnings per share                                                    0.07                 0.06
     8.2 Diluted earnings per share                                                  0.07                 0.06

Legal representative: Shi Xinkun                             Person-in-charge of the accounting work: Zhang Xin

Chief of the accounting division: Jiang He


                                                                                                                  7
4. Income Statement of the Company

                                                                                                      Unit: RMB
                                     Item                                January-June 2017     January-June 2016

1. Operating revenues                                                       1,229,307,547.12     1,163,696,328.66
  Less: Operating costs                                                     1,086,749,833.96     1,000,185,315.06
     Taxes and surtaxes                                                         6,052,840.56         1,663,181.76
     Selling expenses                                                         50,307,968.65         55,298,258.45
     Administrative expenses                                                  64,535,374.12         69,931,423.68
     Finance costs                                                              -636,200.84         -5,358,474.86
     Asset impairment loss                                                      9,150,039.27        10,109,097.39
  Add: profit on fair value changes (“-” means loss)                                  0.00                 0.00
     Investment income (“-” means loss)                                       6,952,750.99         1,185,264.12
     Including: Share of profit/loss of associates and joint
ventures                                                                                0.00                 0.00

     Other gains

2. Operating profit (“-” means loss)                                        20,100,442.39         33,052,791.30
  Add: Non-operating income                                                      567,356.20          9,904,289.56
     Including: Profit on disposal of non-current assets                          94,440.43
  Less: Non-operating expense                                                   6,192,349.28         4,047,840.72
     Including: Loss on disposal of non-current assets                            18,709.80             32,408.99
3. Total profit (“-” means loss)                                            14,475,449.31         38,909,240.14
  Less: Corporate income tax                                                    3,873,394.83         6,299,732.98
4. Net profit (“-” means loss)                                              10,602,054.48         32,609,507.16
5. Other comprehensive income net of tax                                      -41,635,125.00       -49,761,550.00
   5.1 Other comprehensive income that will not be reclassified
into profit and loss                                                                    0.00                 0.00

    5.1.1 Changes in net liabilities or assets with a defined
benefit plan upon re-measurement
    5.1.2 Share of other comprehensive income of investees that
cannot be reclassified into profit/loss under the equity method
   5.2 Other comprehensive             income   to   be   subsequently
reclassified into profit/loss                                                 -41,635,125.00       -49,761,550.00

     5.2.1 Share of other comprehensive income of investees that
will be reclassified into profit/loss under the equity method


                                                                                                                    8
     5.2.2 Profit/loss on fair value changes of available-for-sale
financial assets                                                     -41,635,125.00   -49,761,550.00

     5.2.3 Profit/loss on reclassifying held-to-maturity
investments into available-for-sale financial assets
    5.2.4 Effective profit/loss on cash flow hedges

    5.2.5 Currency translation differences

    5.2.6 Other

6. Total comprehensive income                                        -31,033,070.52   -17,152,042.84
7. Earnings per share

   7.1 Basic earnings per share

   7.2 Diluted earnings per share




                                                                                                       9
5. Consolidated Cash Flow Statement

                                                                                                    Unit: RMB
                                Item                                   January-June 2017     January-June 2016
1. Cash flows associated with operating activities:
   Cash received from sale of commodities and rendering of
                                                                          1,325,350,610.18     1,297,635,026.56
service
   Net increase in money deposits from customers and interbank
placements
  Net increase in loans from the Central Bank
  Net increase in funds borrowed from other financial institutions
  Cash received from premium of original insurance contracts
  Net cash received from reinsurance business
  Net increase in deposits of policy holders and investment fund
  Net increase in disposal of financial assets at fair value through
profit/loss
  Interest, fees and commissions received
  Net increase in interbank borrowings
  Net increase in funds in repurchase business
  Tax refunds received                                                      21,145,032.94         22,852,333.55
  Cash generated by other operating activities                                5,501,291.34         7,978,801.83
Subtotal of cash generated by operating activities                        1,351,996,934.46     1,328,466,161.94
  Cash paid for goods and services                                        1,033,701,551.38       956,379,929.94
  Net increase in loans and advances to customers
   Net increase in funds deposited in the Central Bank and
interbank placements
  Cash paid for claims of original insurance contracts
  Interest, fees and commissions paid
  Cash paid as policy dividends
  Cash paid to and for employees                                           185,470,230.57        174,777,109.44
  Taxes paid                                                                19,440,382.39         36,296,987.31
  Cash used in other operating activities                                   49,005,446.81         42,976,221.96
Subtotal of cash used in operating activities                             1,287,617,611.15     1,210,430,248.65
Net cash generated by operating activities                                  64,379,323.31        118,035,913.29
2. Cash flows associated with investing activities:
  Cash received from retraction of investments                                9,000,000.00        32,000,000.00



                                                                                                                 10
  Cash received as investment income                                       7,143,077.40      663,870.52
  Net cash received from disposal of fixed assets, intangible
                                                                            501,236.14         22,440.00
assets and other long-term assets
  Net cash received from disposal of subsidiaries or other
                                                                                   0.00             0.00
business units
     Cash generated by other investing activities                                                   0.00
Subtotal of cash generated by investing activities                        16,644,313.54    32,686,310.52
  Cash paid to acquire fixed assets, intangible assets and other
                                                                          48,464,630.47    39,123,133.24
long-term assets
  Cash paid for investment                                                 3,000,000.00
  Net increase in pledged loans
  Net cash paid to acquire subsidiaries and other business units           1,854,599.33
     Cash used in other investing activities                              17,100,000.00    23,000,000.00
Subtotal of cash used in investing activities                             70,419,229.80    62,123,133.24
Net cash generated by investing activities                               -53,774,916.26   -29,436,822.72
3. Cash flows associated with financing activities:
   Cash received from capital contributions                                        0.00             0.00
   Including: Cash received          from       minority   shareholder
investments by subsidiaries
   Cash received as borrowings                                            18,000,000.00     8,000,000.00
   Cash received from issuance of bonds
   Cash generated by other financing activities                                    0.00         5,431.58
Subtotal of cash generated by financing activities                        18,000,000.00     8,005,431.58
   Repayment of borrowings                                                 5,000,000.00    15,000,000.00
    Cash paid for interest expenses and distribution of dividends
                                                                          17,410,070.41    13,386,397.00
or profit
     Including: dividends or profit paid by subsidiaries to minority
interests
   Cash used in other financing activities                                         0.00
Sub-total of cash used in financing activities                            22,410,070.41    28,386,397.00
Net cash generated by financing activities                                -4,410,070.41   -20,380,965.42
4. Effect of foreign exchange rate changes on cash and cash
                                                                                   0.00             0.00
equivalents
5. Net increase in cash and cash equivalents                               6,194,336.64    68,218,125.15
     Add: Opening balance of cash and cash equivalents                   583,278,129.09   526,716,238.21
6. Closing balance of cash and cash equivalents                          589,472,465.73   594,934,363.36




                                                                                                       11
6. Cash Flow Statement of the Company

                                                                                                Unit: RMB
                                Item                               January-June 2017     January-June 2016
1. Cash flows associated with operating activities:
   Cash received from sale of commodities and rendering of
service                                                               1,287,943,005.80     1,307,793,947.42

  Tax refunds received                                                  21,145,032.94         22,852,333.55
  Cash generated by other operating activities                            4,003,051.69         5,921,206.26
Subtotal of cash generated by operating activities                    1,313,091,090.43     1,336,567,487.23
  Cash paid for goods and services                                    1,012,243,538.73     1,003,396,703.92
  Cash paid to and for employees                                       160,430,190.27        157,612,290.63
  Taxes paid                                                            17,376,389.94         31,818,121.46
  Cash used in other operating activities                               45,213,130.50         41,036,165.12
Subtotal of cash used in operating activities                         1,235,263,249.44     1,233,863,281.13
Net cash generated by operating activities                              77,827,840.99        102,704,206.10
2. Cash flows associated with investing activities:

  Cash received from retraction of investments                                                20,000,000.00
  Cash received as investment income                                      6,952,750.09           364,000.00
  Net cash received from disposal of fixed assets, intangible
assets and other long-term assets                                           83,115.01             22,440.00

  Net cash received from disposal of subsidiaries or other
business units                                                                                         0.00

  Cash generated by other investing activities

Subtotal of cash generated by investing activities                        7,035,865.10        20,386,440.00
  Cash paid to acquire fixed assets, intangible assets and other
long-term assets                                                        48,311,909.08         37,368,413.24

  Cash paid for investment                                                        0.00
  Net cash paid to acquire subsidiaries and other business units        26,516,925.27
  Cash used in other investing activities                                         0.00
Subtotal of cash used in investing activities                           74,828,834.35         37,368,413.24
Net cash generated by investing activities                              -67,792,969.25       -16,981,973.24
3. Cash flows associated with financing activities:

   Cash received from capital contributions                                       0.00                 0.00


                                                                                                             12
   Cash received as borrowings                                                0.00             0.00
   Cash received from issuance of bonds

   Cash generated by other financing activities                               0.00        35,761.62
Subtotal of cash generated by financing activities                            0.00        35,761.62
   Repayment of borrowings                                                    0.00             0.00
    Cash paid for interest expenses and distribution of dividends
or profit                                                            16,841,229.78    12,911,609.50

   Cash used in other financing activities                                    0.00             0.00
Sub-total of cash used in financing activities                       16,841,229.78    12,911,609.50
Net cash generated by financing activities                          -16,841,229.78   -12,875,847.88
4. Effect of foreign exchange rate changes on cash and cash
equivalents                                                                   0.00             0.00

5. Net increase in cash and cash equivalents                         -6,806,358.04    72,846,384.98
     Add: Opening balance of cash and cash equivalents              558,159,090.01   503,933,918.79
6. Closing balance of cash and cash equivalents                     551,352,731.97   576,780,303.77




                                                                                                  13
7. Consolidated Statement of Changes in Owners’ Equity

January-June 2017
                                                                                                                                                                                             Unit: RMB
                                                                                                         January-June 2017
                                                                              Equity attributable to owners of the Company
                                                                                                                                                                                                Total
              Item                             Other equity instruments                     Less:         Other                                                                 Minority
                                  Share                                        Capital                                  Special        Surplus     General risk    Retained                   owners’
                                             Preferenc Perpetual                           Treasury    comprehens                                                               interests
                                  capital                          Other       reserve                                  reserve        reserve       reserve       earnings                    equity
                                             e shares    bonds                              shares     ive income
1. Balance at the end of the 561,374,3                                       164,328,665               623,048,300 11,715,417. 311,880,248                        651,365,935 18,767,226. 2,342,480,11
                                                  0.00      0.00      0.00                      0.00                                                      0.00
prior year                           26.00                                           .43                          .00             22         .88                          .39           57          9.49
  Add:        Changes        in
                                                                                                                                                                                                    0.00
accounting policies
     Correction of errors in
                                                                                                                                                                                                    0.00
prior periods
     Business         mergers
                                                                                                                                                                                                    0.00
under the same control
     Other                                                                                                                                                                                          0.00
2. Balance at the beginning 561,374,3                                        164,328,665               623,048,300 11,715,417. 311,880,248                        651,365,935 18,767,226. 2,342,480,11
                                                  0.00      0.00      0.00                      0.00                                                      0.00
of the year                          26.00                                           .43                          .00             22         .88                          .39           57          9.49
3. Increase/ decrease in the                                                                           -41,635,125                                                22,837,928.                -18,425,742.
                                      0.00        0.00      0.00      0.00          0.00        0.00                         0.00           0.00          0.00                  371,453.74
period (“-” means decrease)                                                                                     .00                                                     35                             91
  3.1 Total comprehensive                                                                              -41,635,125                                                39,679,158.                -1,584,513.1
                                                                                                                                                                                371,453.74
income                                                                                                            .00                                                     13                              3
  3.2 Capital increased and
                                      0.00        0.00      0.00      0.00          0.00        0.00          0.00           0.00           0.00          0.00           0.00         0.00          0.00
reduced by owners
     3.2.1 Ordinary shares
                                                                                                                                                                                                    0.00
increased by shareholders
     3.2.2 Capital increased
by holders of other equity                                                                                                                                                                          0.00
instruments
     3.2.3 Amounts of                                                                                                                                                                               0.00

                                                                                                                                                                                                          14
share-based payments
charged to owners’ equity
     3.2.4 Other                                                                                                                                                      0.00
                                                                                                                                     -16,841,229               -16,841,229.
 3.3 Profit distribution               0.00   0.00   0.00   0.00          0.00   0.00          0.00        0.00        0.00   0.00                      0.00
                                                                                                                                             .78                        78
     3.3.1 Appropriation to
                                                                                                                       0.00                 0.00                      0.00
surplus reserve
     3.3.2 Appropriation to
                                                                                                                                                                      0.00
general risk provisions
     3.3.3 Appropriation to                                                                                                          -16,841,229               -16,841,229.
owners (or shareholders)                                                                                                                     .78                        78
     3.3.4 Other                                                                                                                                                      0.00
  3.4                  Internal
carry-forward of owners’              0.00   0.00   0.00   0.00          0.00   0.00          0.00        0.00        0.00   0.00          0.00        0.00          0.00
equity
     3.4.1 New increase of
capital (or share capital)                                                                                                                                            0.00
from capital reserve
     3.4.2 New increase of
capital (or share capital)                                                                                                                                            0.00
from surplus reserve
     3.4.3 Surplus reserve
                                                                                                                                                                      0.00
for making up loss
     3.4.4 Other                                                                                                                                                      0.00
3.5 Special reserve                                                                                        0.00                                         0.00          0.00
     3.5.1 Withdrawn for
                                                                                                           0.00                                                       0.00
the period
     3.5.2   Used      in   the
                                                                                                           0.00                                                       0.00
period
3.6 Other                                                                                                                                                             0.00
                                  561,374,3                        164,328,665          581,413,175 11,715,417. 311,880,248          674,203,863 19,138,680. 2,324,054,37
4. Closing balance                            0.00   0.00   0.00                 0.00                                         0.00
                                     26.00                                 .43                  .00         22          .88                  .74         31           6.58


                                                                                                                                                                         15
January-June 2016
                                                                                                                                                                             Unit: RMB
                                                                                                    January-June 2016
                                                                         Equity attributable to owners of the Company
                                                                                                                                                                                 Total
              Item                         Other equity instruments                     Less:         Other                                                    Minority
                              Share                                      Capital                                 Special    Surplus General risk Retained                      owners’
                                       Preferenc Perpetual                             Treasury comprehens                                                     interests
                              capital                          Other     reserve                                 reserve    reserve    reserve     earnings                     equity
                                        e shares    bonds                               shares     ive income
1. Balance at the end of the 561,374,3                                 164,328,665                353,519,675 10,069,746. 305,758,285             607,859,611 17,590,453.    2,020,500,7
                                             0.00       0.00      0.00                       0.00                                            0.00
prior year                       26.00                                          .43                         .00          98        .91                    .69           47         64.48
   Add:        Changes     in
                                                                                                                                                                                    0.00
accounting policies
     Correction of errors in
                                                                                                                                                                                    0.00
prior periods
     Business        mergers
                                                                                                                                                                                    0.00
under the same control
     Other                                                                                                                                                                           0.00
2. Balance at the beginning 561,374,3                                  164,328,665                353,519,675 10,069,746. 305,758,285             607,859,611 17,590,453.     2,020,500,7
                                             0.00       0.00      0.00                       0.00                                            0.00
of the year                      26.00                                          .43                         .00          98        .91                    .69           47          64.48
3. Increase/ decrease in the                                                                      269,528,625 1,645,670.2 6,121,962.9             43,506,323. 1,176,773.1    321,979,355
                                  0.00       0.00       0.00      0.00         0.00          0.00                                            0.00
period (“-” means decrease)                                                                               .00           4          7                     70            0            .01
   3.1 Total comprehensive                                                                        269,528,625                                     62,539,896. 1,176,773.1    333,245,294
income                                                                                                      .00                                            17            0            .27
   3.2 Capital increased and
                                  0.00       0.00       0.00      0.00         0.00          0.00          0.00        0.00       0.00       0.00        0.00        0.00           0.00
reduced by owners
     3.2.1 Ordinary shares
                                                                                                                                                                                    0.00
increased by shareholders
     3.2.2 Capital increased
by holders of other equity                                                                                                                                                          0.00
instruments

     3.2.3 Amounts of
share-based payments                                                                                                                                                                0.00
charged to owners’ equity

    3.2.4 Other                                                                                                                                                                     0.00

                                                                                                                         6,121,962.9               -19,033,572.              -12,911,609
 3.3 Profit distribution         0.00      0.00      0.00      0.00         0.00         0.00         0.00        0.00                      0.00                     0.00
                                                                                                                                   7                        47                       .50

                                                                                                                                                                                          16
     3.3.1 Appropriation to                                                                                        6,121,962.9          -6,121,962.9
                                                                                                                                                                        0.00
surplus reserve                                                                                                              7                     7

    3.3.2 Appropriation to
                                                                                                                                                                        0.00
general risk provisions

    3.3.3 Appropriation to                                                                                                              -12,911,609.              -12,911,609
owners (or shareholders)                                                                                                                         50                       .50


     3.3.4 Other

   3.4               Internal
carry-forward of owners’             0.00   0.00   0.00   0.00          0.00   0.00          0.00         0.00          0.00    0.00          0.00        0.00         0.00
equity
     3.4.1 New increase of
capital (or share capital)                                                                                                                                              0.00
from capital reserve
     3.4.2 New increase of
capital (or share capital)                                                                                                                                              0.00
from surplus reserve

     3.4.3 Surplus reserve
                                                                                                                                                                        0.00
for making up loss

     3.4.4 Other                                                                                                                                                        0.00

                                                                                                     1,645,670.2                                                  1,645,670.2
3.5 Special reserve                                                                                                                                        0.00
                                                                                                               4                                                            4
     3.5.1 Withdrawn for                                                                             4,416,865.6                                                  4,416,865.6
the period                                                                                                     1                                                            1

     3.5.2   Used     in   the                                                                       2,771,195.3                                                  2,771,195.3
period                                                                                                         7                                                            7

3.6 Other                                                                                                                                                               0.00


                                 561,374,3                        164,328,665          623,048,300 11,715,417. 311,880,248              651,365,935 18,767,226. 2,342,480,1
4. Closing balance                           0.00   0.00   0.00                 0.00                                             0.00
                                     26.00                                .43                  .00         22          .88                      .39         57        19.49


                                                                                                                                                                           17
8. Statement of Changes in Owners’ Equity of the Company

January-June 2017
                                                                                                                                                                           Unit: RMB
                                                                                                  January-June 2017
                                                  Other equity instruments                                            Other
              Item                                                                               Less: Treasury                                  Surplus       Retained Total owners’
                              Share capital Preference Perpetual                 Capital reserve                 comprehensive Special reserve
                                                                        Other                        shares                                      reserve       earnings      equity
                                              shares       bonds                                                     income
1. Balance at the end of the 561,374,326.                                        183,071,147.7                    623,048,300.0                311,880,248.8 603,375,714 2,294,465,153
                                                   0.00         0.00        0.00                            0.00                 11,715,417.22
prior year                              00                                                     0                               0                           8          .13            .93
   Add:        Changes     in
                                                                                                                                                                                    0.00
accounting policies
     Correction of errors in
                                                                                                                                                                                    0.00
prior periods
     Other                                                                                                                                                                          0.00
2. Balance at the beginning 561,374,326.                                         183,071,147.7                    623,048,300.0                311,880,248.8 603,375,714 2,294,465,153
                                                   0.00         0.00        0.00                            0.00                 11,715,417.22
of the year                             00                                                     0                               0                           8          .13            .93
3. Increase/ decrease in the                                                                                                                                 -6,239,175.3 -47,874,300.3
                                      0.00         0.00         0.00        0.00            0.00            0.00 -41,635,125.00           0.00          0.00
period (“-” means decrease)                                                                                                                                           0              0
   3.1 Total comprehensive                                                                                                                                    10,602,054. -31,033,070.5
                                                                                                                 -41,635,125.00
income                                                                                                                                                                 48              2
   3.2 Capital increased and
                                      0.00         0.00         0.00        0.00            0.00            0.00            0.00          0.00          0.00         0.00           0.00
reduced by owners
     3.2.1 Ordinary shares
                                                                                                                                                                                    0.00
increased by shareholders
     3.2.2 Capital increased
by holders of other equity                                                                                                                                                         0.00
instruments
     3.2.3 Amounts of
share-based payments                                                                                                                                                               0.00
charged to owners’ equity
     3.2.4 Other                                                                                                                                                                   0.00




                                                                                                                                                                                      18
                                                                                                                                         -16,841,229. -16,841,229.7
  3.3 Profit distribution                 0.00   0.00   0.00   0.00            0.00   0.00           0.00           0.00          0.00
                                                                                                                                                  78              8

     3.3.1 Appropriation to
                                                                                                                                  0.00          0.00           0.00
surplus reserve

    3.3.2 Appropriation to                                                                                                               -16,841,229. -16,841,229.7
owners (or shareholders)                                                                                                                          78              8

     3.3.3 Other                                                                                                                                               0.00
   3.4              Internal
carry-forward of owners’                 0.00   0.00   0.00   0.00            0.00   0.00           0.00           0.00          0.00          0.00           0.00
equity
     3.4.1 New increase of
capital (or share capital)                                                                                                                                     0.00
from capital reserve
     3.4.2 New increase of
capital (or share capital)                                                                                                                                     0.00
from surplus reserve

     3.4.3 Surplus reserve
                                                                                                                                                               0.00
for making up loss

     3.4.4 Other                                                                                                                                               0.00


3.5 Special reserve                                                                                                 0.00                                       0.00


     3.5.1 Withdrawn for
                                                                                                                    0.00                                       0.00
the period

     3.5.2   Used     in    the
                                                                                                                    0.00                                       0.00
period

3.6 Other                                                                                                                                                      0.00

                                  561,374,326.                        183,071,147.7          581,413,175.0               311,880,248.8 597,136,538 2,246,590,853
4. Closing balance                               0.00   0.00   0.00                   0.00                 11,715,417.22
                                           00                                     0                      0                           8         .83            .63


                                                                                                                                                                 19
January-June 2016
                                                                                                                                                                                              Unit: RMB
                                                                                                          January-June 2016
                                                     Other equity instruments                                                    Other
              Item                                                                                       Less: Treasury                                           Surplus        Retained     Total owners’
                                  Share capital Preference   Perpetual                 Capital reserve                       comprehensive Special reserve
                                                                           Other                             shares                                               reserve        earnings        equity
                                                  shares      bonds                                                             income
1. Balance at the end of the 561,374,326.                                              183,071,147.7                         353,519,675.0                      305,758,285.9 561,189,656 1,974,982,838.
                                                      0.00         0.00         0.00                                  0.00                      10,069,746.98
prior year                                 00                                                       0                                      0                                1           .87                46
  Add:        Changes        in
                                                                                                                                                                                                          0.00
accounting policies
     Correction of errors in
                                                                                                                                                                                                          0.00
prior periods
     Other                                                                                                                                                                                                0.00
2. Balance at the beginning 561,374,326.                                               183,071,147.7                         353,519,675.0                      305,758,285.9 561,189,656 1,974,982,838.
                                                      0.00         0.00         0.00                                  0.00                      10,069,746.98
of the year                                00                                                       0                                      0                                1           .87                46
3. Increase/ decrease in the                                                                                                 269,528,625.0                                      42,186,057. 319,482,315.4
                                          0.00        0.00         0.00         0.00             0.00                 0.00                       1,645,670.24    6,121,962.97
period (“-” means decrease)                                                                                                              0                                             26                 7
  3.1 Total comprehensive                                                                                                    269,528,625.0                                      61,219,629. 330,748,254.7
income                                                                                                                                     0                                             73                 3
  3.2 Capital increased and
                                          0.00        0.00         0.00         0.00             0.00                 0.00               0.00            0.00            0.00          0.00               0.00
reduced by owners
     3.2.1 Ordinary shares
                                                                                                                                                                                                          0.00
increased by shareholders
     3.2.2 Capital increased
by holders of other equity                                                                                                                                                                                0.00
instruments
     3.2.3 Amounts of
share-based payments                                                                                                                                                                                      0.00
charged to owners’ equity
     3.2.4 Other                                                                                                                                                                                          0.00
                                                                                                                                                                                -19,033,572. -12,911,609.5
  3.3 Profit distribution                 0.00        0.00         0.00         0.00             0.00                 0.00               0.00            0.00    6,121,962.97
                                                                                                                                                                                         47                 0

                                                                                                                                                                                                            20
     3.3.1 Appropriation to                                                                                                                  -6,121,962.9
                                                                                                                              6,121,962.97                          0.00
surplus reserve                                                                                                                                        7

     3.3.2 Appropriation to                                                                                                                  -12,911,609. -12,911,609.5
owners (or shareholders)                                                                                                                              50              0

     3.3.3 Other                                                                                                                                                    0.00
  3.4                  Internal
carry-forward of owners’                 0.00   0.00   0.00   0.00            0.00   0.00            0.00            0.00            0.00          0.00            0.00
equity
     3.4.1 New increase of
capital (or share capital)                                                                                                                                          0.00
from capital    reserve
     3.4.2 New increase of
capital (or share capital)                                                                                                                                          0.00
from surplus reserve

     3.4.3 Surplus reserve
                                                                                                                                                                    0.00
for making up loss

     3.4.4 Other                                                                                                                                                    0.00


3.5 Special reserve                                                                                           1,645,670.24                                  1,645,670.24


     3.5.1 Withdrawn for
                                                                                                              4,416,865.61                                  4,416,865.61
the period

     3.5.2     Used    in   the
                                                                                                              2,771,195.37                                  2,771,195.37
period

3.6 Other                                                                                                                                                           0.00

                                  561,374,326.                        183,071,147.7          623,048,300.0                   311,880,248.8 603,375,714 2,294,465,153.
4. Closing balance                               0.00   0.00   0.00                   0.00                   11,715,417.22
                                           00                                    0                      0                               8             .13            93




                                                                                                                                                                      21
  Changchai Company, Limited                                                               Semi-Annual Report 2017




III. Company Profile
Changchai Company, Limited (hereinafter referred to as “the Company”) was founded on 5 May 1994, which is a
company limited by shares promoted solely by Changzhou Diesel Engine Plant through the approval by the State
Commission for Restructuring the Economic Systems with document TGS [1993] No. 9 on 15 January 1993 by
way of public offering of shares. With the approved of the People’s Government of Jiangsu Province SZF [1993]
No. 67, as well as reexamined and approved by China Securities Regulatory Commission (“CSRC”) through
document ZJFSZ (1994) No. 9, the Company initially issued A shares to the public from 15 March 1994 to 30 Mar.
1994. As approved by the Shenzhen Stock Exchange through document SZSFZ (1994) No. 15, such tradable
shares of the public got listing on 1 July 1994 at Shenzhen Stock Exchange with “Su Changchai A” for short of
stock, as well as “0570” as stock code (present stock code is “000570”).
In 1996, with the recommendation of the Office of the People’s Government of Jiangsu Province SZBH [1996]
No. 13, as well as first review by Shenzhen Municipal Securities Administration Office through SZBZ [1996] No.
24, and approval of the State Council Securities Commission ZWF [1996] No. 27, the Company issued 100
million B shares to qualified investors on 27 August 1996 to 30 August 1996, getting listed on 13 September
1996.
On 9 June 2006, the Company held a shareholders’ general meeting related to A shares market to examine and
approve share merger reform plan, and performed the share merger reform on 19 June 2006.
As examined and approved at the 2009 2nd Extraordinary Shareholders’ General Meeting in September 2009,
based on the total share capital of 374,249,551 shares as at 30 June 2009, the Company implemented the profit
distribution plan, i.e. to distribute 5 bonus shares and cash of RMB 0.8 for every 10 shares, with registered capital
increased by RMB187,124,775.00, as well as registered capital of RMB561,374,326.00 after change. As at 31
December 2014, the total share capital of the Company is 561,374,326 shares, as well as registered capital of
RMB561,374,326.00, which verified by Jiangsu Gongzheng Tianye Certified Public Accountants Company
Limited with issuing Capital Verification Report SGC [2010] No. B002. The Company had registered the change
with the administrative authorities for industry and commerce, and obtained the renewed business license as legal
person with No. 320400000004012.
The Company’s registered address is situated at No. 123 Huaide Middle Road, Changzhou, Jiangsu, as well as its
head office located at No. 123 Huaide Middle Road, Changzhou, Jiangsu.
The Company belongs to manufacturing with business scope including manufacturing and sale of diesel engine,
diesel engines part and casting, grain harvesting machine, rotary cultivators, walking tractor, mould and fixtures,
assembling and sale of diesel generating set and pumping unit. The Company mainly engaged in the production
and sales of small and medium-sized single cylinders and multi-cylinder diesel engine with the label of Changchai
Brand. The diesel engine produced and sold by the Company were mainly used in tractors, combine harvest
models, light commercial vehicle, farm equipment, small-sized construction machinery, generating sets and
shipborne machinery and equipment, etc. The Company’s main business remained unchanged in the reporting
period.
The Company established the Shareholders’ General Meeting, the Board of Directors and the Board of
Supervisors, Corporate office, Financial Department, Political Department, Investment and Development
Department, Enterprise Management Department, Human Recourses Department, Production Department,
Procurement Department, Sales Company, Market Department, Chief Engineer Office, Technology Center, QA
Department, Foundry Branch, Machine Processing Branch, Single-cylinder Engine branch, Multi-cylinder Engine
Branch and Overseas Business Department in the Company.

                                                                                                                     22
  Changchai Company, Limited                                                               Semi-Annual Report 2017


The financial report has been approved to be issued by the Board of Directors on 25 August 2017.
The consolidation scope for the Reporting Period includes the Company (as the parent company) and five
subsidiaries, one more subsidiary than the last reporting period. To be specific, Changzhou Fuji Changchai Robin
Gasoline Engine Co., Ltd. has become a wholly-owned subsidiary of the Company and has been consolidated
since January 20, 2017. For details about the consolidation scope and the changes, please refer to “Changes in
Consolidation Scope and in Equity Interests in Other Entities” in the “Notes to Financial Statements” herein.


IV. Basis for preparation of the financial report


1. Basis for preparation

With the going-concern assumption as the basis and based on transactions and other events that actually occurred,
the Group prepared financial statements in accordance with  issued by the Ministry of Finance with Decree No. 33 and revised with Decree No.
76, the 41 specific accounting standards, the Application Guidance of Accounting Standards for Business
Enterprises, the Interpretation of Accounting Standards for Business Enterprises and other regulations issued and
revised from 15 Feb. 2006 onwards (hereinafter jointly referred to as “the Accounting Standards for Business
Enterprises”, “China Accounting Standards” or “CAS”), as well as the Rules for Preparation Convention of
Disclosure of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014)
by China Securities Regulatory Commission.
In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the Group adopted
the accrual basis in accounting. Except for some financial instruments, where impairment occurred on an asset, an
impairment reserve was withdrawn accordingly pursuant to relevant requirements.



2. Continuation

The Company comprehensively evaluated the information acquired recently that there would be no such factors in
the 12 months from the end of the reporting period that would obviously influence the continuation capability of
the Company and predicted that the operating activities would continue in the future 12 months of the Company.
The financial statement compiled base on the continuous operation.


V. Important accounting policies and estimations


Note to accounting policies and estimations:

The Company and each subsidiary according to the actual production and operation characteristics and in accord
with the regulations of the relevant ASBE, formulated certain specific accounting polices and accounting
estimations, which mainly reflected in the withdrawal method of the bad debt provision of the accounts receivable
(Notes III, 11), the measurement of the inventory (Notes III, 12) and the depreciation of the fixed assets (Notes III,
16) etc. As for the details of the significant accounting judgment and the estimations made by the management
layer, please refer to Notes III, 30 “Important accounting judgment and estimations”.


                                                                                                                     23
  Changchai Company, Limited                                                                   Semi-Annual Report 2017


1. Statement of Compliance with the Accounting Standards for Business Enterprises

The financial statements prepared by the Group are in compliance with in compliance with the Accounting
Standards for Business Enterprises, which factually and completely present the Company’s and the Group’s
financial positions, business results and cash flows and other relevant information.



2. Fiscal period

The fiscal periods are divided into fiscal year and metaphase, the fiscal year is from Jan. 1 to Dec. 31 and as the
metaphase included monthly, quarterly and semi-yearly periods.



3. Operating cycle

A normal operating cycle refers to a period from the Group purchasing assets for processing to realizing cash or
cash equivalents. An operating cycle for the Group is 12 months, which is also the classification criterion for the
liquidity of its assets and liabilities.



4. Currency used in bookkeeping

Renminbi is functional currency of the Company.


5. Accounting methods for business combinations under the same control and business combinations not

under the same control

(1) Business combinations under the same control:
A business combination under the same control is a business combination in which all of the combining
enterprises are ultimately controlled by the same party or the same parties both before and after the business
combination and on which the control is not temporary.
For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it makes
payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share of the
book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment.
The difference between the initial cost of the long-term equity investment and the payment in cash, non-cash
assets transferred as well as the book value of the debts borne by the merging party shall offset against the capital
reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.
If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger,
regard the share of the book value of the owner's equity of the merged enterprise as the initial cost of the
long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while
the difference between the initial cost of the long-term equity investment and total face value of the shares issued
shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be
adjusted.
All direct costs for the business combination, including expenses for audit, evaluating and legal services shall be
recorded into the profits and losses at the current period. The expenses such as the handling charges and

                                                                                                                         24
  Changchai Company, Limited                                                                Semi-Annual Report 2017


commission etc, premium income of deducting the equity securities, and as for the premium income was
insufficient to dilute, the retained earnings shall be written down.
Owning to the reasons such as the additional investment, for the equity investment held before acquiring the
control right of the combined parties, the confirmed relevant gains and losses, other comprehensive income and
the changes of other net assets since the date of the earlier one between the date when acquiring the original equity
right and the date when the combine parties and combined ones were under the same control to the combination
date, should be respectively written down and compared with the beginning balance of retained earnings or the
current gains and losses during the statement period.
(2) Business combinations not under the same control
A business combination not under the same control is a business combination in which the combining enterprises
are not ultimately controlled by the same party or the same parties both before and after the business combination.
The combination costs of the acquirer and the identifiable net assets obtained by the acquirer in a business
combination shall be measured at the fair values. The acquirer shall recognize the positive balance between the
combination costs and the fair value of the identifiable net assets it obtains forms the acquiree as business
reputation. The direct relevant expenses occurred from the enterprise combination should be included in the
current gains and losses when occurred. The combination costs of the acquirer and the identifiable net assets
obtained by it in the combination shall be measured according to their fair values at the acquiring date. The
difference between the fair value of the assets paid out by the Company and its book value should be included in
the current gains and losses. The purchase date refers to the date that the purchaser acquires the control right of the
acquiree.
For the business combinations not under the same control realized through step by step multiple transaction, as for
the equity interests that the Group holds in the acquiree before the acquiring date, they shall be re-measured
according to their fair values at the acquiring date; the positive difference between their fair values and carrying
amounts shall be recorded into the investment gains for the period including the acquiring date. The equity holed
by the acquiree which involved with the other comprehensive income and the other owners’ equities changes
except for the net gains and losses, other comprehensive income and the profits distribution and other related
comprehensive gains and other owners’ equities which in relation to the equity interests that the Group holds in
the acquiree before the acquiring date should be transferred into the current investment income on the acquiring
date, except for the other comprehensive income occurred from the re-measurement of the net profits of the
defined benefit plans or the changes of the net assets of the investees.



6. Methods for preparing consolidated financial statements

The Company confirms the consolidated scope based on the control and includes the subsidiaries with actual
control right into the consolidated financial statement.
The consolidated financial statement of the Company is compiled according to the regulations of No. 33 of
ASBE-Consolidated Financial Statement and the relevant regulations and as for the whole significant
come-and-go balance, investment, transaction and the unrealized profits should be written off when compiling the
consolidated financial statement. The portion of a subsidiary’s shareholders’ equity and the portion of a
subsidiary’s net profits and losses for the period not held by the Group are recognized as minority interests and
minority shareholder profits and losses respectively and presented separately under shareholders’ equity and net
profits in the consolidation financial statements. The portion of a subsidiary’s net profits and losses for the period
that belong to minority interests is presented as the item of “minority shareholder profits and losses” under the


                                                                                                                      25
  Changchai Company, Limited                                                                Semi-Annual Report 2017


bigger item of net profits in the consolidated financial statements. Where the loss of a subsidiary shared by
minority shareholders exceeds the portion enjoyed by minority shareholders in the subsidiary’s opening owners’
equity, minority interests are offset.
The accounting policy or accounting period of each subsidiary is different from which of the Company, which
shall be adjusted as the Company; or subsidiaries shall prepare financial statement again required by the Company
when preparing the consolidated financial statements.
As for the added subsidiary company not controlled by the same enterprise preparing the consolidated financial
statement, shall adjust individual financial statement based on the fair value of the identifiable net assets on the
acquisition date; as for the added subsidiary companies controlled by the same enterprise preparing the financial
statement, shall not adjust the financial statement of the subsidiaries, namely survived by integration as
participating in the consolidation when the final control party starts implementing control and should adjust the
period-begin amount of the consolidated balance sheet and at the same time adjust the relevant items of the
compared statement.
As for the disposed subsidiaries, the operation result and the cash flow should be included in the consolidated
income statement and the consolidated cash flow before the disposing date; the disposed subsidiaries of the
current period, should not be adjusted the period-begin amount of the consolidated balance sheet.
Where the Group losses control on its original subsidiaries due to disposal of some equity investments or other
reasons, the residual equity interests are re-measured according to the fair value on the date when such control
ceases. The summation of the consideration obtained from the disposal of equity interests and the fair value of the
residual equity interests, minus the portion in the original subsidiary’s net assets measured on a continuous basis
from the acquisition date that is enjoyable by the Group according to the original shareholding percentage in the
subsidiary, is recorded in investment gains for the period when the Group’s control on the subsidiary ceases. Other
comprehensive incomes in relation to the equity investment and the other owners’ equities changes except for the
net gains and losses, other comprehensive income and profits distribution in the original subsidiary are treated on
the same accounting basis as the acquiree directly disposes the relevant assets or liabilities (that is, except for the
changes in the net liabilities or assets with a defined benefit plan resulted from re-measurement of the original
subsidiary, the rest shall all be transferred into current investment gains) when such control ceases. And
subsequent measurement is conducted on the residual equity interests according to the No.2 Accounting Standard
for Business Enterprises-Long-term Equity Investments or the No.22 Accounting Standard for Business
Enterprises-Recognition and Measurement of Financial Instruments.
For the disposal of equity investment belongs to a package deal, should be considered as a transaction and conduct
accounting treatment. However, Before losing control, every disposal cost and corresponding net assets balance of
subsidiary of disposal investment are confirmed as other comprehensive income in consolidated financial
statements, which together transferred into the current profits and losses in the lose of control, when the Group
losing control on its subsidiary.
For the disposal of the equity investment not belongs to a package deal, should be executed accounting treatment
according to the relevant policies of partly disposing the equity investment of the subsidiaries under the situation
not lose the control right before losing the control right; when losing the control right, the former should be
executed accounting treatment according to the general disposing method of the disposal of the subsidiaries.



7. Classification of joint arrangements and accounting treatment of joint operations

The Group classifies joint arrangements into joint operations and joint ventures。


                                                                                                                      26
  Changchai Company, Limited                                                                  Semi-Annual Report 2017


A joint operation refers to a joint arrangement where the Group is the joint operations party of the joint
arrangement and enjoys assets and has to bear liabilities related to the arrangement. The Company confirms the
following items related to the interests share among the joint operations and executes accounting treatment
according to the regulations of the relevant ASBE:
(1) Recognizes the assets that it holds and bears in the joint operation and recognizes the jointly-held assets
according to the Group’s stake in the joint operation;
(2) Recognizes the liabilities that it holds and bears in the joint operation and recognizes the jointly-held liabilities
according to the Group’s stake in the joint operation;
(3) Recognizes the income from sale of the Group’s share in the output of the joint operation
(4) Recognizes the income from sale of the joint operation’s outputs according to the Group’s stake in it
(5) Recognizes the expense solely incurred to the Group and the expense incurred to the joint operation according
to the Group’s stake in it.



8. Recognition standard for cash and cash equivalents

In the Group’s understanding, cash and cash equivalents include cash on hand, any deposit that can be used for
cover, and short-term (usually due within 3 months since the day of purchase) and high circulating investments,
which are easily convertible into known amount of cash and whose risks in change of value are minimal.



9. Foreign currency businesses and translation of foreign currency financial statements

(1) Foreign currency business
Concerning the foreign-currency transactions that occurred, the foreign currency shall be converted into the
recording currency according to the middle price of the market exchange rate disclosed by the People’s Bank of
China on the date of the transaction. Among the said transactions that occurred, those involving foreign exchanges
shall be converted according to the exchange rates adopted in the actual transactions.
On the balance sheet date, the foreign-currency monetary assets and the balance of the liability account shall be
converted into the recoding currency according to the middle price of the market exchange rates disclosed by the
People’s Bank of China on the Balance Sheet Date. The difference between the recording-currency amount
converted according to the exchange rate on the Balance Sheet Date and the original book recording-currency
amount shall be recognized as gains/losses from foreign exchange. And the exchange gain/loss caused by the
foreign-currency borrowings related to purchasing fixed assets shall be handled according to the principle of
capitalizing borrowing expenses; the exchange gain/loss incurred in the establishment period shall be recorded
into the establishment expense; others shall be recorded into the financial expenses for the current period.
On the balance sheet date, the foreign-currency non-monetary items measured by historical cost shall be converted
according to the middle price of the market exchange disclosed by the People’s Bank of China on the date of the
transaction, with no changes in the original recording-currency amount; while the foreign-currency non-monetary
items measured by fair value shall be converted according to the middle price of the market exchange disclosed by
the People’s Bank of China on the date when the fair value is recognized, and the exchange gain/loss caused
thereof shall be recognized as the gain/loss from fair value changes and recorded into the gain/loss of the current
period.
(2) Translation of foreign currency


                                                                                                                        27
  Changchai Company, Limited                                                                   Semi-Annual Report 2017


The assets and liabilities items among the balance sheet of the foreign operation shall be translated at a spot
exchange rate on the balance sheet date. Among the owner’s equity items, except for the items as “undistributed
profits”, other items shall be translated at the spot exchange rate at the time when they are incurred. And the
revenues and expenses items among the balance sheet of the foreign operation shall be translated at the
approximate exchange rate of the transaction date. The difference caused from the above transaction of the foreign
currency statement should be listed in the other comprehensive income among the owners’ equities.



10. Financial instruments

(1) Category of financial instruments
The Company classifies the financial assets into four kinds such as trading financial assets, available-for-sale
financial assets, accounts receivable and held-to-maturity investment according to the investment purpose and the
economy nature.
The Company classifies the financial liabilities into two kinds such as the financial liabilities measured by fair
value with the changes included in the current gains and losses and the other financial liabilities measured by
amortized cost according to the economy nature.
(2) Recognition basis and measurement methods of financial instruments
The trading financial assets should be measured by fair value with the changes of fair value included in the current
gains and losses; the available-for-sale financial assets should be measured by fair value with the changes of fair
value included in the owners’ equities; and the accounts receivable and the held-to-maturity investment should be
measured by amortized cost.
(3) Recognition basis and measurement methods of financial instruments transformation
The Company transfers or delivers a financial asset to a party other than the issuer of the financial asset and the
transformation of the financial assets could be whole of the financial assets or a part of it, which including two
methods:
The enterprise transfers the right to another party for receiving the cash flow of the financial asset;
The enterprise transfers the financial asset to another party, but maintains the right to receive the cash flow of the
financial asset and undertakes the obligation to pay the cash flow it receives to the final recipient.
Where the Company has transferred a part or nearly all of the risks and rewards related to the ownership of the
financial asset to the transferee, it shall stop recognizing the financial asset and the difference between the
consideration received and the book value of the transferred financial assets should be recognized as gains and
losses and at the same time transfers the accumulative gains or losses from the recognized financial assets among
the original owners’ equities in the gains and losses; if it retained nearly all of the risks and rewards related to the
ownership of the financial asset, it shall continue to recognize the whole or part of the financial assets and the
consideration received be recognized as financial liabilities.
Where the Company neither transfers nor retains nearly all of the risks and rewards related to the ownership of a
financial asset, and it does not cease its control on the said financial asset, it recognizes the relevant financial asset
and liability accordingly according to the extent of its continuous involvement in the transferred financial asset.
(4) De-recognition conditions of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the
financial liability be terminated in all or partly.
(5) Recognition methods of the fair value of main financial assets and financial liabilities


                                                                                                                         28
  Changchai Company, Limited                                                                Semi-Annual Report 2017


As for the financial assets held by the Company or the financial liabilities plans to undertake, if there exists active
market, should adopt the current offering price in the active market, and as for the financial assets plans to be
purchased by the Company or the financial liabilities undertook, should adopt the current offering in the active
market, and if there is no current offering price or asking price, should adopt the market quotation of the recent
transactions or the adjusted market quotation of the recent transactions, except for there is definite evidence
indicate the market quotation is not the fair value.
Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal
techniques, including the prices adopted by the parties, who are familiar with the condition, in the latest market
transaction upon their own free will, the current fair value obtained by referring to other financial instruments of
the same essential nature etc.
(6) Impairment test method and withdrawal methods of impairment provision of financial assets (excluding
accounts receivable)
The Company shall carry out an inspection, on the balance sheet day, on the carrying amount of the financial
assets other than those measured at their fair values and of which the variation is recorded into the profits and
losses of the current period. Where there is any objective evidence proving that such financial asset has been
impaired, an impairment provision shall be made. For the financial assets with significant single amount, if there
is objective evidence indicates the occurred impairment, should recognize the impairment losses and should
include which in the current gains and losses. As for the financial assets with insignificant single amount but not
occur impairment, the Company should execute the impairment test by credit groups according to the credit
degree of the customers and the actual situation of the happen of the bad debts over the years for recognizing the
impairment losses.
The expression “objective evidence proving that the financial asset has been impaired” refers to the actually
incurred events which, after the financial asset is initially recognized, have an impact on the predicted future cash
flow of the said financial asset that can be reliably measured by the enterprise.
The objective evidences that can prove the impairment of a financial asset shall include:
A serious financial difficulty occurs to the issuer or debtor;
The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of interests
or the principal, etc.;
The creditor makes any concession to the debtor who is in financial difficulties due to economic or legal factors,
etc.;
The debtor will probably become bankrupt or carry out other financial reorganizations;
The financial asset can no longer continue to be traded in the active market due to serious financial difficulties of
the issuer;
It is impossible to identify whether the cash flow of a certain asset within a certain combination of financial assets
has decreased or not. But after making an overall appraisal according to the public data available, it is found that
the predicted future cash flow of the said combination of financial assets has indeed decreased since it was
initially recognized and such decrease can be measured, for example, the ability of the debtor of the said
combination of financial assets worsens gradually, the unemployment rate of the country or region where the
debtor is situated increases, the prices of the region where the guaranty is situated are obviously dropping, or the
industrial sector concerned is in slump, etc.;
Any seriously disadvantageous change has occurred to technical, market, economic or legal environment, etc.
wherein the debtor operates its business, which makes the investor of an equity instrument unable to take back its
investment;

                                                                                                                      29
  Changchai Company, Limited                                                                Semi-Annual Report 2017


Where the fair value of the equity instrument investment drops significantly or not contemporarily;
Other objective evidences showing the impairment of the financial asset.
Where a financial asset measured on the basis of post-amortization costs is impaired, the carrying amount of the
said financial asset shall be calculated by the difference between the book value and the current value of the
predicted future cash flow of the impairment losses.
Where any financial asset measured on the basis of post-amortization costs is recognized as having suffered from
any impairment loss, if there is any objective evidence proving that the value of the said financial asset has been
restored, and it is objectively related to the events that occur after such loss is recognized, the impairment-related
losses as originally recognized shall be reversed and be recorded into the profits and losses of the current period.
Where a sellable financial asset is impaired, even if the recognition of the financial asset has not been terminated,
the accumulative losses arising from the decrease of the fair value of the owner’s equity which is directly included
shall be transferred out and recorded into the profits and losses of the current period.. The accumulative losses are
the initial cost after deducting the principal, the amortization amount, fair value of current period and balance after
originally recorded into impairment loss of profits or losses. After the recognition of impairment losses, if there is
any objective evidence indicated that the value of financial assets is resumed and objectively related to the events
after the recognition of impairment losses, transfer the impairment losses originally recognized, transfer the
impairment losses of available for sale equity instrument investment and recognized as other comprehensive
income, and transfer the impairment losses of available for sale liability instruments and record into current profits
or losses.



11. Receivables

(1) Accounts receivable with significant single amount for which the bad debt provision is made
individually
Recognition     criteria   of    accounts significant single amounts refers to the accounts receivable of the
receivable with individual and significant single amount more than RMB1 million (RMB1 million include)
amount                                     (including accounts receivable and other accounts receivable)
                                          The Company makes an independent impairment test on the accounts
                                          receivable with significant single amount, and provision for bad debts
Withdrawal method of the bad debt shall withdrawn on the basis of the balance between the current values
provision of the accounts receivable with of the predicted future cash flow lower than book value. Upon
significant single amounts                independent impairment test, the accounts receivable with significant
                                          single amounts has not been impaired, it shall be withdrawn bad debt
                                          provision based on ending balance by adopting aging analysis method.


(2) Account receivable withdrawal bad debt provision by the credit risk portfolio


                          Name of the group                                                Method
The age of the accounts receivable as the credit risk portfolio          Aging analysis
In the group, adopting aging analysis withdraws bad debt provision:
√ Applicable □ Not applicable



                                                                                                                      30
  Changchai Company, Limited                                                             Semi-Annual Report 2017


                                      Withdrawal proportion for accounts      Withdrawal proportion for other
                 Age
                                                 receivable                        accounts receivable
Within 1 year (including 1 year)                                    2.00%                                  2.00%
1-2 years                                                           5.00%                                  5.00%
2-3 years                                                          15.00%                                 15.00%
3-4 years                                                          30.00%                                 30.00%
4-5 years                                                          60.00%                                 60.00%
Over 5 years                                                      100.00%                               100.00%
In the groups, adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
In the groups, adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable

(3) Accounts receivable with an insignificant single amount but for which the bad debt provision is made
individually


                                      Recognition criteria of accounts receivable with individual but
Reason of individually withdrawing    insignificant amount: insignificant single amounts refers to the accounts
bad debt provision                    receivable of the single amount lower than RMB1 million (RMB1 million
                                      include) (including accounts receivable and other accounts receivable).
                                      As for an account receivable with an insignificant single amount and
                                      which can not show its risk feature when withdrawing a bad-bet provision
                                      for it on the group basis, the bad-debt provision for the account receivable
                                      shall be withdrawn based on the difference of the expected present value
Withdrawal method for bad debt
                                      of the future cash flows of the account receivable that less than its
provision
                                      carrying amount. The Company shall withdraw the bad-debt provision for
                                      such an account receivable by combining the aging method and individual
                                      judgment based on the debtor entity’s actual financial position, cash flows
                                      and other relevant information.


12. Inventory

(1) Category of Inventory
Inventory refers to the held-for-sale finished products or commodities, goods in process, materials consumed in
the production process or the process providing the labor service etc. Inventory is mainly including the raw
materials, low priced and easily worn articles, unfinished products, inventories and work in process–outsourced
etc.
(2) Pricing method
Purchasing and storage of the various inventories should be valued according to the planed cost and the dispatch
be calculated according to the weighted average method; carried forward the cost of the finished products
according to the actual cost of the current period and the sales cost according to the weighted average method.

                                                                                                                   31
  Changchai Company, Limited                                                               Semi-Annual Report 2017


(3) Determination basis of the net realizable value of inventory and withdrawal method of the provision for falling
price of inventory
At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. When all the
inventories are checked roundly, for those which were destroyed, outdated in all or in part, sold at a loss, etc, the
Company shall estimate the irrecoverable part of its cost and withdrawal the inventory falling price reserve at the
year-end. Where the cost of the single inventory item is higher than the net realizable value, the inventory falling
price reserve shall be withdrawn and recorded into profits and losses of the current period. Of which: in the
normal production and operating process, as for the commodities inventory directly for sales such as the finished
products, commodities and the materials for sales, should recognize the net realizable value according to the
amount of the estimated selling price of the inventory minuses the estimated selling expenses and the relevant
taxes; as for the materials inventory needs to be processed in the normal production and operating process, should
recognize its net realizable value according to the amount of the estimated selling price of the finished products
minuses the cost predicts to be occur when the production completes and the estimated selling expenses as well as
the relevant taxes; on the balance sheet date, for the same inventory with one part agreed by the contract price
and other parts not by the contract price, should be respectively recognized the net realizable value. For items of
inventories relating to a product line that are produced and marketed in the same geographical area, have the same
or similar end users or purposes, and cannot be practicably evaluated separately from other items in that product
line provision for decline in value is determined on an aggregate basis; for large quantity and low value items of
inventories, provision for decline in value is made based on categories of inventories.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method of low-value consumption goods and packages
It is one time amortization method of low-value consumption goods and packages when consuming.



13. Divided as assets held for sale

The Company recognizes the components (or the non-current assets) which meet with the following conditions as
assets held for sale:
(1) The components must be immediately sold only according to the usual terms of selling this kind of
components under the current conditions;
(2) The Company had made solutions on disposing the components (or the non-current assets), for example, the
Company should gain the approval from the shareholders according to the regulations and had acquired the
approved from the Annual General Meeting or the relevant authority institutions;
(3) The Company had signed the irrevocable transformation agreement with the transferee;
(4) The transformation should be completed within 1 year.



14. Long-term equity investments

(1) Judgment standard of joint control and significant influences
Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement by the
Company and the relevant activities of the arrangement should be decided only after the participants which share
the control right make consensus. Significant influence refers to the power of the Group which could anticipate in
the finance and the operation polices of the investees, but could not control or jointly control the formulation of


                                                                                                                     32
  Changchai Company, Limited                                                               Semi-Annual Report 2017


the policies with the other parties.
(2) Recognition for initial investment cost
The initial investment cost of the long-term equity investment shall be recognized by adopting the following ways
in accordance with different methods of acquisition:
① As for those forms under the same control of the enterprise combine, if the combine party takes the cash
payment, non-cash assets transformation, liabilities assumption or equity securities issuance as the combination
consideration, should take the shares of the book value by the ultimate control party in the consolidate financial
statement of the owners’ equities of the combiners acquired on the merger date as the initial investment cost. The
difference between the initial investment cost and the book value of the paid combination consideration or the
total amount of the issued shares of the long-term equity investment should be adjusted the capital reserve; If the
capital reserve is insufficient to dilute, the retained earnings shall be adjusted. To include each direct relevant
expense occurred when executing the enterprise merger into the current gains and losses; while the handling
charges and commission occurs from the issuing the equity securities or the bonds for the enterprise merger
should be included in the initial measurement amount of the shareholders’ equities or the liabilities.
② As for long-term equity investment acquired through the merger of enterprises not under the same control, its
initial investment cost shall regard as the combination cost calculated by the fair value of the assets, equity
instrument issued and liabilities incurred or undertaken on the purchase date adding the direct cost related with the
acquisition. The identifiable assets of the combined party and the liabilities (including contingent liability)
undertaken on the combining date shall be measured at the fair value without considering the amount of minority
interest. The acquirer shall recognize the positive balance between the combination costs and the fair value of the
identifiable net assets it obtains from the acquiree as business reputation. The acquirer shall record the negative
balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree
into the consolidated income statement directly. The agent expense and other relevant management expenses such
as the audit, legal service and evaluation consultation occurs from the enterprise merger, should be included in the
current gains and losses when occur; while the handling charges and commission occurs from the issuing the
equity securities or the bonds for the enterprise merger should be included in the initial measurement amount of
the shareholders’ equities or the liabilities.
③ Long-term equity investment obtained by other means
The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost
which is actually paid.
The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair
value of the equity securities issued.
The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment
contract or agreement, the unfair value stipulated in the contract or agreement shall be measured at fair value.
As for long-term investment obtained by the exchange of non-monetary assets, where it is commercial in nature,
the fair value of the assets surrendered shall be recognized as the initial cost of the long-term equity investment
received; where it is not commercial in nature, the book value of the assets surrendered shall be recognized as the
initial cost of the long-term equity investment received.
The initial cost of a long-term equity investment obtained by recombination of liabilities shall be recognized at
fair value of long-term equity investment.
(3) Subsequent measurement and recognition of profits and losses
① An investment in the subsidiary company shall be measured by employing the cost method
Where the Company hold, and is able to do equity investment with control over an invested entity, the invested

                                                                                                                     33
  Changchai Company, Limited                                                                  Semi-Annual Report 2017


entity shall be its subsidiary company. Where the Company holds the shares of an entity over 50%, or, while the
Company holds the shares of an entity below 50%, but has a real control to the said entity, then the said entity
shall be its subsidiary company.
② An investment in the joint enterprise or associated enterprise shall be measured by employing the equity
method
Where the Company hold, and is able to do equity investment with joint control with other parties over an
invested entity, the invested entity shall be its joint enterprise. Where the Company hold, and is able to have
equity investment with significant influences on an invested entity, the invested entity shall be its associated
entity.
After the Company acquired the long-term equity investment, should respectively recognize investment income
and other comprehensive income according to the net gains and losses as well as the portion of other
comprehensive income which should be enjoyed or be shared, and at the same time adjust the book value of the
long-term equity investment; corresponding reduce the book value of the long-term equity investment according
to profits which be declared to distribute by the investees or the portion of the calculation of cash dividends which
should be enjoyed; for the other changes except for the net gains and losses, other comprehensive income and the
owners’ equity except for the profits distribution of the investees, should adjust the book value of the long-term
equity investment as well as include in the owners’ equity .
The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity when
it obtains the investment, recognize the attributable share of the net profits and losses of the invested entity after it
adjusts the net profits of the invested entity.
If the accounting polices adopted by the investees is not accord with that of the Group, should be adjusted
according to the accounting policies of the Group and the financial statement of the investees during the
accounting period and according which to recognize the investment income as well as other comprehensive
income.
For the transaction happened between the Company and associated enterprises as well as joint ventures, if the
assets launched or sold not form into business, the portion of the unrealized gains and losses of the internal
transaction, which belongs to the Group according to the calculation of the enjoyed proportion, should recognize
the investment gains and losses on the basis. But the losses of the unrealized internal transaction happened
between the Company and the investees which belongs to the impairment losses of the transferred assets, should
not be neutralized.
The Company shall recognize the net losses of the invested enterprise according to the following sequence: first of
all, to write down the book value of the long-term equity investment. Secondly, if the book value of the long-term
equity investment is insufficient for written down, should be continued to recognized the investment losses limited
to the book value of other long-term equity which forms of the net investment of the investees and to written
down the book value of the long-term accounts receivable etc. Lastly, through the above handling, for those
should still undertake the additional obligations according to the investment contracts or the agreements, it shall
be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into
investment losses at current period. If the invested entity realizes any net profits later, the Group shall, after the
amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume
recognizing its attributable share of profits.
In the preparation for the financial statements, the balance existed between the long-term equity investment
increased by acquiring shares of minority interest and the attributable net assets on the subsidiary calculated by
the increased shares held since the purchase date (or combination date), the capital reserves shall be adjusted, if


                                                                                                                        34
  Changchai Company, Limited                                                                Semi-Annual Report 2017


the capital reserves are not sufficient to offset, the retained profits shall be adjusted; the Company disposed part of
the long-term equity investment on subsidiaries without losing its controlling right on them, the balance between
the disposed price and attributable net assets of subsidiaries by disposing the long-term equity investment shall be
recorded into owners’ equity.
For other ways on disposal of long-term equity investment, the balance between the book value of the disposed
equity and its actual payment gained shall be recorded into current profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained equity after disposal
still adopts the equity method for measurement, the other comprehensive income originally recorded into owners’
equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed
by the investees according to the corresponding proportion. The owners’ equity recognized owning to the changes
of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits
distribution of the investees, should be transferred into the current gains and losses according to the proportion.
For the long-term equity investment which adopts the cost method of measurement, if the remained equity still
adopt the cost method, the other comprehensive income recognized owning to adopting the equity method for
measurement or the recognition and measurement standards of financial instrument before acquiring the control of
the investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly
disposed by the investees and should be carried forward into the current gains and losses according to the
proportion; the changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by adopting the equity
method for measurement, should be carried forward into the current gains and losses according to the proportion.
For those the Company lost the control of the investees by disposing part of the equity investment as well as the
remained equity after disposal could execute joint control or significant influences on the investees, should change
to measure by equity method when compiling the individual financial statement and should adjust the
measurement of the remained equity to equity method as adopted since the time acquired; if the remained equity
after disposal could not execute joint control or significant influences on the investees, should change the
accounting disposal according to the relevant regulations of the recognition and measurement standards of
financial instrument, and its difference between the fair value and book value on the date lose the control right
should be included in the current gains and losses. For the other comprehensive income recognized by adopting
equity method for measurement or the recognition and measurement standards of financial instrument before the
Group acquired the control of the investees, should execute the accounting disposal by adopting the same basis of
the accounting disposal of the relevant assets or liabilities directly disposed by the investees when lose the control
of them, while the changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by adopting the equity
method for measurement, should be carried forward into the current gains and losses according to the proportion.
Of which, for the disposed remained equity which adopted the equity method for measurement, the other
comprehensive income and the other owners’ equity should be carried forward according to the proportion; for the
disposed remained equity which changed to execute the accounting disposal according to the recognition and
measurement standards of financial instrument, the other comprehensive income and the other owners’ equity
should be carried forward in full amount.
For those the Company lost the control of the investees by disposing part of the equity investment, the disposed
remained equity should change to calculate according to the recognition and measurement standards of financial
instrument, and difference between the fair value and book value on the date lose the control right should be
included in the current gains and losses. For the other comprehensive income recognized from the original equity
investment by adopting the equity method, should execute the accounting disposal by adopting the same basis of

                                                                                                                      35
  Changchai Company, Limited                                                                Semi-Annual Report 2017


the accounting disposal of the relevant assets or liabilities directly disposed by the investees when terminate the
equity method for measurement, while for the owners’ equity recognized owning to the changes of the other
owner’s equity except for the net gains and losses, other comprehensive income and the profits distribution of the
investees, should be transferred into the current investment income with full amount when terminate adopting the
equity method.



15. Investment real estates

Measurement mode of investment real estates:
Measurement of cost method
Depreciation or amortization method:
The investment real estate shall be measured at its cost. Of which, the cost of an investment real estate by
acquisition consists of the acquisition price, relevant taxes, and other expense directly relegated to the asset; the
cost of a self-built investment real estate composes of the necessary expenses for building the asset to the hoped
condition for use. The investment real estates invested by investors shall be recorded at the value stipulated in the
investment contracts or agreements, but the unfair value appointed in the contract or agreement shall be entered
into the account book at the fair value.
As for withdrawal basis of provision for impairment of investment real estates, please refer to withdrawal method
for provision for impairment of fixed assets.



16. Fixed assets


(1) Conditions for recognition

Fixed assets refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for
the sake of producing commodities, rendering labor service, renting or business management; and (b) their useful
life is in excess of one fiscal year. The fixed assets are only recognized when the relevant economic benefits
probably flow in the Company and its cost could be reliable measured.

(2) Depreciation methods


                                                                            Expected net           Annual
 Category of fixed assets              Method                Useful life
                                                                            salvage value        deprecation
Houses and buildings        Average method of useful life       20-40                              2.50-5
Machine equipment           Average method of useful life       6-15                             6.67-16.67
Transportation equipment Average method of useful life          5-10                                10-20
Electronic equipment        Average method of useful life
Other equipment             Average method of useful life       5-10                                10-20




                                                                                                                      36
  Changchai Company, Limited                                                                    Semi-Annual Report 2017


(3) Recognition basis, pricing and depreciation method of fixed assets by finance lease

The Company recognizes those meet with the following one or certain standards as the fixed assets by finance
lease:
① The leasing contract had agreed that (or made the reasonable judgment according to the relevant conditions on
the lease starting date) when the lease term expires, the ownership of leasing the fixed assets could be transferred
to the Company;
② The Company owns the choosing right for purchasing and leasing the fixed assets, with the set purchase price
which is estimated far lower than the fair value of the fixed assets by finance lease when executing the choosing
right, so the Company could execute the choosing right reasonably on the lease starting date;
③ Even if the ownership of the fixed assets not be transferred, the lease period is of 75% or above of the useful
life of the lease fixed assets;
④ The current value of the minimum lease payment on the lease starting date of the Company is equal to 90% or
above of the fair value of the lease fixed assets on the lease starting date; the current value of the minimum lease
receipts on the lease starting date of the leaser is equal to 90% or above of the fair value of the lease fixed assets
on the lease starting date;
⑤ The nature of the lease assets is special that only the Company could use it if not execute large transformation.
The fixed assets by finance lease should take the lower one between the fair value of the leasing assets and the
current value of the minimum lease payment on the lease starting date as the entry value. As for the minimum
lease payment which be regarded as the entry value of the long-term accounts payable, its difference should be
regarded as the unrecognized financing expense. For the initial direct expenses occur in the lease negotiations and
the signing process of the lease contracts that attribute to the handling expenses, counsel fees, travel expenses and
stamp taxes of the lease items, should be included in the charter-in assets value. The unrecognized financing
expenses should be amortized by adopting the actual interest rate during the period of the lease term.
The fixed assets by finance lease shall adopt the same depreciation policy for self-owned fixed assets. If it is
reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease term expires,
the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will
obtain the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully depreciated
over the shorter one of the lease term or its useful life



17. Construction in process

(1) Valuation of the progress in construction
Construction in progress shall be measured at actual cost. Self-operating projects shall be measured at direct
materials, direct wages and direct construction fees; construction contract shall be measured at project price
payable; project cost for plant engineering shall be recognized at value of equipments installed, cost of installation,
trail run of projects. Costs of construction in process also include borrowing costs and exchange gains and losses,
which should be capitalized.
(2) Standardization on construction in process transferred into fixed assets and time point
The construction in process, of which the fixed assets reach to the predicted condition for use, shall carry forward
fixed assets on schedule. The one that hasn’t audit the final accounting shall recognize the cost and make
depreciation in line with valuation value. The construction in process shall adjust the original valuation value at its
historical cost but not adjust the depreciation that has been made after auditing the final accounting.

                                                                                                                          37
  Changchai Company, Limited                                                               Semi-Annual Report 2017


18. Borrowing costs

(1) Recognition principle of capitalization of borrowing costs
The borrowing costs shall include the interest on borrowings, amortization of discounts or premiums on
borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. Where the borrowing
costs occurred belong to specifically borrowed loan or general borrowing used for the acquisition and construction
of investment real estates and inventories over one year (including one year) shall be capitalized, and record into
relevant assets cost. Other borrowing costs shall be recognized as expenses on the basis of the actual amount
incurred, and shall be recorded into the current profits and losses. The borrowing costs shall not be capitalized
unless they simultaneously meet the following three requirements: (1) The asset disbursements have already
incurred; (2) The borrowing costs have already incurred; and (3) The acquisition and construction or production
activities which are necessary to prepare the asset for its intended use or sale have already started.
(2) The period of capitalization of borrowing costs
The borrowing costs arising from acquisition and construction of fixed assets, investment real estates and
inventories, if they meet the above-mentioned capitalization conditions, the capitalization of the borrowing costs
shall be measured into asset cost before such assets reach to the intended use or sale, Where acquisition and
construction of fixed assets, investment real estates and inventories is interrupted abnormally and the interruption
period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended, and recorded
into the current expense, till the acquisition and construction of the assets restarts. When the qualified asset is
ready for the intended use or sale, the capitalization of the borrowing costs shall be ceased, the borrowing costs
occurred later shall be included into the financial expense directly at the current period.
(3) Measurement method of capitalization amount of borrowing costs
As for specifically borrowed loans for the acquisition and construction or production of assets eligible for
capitalization, the to-be-capitalized amount of interests shall be determined in light of the actual cost incurred of
the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing
loans as a deposit in the bank or as a temporary investment.
Where a general borrowing is used for the acquisition and construction or production of assets eligible for
capitalization, the enterprise shall calculate and determine the to-be-capitalized amount of interests on the general
borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset
disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The
capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general
borrowing.



19. Intangible assets



(1) Pricing method, using life and impairment test of intangible assets

1) Pricing method of intangible assets
Intangible assets purchased should take the actual payment and the relevant other expenses as the actual cost.
For the intangible assets invested by the investors should be recognized the actual cost according to the value of
the investment contracts or agreements, however, for the value of the contracts or agreements is not fair, the actual
cost should be recognized according to the fair value.

                                                                                                                     38
  Changchai Company, Limited                                                                 Semi-Annual Report 2017


For the intangible assets acquires from the exchange of the non-currency assets, if own the commercial nature,
should be recorded according to the fair value of the swap-out assets; for those not own the commercial nature,
should be recorded according to the book value of the swap-out assets.
For the intangible assets acquires from the debts reorganization should be recognized by the fair value.
2) Amortization method and term of intangible assets
As for the intangible assets with limited service life, which are amortized by straight-line method when it is
available for use within the service period, shall be recorded into the current profits and losses. The Company
shall, at least at the end of each year, check the service life and the amortization method of intangible assets with
limited service life. When the service life and the amortization method of intangible assets are different from those
before, the years and method of the amortization shall be changed.
Intangible assets with uncertain service life may not be amortized. However, the Company shall check the service
life of intangible assets with uncertain service life during each accounting period. Where there are evidences to
prove the intangible assets have limited service life, it shall be estimated of its service life, and be amortized
according to the above method mentioned.
The rights to use land of the Company shall be amortized according to the rest service life.
(2) Accounting polices of internal R & D expenses
The internal research and development projects of an enterprise shall be classified into research phase and
development phase: the term “research” refers to the creative and planned investigation to acquire and understand
new scientific or technological knowledge; the term “development” refers to the application of research
achievements and other knowledge to a certain plan or design, prior to the commercial production or use, so as to
produce any new material, device or product, or substantially improved material, device and product.
The Company collects the expenses of the corresponding phases according to the above standard of classifying the
research phase and the development phase. The research expenditures for its internal research and development
projects of an enterprise shall be recorded into the profit or loss for the current period. The development
expenditures for its internal research and development projects of an enterprise may be capitalized when they
satisfy the following conditions simultaneously: it is feasible technically to finish intangible assets for use or sale;
it is intended to finish and use or sell the intangible assets; the usefulness of methods for intangible assets to
generate economic benefits shall be proved, including being able to prove that there is a potential market for the
products manufactured by applying the intangible assets or there is a potential market for the intangible assets
itself or the intangible assets will be used internally; it is able to finish the development of the intangible assets,
and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources and
other resources; the development expenditures of the intangible assets can be reliably measured.



20. Impairment of long-term assets

For non-current financial Assets of fixed Assets, projects under construction, intangible Assets with limited
service life, investing real estate with cost model, long-term equity investment of subsidiaries, cooperative
enterprises and joint ventures, the Group should judge whether decrease in value exists on the date of balance
sheet. Recoverable amounts should be tested for decrease in value if it exists. Other intangible Assets of reputation
and uncertain service life and other non-accessible intangible assets should be tested for decrease in value no
matter whether it exists.
If the recoverable amount is less than book value in impairment test results, the provision for impairment of
differences should include in impairment loss. Recoverable amounts would be the higher of net value of asset fair

                                                                                                                       39
  Changchai Company, Limited                                                               Semi-Annual Report 2017


value deducting disposal charges or present value of predicted cash flow. Asset fair value should be determined
according to negotiated sales price of fair trade. If no sales agreement exists but with asset active market, fair
value should be determined according to the Buyer’s price of the asset. If no sales agreement or asset active
market exists, asset fair value could be acquired on the basis of best information available. Disposal expenses
include legal fees, taxes, cartage or other direct expenses of merchantable Assets related to asset disposal. Present
value of predicted asset cash flow should be determined by the proper discount rate according to Assets in service
and predicted cash flow of final disposal. Asset depreciation reserves should be calculated on the basis of single
Assets. If it is difficult to predict the recoverable amounts for single Assets, recoverable amounts should be
determined according to the belonging asset group. Asset group is the minimum asset combination producing cash
flow independently.
In impairment test, book value of the business reputation in financial report should be shared to beneficial asset
group and asset group combination in collaboration of business merger. It is shown in the test that if recoverable
amounts of shared business reputation asset group or asset group combination are lower than book value, it should
determine the impairment loss. Impairment loss amount should firstly be deducted and shared to the book value of
business reputation of asset group or asset group combination, then deduct book value of all assets according to
proportions of other book value of above assets in asset group or asset group combination except business
reputation.
After the asset impairment loss is determined, recoverable value amounts would not be returned in future.



21. Amortization method of long-term deferred expenses

Long-term deferred expanses of the Company shall be recorded in light of the actual expenditure, and amortized
averagely within benefit period. In case of no benefit in the future accounting period, the amortized value of such
project that fails to be amortized shall be transferred into the profits and losses of the current period.



22. Payroll

(1) Accounting treatment of short-term compensation
Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services and
benefits, medical insurance premiums, birth insurance premium, industrial injury insurance premium, housing
fund, labor union expenditure and personnel education fund, non-monetary benefits etc. The short-term
compensation actually happened during the accounting period when the active staff offering the service for the
Group should be recognized as liabilities and is included in the current gains and losses or relevant assets cost. Of
which the non-monetary benefits should be measured according to the fair value.
(2) Accounting treatment of the welfare after demission
The Company classifies the welfare plans after demission into defined contribution plans and defined benefit
plans. Welfare plans after demission refers to the agreement on the welfare after demission reaches between the
Company and the employees, or the regulations or methods formulated by the Company for providing the welfare
after demission for the employees. Of which, defined contribution plans refers to the welfare plans after demission
that the Company no more undertake the further payment obligations after the payment of the fixed expenses for
the independent funds; defined benefit plans, refers to the welfare plans after demission except for the defined
contribution plans.
Defined contribution plans

                                                                                                                     40
  Changchai Company, Limited                                                             Semi-Annual Report 2017


During the accounting period that the Company providing the service for the employees, the Company should
recognize the liabilities according to the deposited amount calculated by defined contribution plans, and should be
included in the current gains and losses or the relevant assets cost.
(3) Accounting treatment of the demission welfare
The Company should recognize the payroll payment liabilities occur from the demission welfare according to the
earlier date between the following two conditions and include which in the current gains and losses when
providing the demission welfare for the employees: the Company could not unilaterally withdraw the demission
welfare owning to the relieve plans of the labor relationship or reduction; when the Company recognizing the
costs or expenses related to the reorganization involves with the demission welfare payments.
(4) Accounting treatment of the welfare of other long-term staffs
The Company should recognize the payroll payment liabilities occur from the demission welfare according to the
earlier date between the following two conditions and include which in the current gains and losses when
providing the demission welfare for the employees: the Company could not unilaterally withdraw the demission
welfare owning to the relieve plans of the labor relationship or reduction; when the Company recognizing the
costs or expenses related to the reorganization involves with the demission welfare payments.



23. Estimated liabilities

(1) Criteria of estimated liabilities
Only if the obligation pertinent to a contingencies shall be recognized as an estimated debts when the following
conditions are satisfied simultaneously:
① That obligation is a current obligation of the Company;
② It is likely to cause any economic benefit to flow out of the Company as a result of performance of the
obligation; and
③ The amount of the obligation can be measured in a reliable way.
(2) Measurement of estimated liabilities
The Company shall measure the estimated debts in accordance with the best estimate of the necessary expenses
for the performance of the current obligation.
The Company shall check the book value of the estimated debts on the Balance Sheet Date. If there is any
conclusive evidence proving that the said book value can’t truly reflect the current best estimate, the Company
shall, subject to change, make adjustment to carrying value to reflect the current best estimate.



24. Revenue

(1) Recognition of revenue from sale of goods: the revenue from selling shall be recognized by the following
conditions: The significant risks and rewards of ownership of the goods have been transferred to the buyer by the
Company; the Company retains neither continuous management right that usually keeps relation with the
ownership nor effective control over the sold goods; the relevant amount of revenue can be measured in a reliable
way; the relevant revenue and costs of selling goods can be measured in a reliable way. The amount of the revenue
from selling shall ascertain the revenue incurred by selling goods in accordance with the received or receivable
price stipulated in the contract or agreement signed between the enterprise and the buyer, unless the received or
receivable amount as stipulated in the contract or agreement is unfair.

                                                                                                                   41
  Changchai Company, Limited                                                              Semi-Annual Report 2017


(2) Recognition of revenue from providing labor services: When the total revenue and costs from providing labor
can be measured in a reliable way; the relevant economic benefits are likely to flow into the enterprise; the
schedule of completion under the transaction can be measured in a reliable way, the revenue from providing labor
shall be recognized. If the Company can reliably estimate the outcome of a transaction concerning the labor
services it provides, it shall recognize the revenue from providing services employing the
percentage-of-completion method on the date of the balance sheet, otherwise the revenue from the providing of
labor services shall be recognized in accordance with the amount of the cost of labor services incurred and
expected to be compensated. The Company recognized the completion process of the transaction concerning the
labor services according to the proportion of the occurred cost of the estimated total cost. The total amount of the
revenue from providing services should be recognized according to the contract price received or receivable from
the accepting of the labor services or the agreement price except for those unfair prices.
(3) Recognition of the revenue from transferring use rights of assets: When the relevant economic benefits are
likely to flow into the enterprises and the amount of revenues can be measured in a reliable way, the revenue from
abalienating the right to use assets shall be recognized. The amount of interest revenue should be measured and
confirmed in accordance with the length of time for which the enterprise's cash is used by others and the actual
interest rate;the amount of royalty revenue should be measured and confirmed in accordance with the period and
method of charging as stipulated in the relevant contract or agreement;as for the rental revenue: the amount of the
rental revenue from the operation lease should be recognized according to the straight-line method during each
period of the lease term or accrued into the current gains and losses if rental actual occurred.

25. Government subsidies

(1) Judgment basis and accounting treatment of government subsidies related to assets
A government subsidy means the monetary or non-monetary assets obtained free by an enterprise from the
government. Government subsidies consist of the government subsidies pertinent to assets and government
subsidies pertinent to income according to the relevant government documents.
For those the government documents not definite stipulate the assistance object, the judgment basis of the
Company classifies the government subsidies pertinent to assets and government subsidies pertinent to income is:
whether are used for purchasing or constructing or for forming the long-term assets by other methods.
The government subsidies should be recognized only when meet with the attached conditions of the government
subsidies as well as could be acquired.
If the government subsidies are the monetary assets, should be measured according to the received or receivable
amount; and for the government subsidies are the non-monetary assets, should be measured by fair value.
The government subsidies pertinent to assets shall be recognized as deferred income, equally distributed within
the useful lives of the relevant assets, and included in the current profits and losses.

(2) Judgment basis and accounting treatment of government subsidies related to profits

The government subsidies pertinent to incomes shall be treated respectively in accordance with the circumstances
as follows: those subsidies used for compensating the related future expenses or losses of the enterprise shall be
recognized as deferred income and shall included in the current profits and losses during the period when the
relevant expenses are recognized; or those subsidies used for compensating the related expenses or losses incurred
to the enterprise shall be directly included in the current profits and losses.


                                                                                                                    42
  Changchai Company, Limited                                                                Semi-Annual Report 2017


26. Deferred income tax assets and liabilities

(1) Basis of recognizing the deferred income tax assets
According to the difference between the book value of the assets and liabilities and their tax basis, A deferred tax
assets shall be measured in accord with the tax rates that are expected to apply to the period when the asset is
realized or the liability is settled.
The recognition of the deferred income tax assets is limited by the income tax payable that the Company probably
gains for deducting the deductible temporary differences. At the balance sheet date, where there is strong evidence
showing that sufficient taxable profit will be available against which the deductible temporary difference can be
utilized, the deferred tax asset unrecognized in prior period shall be recognized.
The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If it’s probable that
sufficient taxable profit will not be available against which the deductible temporary difference can be utilized, the
Company shall write down the carrying amount of deferred tax asset, or reverse the amount written down later
when it’s probable that sufficient taxable profit will be available
(2) Basis of recognizing the deferred income tax liabilities
According to the difference between the book value of the assets and liabilities and their tax basis, A deferred tax
liabilities shall be measured in accord with the tax rates that are expected to apply to the period when the asset is
realized or the liability is settled.



27. Lease

(1) Accounting treatment of operating lease
Lessee in an operating lease shall treat the lease payment under an operating lease as a relevant asset cost or the
current profit or loss on a straight-line basis over the lease term. The initial direct costs incurred shall be
recognized as the current profit or loss; Contingent rents shall be charged as expenses in the periods in which they
are incurred.
Lessors in an operating lease shall be recognized as the current profit or loss on a straight-line basis over the lease
term; Initial direct costs incurred by lessors shall be recognized as the current profit or loss; the initial direct
expenses occur should be directly included in the current gains and losses except for those with larger amount and
be capitalized as well as be included in the gains and losses by stages. Contingent rents shall be charged as
expenses in the periods in which they are incurred.
(2) Accounting treatments of financial lease
When the Company as the lessee, On the lease beginning date, the Company shall record the lower one of the fair
value of the leased asset and the present value of the minimum lease payments on the lease beginning date as the
entering value in an account, recognize the amount of the minimum lease payments as the entering value in an
account of long-term account payable, and treat the balance between the recorded amount of the leased asset and
the long-term account payable as unrecognized financing charges and the occurred initial direct expenses, should
be recorded in the lease assets value. During each lease period, should recognize the current financing expenses
by adopting the actual interest rate.
When the Company as the leasor and on the beginning date of the lease term, the Company shall recognize the
sum of the minimum lease receipts on the lease beginning date and the initial direct costs as the entering value in
an account of the financing lease values receivable, and record the unguaranteed residual value at the same time.
The balance between the sum of the minimum lease receipts, the initial direct costs and the unguaranteed residual

                                                                                                                      43
  Changchai Company, Limited                                                               Semi-Annual Report 2017


value and the sum of their present values shall be recognized as unrealized financing income. During each lease
period, should recognize the current financing revenues adopting the actual interest rate.



28. Other significant accounting policies and estimates

(1) Operation termination
Operation termination refers to the compose part that meet with one of the following conditions which had been
disposed by the Group or be classified to held-to-sold as well as could be individually distinguished in operating
and compiling the financial statement:
① The compose part represents an individual main business or a main operation area;
② The compose part is a part intends to dispose and plan an individual main business or a main operation area;
③ The compose part is a subsidiary which be acquired only for resold.
(2) Hedging accounting
The term “hedging” refers to one or more hedging instruments which are designated by an enterprise for avoiding
the risks of foreign exchange, interest rate, commodity price, stock price, credit and etc., and which is expected to
make the changes in fair value or cash flow of hedging instrument(s) to offset all or part of the changes in the fair
value or cash flow of the hedged item.
The term “hedging instrument” shall refer to a derivative instrument which is designated by an enterprise for
hedging and by which it is expected that changes in its fair value or cash flow can offset the changes in fair value
or cash flow of the hedged item. For a hedging of foreign exchange risk, a non-derivative financial asset or
non-derivative financial liability may be used as a hedging instrument.
The “hedged item” shall refer to the following items which make an enterprise faced to changes in fair value or
cash flow and are designated as the hedged objectives.
The hedging should be executed by the hedging accounting methods when satisfying the following conditions at
the same time:
① At the commencement of the hedging, the enterprise shall specify the hedging relationship formally (namely
the relationship between the hedging instrument and the hedged item) and prepare a formal written document on
the hedging relationship, risk management objectives and the strategies of hedging.
② The hedging expectation is highly efficient and meets the risk management strategy, which is confirmed for the
hedging relationship by enterprise at the very beginning.
③ For a cash flow hedging of forecast transaction, the forecast transaction shall be likely to occur and shall make
the enterprise faced to the risk of changes in cash flow, which will ultimately affect the profits and losses.
④ The effectiveness of hedging can be reliably measured.
⑤ The hedging is highly effective in accounting period in which the hedging relationship is specified.

29. Changes in main accounting policies and estimates

(1) Change of accounting policies

√Applicable□ Inapplicable
 The reason of change of accounting policies        Procedures for examination and approval        Remarks
                                                    of projects

                                                                                                                     44
  Changchai Company, Limited                                                               Semi-Annual Report 2017


 According to the Notice (CK [2017] No. 15)         Considered and approved at 6th Meeting
 Regarding Printing and Issuing  issued
 by the Ministry of Finance on May 10, 2017,
 the new standard has applied since June 12,
 2017. As such, the Company accounted its
 governmental subsidies existing on January 1,
 2017 using the prospective application method,
 and adjusted the governmental subsidies arising
 during the period from January 1, 2017 to the
 application day of the new standard.


(2) Change of main accounting estimates

□ Applicable √ Inapplicable

30. Other

Critical accounting judgments and estimates

Due to the inside uncertainty of operating activity, the Group needed to make judgments, estimates and
assumption on the book value of the accounts without accurate measurement during the employment of
accounting policies. And these judgments, estimates and assumption were made basing on the prior experience of
the senior executives of the Group, as well as in consideration of other factors. These judgments, estimates and
assumption would also affect the report amount of income, costs, assets and liabilities, as well as the disclosure of
contingent liabilities on balance sheet date. However, the uncertainty of these estimates was likely to cause
significant adjustment on the book value of the affected assets and liabilities.
The Group would check periodically the above judgments, estimates and assumption on the basis of continuing
operation. For the changes in accounting estimates only affected on the current period, the influence should be
recognized at the period of change occurred; for the changes in accounting estimates affected the current period
and also the future period, the influence should be recognized at the period of change occurred and future period.
On the balance sheet date, the Group needed to make judgments, estimates and assumption on the accounts in the
following important items:
(1) Provision for bad debts
In accordance with the accounting policies of accounts receivable, the Group measured the losses for bad debts by
adopting allowance method. The impairment of accounts receivable was based on the appraisal of the
recoverability of accounts receivable. The impairment of accounts receivable was dependent on the judgment and
estimates. The actual amount and the difference of previous estimates would affect the book value of accounts
receivable and the withdrawal and reversal on provision for bad debts of accounts receivable during the period of
estimates being changed.
(2) Provision for falling price of inventories
In accordance with the accounting policies of inventories, for the inventories that the costs were more than the net


                                                                                                                     45
  Changchai Company, Limited                                                                 Semi-Annual Report 2017


realizable value as well as out-of-date and dull-sale inventories, the Group withdrawn the provision for falling
price of inventories on the lower one between costs and net realizable value. Evaluating the falling price of
inventories needed the management level gain the valid evidence and take full consideration of the purpose of
inventories, influence of events after balance sheet date and other factors, and then made relevant judgments and
estimates. The actual amount and the difference of previous estimates would affect the book value of inventories
and the withdrawal and reversal on provision for bad debts of inventories during the period of estimates being
changed.
(3) Held-to-maturity investment
The Company classifies the non-derivative financial assets which meet with conditions with fixed or confirmable
repayment amount and fixed maturity date as well as the Company owns definite intention and ability to hold until
mature as the held-to-maturity investment. To execute the classification needs large judgment. In the process of
executing the judgment, the Company would assess the intention and ability of the investment which hold until
the due date. Except for the particular situation (for example, selling the investment with insignificant amount
when approaching the due date), if the Company fails to hold the investment until the due date, should re-classify
the investment to the available-for-sale financial assets and would no more be classified as the held-to-maturity
investment in the current fiscal year as well as the afterward two complete fiscal years. If there exits such situation,
that would probably cause significant influences on the value of the relevant financial assets presented on the
financial statement and may influence the risks management strategies of the financial instruments of the
Company.
(4) Held-to-maturity investment impairment
The Company confirms whether the held-to-maturity investment has impairment depends on the judgment from
the management layer to a large extent. The objective evidences of the impairments including the issuers which
occur serious financial difficulties that lead the financial assets could not continue to trade in the active market
and to execute the contracts regulations (for example, to return the interests or the principal violates a treaty) etc.
In the process of executing judgment, the Company needs to evaluate the influences of the objective evidences of
the impairment on the estimated future cash flow.
(5) The impairment of financial assets available for sale
The Group judged whether the financial assets available for sale were impaired relying heavily on the judgment
and assumption of the management team, so as to decide whether recognized the impairment losses in the income
statement. During the process of making the judgment and assumption, the Group needed to appraise the balance
of the cost of the investment exceeding its fair value and the continuous period, the financial status and business
forecast in a short period, including the industrial situation, technical reform, credit level, default rate and risk of
counterparty.
(6) Provision for impairment of non-financial non-current assets
The Group made a judgment on the non-current assets other than financial assets whether they had any indication
of impairment on the balance sheet date. For the intangible assets without finite service life, other than the annual
impairment test, they should be subject to the impairment test when there was any indication of impairment. For
other non-current non-financial assets, which should be subjected to impairment test when there was indication of
impairment indicated that the book value can’t be recoverable.
When the book value of the assets or assets portfolio was more than the recoverable amount, which was the higher
one between the net amount of fair value after deducting the disposal expenses and the discounted amount of the
estimated future cash flow, it means impairment incurred.
The net amount of fair value after deducting the disposal expenses should be fixed the price in the sale agreement

                                                                                                                       46
  Changchai Company, Limited                                                                  Semi-Annual Report 2017


for similar assets in the fair transaction minus the increased costs directly attributable to the assets disposal.
When estimated the discounted value of future cash flow, the Group needed to make important judgment on the
output, selling price, relevant costs and the discount rate for calculating the discounted amount, etc. When
estimated the recoverable amount, the Group would adopt all the available documents, including the prediction for
relevant output, selling price and relevant operating costs arising from reasonable and supportive assumptions.
The Group made the impairment test on goodwill at least one time per year, which required to predict the
discounted amount of the future cash flow of the assets or assets portfolio with the distributed good will, for which,
the Group needed to predict the future cash flow of the assets or assets portfolio, and adopt the property
discounted rate to decide the discounted amount of future cash flow.
(7) Depreciation and amortization
For the investment real estate, fixed assets and intangible assets, the Group withdrew the depreciation and
amortization by adopting the straight-line method during the service life after full consideration of the salvage
value. The Group checked the service life periodically so as to decide the amount of depreciation and amortization
at each reporting period. The service life was fixed by the Group in accordance with the previous experience of
the similar assets and the expected technical update. If there was any significant change on the previous estimates,
the depreciation and amortization expenses should be adjusted.
(8) Income tax
During the routine operating activities, there were some uncertainty in the ultimate tax treatment and calculation
for parts of transactions. Some accounts of such transaction could be listed as pre-tax expenditures only after the
approval of taxation authorities. If there were any differences between the ultimate result of recognition for these
taxation maters and their initial estimates, the differences would affect the current income tax and deferred income
tax at the period of ultimate recognition.

VI. Taxation

1. Main taxes and tax rate


              Type of tax                           Taxation basis                             Tax rates
VAT                                     Payable to sales revenue                13%, 17%
Urban maintenance and construction                                              Tax paid in accordance with the tax
                                   Taxable turnover amount
tax                                                                             regulations of tax units location
Corporate income tax                    Taxable income                          25% or 15%
Education surcharge                     Taxable turnover amount                 5%


2. Tax preference

In 2009, the Company has been identified as High-tech Enterprises, therefore, it enjoys 15-percent preferential
rate for corporate income tax; the Company’s controlling subsidiary—Changchai Wanzhou Diesel Engine Co.,
Ltd., the controlling subsidiary company, shall pay the corporate income tax at tax rate 15% from 1 January 2011
to 31 December 2020 in accordance with the Notice of the Ministry of Finance, the General Administration of
Customs of PRC and the National Administration of Taxation about the Preferential Tax Policies for the Western
Development.


                                                                                                                        47
  Changchai Company, Limited                                                         Semi-Annual Report 2017


VII. Notes on major items in consolidated financial statements of the Company

1. Monetary funds

                                                                                                   Unit: RMB
                Item                             Closing balance                   Opening balance
Cash on hand                                                   136,578.34                         314,905.29
Bank deposits                                              589,335,887.39                     582,963,123.80
Other monetary funds                                       119,219,787.00                      87,425,772.93
Total                                                      708,692,252.73                     670,703,802.02
At the period-end, the restricted monetary fund was RMB 119,219,787.00 in total, of which: the bank acceptance
deposit was RMB 119,219,787.00.

2. Notes receivable

(1) Notes receivable listed by category

                                                                                                   Unit: RMB
                Item                             Closing balance                   Opening balance
Bank acceptance bill                                       261,056,165.98                     501,070,279.01
Total                                                      261,056,165.98                     501,070,279.01


(2) Notes receivable pledged at the period-end

Naught

(3) Notes receivable which had endorsed by the Company or had discounted and had not due on the
balance sheet date at the period-end

                                                                                                   Unit: RMB
                                      Amount of recognition termination Amount of not terminated recognition
                Item
                                             at the period-end                   at the period-end
Bank acceptance bill                                       210,469,025.51
Total                                                      210,469,025.51


(4) There was no any notes be transferred to accounts receivable owning to the drawer failed to
performance of the Company at the period-end

 (5) The amount of the period-end decreased of 47.9% over that of the period-begin, which was mainly due
to the payment in current period for non balance bill in last period-end or collection with acceptance



                                                                                                               48
  Changchai Company, Limited                                                                Semi-Annual Report 2017


3. Accounts receivable

(1) Accounts receivable disclosed by category

                                                                                                           Unit: RMB
                                    Closing balance                                 Opening balance
                                             Bad debt
                         Book balance                                  Book balance Bad debt provision
                                             provision
     Category                              Withdra Book                                 Withdraw             Book
                           Proporti          wal    value          Amou Proporti           al                value
                    Amount          Amount                                       Amount
                              on           proporti                 nt     on           proportio
                                              on                                            n
Accounts
receivable    with
                                                               27,508
significant single 26,163,              25,324,        838,639                        25,391,0             2,117,539.
                                  2.64%         96.79%          ,638.8        4.62%               92.30%
amount for which 467.65                  828.04            .61                           99.21                    61
                                                                     2
bad debt provision
separately accrued
Accounts
receivable
withdrawn       bad                                          567,67
                    964,407         219,695         744,712                 210,511,                       357,162,28
debt     provision           97.33%          22.78%           3,711. 95.33%                       37.08%
                     ,900.22         ,425.53         ,474.69                 429.64                              2.08
according to credit                                              72
risks
characteristics
Accounts
receivable    with
insignificant
                   276,298                276,298 100.00           276,29             276,298.
single amount for                 0.03%                                       0.05%            100.00%
                       .29                    .29     %              8.29                  29
which bad debt
provision
separately accrued

Total                                                      595,45
                    990,847 100.00 245,296        745,551          100.00 236,178,                         359,279,82
                                           24.76%           8,648.                                39.66%
                     ,666.16    % ,551.86          ,114.30             % 827.14                                  1.69
                                                               83
Accounts receivable with significant single amount for which bad debt provision separately accrued at period end:
√ Applicable □ Not applicable
                                                                                                           Unit: RMB
                                                              Closing balance
 Accounts receivable
                                                                             Withdrawal
 (classified by units)       Book balance         Bad debt provision                             Withdrawal Reason
                                                                             Proportion


                                                                                                                      49
  Changchai Company, Limited                                                                 Semi-Annual Report 2017


Customer 1                         1,902,326.58           1,902,326.58                100.00% Difficult to recover
Customer 2                         6,215,662.64           6,202,854.45                 99.79% Difficult to recover
                                                                                                Estimated
Customer 3                         3,040,439.17           2,214,607.75                 72.84%
                                                                                                irrecoverable
Customer 4                         3,279,100.00           3,279,100.00                100.00% Difficult to recover
Customer 5                         2,133,377.01           2,133,377.01                100.00% Difficult to recover
Customer 6                         5,359,381.00           5,359,381.00                100.00% Difficult to recover
Customer 7                         2,584,805.83           2,584,805.83                100.00% Difficult to recover
Customer 8                         1,648,375.42           1,648,375.42                100.00% Difficult to recover
Total                             26,163,467.65          25,324,828.04           --                       --
In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
                                                                                                           Unit: RMB
                                                                  Closing balance
           Aging
                                   Accounts receivable          Bad debt provision          Withdrawal Proportion
Sub-item within 1 year
Within 1 year                              752,385,108.62                 15,047,702.17                          2.00%
Subtotal of within 1 year                  752,385,108.62                 15,047,702.17                          2.00%
1 to 2 years                                 3,248,002.36                   162,400.11                           5.00%
2 to 3 years                                 1,995,444.32                   299,316.65                          15.00%
3 to 4 years                                      602,482.11                180,744.63                          30.00%
4 to 5 years                                 5,429,002.10                  3,257,401.26                         60.00%
Over 5 years                               200,747,860.71                200,747,860.71                         100.00%
Total                                      964,407,900.22                219,695,425.53
Notes of confirming the basis of the groups:
In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision
□ Applicable √ Not applicable
In the groups, accounts receivable adopting other methods to withdraw bad debt provision:
Not applicable

(2) Accounts receivable withdraw, reversed or collected during the Reporting Period

The withdrawal amount of the bad debt provision during the Reporting Period was of RMB 9,183,995.89; the
amount of the reversed or collected part during the Reporting Period was of RMB 66,271.17.

(3) Top 5 of the closing balance of the accounts receivable collected according to the arrears party

At period end, the total amount of top 5 of the closing balance of the accounts receivable collected according to

                                                                                                                       50
  Changchai Company, Limited                                                           Semi-Annual Report 2017


the arrears party was RMB 449,507,585.4, 45.37% of the closing balance of the accounts receivable and the
relevant closing balance of bad debt provision was RMB 22,939,768.44.

(4) The amount of the period-end increased of 107.51% over that of the period-begin, which was mainly because
the Company sells on credit moderately to expand the market space. At the same time, the proportion of
multi-cylinder engine among promoting products increased. Customers of multi-cylinder engine are mainly from
units of supporting main engine, so the payment days are comparatively long.

4. Prepayment

(1) List by aging analysis:

                                                                                                      Unit: RMB
        Aging                        Closing balance                             Opening balance
                               Amount                Proportion           Amount               Proportion
Within 1 year                  27,901,734.49                  94.82%       13,981,887.79                  90.30%
1 to 2 years                     621,763.47                    2.11%          515,122.72                   3.33%
2 to 3 years                      12,785.91                   0.04%             7,418.00                   0.05%
Over 3 years                     890,455.42                   3.03%           979,046.92                   6.32%
Total                          29,426,739.29             --                15,483,475.43             --


(2) Top 5 of the closing balance of the prepayment collected according to the prepayment target

At the period-end, the total amount of top 5 of the closing balance of the prepayment collected according to the
prepayment target was RMB 26,018,229.27, 88.42% of the closing balance of the accounts receivable.
(3) The amount of the period-end increased of 90.05% over that of the period-begin, which was mainly due
 to the increased payment in advance for some materials customers to meet the market demand.

5. Other accounts receivable

(1) Other accounts receivable disclosed by category

                                                                                                      Unit: RMB

                                  Closing balance                               Opening balance

                                         Bad debt
                     Book balance                                  Book balance Bad debt provision
                                         provision
     Category
                                          Withdra Book                                 Withdraw           Book
                          Proporti          wal    value          Amou Proporti           al              value
                   Amount          Amount                                       Amount
                             on           proporti                 nt     on           proportio
                                             on                                            n



                                                                                                                  51
  Changchai Company, Limited                                                                  Semi-Annual Report 2017


Other     accounts
receivable    with
significant single 2,853,1                2,853,1 100.00           2,853,            2,853,18
                                  6.21%                                      7.82%            100.00%
amount for which 88.02                      88.02     %           188.02                 8.02
bad debt provision
separately accrued
Other     accounts
receivable
withdrawn       bad                                       30,950
                    40,435,        26,788,        13,647,                26,785,0                           4,165,674.
debt     provision          87.96%         66.25%          ,737.2 84.83%                           86.54%
                     733.09         058.82         674.27                   62.60                                   62
according to credit                                             2
risks
characteristics
Other      accounts
receivable     with
insignificant
                    2,679,8               2,679,8 100.00           2,679,            2,679,80
single amount for                 5.83%                                      7.35%            100.00%
                      01.13                 01.13     %           801.13                 1.13
which bad debt
provision
separately accrued
                                                           36,483
                     45,968, 100.00 32,321, 100.00 13,647,         100.00 32,318,0                          4,165,674.
Total                                                       ,726.3                                 88.58%
                      722.24     % 047.97       % 674.27               %     51.75                                  62
                                                                 7
Other accounts receivable with significant single amount for which bad debt provision separately accrued:
√ Applicable □ Not applicable
                                                                                                            Unit: RMB
                                                                  Closing balance
    Other account receivable
                                                                                     Withdrawal         Withdrawal
      (classified by units)         Other accounts receivable   Bad provision
                                                                                     proportion          reason
Changchai Group Import &                                                                             Difficult to
                                                 2,853,188.02     2,853,188.02           100.00%
Export Company                                                                                       recover
Total                                            2,853,188.02     2,853,188.02           --                  --
In the groups, other accounts receivable adopting aging analysis method to accrue bad debt provision:
√ Applicable □ Not applicable
                                                                                                            Unit: RMB
                                                                Closing balance
           Aging
                               Other account receivable          Bad provision                Withdrawal proportion
Sub-item within 1 year
Within 1 year                               13,275,459.23                   265,509.18                              2.00%



                                                                                                                        52
  Changchai Company, Limited                                                             Semi-Annual Report 2017


Subtotal of within 1 year                  13,275,459.23                   265,509.18                      2.00%
1-2 years                                    153,096.28                      7,654.81                      5.00%
2-3 years                                     73,669.19                     11,050.37                      15.00%
3-4 years                                    594,689.02                    178,406.70                      30.00%
4-5 years                                     33,454.01                     20,072.40                      60.00%
Over 5 years                               26,305,365.36              26,305,365.36                      100.00%
Total                                      40,435,733.09              26,788,058.82
In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision
□ Applicable √ Not applicable
In the groups, other accounts receivable adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable

(2) Accounts receivable withdraw, reversed or collected during the Reporting Period

The withdrawal amount of the bad debt provision during the Reporting Period was of RMB 2,996.22; the amount
of the reversed or collected part during the Reporting Period was of RMB 0.00.

(3) List of the other accounts receivable actual written-off during the Reporting Period

Naught

(4) Other accounts receivable classified by the nature of accounts

                                                                                                       Unit: RMB
                Nature                        Closing book balance                  Opening book balance
Margin and cash pledge                                            4,200.00                               4,200.00
Unit current amount                                         18,255,359.36                           19,305,341.92
Employee loan                                                2,093,156.28                            1,819,817.62
Other                                                       25,616,006.60                           15,354,366.83
Total                                                       45,968,722.24                           36,483,726.37


(5) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party

                                                                                                       Unit: RMB
                                                                            Proportion of the total Closing
                                               Closing
         Name of units            Nature                      Aging         year end balance of the balance of bad
                                               balance
                                                                             accounts receivable debt provision
Xuzhou East China Casting
                          Current             5,000,000.00 Within 1 year                   10.88%      100,000.00
General Factory


                                                                                                                   53
  Changchai Company, Limited                                                                    Semi-Annual Report 2017


Changzhou         Changjiang
                             Current            5,000,000.00 Within 1 year                        10.88%      100,000.00
Casting Materials Co., Ltd.
Changzhou Compressor Co.,
                          Current               2,940,000.00 Over 5 years                           6.40% 2,940,000.00
Ltd.
Import and Export Company
                          Current               2,853,188.02 Over 5 years                           6.21% 2,853,188.02
of Changchai Group
Changzhou New           District
                                   Current      1,626,483.25 Over 5 years                           3.54% 1,626,483.25
Accounting Center
Total                                   --     17,419,671.27           --                         37.89% 7,619,671.27
(6) The amount of the period-end increased of 227.62% over that of the period-begin, which was mainly due
to the temporary borrowings of subsidiary Housheng Investment from Xuzhou East China Casting General
Factory and other units in the Reporting Period.

6. Inventory

(1) Category of inventory

                                                                                                              Unit: RMB
        Item                         Closing balance                                       Opening balance
                                      Falling price                                         Falling price
                    Book balance                       Book value       Book balance                         Book value
                                        reserves                                              reserves
Raw material        130,188,781.71 4,345,253.62 125,843,528.09 105,129,601.58                 4,315,935.29 100,813,666.29
Goods          in
                    103,285,266.86 21,803,781.18       81,481,485.68 127,378,644.50         21,803,781.18 105,574,863.32
process
Materials
processed on         28,446,620.31       597,808.75    27,848,811.56 25,326,273.77             597,808.75 24,728,465.02
commission
Finished goods 229,645,391.32 20,174,913.34 209,470,477.98 280,847,238.35                   20,174,913.34 260,672,325.01
Low      priced
and       easily      5,489,300.37 1,300,787.34         4,188,513.03        3,557,926.14      1,300,787.34   2,257,138.80
worn articles
Total               497,055,360.57 48,222,544.23 448,832,816.34 542,239,684.34              48,193,225.90 494,046,458.44




                                                                                                                          54
  Changchai Company, Limited                                                                Semi-Annual Report 2017


(2) Falling price reserves of inventory

                                                                                                          Unit: RMB
                                                        Increased amount       Decreased amount
                                          Opening
                  Item                                                         Reverse or            Closing balance
                                          balance       Withdrawal Other                     Other
                                                                                write-off
Raw material                             4,315,935.29    29,318.33                                      4,345,253.62
Goods in process                      21,803,781.18                                                   21,803,781.18
Materials processed on commission         597,808.75                                                     597,808.75
Finished goods                        20,174,913.34                                                   20,174,913.34
Low priced and easily worn articles      1,300,787.34                                                   1,300,787.34
Total                                 48,193,225.90      29,318.33                                    48,222,544.23


7. Other current assets

                                                                                                          Unit: RMB
                         Item                                Closing balance                 Opening balance
The VAT tax credits                                                   8,728,929.49                    31,669,983.12
Bank financial products
Financial products from securities companies                          5,500,000.00                      6,000,000.00
Financial products                                                    5,000,000.00                      2,000,000.00
Total                                                                19,228,929.49                    39,669,983.12
The amount of the period-end decreased of 51.53% over that of the period-begin, which was mainly to the
 decrease of tax retained of retained VAT in last period-end.

8. Available-for-sale financial assets

(1) List of available-for-sale financial assets

                                                                                                          Unit: RMB
           Item                         Closing balance                           Opening balance
                                          Depreciatio                               Depreciatio
                            Book balance                Book value     Book balance               Book value
                                          n reserves                                n reserves
Available-for-sale equity
                          772,300,000.00 1,210,000.00 771,090,000.00 821,282,500.00 1,210,000.00 820,072,500.00
instruments:
    Measured by fair
                          763,890,000.00              763,890,000.00 812,872,500.00              812,872,500.00
value
    Measured by cost
                            8,410,000.00 1,210,000.00   7,200,000.00   8,410,000.00 1,210,000.00   7,200,000.00
method
Total                     772,300,000.00 1,210,000.00 771,090,000.00 821,282,500.00 1,210,000.00 820,072,500.00


                                                                                                                      55
  Changchai Company, Limited                                                             Semi-Annual Report 2017


(2) Available-for-sale financial assets measured by fair value at the period-end

                                                                                                         Unit: RMB
                                                     Available-for-sale     Available-for-sale
                    Category                                                                            Total
                                                     equity instruments     debt instruments
Cost of equity instruments /amortized cost of
                                                            79,874,500.00                             79,874,500.00
debt instruments
Fair value                                                763,890,000.00                          763,890,000.00
Changes of fair value accumulated recorded
                                                          581,413,175.00                          581,413,175.00
into other comprehensive income


(3) Available-for-sale financial assets measured by cost at the period-end

                                                                                                         Unit: RMB
                        Book balance                                             Sharehol
                                                               Impairment provision
                                                                                             Cash
                                                                                   ding
                                                                                           bonus of
                                                                                 proportio
Investee Period-b                   Period-e Period-b                   Period-e              the
                  Increase Decrease                   Increase Decrease          n among
           egin                        nd      egin                        nd              reporting
                                                                                    the
                                                                                            period
                                                                                 investees
Qidong
Liantong
          7,200,00                        7,200,00
Dynamo                                                                                           3.20%
              0.00                            0.00
meter
Co., Ltd.
             1,210,00                     1,210,00 1,210,00                        1,210,00
Others
                 0.00                         0.00     0.00                            0.00
             8,410,00                     8,410,00 1,210,00                        1,210,00
Total                                                                                            --
                 0.00                         0.00     0.00                            0.00

Other were respectively the investment of RMB0.51 million in Chengdu Changchai Wanzhou Diesel Engine

Distribution Company, RMB0.29 million in Chongqing Wanzhou District Changchai Wanzhou Diesel Engine

Accessories Company, RMB0.02 million in Changzhou Economic Technology Development Company, RMB0.1

million in Changzhou Tractor Company, RMB0.2 million in Changzhou Economic Commission Industrial Funds

Fraternity and RMB0.09 million in Beijing Engineering Machinery Agricultural Machinery Company, and all of

the above investment were difficult to recover that should withdraw the impairment provision in full amount.




                                                                                                                   56
  Changchai Company, Limited                                                          Semi-Annual Report 2017


(4) Changes of the impairment of the available-for-sale financial assets during the reporting period

                                                                                                    Unit: RMB
                                      Available-for-sale equity    Available-for-sale debt
              Category                                                                             Total
                                            instruments                 instruments
Balance of the withdrawn impairment
                                                    1,210,000.00                                   1,210,000.00
at the period-begin
Balance of the withdrawn impairment
                                                    1,210,000.00                                   1,210,000.00
at the period-end


9. Long-term equity investment

                                                                                                    Unit: RMB
                                               Increase/decrease
                                     Gains
                                                                                                       Closing
                                      and      Adjustm             Cash Withdra
                                                                                                       balance
                    Additio          losses      ent of          bonus or wal of
Investee Opening            Reduced                     Changes                               Closing     of
                       nal          recogniz      other           profits impairm
     s    balance           investm                     of other                  Other       balance impairme
                    investm         ed under   compreh           announc ent
                              ent                        equity                                           nt
                       ent             the       ensive            ed to provisio
                                                                                                      provision
                                     equity     income             issue     n
                                     method
I.Joint ventures
II. Associated enterprises
Changz
hou Fuji
Changc
hai
Robin 21,006,2                                                                     -21,006,
Gasolin      30.03                                                                   230.03
e
Engine
Co.,
Ltd.
Beijing
Tsinghu
a
Industri
al
                                                                                                       44,182.5
Investm
                                                                                                              0
ent
Manage
ment
Co.,
Ltd.
          21,006,2                                                                 -21,006,            44,182.5
Subtotal
             30.03                                                                   230.03                   0
          21,006,2                                                                 -21,006,            44,182.5
Total
             30.03                                                                   230.03                   0

                                                                                                                57
  Changchai Company, Limited                                                           Semi-Annual Report 2017


The closing amount decreases 100% from the opening amount mainly because wholly-owned subsidiary Changch
ai Robin was included in the consolidation scope for the Reporting Period while it was a joint stock company and
accounted for as a long-term equity investment in the same period of last year.

10. Investment property

(1) Investment property adopted the cost measurement mode

√ Applicable □ Not applicable
                                                                                                     Unit: RMB
                                            Houses and                           Construction in
                   Item                                        Land use right                          Total
                                             buildings                             progress
I. Original book value
     1. Opening balance                       87,632,571.14                                        87,632,571.14
     2. Increased amount of the period
  (1) Outsourcing
  (2) Transfer of inventory\fixed
assets\project under construction
  (3) Increased from enterprise merger
    3. Decreased amount of the period
  (1) Disposal
  (2) Other transfer
    4. Closing balance                        87,632,571.14                                        87,632,571.14
II. Accumulative depreciation         and
accumulative amortization
  1.Opening balance                           32,559,881.91                                        32,559,881.91
  2. Increased amount of the period             1,104,170.40                                         1,104,170.40
     (1) Withdrawal or amortization             1,104,170.40                                         1,104,170.40
     3. Decreased amount of the period
    (1) Disposal
    (2) Other transfer
     4. Closing balance                       33,664,052.31                                        33,664,052.31
III. Depreciation reserves
  1. Opening balance
  2. Increased amount of the period
     (1) Withdrawal
     3. Decreased amount of the period


                                                                                                                 58
  Changchai Company, Limited                                                           Semi-Annual Report 2017


    (1) Disposal
    (2) Other transfer
     4. Closing balance
IV. Book value
     1. Closing book value                     53,968,518.83                                       53,968,518.83
     2. Opening book value                     55,072,689.23                                       55,072,689.23


11. Fixed assets

(1) List of fixed assets

                                                                                                     Unit: RMB
                               Houses and      Machinery       Transportation
           Item                                                                   Other             Total
                                buildings      equipment         equipment
I. Original book value
  1. Opening balance         419,008,246.37   853,659,305.64    23,007,178.60 35,579,255.84 1,331,253,986.45
  2. Increased amount of
                               7,294,253.69    83,913,099.63       895,525.12 1,582,238.78       93,685,117.22
the period
     (1) Purchase                                                                                           0.00
         (2) Transfer of
                               3,769,687.39    64,566,184.52                    1,058,113.59     69,393,985.50
project under construction
      (3) Increased from
                               3,524,566.30    19,346,915.11       895,525.12    524,125.19      24,291,131.72
enterprise merger
  3. Decreased amount of
                                                2,076,030.39     1,275,274.00    351,002.32        3,702,306.71
the period
     (1) Disposal or scrap                      2,076,030.39     1,275,274.00    351,002.32        3,702,306.71
  4. Closing balance         426,302,500.06   935,496,374.88    22,627,429.72 36,810,492.30 1,421,236,796.96
II.         Accumulative
depreciation
  1.Opening balance          227,113,343.57   521,613,394.34    16,918,357.45 27,792,358.93     793,437,454.29
  2. Increased amount of
                               7,854,165.37    30,899,240.09       994,215.91 1,419,264.10       41,166,885.47
the period
     (1) Withdrawal            7,854,165.37    30,899,240.09       994,215.91 1,419,264.10       41,166,885.47
  3. Decreased amount of
                                                1,820,588.31     1,099,240.63    302,898.10        3,222,727.04
the period
     (1) Disposal or scrap                      1,820,588.31     1,099,240.63    302,898.10        3,222,727.04
  4. Closing balance         234,967,508.94   550,692,046.12    16,813,332.73 28,908,724.93     831,381,612.72



                                                                                                                 59
  Changchai Company, Limited                                                                 Semi-Annual Report 2017


III. Depreciation reserves
  1.Opening balance                                 2,524,137.36                                           2,524,137.36
  2. Increased amount of
the period
     (1) Withdrawal
  3. Decreased amount of
the period
     (1) Disposal or scrap
  4. Closing balance                                2,524,137.36                                           2,524,137.36
IV. Book value
  1. Closing book value       191,334,991.12      382,280,191.40     5,814,096.99 7,901,767.37           587,331,046.88
  2. Opening book value 194,880,445.10            342,780,985.20     6,245,071.54 9,772,437.03           553,678,938.87
The depreciation amount of the Reporting Period was of RMB 41,166,885.47. The original value transferred into
the fixed assets from the construction in progress of the Reporting Period was of RMB 69,393,985.50.

12. Construction in progress

(1) List of construction in progress

                                                                                                             Unit: RMB
                                              Closing amount                            Opening amount
            Item                  Book balance    Bad debt     Book value     Book balance Bad debt        Book value
                                                  provision                                  provision
Trial production workshop
                                   1,753,262.88                1,753,262.88 4,233,919.80                   4,233,919.80
project technology center
Test system of technology
                                  18,608,677.80               18,608,677.80
center
Casting renovation project         7,527,600.00                7,527,600.00     396,000.00                  396,000.00
Expansion      capacity      of
multi-cylinder     (The    2nd 1,603,928.11                    1,603,928.11 57,529,623.42                 57,529,623.42
Period)
Warehouse of
                                   5,929,403.82                5,929,403.82
multi-cylinder engine
Diesel    Engine    Cylinder
Body                 Flexible 19,476,100.69                   19,476,100.69 15,110,073.95                 15,110,073.95
Manufacturing Line
Equipment to be installed
                                  14,633,428.68               14,633,428.68 12,511,430.04                 12,511,430.04
and payment for projects
Total                             69,532,401.98               69,532,401.98 89,781,047.21                 89,781,047.21


                                                                                                                       60
  Changchai Company, Limited                                                             Semi-Annual Report 2017


(2) Changes of significant construction in progress

                                                                                                       Unit: RMB
                                                                                           Of
                                                                Proport
                                     Amoun                                     Accum which:
                                                                  ion                            Capitali
                                       t that    Other                         ulative    the
                       Increas                                  estimat                           zation
                                     transfer   decreas                        amount amount
        Estimat Openin    ed                                     ed of Project                    rate of Capital
Name                                  red to       ed   Closing                   of     of the
          ed      g    amount                                     the progres                       the resourc
of item                                fixed    amount balance                 capitali capitali
        number balance of the                                   project   s                      interest   es
                                      assets     of the                          zed      zed
                        period                                  accumu                           s of the
                                      of the     period                        interest interest
                                                                 lative                           period
                                      period                                      s     s of the
                                                                 input
                                                                                         period
Trial
product
ion
worksh
        49,130, 4,233,9 1,384,6 3,865,2                   1,753,2
op                                                                65.68% 65.68%                          Other
         000.00 19.80 01.36 58.28                           62.88
project
technol
ogy
center
Test
system
of         22,896,         18,608,                        18,608,
                                                                  81.27% 81.27%                             Other
technol     320.00          677.80                         677.80
ogy
center
Casting
renovat    48,320, 396,000 7,131,6                        7,527,6
                                                                  48.21% 48.21%                          Other
ion         000.00     .00 00.00                            00.00
project
Expansi
on
capacit
y     of
           60,000, 57,529, 1,207,7 57,133,                1,603,9
multi-c                                                           95.55% 95.55%                          Other
            000.00 623.42 11.25 406.56                      28.11
ylinder
(The
2nd
Period)
Wareho
use of
           10,190,         5,929,4                        5,929,4
multi-c                                                           58.19% 58.19%                             Other
            000.00           03.82                          03.82
ylinder
engine
Diesel
Engine
Cylinde
r Body
Flexibl    116,040 15,110, 4,366,0                        19,476,
                                                                  24.65% 24.65%                          Other
e          ,000.00 073.95 26.74                            100.69
Manufa
cturing
Line

           306,576 77,269, 38,628, 60,998,                54,898,
Total                                              0.00             --     --                                --
            ,320.00 617.17 020.97 664.84                   973.30


                                                                                                                   61
     Changchai Company, Limited                                                                  Semi-Annual Report 2017


13. Intangible assets

(1) List of intangible assets

                                                                                                               Unit: RMB
                                                            Patent   Non-patented
                    Item                  Land use right                              Software       Other      Total
                                                             right    technology
I. Total original book value
1. Opening balance                         137,782,945.30                             8,795,831.59           146,578,776.89

2.     Increase in the reporting period      2,550,800.00              8,751,862.30                           11,302,662.30

     (1) Purchase
     (2) Internal R &D
  (3) Increase        from   enterprise
                                             2,550,800.00              8,751,862.30                           11,302,662.30
combination
3. Decrease in the reporting period
     (1) Purchase
     4. Closing balance                    140,333,745.30              8,751,862.30   8,795,831.59           157,881,439.19

II. Total accrued amortization
1. Opening balance                          42,118,737.38              2,553,703.10   5,360,285.28            50,032,725.76

2. Increase in the reporting period          1,421,545.38               346,126.47    1,183,969.43             2,951,641.28

 (1) Withdrawal                              1,421,545.38               346,126.47    1,183,969.43             2,951,641.28

3. Decrease in the reporting period
 (1) Disposal
4. Closing balance                          43,540,282.76              2,899,829.57   6,544,254.71            52,984,367.04

III. Total impairment provision
1. Opening balance
2.     Increase in the reporting period
 (1) Withdrawal
3. Decrease in the reporting period
 (1) Disposal
4. Closing balance
IV. Total book value of intangible
assets
1. Book value of the period-end             96,793,462.54              5,852,032.73   2,251,576.88           104,897,072.15

2. Book value of the period-begin           96,479,591.31                             3,435,546.31            99,915,137.62




                                                                                                                           62
  Changchai Company, Limited                                                                Semi-Annual Report 2017


14. Deferred income tax assets/deferred income tax liabilities

(1) Deferred income tax assets had not been off-set

                                                                                                          Unit: RMB
                                       Closing balance                              Opening balance
         Item            Deductible temporary Deferred income tax Deductible temporary Deferred income tax
                             difference              assets           difference              assets
Assets    impairment
                                   6,074,862.83           911,229.42            6,074,862.83              911,229.42
provision
Total                              6,074,862.83           911,229.42            6,074,862.83              911,229.42


(2) Deferred income tax liabilities had not been off-set

                                                                                                          Unit: RMB
                                             Closing balance                           Opening balance
           Item                Taxable temporary      Deferred income tax Taxable temporary Deferred income
                                   difference              liabilities        difference     tax liabilities
Change in fair value of
                                     684,015,500.00        102,602,325.00       732,998,000.00       109,949,700.00
available financial assets
Total                                684,015,500.00        102,602,325.00       732,998,000.00       109,949,700.00


(3) List of the unrecognized deferred income tax assts

                                                                                                          Unit: RMB
                  Item                              Closing balance                      Opening balance
Bad debt provision                                             271,542,737.00                        262,422,016.06
Inventory falling price reserves                                48,222,544.23                         48,193,225.90
Total                                                          319,765,281.23                        310,615,241.96


15. Other non-current assets

                                                                                                          Unit: RMB
                                             Impairment provision at                        Impairment provision at
        Item             Closing balance                               Opening balance
                                                 the period-end                                the period-begin
Entrusted loans              14,000,000.00            14,000,000.00         14,000,000.00             14,000,000.00
Total                        14,000,000.00            14,000,000.00         14,000,000.00             14,000,000.00




                                                                                                                      63
  Changchai Company, Limited                                                      Semi-Annual Report 2017


16. Short-term loans

(1) Category of short-term loans

                                                                                                Unit: RMB
                Item                           Closing balance                  Opening balance
Mortgage loan                                              13,000,000.00                      5,000,000.00
Guaranteed loan                                            10,000,000.00                      5,000,000.00
Total                                                      23,000,000.00                    10,000,000.00
(2) List of the short-term loans overdue but not return at period end
(3) The amount of the period-end increased of 130% over that of the period-begin, which was mainly due to
 the increasing bank borrowings of subsidiaries Fuji Robin and Housheng Agricultural Equipment in the
 Reporting Period.

17. Notes payable

                                                                                                Unit: RMB
             Category                          Closing balance                  Opening balance
Bank acceptance bill                                      389,020,800.00                   276,090,000.00
Total                                                     389,020,800.00                   276,090,000.00


The amount of the period-end increased of 40.9% over that of the period-begin, which was mainly due to the
   settlement with suppliers with more bills of the Company in the Reporting Period.

18. Accounts payable

(1) List of accounts payable

                                                                                                Unit: RMB
                Item                           Closing balance                  Opening balance
Goods payment                                             582,942,259.00                   605,424,726.65
Total                                                     582,942,259.00                   605,424,726.65
(2)There was no note of the accounts payable aging over one year

19. Advance from customers

(1) List of advance from customers




                                                                                                            64
  Changchai Company, Limited                                                             Semi-Annual Report 2017


                                                                                                       Unit: RMB
                  Item                            Closing balance                     Opening balance
Goods payment                                                 71,687,056.39                         40,890,620.69
Total                                                         71,687,056.39                         40,890,620.69
(2) There was no significant advance from customers aging over one year
(3) The amount of the period-end increased of 75.31% over that of the period-begin, which was mainly
because the Company increased the advance payment of some customers in the Reporting Period.

20. Payroll payable

(1) List of Payroll payable

                                                                                                       Unit: RMB
                  Item                     Opening balance      Increase          Decrease        Closing balance
I. Short-term salary                          58,549,908.90   137,532,006.04     163,698,634.81     32,383,280.13
II. Post-employment benefit-defined
                                                               19,148,057.60      19,148,057.60
contribution plans
Total                                         58,549,908.90   156,680,063.64     182,846,692.41     32,383,280.13


(2) List of Short-term salary

                                                                                                       Unit: RMB
                  Item                     Opening balance      Increase          Decrease        Closing balance
1. Salary, bonus, allowance, subsidy          50,720,926.61   112,882,259.68     140,014,642.47     23,588,543.82
2. Employee welfare                                             2,596,588.69       2,596,588.69
3. Social insurance                                             9,764,264.83       9,764,264.83
Of which:         Medical      insurance
                                                                7,876,593.40       7,876,593.40
premiums
Work-related injury insurance                                   1,330,547.67       1,330,547.67
Maternity insurance                                                 557,123.76      557,123.76
4. Housing fund                                                 9,094,294.00       9,094,294.00
5. Labor union budget and employee
                                               7,828,982.29     3,194,598.84       2,228,844.82      8,794,736.31
education budget
Total                                         58,549,908.90   137,532,006.04     163,698,634.81     32,383,280.13


(3) List of drawing scheme




                                                                                                                   65
  Changchai Company, Limited                                                         Semi-Annual Report 2017


                                                                                                   Unit: RMB
               Item                  Opening balance         Increase         Decrease        Closing balance
1. Basic pension benefits                                   18,330,431.52     18,330,431.52
2. Unemployment insurance                                        817,626.08     817,626.08
Total                                                       19,148,057.60     19,148,057.60


(4) The amount of the period-end decreased of 44.69% over that of the period-begin, which was mainly
because some of the salary and bonus withheld in the same period of last year has been paid.

21. Taxes payable

                                                                                                   Unit: RMB
                  Item                            Closing balance                  Opening balance
VAT                                                              325,025.10                        972,104.89
Corporate income tax                                             799,265.24                      5,537,211.23
Personal income tax                                              124,661.81                        940,612.41
Urban maintenance and construction tax                            52,624.01                        902,501.60
Property tax                                                     154,266.37                        143,204.51
Education surcharge                                               45,744.87                         51,563.36
Comprehensive fees                                               239,415.44                      1,075,134.76
Total                                                        1,741,002.84                        9,622,332.76


22. Dividends payable

                                                                                                   Unit: RMB
                Item                           Closing balance                    Opening balance
Common stock dividends                                      8,368,537.05                         3,243,179.97
Minority dividends                                            648,253.86                           648,253.86
Total                                                       9,016,790.91                         3,891,433.83
Reason of not pay overdue 1 year: the shareholder had not drawn down yet.
The amount of the beginning of the period increases 131.71% compared with that of the end of the period,
 which is mainly generated from some shareholders’ dividends not yet taken.

23. Other Accounts Payable

(1) Other Accounts Payable Listed by Nature of the Account

                                                                                                   Unit: RMB



                                                                                                               66
  Changchai Company, Limited                                                         Semi-Annual Report 2017


                Item                          Closing balance                      Opening balance
Margin &cash pledge                                       3,280,796.03                            2,700,853.59
Intercourse funds between entities                       15,497,255.05                           11,420,825.32
Personal amount payable                                   1,785,768.40                            1,067,429.96
Sales discount and three guarantees                     154,374,468.85                          151,408,043.35
Others                                                   38,816,148.09                           37,849,658.34
Total                                                   213,754,436.42                          204,446,810.56


(2) Other Significant Accounts Payable with Aging over One Year


Other significant accounts payable with aging over one year mainly was the temporary receivable and charges

owed.

24. Other Current-liabilities

                                                                                                      Unit: RMB
                Item                          Closing balance                      Opening balance
Sewage charge                                               200,000.00                                200,000.00
Energy charge                                             2,454,129.51                           2,254,381.75
Other                                                       784,459.61
Total                                                     3,438,589.12                           2,454,381.75


25. Deferred Revenue

                                                                                                      Unit: RMB
                                                                         Closing
         Item           Opening balance    Increase     Decrease                         Formed reason
                                                                         balance
Government subsidies       61,057,232.08                 532,186.81 60,525,045.27 Government allocations
Total                      61,057,232.08                 532,186.81 60,525,045.27                --
Item involving government subsidies:
                                                                                                      Unit: RMB
                                                     Amount recorded
                                           Amount                                                     Related to
                                 Opening            into non-operating Other          Closing
            Item                           of newly                                                   assets/relat
                                 balance             income in report changes         balance
                                           subsidy                                                    ed income
                                                          period
Electric control of diesel
                                                                                                      Related to
engine     research   and 1,443,600.00                     199,200.00                1,244,400.00
                                                                                                      assets
development           and

                                                                                                                67
  Changchai Company, Limited                                                                 Semi-Annual Report 2017


industrialization allocations
National     major       project                                                                            Related to
                                   28,770,000.00                                            28,770,000.00
special allocations                                                                                         assets
                                                                                                            Related to
Remove compensation                21,843,632.08                   332,986.81               21,510,645.27
                                                                                                            assets
The R & D and
 Industrialization allocations
                                                                                                            Related to
 of National III/IV Standard        9,000,000.00                                             9,000,000.00
                                                                                                            assets
 high-powered and efficient
 agricultural diesel engine
Total                              61,057,232.08      0.00         532,186.81               60,525,045.27       --


26. Share Capital

                                                                                                            Unit: RMB
                                                         Increase/decrease (+/-)
                      Opening
                                    New shares      Bonus        Capitalized                           Closing balance
                      balance                                                      Others   Subtotal
                                      issued        shares     Capital reserves
The sum of
                  561,374,326.00                                                                       561,374,326.00
shares


27. Capital Surplus

                                                                                                            Unit: RMB
         Item              Opening balance              Increase                Decrease          Closing balance
Capital premium                  143,990,690.24                                                        143,990,690.24
Other capital reserves             20,337,975.19                                                        20,337,975.19
Total                            164,328,665.43                                                        164,328,665.43


28. Other Comprehensive Income

                                                                                                            Unit: RMB
                                                                   The reporting period
                                                                 Less:
                                                              recorded in
                                                                                     Attributab   Attributab
                                                   Amount        other
                                                                            Less:       le to        le to
                                   Opening          before   comprehensi                                     Closing
           Item                                                            Income owners of        minority
                                   balance       income tax ve income in                                     balance
                                                                              tax        the      sharehold
                                                  in current prior period
                                                                           expense Company         ers after
                                                    period        and
                                                                                      after tax       tax
                                                              transferred
                                                              to profit or

                                                                                                                       68
  Changchai Company, Limited                                                                Semi-Annual Report 2017


                                                              loss in
                                                              current
                                                              period
I. Other comprehensive
cannot be reclassified into                                                                 0.00
profits or losses
II. Other comprehensive
                                            -48,982,500.                   -7,347,37 -41,635,1              581,413,
reclassified into profits or 623,048,300.00
                                                     00                         5.00     25.00               175.00
losses
        Profits or losses of
change in fair value of                     -48,982,500.                   -7,347,37 -41,635,1              581,413,
                             623,048,300.00
available-for-sale                                   00                         5.00     25.00               175.00
financial assets
                                            -48,982,500.                   -7,347,37 -41,635,1              581,413,
Total                        623,048,300.00
                                                     00                         5.00     25.00               175.00

29. Special Reserves

                                                                                                          Unit: RMB
           Item                Opening balance            Increase             Decrease            Closing balance
Safety production cost              11,715,417.22                                                      11,715,417.22
Total                               11,715,417.22                                                      11,715,417.22


30. Surplus Reserves

                                                                                                          Unit: RMB
             Item                    Opening balance            Increase           Decrease        Closing balance
Statutory surplus reserves              298,723,390.98                                                298,723,390.98
Discretionary surplus reserves            13,156,857.90                                                13,156,857.90
Total                                    311,880,248.88                                               311,880,248.88


31. Retained Profits

                                                                                                          Unit: RMB
                             Item                                    Reporting Period              Last period
Opening balance of retained profits before adjustments                     651,365,935.39             607,859,611.69
Opening balance of retained profits after adjustments                      651,365,935.39             607,859,611.69
Add: Net profit attributable to owners of the Company                       39,679,158.13              62,539,896.17
Less: Withdrawal of statutory surplus reserves                                                          6,121,962.97
Dividend of common stock payable                                            16,841,229.78              12,911,609.50
Closing retained profits                                                   674,203,863.74             651,365,935.39


                                                                                                                      69
  Changchai Company, Limited                                                                Semi-Annual Report 2017


32. Revenue and Cost of Sales

                                                                                                          Unit: RMB
                                     Reporting Period                            Same period of last year
        Item
                            Sales revenue        Cost of sales             Sales revenue           Cost of sales
Main operations             1,297,931,638.97     1,134,816,954.26           1,152,656,941.95         976,226,687.99
Other operations               10,174,541.95            6,575,367.62           11,003,779.74            8,367,576.44
Total                       1,308,106,180.92     1,141,392,321.88           1,163,660,721.69         984,594,264.43


33. Business Tax and Surcharges

                                                                                                          Unit: RMB
                     Item                               Reporting Period                Same period of last year
Urban maintenance and construction tax                             1,420,461.39                         1,130,189.36
Education Surcharge                                                1,010,250.20                          792,992.40
House property tax                                                 2,185,072.01
Land use tax                                                       1,632,123.85
Stamp duty                                                             553,859.70
Business tax                                                                                                94,345.65
Vehicles and vessels tax                                                   3,495.54
Other taxes                                                            226,866.31
Total                                                              7,032,129.00                         2,017,527.41


The current financial expenses increase 106.93% ,According to “Notice of ‘VAT Accounting Treatment’
 Issued by Ministry of Finance” (Finance and 137Accounting [2016] No.22), after full trial for changing business
 tax to VAT, the name of “business tax and surcharges” was changed to “tax and surcharges”, which was for
 calculating consumption tax, urban maintenanceand construction tax, and resources tax, education surcharge,
 house property tax, land use tax, vehicle and vessel taxand stamp tax, and other related taxes in enterprise’s
 business activities.

34. Sales Expenses

                                                                                                          Unit: RMB
                   Item                         Reporting Period                      Same period of last year
Office expenses                                                6,982,458.17                             9,181,360.21
Employee’s remuneration                                      11,332,610.95                           12,133,611.70
Sales promotional expense                                      5,898,980.00                             7,436,628.43
Three guarantees                                              25,519,985.07                           26,050,046.98


                                                                                                                      70
     Changchai Company, Limited                                                   Semi-Annual Report 2017


Transport fees                                           2,928,996.14                         3,854,006.91
Others                                                   3,152,325.80                           862,820.37
Total                                                   55,815,356.13                        59,518,474.60


35. Administrative Expenses

                                                                                                Unit: RMB
                   Item                     Reporting Period                Same period of last year
Office expenses                                          8,272,173.27                        8,381,652.44
Employee’s remuneration                                30,067,256.77                       32,126,018.65
Depreciation and amortization                            7,874,255.36                        8,374,082.68
Research and development expense                        20,745,380.97                       20,553,134.25
Transport fees                                           1,748,122.94                        1,035,214.39
Repair charge                                            2,150,881.75                        2,044,525.58
Taxes                                                                                        3,789,425.82
Security charge                                            584,333.18                          881,547.58
Others                                                   1,955,663.27                        1,303,014.31
Total                                                   73,398,067.51                       78,488,615.70


36. Financial Expenses

                                                                                                Unit: RMB
                   Item                     Reporting Period                Same period of last year
Interest expenses                                        2,466,943.16                        1,917,987.53
Less: Interest income                                    1,995,814.22                        2,859,561.84
Exchange net profit or loss                              2,245,667.55                       -1,649,720.29
Others                                                  -2,383,345.13                       -2,219,840.69
Total                                                      333,451.36                       -4,811,135.29


The current financial expenses increase 106.93% compared to that of the same period of last year, which is
 mainly generated from the increase of exchange net profit or loss caused by the changes in exchange rate.

37. Asset Impairment Loss

                                                                                                Unit: RMB
                   Item                     Reporting Period                Same period of last year
I.     Bad debt loss                                     9,120,720.94                        10,257,154.02



                                                                                                            71
      Changchai Company, Limited                                                                Semi-Annual Report 2017


II.     Inventory falling price loss                                   29,318.33
Total                                                               9,150,039.27                           10,257,154.02


38. Investment Income

                                                                                                              Unit: RMB
                                   Item                                   Reporting Period      Same period of last year
Long-term equity investment income accounted by equity method                                                 821,264.12
Investment income received from disposal of financial assets
measured by fair value and the changes be included in the current                                             555,871.52
profits and losses during holding period
Investment income received from holding of available-for-sale
                                                                               6,952,750.99                   160,000.00
financial assets
Investment income from disposal of bank financial products                                                    364,000.00
Investment income from disposal of financial products of
                                                                                   190,326.41
security companies
Equity difference is measured at fair value.                                   2,215,049.22
Total                                                                          9,358,126.62                 1,901,135.64

The amount in the Reporting Period increases 392.24% from a year earlier mainly because the Company received
dividends from the Bank of Jiangsu in the Reporting Period while there were no such dividends in the same period
of last year; and the Company increased its investment in Changchai Robin to gain its control and the Company’s
previous holdings in Changchai Robin are accounted for at the difference between these holdings’ fair value and
book value.

39. Non-operating Gains

                                                                                                              Unit: RMB
                                                                                        Recorded in the amount of the
               Item                    Reporting Period      Same period of last year
                                                                                        non-recurring gains and losses
Total gains from disposal
                                                 94,440.43               6,113,117.21                         94,440.43
of non-current assets
Including:       Gains    from
                                                 94,440.43               6,113,117.21                         94,440.43
disposal of fixed assets
Government subsidies                            532,186.81               3,787,728.09                        532,186.81
Insurance compensation                          353,600.00                144,000.00                         353,600.00
Gains from disposal of
                                                251,402.73                377,937.49                         251,402.73
current assets
Others                                       20,541,693.44                213,411.26                      20,541,693.44
Total                                        21,773,323.41             10,636,194.05                      21,773,323.41


                                                                                                                          72
  Changchai Company, Limited                                                                           Semi-Annual Report 2017


Government subsidies recorded into current profits and losses:
                                                                                                                      Unit: RMB
                                                              Whether
                     Distribut                               subsidies         Special                                Related to
                                 Distributio                                              Reportin Same period
         Item            ion                   Nature      influence the       subsidy                                assets/relat
                                 n    reason                                              g Period     of last year
                       entity                             current profits       or not                                ed income
                                                         and losses or not
The central
                                                                                                                      Related to
budget                                                                                                 1,000,000.00
                                                                                                                      income
investment plans
Special fund for
                                                                                                                      Related to
industrial
                                                                                                                      income
development
Special fund for
Promoting the
transformation of                                                                                                     Related to
                                                                                                       1,250,000.00
industrial                                                                                                            income
economy steady
growth
Borrowing fiscal                                                                                                      Related to
                                                                                                         500,000.00
interest discount                                                                                                     income
Talent
                                                                                                                      Related to
development                                                                                              103,800.00
                                                                                                                      income
funds
Other incentives                                                                                                      Related to
                                                                                                         300,941.28
and subsidies                                                                                                         income
Remove                                                                                    332,986.                    Related to
                                                                                                         332,986.81
compensation                                                                                      81                  assets
Electric control
of diesel engine
research and                                                                              199,200.                    Related to
development and                                                                                   00                  assets
industrialization
allocations
Famous brand                                                                                                          Related to
                                                                                                         300,000.00
reward                                                                                                                income
                                                                                          532,186.
Total                     --          --          --              --              --                   3,787,728.09        --
                                                                                                  81

The current non-operating gains increase 104.71% compared to that of the same period of last year, which
 is mainly generated from the stock acquisition by a discount of Changzhou Fuji Changchai Robin Gasoline Engine Co.,
 Ltd. which is recorded into the income of scope of consolidated statements as current non-operating gains.




                                                                                                                                 73
  Changchai Company, Limited                                                               Semi-Annual Report 2017


40. Non-operating Expenses

                                                                                                         Unit: RMB
                                                               Same period of last Recorded in the amount of the
                  Item                     Reporting Period
                                                                     year          non-recurring gains and losses
Loss on disposal of non-current assets             18,709.80            32,408.99
Including: Loss on disposal of fixed
                                                   18,709.80            32,408.99
assets
Donation                                                              100,000.00
Loss on disposal of current assets             6,124,349.29          3,988,707.85
Others                                           251,596.09             26,723.88
Total                                          6,394,655.18          4,147,840.72
The current non-operating expenses increase 54.17% compared to that of the same period of last year,
which is mainly generated from losses caused by the disposal of bad inventory.

41. Income Tax Expense

(1) Lists of Income Tax Expense

                                                                                                         Unit: RMB
                 Item                             Reporting Period                   Same period of last year
Current income tax expense                                       5,670,998.75                         6,581,748.12
Total                                                            5,670,998.75                         6,581,748.12


(2) Adjustment Process of Accounting Profit and Income Tax Expense:

                                                                                                         Unit: RMB
                           Item                                                 Reporting Period
Total profits                                                                                        45,721,610.62
Current income tax expense accounted by tax and
                                                                                                      6,858,241.59
relevant regulations
Influence of different tax rate suitable to subsidiary                                                  649,121.03
Influence of non taxable income                                                                      -1,042,912.65
Influence of not deductable costs, expenses and losses                                                  762,452.35
Tax preference incurred from qualified expense                                                       -1,555,903.57
Income tax expense                                                                                    5,670,998.75




                                                                                                                     74
  Changchai Company, Limited                                                              Semi-Annual Report 2017


42. Information of Cash Flow Statements

(1) Other Cash Received Relevant to Operating Activities

                                                                                                          Unit: RMB
                   Item                            Reporting Period                Same period of last year
Subsidies and grants                                                                                  3,454,741.28
Cash received from other current account                      3,505,477.12                            1,964,606.67
Interest income                                               1,995,814.22                            2,559,453.88
Total                                                         5,501,291.34                            7,978,801.83


(2) Other Cash Paid Relevant to Operating Activities

                                                                                                          Unit: RMB
                               Item                             Reporting Period          Same period of last year
Sales expense paid in Reporting Period                                  25,339,487.40               18,835,610.08
Administration expense paid in Reporting Period                         23,145,470.19               23,200,555.04
Handling charges for financial expense in Reporting Period                 190,445.34                     359,561.84
Others                                                                     330,043.88                     580,495.00
Total                                                                   49,005,446.81               42,976,221.96


43. Supplemental Information for Cash Flow Statement

(1) Supplemental Information for Cash Flow Statement

                                                                                                          Unit: RMB
                       Supplemental information                       Reporting Period Same period of last year
1. Reconciliation of net profit to net cash flows generated from
                                                                             --                      --
operating activities
Net profit                                                               40,050,611.87              35,403,561.67
Add: Provision for impairment of assets                                   9,150,039.27              10,257,154.02
Depreciation of fixed assets, of oil-gas assets, of productive
                                                                         46,215,003.48              42,685,033.48
biological assets
Amortization of intangible assets                                         2,951,641.28                2,408,513.75
Losses on disposal of fixed assets, intangible assets and other
                                                                            -65,821.39               -6,113,117.21
long-term assets (gains: negative)
Financial cost (gains: negative)                                            568,840.63                2,163,147.25
Investment loss (gains: negative)                                         -7,143,077.40              -1,901,135.64


                                                                                                                    75
  Changchai Company, Limited                                                                       Semi-Annual Report 2017


Decrease in deferred income tax assets
                                                                                                                -8,781,450.00
(“-” means increase)
Decrease in inventory (gains: negative)                                        45,213,642.10                   37,091,003.67
Decrease in accounts receivable from operating activities (gains:
                                                                               -97,396,929.18                  -25,134,137.10
negative)
Increase in payables from operating activities (decrease: negative)            30,817,483.85                   29,957,339.40
Others                                                                             -5,982,111.20
Net cash flows generated from operating activities                             64,379,323.31                118,035,913.29
2. Significant investing and financing              activities     without
                                                                                      --                        --
involvement of cash receipts and payments
3. Change of cash and cash equivalent:                                                --                        --
Closing balance of cash                                                       589,472,465.73                594,934,363.36
Less: Opening balance of cash                                                 583,278,129.09                526,716,238.21
Net increase in cash and cash equivalents                                          6,194,336.64                68,218,125.15


(2) Cash and Cash Equivalents

                                                                                                                     Unit: RMB
                       Item                                      Closing balance                    Opening balance
I. Cash                                                                 589,472,465.73                      583,278,129.09
Including: Cash on hand                                                      136,578.34                              314,905.29
Bank deposit on demand                                                  589,335,887.39                      582,963,123.80
Other monetary fund on demand                                                                                           100.00
III. Closing balance of cash and cash equivalents                       589,472,465.73                      583,278,129.09


44. The Assets with the Ownership or Use Right Restricted

                                                                                                                     Unit: RMB
              Item                        Closing book value                               Restricted reason
Monetary capital                                    119,219,787.00 Bank acceptance draft deposited in the margin
Houses and buildings                                   9,394,240.27 Pledge for bank loan
Land use right                                       21,179,360.79 Pledge for bank loan
Total                                               149,793,388.06                                 --




                                                                                                                             76
  Changchai Company, Limited                                                                Semi-Annual Report 2017


45. Foreign Currency Monetary Items

(1) Foreign Currency Monetary Items

                                                                                                          Unit: RMB
          Item             Closing foreign currency balance       Exchange rate    Closing convert to RMB balance
Monetary capital
Including: USD                                  5,742,604.48 6.774                                    38,902,699.82
Account receivable
Including: USD                                  5,063,339.22 6.774                                    34,301,085.23


(2) Note to Oversea Entities Including: for Significant Oversea Entities, Shall Disclose Main Operating
Place, Recording Currency and Selection Basis, if there Are Changes into Recording Currency, Shall Also
Disclose the Reason.

□ Applicable √ Not applicable

VIII. Changes of Merge Scope

The Company held an extraordinary meeting of the Board of Directors on August 26, 2016. The meeting
examined and approved the Proposal on Assigning 67% Equity of Changzhou Fuji Changchai Robin Gasoline
Engine Co., Ltd. held by Fuji Heavy Industries, Ltd.. After the completion of the acquisition, the Company holds
Changzhou 100% stock of Fuji Changchai Robin Gasoline Engine Co., Ltd. and it shall change from Sino-foreign
joint ventures to domestic enterprises. On January 20, 2017, Changzhou Fuji Changchai Robin Gasoline Engine
Co., Ltd. completed the business registration procedures related to equity transfer, and got the business license
issued by Changzhou National Hi-Tech Industrial Development Zone (Xinbei District) Market Supervision and
Administration. The registered capital is RMB37,250,000, and the business scope includes small general-purpose
gasoline engine and its auxiliary units (Including agricultural machinery, engineering machinery, water pump units,
small generating units) and the production, processing, R & D, development, sales and technical consulting of
supporting components and parts. Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. has been included
in the consolidated financial statements of the Company since January 20, 2017.

IX. Equity in Other Entities

(1) The Structure of the Enterprise Group

1. Equity in Subsidiary


                                    Main operating Registration     Nature of     Holding percentage (%)  Way of
              Name
                                        place         place         business      Holding      percentage gaining
Changchai Wanzhou          Diesel
                                    Chongqing      Chongqing Industry                 60.00%               Set-up
Engine Co., Ltd.


                                                                                                                      77
  Changchai Company, Limited                                                           Semi-Annual Report 2017


Changzhou Changchai Benniu
                                 Changzhou       Changzhou Industry               99.00%       1.00% Set-up
Diesel Engine Fittings Co., Ltd.
Changzhou            Housheng
                              Changzhou          Changzhou Service              100.00%               Set-up
Investment Co., Ltd.
Changzhou            Changchai
Housheng            Agricultural Changzhou       Changzhou Industry               70.00%      25.00% Set-up
Equipment Co., Ltd.
Changzhou Fuji Changchai                                                                              Investme
                                Changzhou        Changzhou Industry             100.00%
Robin Gasoline Engine Co., Ltd.                                                                       nt


(2) Significant Not Wholly Owned Subsidiary

                                                                                                     Unit: RMB
                          Shareholding      The profits and losses Declaring dividends      Balance of minority
       Name               proportion of        arbitrate to the    distribute to minority     shareholder at
                       minority shareholder minority shareholders        shareholder          closing period
Changchai Wanzhou
Diesel Engine Co.,                  40.00%             347,142.32                                18,746,089.89
Ltd.
Changzhou
Changchai Housheng
                                     5.00%              24,311.42                                   392,590.42
Agricultural
Equipment Co., Ltd.


(3) The Main Financial Information of Significant Not Wholly Owned Subsidiary

                                                                                                     Unit: RMB
                          Closing balance                                    Opening balance
                 Non-cu        Current Non-cu Total              Non-cu        Current Non-curr Total
 Name Current           Total                            Current        Total
                  rrent        liabiliti rrent liabiliti          rrent        liabiliti    ent    liabiliti
       assets           assets                            assets        assets
                 assets           es    liability es             assets           es     liability    es
Changc
hai
Wanzh
ou     50,196, 27,219, 77,416, 30,551,              30,551, 43,462, 27,671, 71,134, 25,137,             25,137,
Diesel 479.97 810.97 290.94 066.20                   066.20 836.42 597.38 433.80 064.88                  064.88
Engine
Co.,
Ltd.

Changz 25,427, 389,88 25,817, 17,965,               17,965, 29,743, 372,86 30,116, 22,750,              22,750,
hou     470.18   7.75 357.93 549.57                  549.57 164.98    8.70 033.68 453.64                 453.64


                                                                                                                 78
  Changchai Company, Limited                                                               Semi-Annual Report 2017


Changc
hai
Houshe
ng
Agricul
tural
Equipm
ent Co.,
Ltd.
                                                                                                          Unit: RMB
                               Reporting Period                                Same period of last year
                                                                                             Total
                                         Total
    Name         Operation      Net               Operating       Operation               comprehen       Operating
                                      comprehen                                Net profit
                  revenue      profit             cash flow        revenue                    sive        cash flow
                                      sive income
                                                                                            income
Changchai
Wanzhou       32,078,103. 867,855            1,475,032.8 29,922,164.                       9,295,155.4
                                  867,855.82                         684,407.82 684,407.82
Diesel Engine         46      .82                      7         72                                  0
Co., Ltd.
Changzhou
Changchai
Housheng        8,689,291.6 486,228            -10,269,00 14,101,934. 2,233,123.5 2,233,123.5 -10,382,517.
                                    486,228.32
Agricultural              1     .32                  3.10         04            6           6          52
Equipment
Co., Ltd.


X. The Risk Related Financial Instruments

The goal of the Company’s risk management was gaining the balance between the risk and income, and reduced
the negative impact to the operation performance of the Company in the lowest level and maximized the interests
of shareholders and other equity investors. Base on the risk management goal, the basis strategy of the Company’s
risk management was to recognized and analyze all kinds of risk that the Company faced, set up suitable risk
bottom line and conduct risk management, and supervised the risks timely and reliably and control the risk within
the limited scope.
The main risks of the Company due to financial instruments were credit risk, liquidity risk and market risk. The
management level had reviewed and approved the policies to manage the risks, which summarized as follows:
(I) Credit risk
Credit risk was one party of the contract failed to fulfill the obligations and causes loss of financial assets of the
other party.
The credit of risk of the Company mainly was related to account receivable, in order to control the risk, the
Company conduct the following methods.
The Company only conducts related transaction with approved and reputable third party, in line with the policy of
the Company, the Company need to conduct credit-check for the clients adopting way of credit to conduct

                                                                                                                     79
  Changchai Company, Limited                                                                    Semi-Annual Report 2017


transaction. In addition, the Company continuously monitors the balance of account receivable to ensure the
Company would not face the significant bad debt risk.
(II) Liquidity Risk
Liquidity risk is referred to the risk of incurring capital shortage when performing settlement obligation in the way
of cash payment or other financial assets. The policies of the Company are to ensure that there was sufficient cash
to pay the due liabilities.
The liquidity risk was centralized controlled by the financial department of the Company. The financial
departments through supervising the balance of the cash and securities can be convert to cash at any time and the
rolling prediction of cash flow in future 12 months to ensure the Company have sufficient cash to pay the
liabilities under the case of all reasonable prediction.
(III) Market risk
Market risk is refer to risk of the fair value or future cash flow of financial instrument changed due to the change
of market price, including: foreign exchange rate risk, interest rate risk.
1. Interest rate risk
Interest rate risk is refers to fluctuation risk of the fair value or future cash flow of financial instrument change due
to the change of market price.
2. Foreign exchange risk
Foreign exchange rate risk is referred to the risk incurred form the change of exchange rate. The export sales of
the Company mainly was market of Southeast Asia region which settled by USD. Though the Company’s export
business receiving part of payment for goods in advance, but the balance had a certain credit term, if the RMB
appreciates against the dollar, the company's accounts receivable will incur foreign currency exchange loss.

XI. The Disclosure of the Fair Value

1. Closing Fair Value of Assets and Liabilities Calculated by Fair Value

                                                                                                              Unit: RMB
                                                     Fair value at the end of the reporting period

                                       First level        Second level            Third level
             Item
                                      Fair value           Fair value      Fair value measurement             Total
                                     measurement          measurement

I. Consistent       fair   value
                                           --                   --                     --                       --
measurement
(II)        Available-for-sale
                                        763,890,000.00                                                   763,890,000.00
financial assets
(2) Equity tool investment              763,890,000.00                                                   763,890,000.00
Total assets of consistent fair
                                        763,890,000.00                                                   763,890,000.00
value measurement
II. Inconsistent fair value
                                           --                   --                     --                       --
measurement




                                                                                                                          80
  Changchai Company, Limited                                                                Semi-Annual Report 2017


2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level
1


Tradable financial assets and available for sale financial assets of the Company were funds and shares with the

closing price as the basis of fair value calculation at period-end.

XII. Related Party and Related Transaction

1. Information Related to Parent Company of the Company


                                                                                          Proportion of voting
                                                                      Proportion of share
                                                                                            rights owned by
                                     Registration Nature of Registered held by parent
     Name of parent company                                                                 parent company
                                        place     business   capital    company against
                                                                                          against the Company
                                                                       the Company (%)
                                                                                                   (%)
Changzhou Government
State-owned Assets Supervision       Changzhou                                         30.43%                 30.43%
and Administration Commission
The actual controller of the Company is Changzhou Government State-owned Assets Supervision and
Administration Commission. As of June 30, 2017, it held 30.43% shares of the Company (state owned shares).

2. Subsidiaries of the Company

The details of subsidiaries of the Company please refer to equity in other entities in note to financial statements.

3. Information on the Joint Ventures and Associated Enterprises of the Company

The details of the joint ventures and associated enterprises of the Company please refer to equity in other entities
in note to financial statements.

4. Information on Other Related Parties of the Company

The Company had no other related party.

5. List of Related-party Transactions

The Company had no other related transaction need to be disclosed.

XIII. Commitments and Contingencies

1. Significant Commitments

As of 30 June 2017, there were no significant commitments to be disclosed.

                                                                                                                       81
  Changchai Company, Limited                                                               Semi-Annual Report 2017


2. Contingencies

(1) Significant Contingency at Balance Sheet Date

Litigation and arbitration in the Reporting Period:

        Name of the entity             Date of        Name of the litigation or   Amount involved        Notes
                                      accepted         arbitration institutions        (RMB ten
                                                                                       thousand)
Shandong Hongli Group Co., Ltd. 06/27/2001            Changzhou Intermediate              1,436.00      Under the
                                                          People's Court                             bankruptcy and
                                                                                                       liquidation

Total                                                                                1,436.00
Notes:
About the lawsuit case of Shandong Hongli Group Co., Ltd., the accused company owed accumulatively RMB
14.36 million to the Company. The Company sued to Changzhou Intermediate People’s Court in 2001 and sued
for compulsory execution in April, 2002. Currently, the defendant has started the bankruptcy procedure. The
aforesaid payment has arranged for the full provision for bad debts.

XIV. Other Significant Events

1. Segment Information

Due to the operation scope of the Company and subsidiaries were similar, the Company conduct common
management, did not divide business unit, so the Company only made single branch report.

XV. Notes of Main Items in the Financial Statements of the Company

1. Accounts Receivable

(1) Accounts Receivable Classified by Category

                                                                                                         Unit: RMB
                                   Closing balance                                 Opening balance
                                          Bad debt
                      Book balance                                   Book balance Bad debt provision
                                          provision
     Category                              Withdra Book                                  Withdraw          Book
                           Proporti          wal    value           Amou Proporti           al             value
                    Amount          Amount                                        Amount
                              on           proporti                  nt     on           proportio
                                              on                                             n

Accounts                                                    37,894
                   36,350,           31,144,        5,205,6                          31,210,5            6,684,100.
receivable    with             4.08%         85.68%          ,677.7          7.17%              82.36%
                    005.76            305.79          99.97                             76.96                    82
significant single                                                8


                                                                                                                     82
  Changchai Company, Limited                                                                  Semi-Annual Report 2017


amount for which
bad debt provision
separately accrued
Accounts
receivable
                                                          490,38
withdrawal of bad 853,571        197,451         656,119,                188,267,                            302,116,57
                          95.89%          23.13%           3,771. 92.78%                            38.39%
debt provision of ,093.30         ,197.74         895.56                   201.85                                  0.08
                                                              93
by credit risks
characteristics:
Accounts
receivable    with
insignificant
                   276,298                276,298 100.00             276,29            276,298.
single amount for                 0.03%                       0.00             0.05%            100.00%
                       .29                    .29     %                8.29                 29
which bad debt
provision
separately accrued
                                                            528,55
                     890,197 100.00 228,871        661,325          100.00 219,754,                          308,800,67
Total                                       25.71%           4,748.                                 41.58%
                      ,397.35    % ,801.82          ,595.53             % 077.10                                   0.90
                                                                00
Accounts receivable with single significant amount and withdrawal bad debt provision separately at end of period
√ Applicable □ Not applicable
                                                                                                             Unit: RMB
                                                               Closing balance
 Accounts receivable
                                                                              Withdrawal
 (classified by units)   Account receivable       Bad debt provision                              Withdrawal reason
                                                                              proportion
Customer 1                         1,902,326.58          1,902,326.58                  100.00% Difficult to recover
Customer 2                         6,215,662.64          6,202,854.45                   99.79% Difficult to recover
                                                                                                 Estimated difficult
Customer 3                         3,040,439.17          2,214,607.75                   72.84%
                                                                                                 to recover
Customer 4                         3,279,100.00          3,279,100.00                  100.00% Difficult to recover
Customer 5                         2,133,377.01          2,133,377.01                  100.00% Difficult to recover
Customer 6                         5,359,381.00          5,359,381.00                  100.00% Difficult to recover
Customer 7                         2,584,805.83          2,584,805.83                  100.00% Difficult to recover
Customer 8                         1,648,375.42          1,648,375.42                  100.00% Difficult to recover
                                                                                                 Estimated difficult
Customer 9                        10,186,538.11          5,819,477.75                   57.13%
                                                                                                 to recover
Total                             36,350,005.76        31,144,305.79              --                      --
In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable

                                                                                                                        83
  Changchai Company, Limited                                                           Semi-Annual Report 2017


                                                                                                     Unit: RMB
                                                              Closing balance
            Aging
                                  Account receivable        Bad debt provision         Withdrawal proportion
Subentry within 1 year
Within 1 year                           662,351,634.14               13,247,032.68                       2.00%
Subtotal of within 1 year               662,351,634.14               13,247,032.68                       2.00%
1 to 2 years                               3,158,558.75                 157,927.94                       5.00%
2 to 3 years                               1,700,460.62                 255,069.09                      15.00%
3 to 4 years                                656,652.40                  196,995.72                      30.00%
4 to 5 years                               5,274,037.71               3,164,422.63                      60.00%
Over 5 years                            180,429,749.68              180,429,749.68                      100.00%
Total                                   853,571,093.30              197,451,197.74
In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
In the groups, accounts receivable adopting other methods to withdraw bad debt provision:
Not applicable

(2) Accounts Receivable Withdraw, Reversed or Collected during the Reporting Period

The withdrawal amount of the bad debt provision during the Reporting Period was of RMB9,183,995.89; the
amount of the reversed or collected part during the Reporting Period was of RMB66,271.17.

(3) Accounts Receivable of the Top 5 of the Closing Balance Collected According to the Arrears Party

The total amount of top five of account receivable of closing balance collected by arrears party was
RMB449,507,585.41, 50.50% of total closing balance of account receivable. 42.05%, the relevant closing balance
of bad debt provision withdrawn was RMB22,939,768.44.

2. Other Accounts Receivable

(1) Other Accounts Receivable Classified by Category

                                                                                                     Unit: RMB
                                  Closing balance                                Opening balance
                                         Bad debt
                      Book balance                               Book balance Bad debt provision
                                         provision
     Category                              Withdra Book                              Withdraw           Book
                           Proporti          wal    value       Amou Proporti           al              value
                    Amount          Amount                                    Amount
                              on           proporti              nt     on           proportio
                                              on                                         n

                                                                                                                 84
  Changchai Company, Limited                                                                  Semi-Annual Report 2017


Other     accounts
receivable    with
significant single 2,853,1                2,853,1 100.00            2,853,           2,853,18
                                  8.95%                                      8.56%            100.00%
amount for which 88.02                      88.02     %            188.02                8.02
bad debt provision
separately accrued
Other     accounts
receivable
withdrawn       bad                                       27,799
                    26,346,        24,115,        2,230,5                24,104,7                             3,694,673.
debt     provision          82.64%         91.53%          ,389.2 83.40%                           86.71%
                     366.45        804.37           62.08                   15.33                                    93
according to credit                                             6
risks
characteristics
Other      accounts
receivable     with
insignificant
                    2,679,8               2,679,8 100.00            2,679,           2,679,80
single amount for                 8.41%                                      8.04%            100.00%
                      01.13                 01.13     %            801.13                1.13
which bad debt
provision
separately accrued
                                                           33,332
                     31,879, 100.00 29,648,        2,230,5         100.00 29,637,7                            3,694,673.
Total                                       93.00%          ,378.4                                 88.92%
                      355.60     % 793.52            62.08             %     04.48                                    93
                                                                 1
Other receivable with single significant amount and withdrawal bad debt provision separately at end of period:
√ Applicable □ Not applicable
                                                                                                             Unit: RMB
                                                                 Closing balance
 Other accounts receivable
                                   Other accounts                                   Withdrawal            Withdrawal
          (unit)                                        Bad debt provision
                                     receivable                                     proportion             reason
Changchai Group Import &                                                                                Difficult to
                                        2,853,188.02            2,853,188.02                  100.00%
Export Co., Ltd.                                                                                        recover
Total                                   2,853,188.02            2,853,188.02             --                    --
In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
                                                                                                             Unit: RMB
                                                                 Closing balance
           Aging
                                  Other accounts receivable    Bad debt provision             Withdrawal proportion
Subentry within 1 year
Within 1 year                                 1,699,462.99                   33,989.26                              2.00%



                                                                                                                        85
  Changchai Company, Limited                                                              Semi-Annual Report 2017


Subtotal of within 1 year                     1,699,462.99                  33,989.26                        2.00%
1 to 2 years                                    99,906.12                     4,995.31                       5.00%
2 to 3 years                                    59,314.08                     8,897.10                      15.00%
3 to 4 years                                   588,002.87                  176,400.85                       30.00%
4 to 5 years                                    20,396.36                   12,237.82                       60.00%
Over 5 years                              23,879,284.03                 23,879,284.03                     100.00%
Total                                     26,346,366.45                 24,115,804.37
In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision
□ Applicable √ Not applicable
In the groups, other accounts receivable adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable

(2) The Bad-debt Provision Withdrew, Reversed or Collected during the Reporting Period

The withdrawal amount of the bad debt provision during the Reporting Period was of RMB2,996.22; the amount
of the reversed or collected part during the Reporting Period was of RMB0.00.

(3) Other Accounts Receivable Classified by Account Nature

                                                                                                         Unit: RMB
          Nature of accounts                     Closing book balance                Opening book balance
Margin &cash pledge                                                4,200.00                                4,200.00
Intercourse funds between entities                             8,954,002.16                           16,917,626.21
Petty cash &employee borrowing                                 1,980,351.32                            1,056,185.37
Others                                                        20,940,802.12                           15,354,366.83
Total                                                         31,879,355.60                           33,332,378.41


(4) The Top Five Other Account Receivable Classified by Debtor at Period-end

                                                                                                         Unit: RMB
                                                                                 Proportion to the      Closing
                                                             Account-age at
                                  Nature of      Closing                          total of closing     balance of
         Name of unit                                        the end of the
                                  accounts       balance                          balance of other      bad-debt
                                                                 period
                                                                                accounts receivable    provision
Changzhou Compressor Co., Intercours
                                               2,940,000.00 Over 5 years                     9.22% 2,940,000.00
Ltd.                      e funds
Changchai Group Import & Intercours
                                               2,853,188.02 Over 5 years                     8.95% 2,853,188.02
Export Co., Ltd.         e funds

Changzhou       New     District Intercours    1,626,483.25 Over 5 years                     5.10% 1,626,483.25

                                                                                                                    86
  Changchai Company, Limited                                                                    Semi-Annual Report 2017


Accounting Center                e funds
                                 Intercours
OEM Group Settlement Cente                       1,140,722.16 Over 5 years                          3.58% 1,140,722.16
                                 e funds
Changzhou Xingsheng
                                 Intercours
Property Management Co.,                           505,981.70 Within 1 year                         1.59%       10,119.63
                                 e funds
Ltd.
Total                                  --        9,066,375.13           --                        28.44% 8,570,513.06


3. Long-term Equity Investment

                                                                                                               Unit: RMB
                                    Closing balance                                     Opening balance
        Item                          Depreciation                                           Depreciatio
                     Book balance                         Book value     Book balance                       Book value
                                        reserves                                             n reserves
Investment to
                     231,752,730.03                      231,752,730.03 184,466,500.00                     184,466,500.00
the subsidiary
Investment to
joint ventures
                          44,182.50          44,182.50                       21,050,412.53     44,182.50 21,006,230.03
and associated
enterprises
Total                231,796,912.53          44,182.50 231,752,730.03 205,516,912.53           44,182.50 205,472,730.03


(1) Investment to the Subsidiary

                                                                                                               Unit: RMB
                                                                                         Withdrawn             Closing
                                                                         Closing         impairment           balance of
          Investee         Opening balance Increase Decrease
                                                                         balance       provision in the      impairment
                                                                                       Reporting Period       provision
Changchai     Wanzhou
                               51,000,000.00                           51,000,000.00
Diesel Engine Co., Ltd.
Changzhou Changchai
Benniu Diesel Engine           96,466,500.00                           96,466,500.00
Fittings Co., Ltd.
Changzhou Housheng
                               30,000,000.00                           30,000,000.00
Investment Co., Ltd.
Changzhou Changchai
Housheng Agricultural           7,000,000.00                            7,000,000.00
Equipment Co., Ltd.

Changzhou Fuji                              0.00 47,286,2              47,286,230.03


                                                                                                                          87
  Changchai Company, Limited                                                         Semi-Annual Report 2017


Changchai Robin                               30.03
Gasoline Engine Co.,
Ltd.
                                            47,286,2          231,752,730.0
Total                      184,466,500.00
                                               30.03                      3


(2) Investment to Joint Ventures and Associated Enterprises

                                                                                                   Unit: RMB
                                    Increase/decrease in Reporting Period
                                     Investm
                                        ent                                                          Closing
                                              Adjustm            Declarat Withdra
                                       profit                                                        balance
                    Additio Negativ             ent of            ion of   wn
           Opening                   and loss            Other                             Closing      of
Investee               nal     e                 other             cash impairm
           balance                   recogniz            equity                    Others balance impairme
                    investm investm           compreh           dividend ent
                                    ed under            changes                                         nt
                       ent    ent               ensive             s or provisio
                                        the                                                         provision
                                               income             profits    n
                                      equity
                                      method
I. Joint ventures
II. Associated enterprises
Changz
hou Fuji
Changc
hai        21,006,2                                                               21,006,2
                                                                                               0.00
Robin         30.03                                                                  30.03
Gasolin
e Engine
Co., Ltd.
  Beijing
Tsinghu
a
Xingye
Industri
al         44,182.5                                                                        44,182.5 44,182.5
Investm           0                                                                               0         0
ent
Manage
ment
Co.,
Ltd.
           21,050,4                                                                        44,182.5 44,182.5
Subtotal
              12.53                                                                               0         0
           21,050,4                                                                        44,182.5 44,182.5
Total
              12.53                                                                               0         0

                                                                                                               88
  Changchai Company, Limited                                                                   Semi-Annual Report 2017


4. Revenues and Operating Costs

                                                                                                              Unit: RMB
                                         Reporting Period                           Same period of last year
         Item
                            Sales revenue            Cost of sales            Sales revenue           Cost of sales
Main operations             1,219,777,917.09         1,080,764,388.78         1,153,641,301.29          992,786,487.60
Other operations                  9,529,630.03              5,985,445.18         10,055,027.37               7,398,827.46
Total                       1,229,307,547.12         1,086,749,833.96         1,163,696,328.66        1,000,185,315.06


5. Investment Income

                                                                                                              Unit: RMB
                                  Item                                     Reporting Period    Same period of last year
Long-term equity investment income accounted by equity method                                                 821,264.12
Investment income received from holding of available-for-sale
                                                                                6,952,750.99
financial assets
Investment income from disposal of bank financial products                                                    364,000.00
Total                                                                           6,952,750.99                 1,185,264.12


XVI. Supplementary Materials

1. Items and Amounts of Extraordinary Gains and Losses

√ Applicable □ Not applicable
                                                                                                              Unit: RMB
                          Item                                   Amount                        Explanation
Gains/losses on the disposal of non-current assets                 756,874.20
Government subsidies recorded into the current gains
and losses (excluding the government subsidies that
are closely relative to business and enjoyed in normed             788,186.82
way or quantitatively in accordance with the national
standards)
                                                                              On January 20, 2017, the Company
                                                                              accomplished the transfer of stock
Gain achieved when the Company’s investment costs
                                                                              rights after the acquisition of shares of
in the acquisition of subsidiary, Joint venture and
                                                                              Changzhou Fuji Changchai Robin
associated enterprise are less than the fair value of           22,756,742.66
                                                                              Gasoline Engine Co., Ltd. From
recognizable assets of invested company enjoyed by
                                                                              January 20, 2017, the company shall be
the Company while finishing the investment
                                                                              included in the Company’s
                                                                              consolidated statements. Since the


                                                                                                                         89
  Changchai Company, Limited                                                               Semi-Annual Report 2017


                                                                             transfer price was less than valuation,
                                                                             the transaction brought about revenues
                                                                             of RMB22,756,742.66.
Gain/loss from change of fair value of transactional
assets and liabilities, and investment gains from
disposal of transactional financial assets and liabilities     190,326.41
and available-for-sale financial assets, other than valid
hedging related to the Company’s common businesses
Other non-operating income and expenses other than
                                                             -6,246,118.36
the above
Less: Income tax effects                                       -591,497.43
     Minority interests effects                                 -67,601.48
Total                                                        18,905,110.64                      --
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in
the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Extraordinary Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said
explanatory announcement as a recurrent gain/loss item.
□ Applicable √ Not applicable

2. Return on Net Equity and Earnings Per Share


                                                                Weighted average           EPS(Yuan/share)
                Profit as of Reporting Period
                                                                   ROE (%)               EPS-basic      EPS-diluted
Net profit attributable to common shareholders of the
                                                                                1.71%            0.07           0.07
Company
Net profit attributable to common shareholders of the
                                                                                0.90%            0.04           0.04
Company after deduction of non-recurring profit and loss


3. Differences between Accounting Data under Domestic and Overseas Accounting Standards

(1) Differences of Net Profit and Net Assets Disclosed in Financial Reports Prepared under International
and Chinese Accounting Standards

□ Applicable √ Not applicable

(2) Differences of Net Profit and Net Assets Disclosed in Financial Reports Prepared under Overseas and
Chinese Accounting Standards

□ Applicable √ Not applicable




                                                                                                                     90
Changchai Company, Limited              Semi-Annual Report 2017




                             Changchai Company, Limited

                                        August 25, 2017




                                                                  91