Changchai Company, Limited
Financial Report For the Year 2018
I Independent Auditor’s Report
Type of the independent auditor’s opinion Unmodified unqualified opinion
Date of signing this report 9 April 2019
Name of the independent auditor Jiangsu Gongzheng Tianye Certified Public Accountants LLP
No. of the auditor’s report Sugong W[2019]A405
Name of the certified public accountants Dai Weizhong, Xu Wenxiang
Text of the Independent Auditor’s Report
To the Shareholders of Changchai Company, Limited,
I Opinion
We have audited the accompanying financial statements of Changchai Company, Limited. (together with its
consolidated subsidiaries included in the consolidated financial statements, the “Company”), which comprise the
parent’s and consolidated balance sheets as at 31 December 2018, the parent’s and consolidated income statements,
the parent’s and consolidated cash flow statements, the parent’s and consolidated statements of changes in owners’
equity for the year then ended, as well as the notes to the financial statements.
In our opinion, the financial statements attached were prepared in line with the regulations of Accounting
Standards for Business Enterprises in all significant aspects which gave a true and fair view of the consolidated
and parent financial position of Changchai Company, Limited. as at 31 December 2018 and the consolidated and
parent business performance and cash flow for 2018.
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for Audit of Financial
Statements section of our report. We are independent of the Company in accordance with the China Code of
Ethics for Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance with
the said Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
III Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. And key audit matter identified in our audit is summarized as follows:
(I) Recognition of revenue
1. Description of the item
The consolidated revenue of the Company in 2018 was RMB2,132,902,700. Because of the significant
amount of the revenue and being the key performance indicator, related risks of recognition of revenue may
existed according to the accounting policies, so we identify income recognition as a key audit item.
2. Response for audit
(1) Know the key internal control related to revenue recognition, evaluate whether its design and execution
are valid or not, and test the operation effectiveness of the related internal control.
(2) Analyze and assess the time-point of transferring major risks and rewards related to recognition of sales
revenue through the sampling inspection of sales contract and interviews with management, and then evaluate the
recognition policies of sales revenue of the Company.
(3) Check the supporting documents related to revenue recognition, such as sales contracts, order form,
invoice for sales, shipping order, declaration for exportation, and etc.
(4) Check the operating revenue recognized before and after the balance sheet date to the supporting
documents, such as shipping order, declaration for exportation, and etc by sampling method to assess whether the
operating revenue is recognized within appropriate period.
(5) Implement the confirmation by drawing sample to recognize the balance of accounts receivable and the
amount of sales revenue according to the features and natures of customer transaction.
(II) Bad debt provision for accounts receivable
1. Description of the item
As stated in Notes V. 2 of the Financial Statements, as of 31 December 2018, carrying value of accounts
receivable of the Company is RMB378,859,200, accounting for 10.70% of the total assets. Bad debt provision for
accounts receivable of the Company is calculated by the assessment of accounts receivable’s return ability. The
assessment of accounts receivable’s return ability needs large judgment of the management, involving the
significant accounting estimations with significant influences on amounts. So, we take bad debt provision for
account receivable as a key audit item.
2. Response for audit
(1) Knowing, evaluating and testing the related internal control of bad debt provision for accounts receivable;
(2) Re-checking the related considerations and objective evidences of impairment test for accounts receivable,
paying attention to whether the management has fully recognized the impairment of items;
(3) For accounts receivable made bad debt provision separately, we re-check the basis and reasonability for
the estimated available cash flow in the future;
(4) For accounts receivable made bad debt provision by the credit risks characteristic group, we evaluate
whether the ratio of bad debt provision confirmed by management is reasonable;
(5) We request for confirmation of accounts receivable, and check the confirmation result with the carrying
amount;
(6) Checking the payment collection after the binding stage, and evaluating the reasonability of bad debt
provision made by management.
IV Other Information
The Company’s management (hereinafter referred to as “management”) is responsible for the other
information. The other information comprises all of the information included in the Company’s 2017 Annual
Report other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information; we are required to
report that fact. We have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance for Financial Statements
The management is responsible for the preparation of the financial statements that give a fair view in
accordance with CAS, and for designing, implementing and maintaining such internal control as the management
determines is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the management either intends to liquidate the Company or to cease operations,
or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with CAS will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances.
Jiangsu Gongzheng Tianye Certified Public Accountants Chinese CPA Dai Weizhong
(LLP) (Engagement Partner)
Chinese CPA Xu Wenxiang
Wuxi China 9 April 2019
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Changchai Company, Limited
Unit: RMB
Item 31 December 2018 31 December 2017
Current assets:
Monetary capital 800,960,036.69 430,305,367.71
Settlement reserve
Interbank loans granted
Financial assets at fair value through profit or loss
Derivative financial assets
Notes and accounts receivable 874,229,941.58 1,108,415,299.12
Including: Notes receivable 495,370,782.47 716,404,345.57
Accounts receivable 378,859,159.11 392,010,953.55
Prepayments 11,352,297.10 17,781,007.77
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract reserve
Other receivables 9,244,584.42 5,794,971.22
Including: Interest receivable
Dividends receivable
Financial assets purchased under resale agreements
Inventories 557,953,891.70 508,246,807.48
Assets classified as held for sale
Current portion of non-current assets
Other current assets 34,357,608.97 42,540,184.05
Total current assets 2,288,098,360.46 2,113,083,637.35
Non-current assets:
Loans and advances to customers
Available-for-sale financial assets 498,851,369.49 793,522,639.04
Held-to-maturity investments
Long-term receivables
Long-term equity investments 0.00 0.00
Investment property 50,656,007.63 52,864,348.43
Fixed assets 511,250,371.37 560,049,970.50
Construction in progress 89,090,384.71 94,581,989.06
Productive living assets
Oil and gas assets
Intangible assets 103,092,879.38 107,795,746.86
R&D expense
Goodwill
Long-term prepaid expense
Deferred income tax assets 979,822.71 1,006,953.81
Other non-current assets 0.00 0.00
Total non-current assets 1,253,920,835.29 1,609,821,647.70
Total assets 3,542,019,195.75 3,722,905,285.05
Current liabilities:
Short-term borrowings 27,000,000.00 24,900,000.00
Borrowings from central bank
Customer deposits and interbank deposits
Interbank loans obtained
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Notes and accounts payable 1,030,130,275.77 963,299,000.18
Advances from customers 34,500,232.97 40,153,984.91
Financial assets sold under repurchase agreements
Handling charges and commissions payable
Payroll payable 50,500,592.99 51,247,112.66
Taxes payable 7,066,085.89 4,017,920.78
Other payables 199,412,250.90 195,985,676.91
Including: Interest payable
Dividends payable 3,891,433.83 3,891,433.83
Reinsurance payables
Insurance contract reserve
Payables for acting trading of securities
Payables for underwriting of securities
Liabilities directly associated with assets classified as
held for sale
Current portion of non-current liabilities 18,500,000.00
Other current liabilities 2,082,985.18 2,028,937.59
Total current liabilities 1,369,192,423.70 1,281,632,633.03
Non-current liabilities:
Long-term borrowings 2,000,000.00 21,500,000.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payable
Provisions
Deferred income 59,928,484.84 60,992,858.46
Deferred income tax liabilities 47,971,780.36 92,409,779.39
Other non-current liabilities
Total non-current liabilities 109,900,265.20 174,902,637.85
Total liabilities 1,479,092,688.90 1,456,535,270.88
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 164,328,665.43 164,328,665.43
Less: Treasury stock
Other comprehensive income 264,405,675.00 515,068,550.00
Specific reserve 15,182,958.83 13,289,059.21
Surplus reserves 320,133,050.15 313,705,210.16
General reserve
Retained earnings 717,883,351.33 679,131,047.06
Total equity attributable to owners of the Company as the
2,043,308,026.74 2,246,896,857.86
parent
Non-controlling interests 19,618,480.11 19,473,156.31
Total owners’ equity 2,062,926,506.85 2,266,370,014.17
Total liabilities and owners’ equity 3,542,019,195.75 3,722,905,285.05
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2018 31 December 2017
Current assets:
Monetary capital 759,404,219.72 366,907,287.64
Financial assets at fair value through profit or loss
Derivative financial assets
Notes and accounts receivable 790,877,079.72 1,031,361,397.27
Including: Notes receivable 490,519,795.91 711,474,345.57
Accounts receivable 300,357,283.81 319,887,051.70
Prepayments 4,768,038.11 9,815,561.98
Other receivables 21,681,331.85 11,798,211.40
Including: Interest receivable 0.00 0.00
Dividends receivable 0.00 0.00
Inventories 437,423,195.46 376,814,388.82
Assets classified as held for sale
Current portion of non-current assets
Other current assets 23,099,858.67 20,692,057.15
Total current assets 2,037,253,723.53 1,817,388,904.26
Non-current assets:
Available-for-sale financial assets 470,940,000.00 785,837,500.00
Held-to-maturity investments
Long-term receivables
Long-term equity investments 241,752,730.03 231,752,730.03
Investment property 50,656,007.63 52,864,348.43
Fixed assets 413,186,680.19 453,155,359.47
Construction in progress 87,007,215.91 93,681,793.26
Productive living assets
Oil and gas assets
Intangible assets 72,184,608.63 75,623,219.49
R&D expense
Goodwill
Long-term prepaid expense
Deferred income tax assets 930,641.19 934,554.06
Other non-current assets
Total non-current assets 1,336,657,883.58 1,693,849,504.74
Total assets 3,373,911,607.11 3,511,238,409.00
Current liabilities:
Short-term borrowings 10,000,000.00
Financial liabilities at fair value through profit or
loss
Derivative financial liabilities
Notes and accounts payable 987,550,797.44 883,244,989.22
Advances from customers 32,072,387.55 38,382,261.14
Payroll payable 43,597,759.22 41,401,495.39
Taxes payable 2,443,767.89 1,373,036.64
Other payables 185,022,961.56 185,981,889.23
Including: Interest payable
Dividends payable 3,243,179.97 3,243,179.97
Liabilities directly associated with assets classified as
held for sale
Current portion of non-current liabilities 18,500,000.00
Other current liabilities
Total current liabilities 1,279,187,673.66 1,150,383,671.62
Non-current liabilities:
Long-term borrowings 19,500,000.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payable
Provisions
Deferred income 59,928,484.84 60,992,858.46
Deferred income tax liabilities 46,659,825.00 90,894,450.00
Other non-current liabilities
Total non-current liabilities 106,588,309.84 171,387,308.46
Total liabilities 1,385,775,983.50 1,321,770,980.08
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 183,071,147.70 183,071,147.70
Less: Treasury stock
Other comprehensive income 264,405,675.00 515,068,550.00
Specific reserve 15,182,958.83 13,289,059.21
Surplus reserves 320,133,050.15 313,705,210.16
Retained earnings 643,968,465.93 602,959,135.85
Total owners’ equity 1,988,135,623.61 2,189,467,428.92
Total liabilities and owners’ equity 3,373,911,607.11 3,511,238,409.00
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
3. Consolidated Income Statement
Unit: RMB
Item 2018 2017
1. Revenue 2,132,902,718.60 2,423,058,958.29
Including: Operating revenue 2,132,902,718.60 2,423,058,958.29
Interest income
Premium income
Handling charge and commission income
2. Costs and expenses 2,177,879,797.73 2,412,300,893.20
Including: Cost of sales 1,813,444,585.66 2,072,877,976.77
Interest expense
Handling charge and commission expense
Surrenders
Net claims paid
Net amount provided as insurance contract reserve
Expenditure on policy dividends
Reinsurance premium expense
Taxes and surcharges 12,532,729.68 13,904,298.45
Selling expense 126,997,066.87 102,297,713.37
Administrative expense 116,027,838.96 107,835,619.11
R&D expense 72,182,840.78 76,715,296.15
Finance costs -903,762.30 -2,290,794.39
Including: Interest expense 4,553,608.46 2,119,903.67
Interest income 4,665,445.23 7,613,535.50
Asset impairment loss 37,598,498.08 40,960,783.74
Add: Other income 6,291,685.65 8,456,560.85
Investment income (“-” for loss) 113,270,824.83 13,115,817.10
Including: Share of profit or loss of joint ventures and
associates
Gain on changes in fair value (“-” for loss)
Foreign exchange gain (“-” for loss)
Asset disposal income (“-” for loss) 662,151.89 1,373,236.33
3. Operating profit (“-” for loss) 75,247,583.24 33,703,679.37
Add: Non-operating income 1,938,995.76 22,907,878.36
Less: Non-operating expense 1,474,218.49 7,792,658.00
4. Profit before tax (“-” for loss) 75,712,360.51 48,818,899.73
Less: Income tax expense 13,545,662.67 1,681,667.26
5. Net profit (“-” for net loss) 62,166,697.84 47,137,232.47
5.1 Net profit from continuing operations (“-” for net loss) 62,166,697.84 47,137,232.47
5.2 Net profit from discontinued operations (“-” for net loss)
Net profit attributable to owners of the Company as the parent 62,021,374.04 46,431,302.73
Net profit attributable to non-controlling interests 145,323.80 705,929.74
6. Other comprehensive income, net of tax -250,662,875.00 -107,979,750.00
Attributable to owners of the Company as the parent -250,662,875.00 -107,979,750.00
6.1 Items that will not be reclassified to profit or loss
6.1.1 Changes caused by remeasurements on defined benefit
pension schemes
6.1.2 Share of other comprehensive income of investees that
will not be reclassified to profit or loss under equity method
6.2 Items that may subsequently be reclassified to profit or loss -250,662,875.00 -107,979,750.00
6.2.1 Share of other comprehensive income of investees that
will be reclassified to profit or loss under equity method
6.2.2 Gain/Loss on changes in fair value of available-for-sale
-250,662,875.00 -107,979,750.00
financial assets
6.2.3 Gain/Loss arising from reclassification of
held-to-maturity investments to available-for-sale financial assets
6.2.4 Effective gain/loss on cash flow hedges
6.2.5 Differences arising from translation of foreign
currency-denominated financial statements
6.2.6 Other
Attributable to non-controlling interests
7. Total comprehensive income -188,496,177.16 -60,842,517.53
Attributable to owners of the Company as the parent -188,641,500.96 -61,548,447.27
Attributable to non-controlling interests 145,323.80 705,929.74
8. Earnings per share
8.1 Basic earnings per share 0.11 0.08
8.2 Diluted earnings per share 0.11 0.08
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
4. Income Statement of the Company as the Parent
Unit: RMB
Item 2018 2017
1. Operating revenue 1,968,727,065.36 2,235,805,990.99
Less: Cost of sales 1,689,706,860.63 1,931,679,323.68
Taxes and surcharges 9,550,011.21 11,611,908.48
Selling expense 113,219,756.42 91,518,856.80
Administrative expense 99,399,032.15 90,013,191.80
R&D expense 70,981,785.06 76,589,354.80
Finance costs -2,269,683.27 -5,269,152.69
Including: Interest expense 1,150,062.50 243,305.56
Interest income 4,320,565.70 7,398,676.24
Asset impairment loss 33,088,706.77 36,843,390.33
Add: Other income 6,156,851.75 7,921,898.35
Investment income (“-” for loss) 112,464,720.49 10,709,750.99
Including: Share of profit or loss of joint ventures and
associates
Gain on changes in fair value (“-” for loss)
Asset disposal income (“-” for loss) 577,265.23 1,184,146.48
2. Operating profit (“-” for loss) 74,249,433.86 22,634,913.61
Add: Non-operating income 1,231,701.78 1,324,306.44
Less: Non-operating expense 1,442,817.89 6,979,953.83
3. Profit before tax (“-” for loss) 74,038,317.75 16,979,266.22
Less: Income tax expense 9,759,917.90 -1,270,346.56
4. Net profit (“-” for net loss) 64,278,399.85 18,249,612.78
4.1 Net profit from continuing operations (“-” for net loss) 64,278,399.85 18,249,612.78
4.2 Net profit from discontinued operations (“-” for net loss)
5. Other comprehensive income, net of tax -250,662,875.00 -107,979,750.00
5.1 Items that will not be reclassified to profit or loss
5.1.1 Changes in caused by remeasurements on defined benefit
pension schemes
5.1.2 Share of other comprehensive income of investees that
will not be reclassified to profit or loss under equity method
5.2 Items that may subsequently be reclassified to profit or loss -250,662,875.00 -107,979,750.00
5.2.1 Share of other comprehensive income of investees that
will be reclassified to profit or loss under equity method
5.2.2 Gain/Loss on changes in fair value of available-for-sale
-250,662,875.00 -107,979,750.00
financial assets
5.2.3 Gain/Loss arising from reclassification of
held-to-maturity investments to available-for-sale financial assets
5.2.4 Effective gain/loss on cash flow hedges
5.2.5 Differences arising from translation of foreign
currency-denominated financial statements
5.2.6 Other
6. Total comprehensive income -186,384,475.15 -89,730,137.22
7. Earnings per share
7.1 Basic earnings per share
7.2 Diluted earnings per share
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2018 2017
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 2,425,197,716.22 2,340,135,466.05
Net increase in customer deposits and interbank deposits
Net increase in borrowings from central bank
Net increase in loans from other financial institutions
Premiums received on original insurance contracts
Net proceeds from reinsurance
Net increase in deposits and investments of policy holders
Net increase in proceeds from disposal of financial assets at
fair value through profit or loss
Interest, handling charges and commissions received
Net increase in interbank loans obtained
Net increase in proceeds from repurchase transactions
Tax rebates 57,089,558.17 45,280,119.53
Cash generated from other operating activities 12,322,331.45 20,703,603.65
Subtotal of cash generated from operating activities 2,494,609,605.84 2,406,119,189.23
Payments for commodities and services 1,748,699,087.54 2,068,207,850.42
Net increase in loans and advances to customers
Net increase in deposits in central bank and in interbank loans
granted
Payments for claims on original insurance contracts
Interest, handling charges and commissions paid
Policy dividends paid
Cash paid to and for employees 321,746,157.63 332,974,762.36
Taxes paid 33,740,896.03 38,505,023.00
Cash used in other operating activities 116,603,937.75 88,100,832.84
Subtotal of cash used in operating activities 2,220,790,078.95 2,527,788,468.62
Net cash generated from/used in operating activities 273,819,526.89 -121,669,279.39
2. Cash flows from investing activities:
Proceeds from disinvestment 43,589,736.75 8,000,000.00
Investment income 113,425,932.70 11,364,613.67
Net proceeds from disposal of fixed assets, intangible assets
979,093.38 835,345.89
and other long-lived assets
Net proceeds from disposal of subsidiaries or other business
units
Cash generated from other investing activities 1,000,000.00
Subtotal of cash generated from investing activities 157,994,762.83 21,199,959.56
Payments for acquisition of fixed assets, intangible assets and
18,482,660.75 57,507,086.97
other long-lived assets
Payments for investments 33,293,147.06 113,985,139.04
Net increase in pledged loans granted
Net payments for acquisition of subsidiaries and other
4,272,350.99
business units
Cash used in other investing activities
Subtotal of cash used in investing activities 51,775,807.81 175,764,577.00
Net cash generated from/used in investing activities 106,218,955.02 -154,564,617.44
3. Cash flows from financing activities:
Capital contributions received
Including: Capital contributions by non-controlling interests
to subsidiaries
Increase in borrowings obtained 40,700,000.00 51,900,000.00
Net proceeds from issuance of bonds
Cash generated from other financing activities
Subtotal of cash generated from financing activities 40,700,000.00 51,900,000.00
Repayment of borrowings 39,600,000.00 15,500,000.00
Payments for interest and dividends 19,322,496.75 18,180,577.83
Including: Dividends paid by subsidiaries to non-controlling
interests
Cash used in other financing activities
Subtotal of cash used in financing activities 58,922,496.75 33,680,577.83
Net cash generated from/used in financing activities -18,222,496.75 18,219,422.17
4. Effect of foreign exchange rate changes on cash and cash
equivalents
5. Net increase in cash and cash equivalents 361,815,985.16 -258,014,474.66
Add: Cash and cash equivalents, beginning of the period 325,263,654.43 583,278,129.09
6. Cash and cash equivalents, end of the period 687,079,639.59 325,263,654.43
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item 2018 2017
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 2,373,022,957.25 2,272,196,372.83
Tax rebates 40,981,398.83 29,635,115.60
Cash generated from other operating activities 10,293,262.16 16,533,875.78
Subtotal of cash generated from operating activities 2,424,297,618.24 2,318,365,364.21
Payments for commodities and services 1,748,150,322.59 2,059,024,833.30
Cash paid to and for employees 268,331,025.24 277,811,436.98
Taxes paid 21,464,799.34 28,251,524.17
Cash used in other operating activities 114,428,231.52 81,615,494.68
Subtotal of cash used in operating activities 2,152,374,378.69 2,446,703,289.13
Net cash generated from/used in operating activities 271,923,239.55 -128,337,924.92
2. Cash flows from investing activities:
Proceeds from disinvestment 30,000,000.00
Investment income 112,621,521.91 10,709,750.99
Net proceeds from disposal of fixed assets, intangible assets
867,615.38 131,366.89
and other long-lived assets
Net proceeds from disposal of subsidiaries or other business
units
Cash generated from other investing activities 1,000,000.00
Subtotal of cash generated from investing activities 143,489,137.29 11,841,117.88
Payments for acquisition of fixed assets, intangible assets and
16,631,342.48 45,733,282.92
other long-lived assets
Payments for investments 10,000,000.00 126,280,000.00
Net payments for acquisition of subsidiaries and other
business units
Cash used in other investing activities
Subtotal of cash used in investing activities 26,631,342.48 172,013,282.92
Net cash generated from/used in investing activities 116,857,794.81 -160,172,165.04
3. Cash flows from financing activities:
Capital contributions received
Increase in borrowings obtained 10,000,000.00 20,000,000.00
Net proceeds from issuance of bonds
Cash generated from other financing activities
Subtotal of cash generated from financing activities 10,000,000.00 20,000,000.00
Repayment of borrowings 1,000,000.00 500,000.00
Payments for interest and dividends 17,991,292.28 17,084,535.34
Cash used in other financing activities
Sub-total of cash used in financing activities 18,991,292.28 17,584,535.34
Net cash generated from/used in financing activities -8,991,292.28 2,415,464.66
4. Effect of foreign exchange rate changes on cash and cash
equivalents
5. Net increase in cash and cash equivalents 379,789,742.08 -286,094,625.30
Add: Cash and cash equivalents, beginning of the period 272,064,464.71 558,159,090.01
6. Cash and cash equivalents, end of the period 651,854,206.79 272,064,464.71
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
7. Consolidated Statements of Changes in Owners’ Equity
2018
Unit: RMB
2018
Equity attributable to owners of the Company as the parent
Other equity
instruments Non-con Total
Item Other
Less: trolling owners’
Share Pref Capital compreh Specific Surplus General Retained
Treasury interests equity
capital erre Perpet reserves ensive reserve reserves reserve earnings
Oth stock
d ual income
er
shar bonds
es
1. Balances as at the end 561,374, 164,328, 515,068, 13,289,0 313,705, 679,131, 19,473,1 2,266,37
of the prior year 326.00 665.43 550.00 59.21 210.16 047.06 56.31 0,014.17
Add: Adjustments for
changed accounting
policies
Adjustments for
corrections of previous
errors
Adjustments for
business combinations
under common control
Other adjustments
2. Balances as at the 561,374, 164,328, 515,068, 13,289,0 313,705, 679,131, 19,473,1 2,266,37
beginning of the year 326.00 665.43 550.00 59.21 210.16 047.06 56.31 0,014.17
3. Increase/ decrease in
-250,662 1,893,89 6,427,83 38,752,3 145,323. -203,443
the period (“-” for
,875.00 9.62 9.99 04.27 80 ,507.32
decrease)
3.1 Total -142,712 62,021,3 145,323. -80,546,
comprehensive income ,875.00 74.04 80 177.16
3.2 Capital increased
and reduced by owners
3.2.1 Ordinary
shares increased by
shareholders
3.2.2 Capital
increased by holders of
other equity instruments
3.2.3 Share-based
payments included in
owners’ equity
3.2.4 Other
6,427,83 -23,269, -16,841,
3.3 Profit distribution
9.99 069.77 229.78
3.3.1 Appropriation 6,427,83 -6,427,8
to surplus reserves 9.99 39.99
3.3.2 Appropriation
to general reserve
3.3.3 Appropriation
-16,841, -16,841,
to owners (or
229.78 229.78
shareholders)
3.3.4 Other
3.4 Transfers within
owners’ equity
3.4.1 Increase in
capital (or share capital)
from capital reserves
3.4.2 Increase in
capital (or share capital)
from surplus reserves
3.4.3 Loss offset
by surplus reserves
3.4.4 Changes in
defined benefit pension
schemes transferred to
retained earnings
3.4.5 Other
1,893,89 1,893,89
3.5 Specific reserve
9.62 9.62
3.5.1 Increase in 4,135,80 4,135,80
the period 5.99 5.99
3.5.2 Used in the 2,241,90 2,241,90
period 6.37 6.37
-107,950 -107,950
3.6 Other
,000.00 ,000.00
4. Balances as at the end 561,374, 164,328, 264,405, 15,182,9 320,133, 717,883, 19,618,4 2,062,92
of the period 326.00 665.43 675.00 58.83 050.15 351.33 80.11 6,506.85
2017
Unit: RMB
2017
Equity attributable to owners of the Company as the parent
Other equity
instruments Other Non-con Total
Item
Less: trolling owners’
Share Capital compreh Specific Surplus General Retained
Prefe Perp Treasury interests equity
capital reserves ensive reserve reserves reserve earnings
rred etual Othe stock
income
share bond r
s s
1. Balances as at the 561,374,3 164,328, 623,048, 11,715,4 311,880, 651,365, 18,767,2 2,342,48
end of the prior year 26.00 665.43 300.00 17.22 248.88 935.39 26.57 0,119.49
Add: Adjustments for
changed accounting
policies
Adjustments for
corrections of previous
errors
Adjustments for
business combinations
under common control
Other adjustments
2. Balances as at the 561,374,3 164,328, 623,048, 11,715,4 311,880, 651,365, 18,767,2 2,342,48
beginning of the year 26.00 665.43 300.00 17.22 248.88 935.39 26.57 0,119.49
3. Increase/ decrease in
-107,979 1,573,64 1,824,96 27,765,1 705,929. -76,110,
the period (“-” for
,750.00 1.99 1.28 11.67 74 105.32
decrease)
3.1 Total -107,979 46,431,3 705,929. -60,842,
comprehensive income ,750.00 02.73 74 517.53
3.2 Capital increased
and reduced by owners
3.2.1 Ordinary
shares increased by
shareholders
3.2.2 Capital
increased by holders of
other equity
instruments
3.2.3 Share-based
payments included in
owners’ equity
3.2.4 Other
1,824,96 -18,666, -16,841,
3.3 Profit distribution
1.28 191.06 229.78
3.3.1
1,824,96 -1,824,9
Appropriation to
1.28 61.28
surplus reserves
3.3.2
Appropriation to
general reserve
3.3.3
-16,841, -16,841,
Appropriation to
owners (or 229.78 229.78
shareholders)
3.3.4 Other
3.4 Transfers within
owners’ equity
3.4.1 Increase in
capital (or share capital)
from capital reserves
3.4.2 Increase in
capital (or share capital)
from surplus reserves
3.4.3 Loss offset
by surplus reserves
3.4.4 Changes in
defined benefit pension
schemes transferred to
retained earnings
3.4.5 Other
1,573,64 1,573,64
3.5 Specific reserve
1.99 1.99
3.5.1 Increase in 4,161,42 4,161,42
the period 4.06 4.06
3.5.2 Used in the 2,587,78 2,587,78
period 2.07 2.07
3.6 Other
4. Balances as at the 561,374,3 164,328, 515,068, 13,289,0 313,705, 679,131, 19,473,1 2,266,37
end of the period 26.00 665.43 550.00 59.21 210.16 047.06 56.31 0,014.17
Legal representative: Shi Xinkun General Manager: Zhang Xin Head of the accounting department: Jiang He
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2018
Unit: RMB
2018
Other equity instruments Other
Less: Total
Item Share Capital comprehen Specific Surplus Retained
Preferre Perpetua Treasury owners’
capital Other reserves sive reserve reserves earnings
d shares l bonds stock equity
income
1. Balances as at the 561,374, 183,071,14 515,068,55 13,289,059 313,705,21 602,959, 2,189,467,
end of the prior year 326.00 7.70 0.00 .21 0.16 135.85 428.92
Add: Adjustments for
changed accounting
policies
Adjustments for
corrections of
previous errors
Other adjustments
2. Balances as at the 561,374, 183,071,14 515,068,55 13,289,059 313,705,21 602,959, 2,189,467,
beginning of the year 326.00 7.70 0.00 .21 0.16 135.85 428.92
3. Increase/ decrease
-250,662,8 1,893,899. 6,427,839. 41,009,3 -201,331,8
in the period (“-” for
75.00 62 99 30.08 05.31
decrease)
3.1 Total
-142,712,8 64,278,3 -78,434,47
comprehensive
75.00 99.85 5.15
income
3.2 Capital
increased and reduced
by owners
3.2.1 Ordinary
shares increased by
owners
3.2.2 Capital
increased by holders
of other equity
instruments
3.2.3
Share-based payments
included in owners’
equity
3.2.4 Other
3.3 Profit 6,427,839. -23,269, -16,841,22
distribution 99 069.77 9.78
3.3.1
6,427,839. -6,427,8
Appropriation to
99 39.99
surplus reserves
3.3.2
Appropriation to -16,841, -16,841,22
owners (or 229.78 9.78
shareholders)
3.3.3 Other
3.4 Transfers within
owners’ equity
3.4.1 Increase in
capital (or share
capital) from capital
reserves
3.4.2 Increase in
capital (or share
capital) from surplus
reserves
3.4.3 Loss offset
by surplus reserves
3.4.4 Changes in
defined benefit
pension schemes
transferred to retained
earnings
3.4.5 Other
1,893,899. 1,893,899.
3.5 Specific reserve
62 62
3.5.1 Increase in 4,135,805. 4,135,805.
the period 99 99
3.5.2 Used in the 2,241,906. 2,241,906.
period 37 37
-107,950,0 -107,950,0
3.6 Other
00.00 00.00
4. Balances as at the 561,374, 183,071,14 264,405,67 15,182,958 320,133,05 643,968, 1,988,135,
end of the period 326.00 7.70 5.00 .83 0.15 465.93 623.61
2017
Unit: RMB
2017
Other equity instruments Other
Item Less: Total
Share Capital comprehen Specific Surplus Retained
Preferre Perpetua Treasury owners’
capital Other reserves sive reserve reserves earnings
d shares l bonds stock equity
income
1. Balances as at the 561,374, 183,071,14 623,048,30 11,715,417 311,880,24 603,375, 2,294,465,
end of the prior year 326.00 7.70 0.00 .22 8.88 714.13 153.93
Add: Adjustments for
changed accounting
policies
Adjustments for
corrections of
previous errors
Other adjustments
2. Balances as at the 561,374, 183,071,14 623,048,30 11,715,417 311,880,24 603,375, 2,294,465,
beginning of the year 326.00 7.70 0.00 .22 8.88 714.13 153.93
3. Increase/ decrease
-107,979,7 1,573,641. 1,824,961. -416,578 -104,997,7
in the period (“-” for
50.00 99 28 .28 25.01
decrease)
3.1 Total
-107,979,7 18,249,6 -89,730,13
comprehensive
50.00 12.78 7.22
income
3.2 Capital
increased and reduced
by owners
3.2.1 Ordinary
shares increased by
owners
3.2.2 Capital
increased by holders
of other equity
instruments
3.2.3
Share-based payments
included in owners’
equity
3.2.4 Other
3.3 Profit 1,824,961. -18,666, -16,841,22
distribution 28 191.06 9.78
3.3.1
1,824,961. -1,824,9
Appropriation to
28 61.28
surplus reserves
3.3.2
Appropriation to -16,841, -16,841,22
owners (or 229.78 9.78
shareholders)
3.3.3 Other
3.4 Transfers
within owners’ equity
3.4.1 Increase in
capital (or share
capital) from capital
reserves
3.4.2 Increase in
capital (or share
capital) from surplus
reserves
3.4.3 Loss offset
by surplus reserves
3.4.4 Changes in
defined benefit
pension schemes
transferred to retained
earnings
3.4.5 Other
1,573,641. 1,573,641.
3.5 Specific reserve
99 99
3.5.1 Increase in 4,161,424. 4,161,424.
the period 06 06
3.5.2 Used in the 2,587,782. 2,587,782.
period 07 07
3.6 Other
4. Balances as at the 561,374, 183,071,14 515,068,55 13,289,059 313,705,21 602,959, 2,189,467,
end of the period 326.00 7.70 0.00 .21 0.16 135.85 428.92
Legal representative: Shi Xinkun General Manager: Zhang Xin Head of the accounting department: Jiang He
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 March 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 2nd Extraordinary General Meeting of 2009 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 RMB0.80 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
2015, the total share capital of the Company is 561,374,326.00 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. And the unified social credit code of the
enterprise business license of the Company is 91320400134792410W.
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 Supervisory
Committee, Corporate office, Financial Department, Political Department, Investment and Development
Department, Audit Department, Human Recourses Department, Production Department, Procurement Department,
Sales Company, 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.
The financial report has been approved to be issued by the Board of Directors on 9 April 2019.
36
The consolidated scope of the Company of the Reporting Period includes the Company as the parent and 5
subsidiaries. For the details of the consolidated scope of the Reporting Period and the changes situation, please
refer to the changes of the consolidated scope of the notes to the financial report and the notes to the equities
among other entities.
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 The Accounting Standards for Business
Enterprises—Basic Standard issued by the Ministry of Finance with Decree No. 33 and revised with Decree No.
76, the various 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 February 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
Does the Company need to comply with the disclosure requirements of special industry?
No
Notification of specific accounting policies and accounting 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 policies 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”.
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.
37
2. Fiscal Period
The fiscal periods are divided into fiscal year and metaphase, the fiscal year is from January 1 to December
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
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
38
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
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
39
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 loss 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.
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
40
(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
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.
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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
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
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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;
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
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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. Notes and Accounts Receivable
(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 single
receivable with individual and amount more than RMB 1 million (RMB 1 million include) (including
significant amount 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 shall
Withdrawal method of the bad
withdrawn on the basis of the balance between the current values of the
debt provision of the accounts
predicted future cash flow lower than book value. Upon independent
receivable with significant
impairment test, the accounts receivable with significant single amounts
single amounts
has not been impaired, it shall be withdrawn bad debt provision based on
ending balance by adopting aging analysis method.
(2) Accounts Receivable which the Bad Debt Provision is withdrawn by Credit Risk Characteristics
Group name Withdrawal method of bad debt provision
the age of the accounts receivable is divided by the
aging analysis method
groups of credit risk
In the groups, those adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Withdrawal proportion of account Withdrawal proportion of other
Aging
receivables account receivables
Within 1 year (including 1 year) 2.00% 2.00%
1 to 2 years 5.00% 5.00%
2 to 3 years 15.00% 15.00%
3 to 4 years 30.00% 30.00%
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4 to 5 years 60.00% 60.00%
Over 5 years 100.00% 100.00%
In the groups, those adopting balance percentage method to withdraw bad debt provision
□ Applicable √ Not applicable
In the groups, those 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
Independently
Reason of individually Insignificant single amounts refers to the accounts receivable of the single amount
withdrawing bad debt lower than RMB 1 million (RMB1 million not include) (including accounts
provision 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
Withdrawal method for difference of the expected present value of the future cash flows of the account
bad debt provision receivable that less than its 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
Is the Company subject to any disclosure requirements for special industries?
No
(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.
(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 costs 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
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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 consumables and packages
One time amortization method is adopted for low-value consumables and packages.
13. 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 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
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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 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.
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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 policy 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
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
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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 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 Estate
Measurement mode of investment real estate:
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Measurement of cost model
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 estate 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) Recognition Conditions
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 Method
Category of fixed assets Method Useful life Annual deprecation
Housing and building Average method of useful life 20-40 2.50%-5%
Machinery equipment Average method of useful life 6-15 6.67%-16.67%
Transportation equipment Average method of useful life 5-10 10%-20%
Other equipment Average method of useful life 5-10 10%-20%
(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
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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 Progress
Is the Company subject to any disclosure requirements for special industries?
No
(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 has not audited 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.
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
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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, Service Life, and Impairment Test
(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.
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.
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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
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
53
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
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.
23. Estimated Liabilities
(1) Criteria of estimated liabilities
54
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;
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
Is the Company subject to any disclosure requirements for special industries?
No
(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.
(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.
55
25. Government Subsidies
(1) Type
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.
(2) Recognition of Government Subsidies
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.
(3) Accounting Treatment
The government subsidies pertinent to assets shall be recognized as deferred income, and included in the
current gains and losses or offset the book value of related assets within the useful lives of the relevant assets with
a reasonable and systematic method. Government subsidies pertinent to income used to compensate the relevant
costs, expenses or losses of the Company in the subsequent period shall be recognized as deferred income, and
shall be included in the current profit and loss during the period of confirming the relevant costs, expenses or
losses; those used to compensate the relevant costs, expenses or losses of the Company already happened shall be
included in the current gains and losses or used to offset relevant costs directly.
For government subsidies that include both assets-related and income-related parts, they should be
distinguished separately for accounting treatment; for government subsidies that are difficult to be distinguished,
they should be classified as income-related.
Government subsidies related to the daily activities of the Company shall be included into other income or
used to offset relevant costs by the nature of economic business; those unrelated shall be included into
non-operating income.
The government subsidies recognized with relevant deferred income balance but need to return shall be used
to offset the book balance of relevant deferred income, the excessive part shall be included in the current gains
and losses or adjusting the book value of assets for the government subsidies assets-related that offset the book
value of relevant assets when they are initially recognized; those belong to other cases shall be directly included in
the current gains and losses.
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
56
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
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:
57
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
Contents and reasons Procedures Remarks
In the balance sheet, “Notes The impact on the items of Consolidated
Receivable” and “Accounts Balance Sheet as at 31 December 2017 is as
Receivable” are combined into follows:
“Notes Receivable and Accounts The 14th Meeting of 1. “Notes Receivable and Accounts
Receivable”; “Notes Payable” and the 8th Board of Receivable” increased by
“Accounts Payable” are combined Directors RMB1,108,415,299.12;”Notes
into “Notes Payable and Accounts receivable”decreased by
Payable”; “Interest Receivable” and RMB716,404,345.57 ; “Accounts
“Dividends Receivable” are receivable” decreased by
incorporated into “Other RMB392,010,953.55;
Receivables”; “Interest Payable” and 2. “Notes Payable and Accounts Payable”
58
“Dividends Payable” are incorporated increased by RMB 963,299,000.18, “Notes
into “Other Payables” “Fixed Assets Payable” decreased by RMB347,070,500.00
Liquidation” is incorporated into and “Accounts Payable” decreased by
“Fixed Assets”; “Engineering RMB616,228,500.18.
Materials” is incorporated into 3. The “Dividends Payable" decreased by
“Construction in Progress”; “Specific RMB3,891,433.83 and was incorporated
Payables” is incorporated into into “Other Payables”; the “Qther Payables”
“Long-term Payables”. The increased by RMB3,891,433.83, and the
comparative data shall be adjusted adjusted balance of "Other Payables" was
accordingly. RMB195,985,676.91.
In the income statement, the item of
“R&D Expense” is added and the The impact on the items of Consolidated
original R&D expense in the item of Income Statement for the year 2017 is as
“Administrative Expense” is follows:
reclassified into “R&D Expense”; in The “Administrative Expense” was reduced
the income statement, the items of by RMB76,715,296.15, reclassified to
“Of which: interest expense” and "R&D Expense", and the adjusted
“Interest income” are added under the “Administrative Expense” was
item of “Finance Costs”. The RMB107,835,619.11, while the “R&D
comparative data shall be adjusted Expense”increased by RMB76,715,296.15.
accordingly.
Notes of the Ministry of Finance on Revising and Printing the Format of 2018 General Enterprises Financial
Statement (CK [2018] No. 15) was issued by the Ministry of Finance on 15 June 2018, which revised the format
of general enterprises financial statements. After it was being reviewed and approved by the 14th Meeting of the
8th Board of Directors, the Company began to implement the above-mentioned notice on the required time by the
Ministry of Finance.
(2) Changes in Accounting Estimates
□ Applicable √ Not applicable
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.
59
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 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
60
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 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
Category of taxes Tax basis Tax rate
61
VAT Payable to sales revenue 17%, 16%, 13%, 11%, 10%, 6%
Urban maintenance and Tax paid in accordance with the
Taxable turnover amount
construction tax tax regulations of tax units location
Enterprise income tax Taxable income 25% or 15%
Education surcharge Taxable turnover amount 5%
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
Name Income tax rate
Changchai Co., Ltd. 15%
Changchai Wanzhou Diesel Engine Co., Ltd. 15%
Changzhou Changchai Benniu Diesel Engine Fittings Co., Ltd. 25%
Changzhou Housheng Investment Co., Ltd. 25%
Changzhou Changchai Housheng Agricultural Equipment Co., Ltd. 25%
Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. 25%
2. Tax Preference
In 2018, 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.
VII. Notes to Major Items in the Consolidated Financial Statements of the Company
1. Monetary Capital
Unit: RMB
Item Ending balance Beginning balance
Cash on hand 441,363.70 466,356.31
Bank deposits 684,620,907.41 324,781,747.27
Other monetary capital 115,897,765.58 105,057,264.13
Total 800,960,036.69 430,305,367.71
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At the period-end, the restricted monetary capital of the Company was RMB113,880,397.10, of which,
RMB111,740,012.93 was the cash deposit for bank acceptance bills and RMB2,140,384.17 was cash deposit for
L/C.
2. Notes Receivable and Accounts Receivable
Item Ending balance Beginning balance
Notes receivable 495,370,782.47 716,404,345.57
Accounts receivable 378,859,159.11 392,010,953.55
Total 874,229,941.58 1,108,415,299.12
(1) Notes Receivable
1) Notes Receivable Listed by Category
Unit: RMB
Item Ending balance Beginning balance
Bank acceptance bill 495,370,782.47 716,404,345.57
Total 495,370,782.47 716,404,345.57
2) There Was No Notes Receivable Pledged by the Company at the Period-end
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
Item
at the period-end recognition at the period-end
Bank acceptance bill 485,209,946.33
Total 485,209,946.33
63
4) There Was No Notes Transferred to Accounts Receivable because Drawer of the Notes Failed to Execute
the Contract or Agreement
(2) Accounts Receivable
1) Accounts Receivable Classified by Category
Unit: RMB
Ending balance Beginning balance
Carrying Bad debt Carrying
Bad debt provision
amount provision amount
Category Carr
Carryin
Withd ying Withdra
Prop g value
Amou Propo Amou rawal value Amou Amoun wal
ortio
nt rtion nt propo nt t proporti
n
rtion on
Accounts
receivable with
significant
28,20 27,31 26,48
single amount 96.85 887,4 4.19 25,729, 753,511
5,070. 4.52% 7,634. 2,933. 97.15%
for which bad % 36.42 % 422.09 .42
58 16 51
debt provision
separately
accrued
Accounts
receivable
withdrawal of 591,4 213,5 377,9 604,2 212,95
94.87 36.10 95.6 391,257
bad debt 89,45 17,72 71,72 09,51 2,068.3 35.24%
% % 5% ,442.13
provision by 0.66 7.97 2.69 0.47 4
credit risks
characteristics
Accounts
receivable with
insignificant
3,815, 3,815,
single amount 100.0 974,9 0.16 974,98 100.00
656.9 0.61% 656.9
for which bad 0% 86.14 % 6.14 %
5 5
debt provision
separately
accrued
623,5 244,6 378,8 631,6 239,65
Total 100.0 39.24 100. 37.94% 392,010
10,17 51,01 59,15 67,43 6,476.5
64
8.19 0% 9.08 % 9.11 0.12 00% 7 ,953.55
Accounts receivable with significant single amount for which bad debt provision separately accrued at the
period-end：
√ Applicable □ Not applicable
Unit: RMB
Ending balance
Accounts receivable
(classified by units) Withdrawal
Accounts receivable Bad debt provision Withdrawal reason
proportion
Customer 1 1,902,326.58 1,902,326.58 100.00% Difficult to recover
Customer 2 1,161,700.00 580,850.00 50.00% Expected to difficultly recover
Customer 3 6,215,662.64 6,215,662.64 100.00% Difficult to recover
Customer 4 2,484,497.34 2,177,910.92 87.66% Expected to difficultly recover
Customer 5 3,279,100.00 3,279,100.00 100.00% Expected to difficultly recover
Customer 6 2,068,377.01 2,068,377.01 100.00% Expected to difficultly recover
Customer 7 5,359,381.00 5,359,381.00 100.00% Difficult to recover
Customer 8 2,584,805.83 2,584,805.83 100.00% Difficult to recover
Customer 9 1,679,109.54 1,679,109.54 100.00% Difficult to recover
Customer 10 1,470,110.64 1,470,110.64 100.00% Expected to difficultly recover
Total 28,205,070.58 27,317,634.16 -- --
In the groups, accounts receivable adopted aging analysis methods to accrue bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Ending balance
Aging
Accounts receivable Bad debt provision Withdrawal proportion
Sub-item within 1 year
Subtotal of within 1 year 363,307,344.78 7,266,147.87 2.00%
1 to 2 years 18,019,515.24 900,975.76 5.00%
2 to 3 years 4,691,418.52 703,712.78 15.00%
65
3 to 4 years 929,020.59 278,706.18 30.00%
4 to 5 years 434,915.38 260,949.23 60.00%
Over 5 years 204,107,236.15 204,107,236.15 100.00%
Total 591,489,450.66 213,517,727.97
Notes of the basis of recognizing the group:
Among these groups, accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
Among these groups, accounts receivable adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB6,540,830.48; the
amount of the reversed or collected part during the Reporting Period was of RMB1,546,287.97.
3) There Were No Particulars of the Actual Verification of Accounts Receivable during the Reporting
Period
4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to the Arrears Party
At the period-end, the total top 5 of the ending balance of the accounts receivable collected according to the
arrears party was RMB206,150,555.84 accounting for 33.06% of the total ending balance of accounts receivable.
And the ending balance of bad debt provision withdrawn was RMB4,123,011.12.
3. Prepayments
(1) List by Aging Analysis
Unit: RMB
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 9,535,876.40 84.01% 16,300,217.23 91.67%
1 to 2 years 437,529.70 3.85% 110,270.90 0.62%
2 to 3 years 57,536.24 0.51% 384,622.72 2.16%
Over 3 years 1,321,354.76 11.63% 985,896.92 5.55%
66
Total 11,352,297.10 -- 17,781,007.77 --
(2) Top 5 of the Ending Balance of the Prepayments Collected according to the Prepayment Target
At the period-end, the total top 5 of the ending balance of the prepayments collected according to the
prepayment target was RMB6,371,752.62 accounting for 56.13% of the total ending balance of prepayments.
4. Other Receivables
(1) Other Receivables Classified by Category
Unit: RMB
Ending balance Beginning balance
Carrying Bad debt Carrying Bad debt
amount provision amount provision
Category Carryi
Withd Withdra Carryin
ng
Amou Propo Amou rawal Amo Propo Amou wal g value
value
nt rtion nt propo unt rtion nt proporti
rtion on
Other
receivables with
significant
2,853, 2,853, 2,85
single amount 100.0 2,853, 100.00
188.0 6.76% 188.0 3,18 7.45%
for which bad 0% 188.02 %
2 2 8.02
debt provision
separately
accrued
Other
receivables
33,3
withdrawn bad 37,22 27,97 9,244, 27,572
88.13 75.16 67,4 87.08 5,794,9
debt provision 2,241. 7,657. 584.4 ,489.7 82.63%
% % 60.9 % 71.22
according to 84 42 2 6
8
credit risks
characteristics
Other
receivables with
2,158, 2,158, 2,09
insignificant 100.0 2,099, 100.00
775.1 5.11% 775.1 9,38 5.47%
single amount 0% 382.02 %
4 4 2.02
for which bad
debt provision
67
separately
accrued
38,3
42,23 32,98 9,244, 32,525
100.0 78.11 20,0 100.0 5,794,9
Total 4,205. 9,620. 584.4 ,059.8 84.88%
0% % 31.0 0% 71.22
00 58 2 0
2
Other receivables with significant single amount for which bad debt provision separately accrued at the
period-end
√ Applicable □ Not applicable
Unit: RMB
Ending balance
Other receivables (by unit)
Other Bad debt Withdrawal Withdrawa
receivables provision proportion l reason
Changchai Group Import & Export Difficult to
2,853,188.02 2,853,188.02 100.00%
Company recover
Total 2,853,188.02 2,853,188.02 -- --
Among these groups, other receivables adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Ending balance
Aging
Other receivables Bad debt provision Withdrawal proportion
Subentry within 1 year
Subtotal of within 1 year 7,235,781.27 144,715.62 2%
1 to 2 years 1,914,609.00 95,730.46 5%
2 to 3 years 284,706.89 42,706.03 15%
3 to 4 years 96,930.77 29,079.23 30%
4 to 5 years 61,969.57 37,181.74 60%
Over 5 years 27,628,244.34 27,628,244.34 100%
Total 37,222,241.84 27,977,657.42
Notes:
Among these groups, other receivables adopting balance percentage method to withdraw bad debt provision:
68
□ Applicable √ Not applicable
Among these groups, other receivables adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB466,360.42; the
amount of the reversed or collected part during the Reporting Period was of RMB1,799.64.
(3) There Were No Particulars of the Actual Verification of Other Receivables during the Reporting Period
(4) Other Receivables Classified by Account Nature
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Margin &cash pledge 4,200.00 4,200.00
Intercourse funds 25,451,250.34 21,072,102.14
Petty cash and borrowings by
1,232,153.09 1,854,174.11
employees
Other 15,546,601.57 15,389,554.77
Total 42,234,205.00 38,320,031.02
(5) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to Ending
Ending ending balance balance of
Name of the entity Nature Aging
balance of other bad debt
receivables% provision
Changzhou Changjiang Intercourse Within 1
5,000,000.00 11.84% 100,000.00
Casting Materials Co., Ltd. funds year
Changzhou Compressors Intercourse
2,940,000.00 Over 5 years 6.96% 2,940,000.00
Factory funds
Changchai Group Imp. & Intercourse
2,853,188.02 Over 5 years 6.76% 2,853,188.02
Exp. Co., Ltd. funds
Changzhou New District Intercourse 1,626,483.25 Over 5 years 3.85% 1,626,483.25
69
Accounting Centre funds
Changzhou Group Intercourse
1,140,722.16 Over 5 years 2.70% 1,140,722.16
Settlement Centre funds
Total -- 13,560,393.43 -- 32.11% 8,660,393.43
5. Inventories
Whether the Company need satisfy relevant disclosure requirements governing the real estate industry
No
(1) Category of Inventories
Unit: RMB
Ending balance Beginning balance
Item Carrying Falling price Carrying Carrying Falling price Carrying
amount reserves value amount reserves value
Raw 134,454,498. 128,608,994. 137,637,917. 131,991,142.
5,845,504.24 5,646,775.16
materials 93 69 36 20
Goods in 166,798,553. 24,187,100.5 142,611,452. 142,366,956. 18,705,451.9 123,661,504.
process 34 4 80 08 2 16
Inventory 288,979,920. 16,035,855.0 272,944,065. 247,668,232. 15,020,818.9 232,647,413.
goods 46 3 43 73 3 80
Revolving
materials
Consumptive
living assets
Completed
but Unsettled
Assets
Generated
from
Construction
Contacts
Materials
13,330,233.2 12,336,933.1 17,692,442.7 17,509,331.4
processed on 993,300.18 183,111.28
9 1 1 3
commission
70
Low priced
and easily 3,632,711.20 2,180,265.53 1,452,445.67 4,212,709.15 1,775,293.26 2,437,415.89
worn articles
607,195,917. 49,242,025.5 557,953,891. 549,578,258. 41,331,450.5 508,246,807.
Total
22 2 70 03 5 48
Whether the Company need satisfy relevant disclosure requirements stated in SZSE Industrial Information
Disclosure Guidance No.4---Listed Company Specialized in Seed Industry and Planting Businesses or not?
No
(2) Falling Price Reserves of Inventories
Unit: RMB
Increase Decrease
Beginning Ending
Item
balance Reverse or balance
Withdrawal Other Other
write-off
Raw
5,646,775.16 802,784.22 604,055.14 5,845,504.24
materials
Goods in
18,705,451.92 24,187,100.54 18,705,451.92 24,187,100.54
process
Inventory
15,020,818.93 15,436,905.74 14,421,869.64 16,035,855.03
goods
Revolving
materials
Consumptive
living assets
Completed
but Unsettled
Assets
Generated
from
Construction
Contracts
Materials
processed on 183,111.28 810,188.90 0.00 993,300.18
commission
71
Low priced
and easily 1,775,293.26 902,415.39 497,443.12 2,180,265.53
worn articles
Total 41,331,450.55 42,139,394.79 34,228,819.82 49,242,025.52
(3) There Was No Capitalized Borrowing Expense in the Ending Balance of Inventories
(4) There Was No Completed but Unsettled Assets Generated from Construction Contracts at the
Period-end
6. Other Current Assets
Unit: RMB
Item Ending balance Beginning balance
The VAT tax credits 25,962,369.29 28,078,565.33
Bank financial products 0.00 825,933.00
Prepaid expense 86,761.81 135,685.72
Securities company financial product 8,253,873.41 13,500,000.00
Other 54,604.46 0.00
Total 34,357,608.97 42,540,184.05
7. Available-for-sale Financial Assets
(1) List of Available-for-sale Financial Assets
Unit: RMB
Ending balance Beginning balance
Item
Carrying Depreciatio Carrying Carrying Depreciation Carrying
amount n reserves value amount reserves value
Available-for-sale
debt instruments:
Available-for-sale 500,061,36 1,210,000. 498,851,36 794,732,63 793,522,639.
1,210,000.00
equity instruments: 9.49 00 9.49 9.04 04
Measured at 370,940,00 370,940,00 685,837,50 685,837,500.
72
fair vale 0.00 0.00 0.00 00
Measured at 129,121,36 1,210,000. 127,911,36 108,895,13 107,685,139.
1,210,000.00
cost 9.49 00 9.49 9.04 04
500,061,36 1,210,000. 498,851,36 794,732,63 793,522,639.
Total 1,210,000.00
9.49 00 9.49 9.04 04
(2) Available-for-sale Financial Assets at Fair Value at the Period-end
Unit: RMB
Available-for-sale equity
Category Total
instruments
Cost of equity instruments /amortized cost of
59,874,500.00 59,874,500.00
debt instruments
Fair value 370,940,000.00 370,940,000.00
Accumulated changes in fair value recorded
264,405,675.00 264,405,675.00
into other comprehensive income
Amount withdrawn impairment
(3) Available-for-sale Financial Assets Measured by Cost at the Period-end
Unit: RMB
Carrying amount Depreciation reserves Shareh
olding Cash
proport bonus
Perio Perio ion of the
Investee d-beg d-beg
Incre Decr Period- Increas Decre Period- among Reporti
innin ase ease end innin e ase end the ng
g g investe Period
es
Jiangsu Liance
7,200
Electromechanic 7,200,0
,000. 3.02%
al Technology 00.00
00
Co., LTD.
Changzhou
100,0 100,00
Synergetic
00,00 0,000.0 70.92%
Innovation
0.00 0
Private Equity
73
Fund (Limited
Partnership)
Kailong High 20,00
20,001,
Technology Co., 1,268 1.20%
268.00
Ltd. .00
Guizhou
Warmen 200,1 200,10
920.00
Pharmaceutical 04.80 4.80
Co, Ltd.
Guizhou Anda
Energy 195,2 195,29 3,000.0
Technology Co., 97.49 7.49 0
Ltd.
FUNIK
63,0
Ultrahard 63,09
96.0
Material Co., 6.08
8
Ltd
Epitop 26,6
26,64
Optoelectronic 40.6
0.67
Co., LTD 7
HENAN
160,7 160,74 6,000.0
LANTIAN
44.76 4.76 0
GAS,. LTD.
Hebei Songhe
Recycling 104,6 104,69
Resources Co., 99.44 9.44
Ltd.
Hunan Litian
High-tech 49,25 49,255.
Materials Co., 5.00 00
Ltd.
1,210 1,210,
1,210,0 1,210,0
Other ,000. 000.0
00.00 00.00
00 0
108,8 20,31 89,7 129,12 1,210,
1,210,0 9,920.0
Total 95,13 5,967 36.7 1,369.4 000.0 --
00.00 0
9.04 .20 5 9 0
74
Note: Other respectively refers to as follows: RMB0.51 million for Chengdu Changwan Diesel Machine
Distribution Co.,Ltd., RMB0.29 million for Chongqing Wanzhou Changwan Diesel Engine Fittings Co., Ltd.,
RMB20,000 for Changzhou Economic and Technological Development Company, RMB0.1 million for
Changzhou Tractor Company, RMB0.2 million for Changzhou Economic Commission Industrial Fund Rotating
Savings and Credit Associations, RMB90,000 for Beijing Engineering Machinery Agricultural Machinery
Company. The above-mentioned investments are difficult to recover, thus the depreciation reserves are withdrawn
in full.
(4) Changes in Depreciation of Available-for-sale Financial Assets during the Reporting Period
Unit: RMB
Available-for-sale Available-for-sale
Category Total
equity instruments debt instruments
Beginning balance withdrawn impairment 1,210,000.00 1,210,000.00
Withdrawal in the Reporting Period
Of which: transferred from other comprehensive
income
Decrease in the Reporting Period
Of which: transferred back due to rally of fair
value after the Reporting Period
Ending balance withdrawn impairment 1,210,000.00 1,210,000.00
8. Long-term Equity Investments
Unit: RMB
Increase/decrease
Gains
Adjust
and Cash Ending
Beg ment Withd
losses bonus Endi balance
inni of rawal
Investee Additi Reduc recogn Chang or ng of
ng other of
s onal ed ized es of profits balan depreci
bala compr deprec Other
invest invest under other annou ce ation
nce ehensi iation
ment ment the equity nced reserves
ve reserv
equity to
incom es
metho issue
e
d
I. Joint ventures
75
II. Associated enterprises
Beijing
Tsinghua
Industria
l 44,1
44,18 44,182.
Investme 82.5
2.50 50
0
nt
Manage
ment
Co., Ltd.
44,1
44,18 44,182.
Subtotal 82.5
2.50 50
0
44,1
44,18 44,182.
Total 82.5
2.50 50
0
9. Investment Property
(1) Investment Property Adopting the Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMB
Houses and Construction in
Item Land use right Total
buildings progress
I. Original carrying
value
1. Beginning balance 87,632,571.14 87,632,571.14
2. Increased amount
of the period
(1) Outsourcing
(2) Transfer from
inventories\fixed
assets\construction in
76
progress
(3) Enterprise
combination increase
3. Decreased amount
of the period
(1) Disposal
(2) Other transfer
4. Ending balance 87,632,571.14 87,632,571.14
II. Accumulative
depreciation and
accumulative
amortization
1. Beginning balance 30,351,541.11 30,351,541.11
2. Increased amount
2,208,340.80 2,208,340.80
of the period
(1) Withdrawal or
2,208,340.80 2,208,340.80
amortization
3. Decreased amount
of the period
(1) Disposal
(2) Other transfer
4. Ending balance 32,559,881.91 32,559,881.91
III. Depreciation
reserves
1. Beginning balance
2. Increased amount
of the period
(1) Withdrawal
3. Decreased amount
of the period
(1) Disposal
77
(2) Other transfer
4. Ending balance
IV. Carrying value
1. Ending carrying
55,072,689.23 55,072,689.23
value
2. Beginning
57,281,030.03 55,072,689.23
carrying value
10. Fixed Assets
Unit: RMB
Item Ending balance Beginning balance
Fixed assets 511,250,371.37 560,049,970.50
Total 511,250,371.37 560,049,970.50
(1) List of Fixed Assets
Unit: RMB
Houses and Machinery Transportation Other
Item Total
buildings equipment equipment equipment
I. Original
carrying value
1. Beginning 1,423,630,068.8
445,235,823.37 910,680,568.87 23,363,510.00 44,350,166.61
balance 5
2. Increased
amount of the 1,840,550.18 31,574,161.21 1,081,805.53 2,940,725.89 37,437,242.81
period
(1)
807,517.05 1,478,874.00 46,410.26 680,597.77 3,013,399.08
Purchase
(2)
Transfer from 1,033,033.13 30,095,287.21 1,035,395.27 2,260,128.12 34,423,843.73
construction in
78
progress
(3)
Enterprise
combination
increase
3. Decreased
amount of the 6,143,815.14 6,361,487.00 2,868,503.04 15,373,805.18
period
(1)
Disposal or 6,143,815.14 6,361,487.00 2,868,503.04 15,373,805.18
Scrap
4. Ending 1,445,693,506.4
447,076,373.55 936,110,914.94 18,083,828.53 44,422,389.46
balance 8
II.
Accumulative
depreciation
1. Beginning
249,203,618.96 561,623,572.09 17,903,567.46 33,355,224.84 862,085,983.35
balance
2. Increased
amount of the 16,575,213.22 62,874,579.95 1,657,207.90 3,491,318.83 84,598,319.90
period
(1)
16,575,213.22 62,874,579.95 1,657,207.90 3,491,318.83 84,598,319.90
Withdrawal
3. Decreased
amount of the 4,875,587.40 6,219,137.33 2,640,558.41 13,735,283.14
period
(1)
Disposal or 4,875,587.40 6,219,137.33 2,640,558.41 13,735,283.14
Scrap
4. Ending
265,778,832.18 619,622,564.64 13,341,638.03 34,205,985.26 932,949,020.11
balance
III.
Depreciation
reserves
1. Beginning 1,494,115.00 1,494,115.00
79
balance
2. Increased
amount of the
period
(1)
Withdrawal
3. Decreased
amount of the
period
(1)
Disposal or
Scrap
4. Ending
1,494,115.00 1,494,115.00
balance
IV. Carrying
value
1. Ending
181,297,541.37 314,994,235.30 4,742,190.50 10,216,404.20 511,250,371.37
carrying value
2. Beginning
196,032,204.41 347,562,881.78 5,459,942.54 10,994,941.77 560,049,970.50
carrying value
The depreciation in the Reporting Period was RMB84,598,319.90. the original value of the fixed assets
transferred from construction in progress in the Reporting Period was RMB 34,423,843.73.
11. Construction in Progress
Unit: RMB
Item Ending balance Beginning balance
Construction in progress 89,090,384.71 94,581,989.06
Total 89,090,384.71 94,581,989.06
(1) List of Construction in Progress
Unit: RMB
Item Ending balance Beginning balance
80
Carrying Depreciation Carrying Carrying Depreciation Carrying
amount reserves value amount reserves value
Trial production
14,349,461. 14,349,46 14,349,461 14,349,4
workshop project
80 1.80 .80 61.80
technology center
Casting renovation 396,000.0 396,000.
396,000.00 396,000.00
project 0 00
Expansion capacity of
11,371,098. 11,371,09 11,217,706 11,217,7
multi-cylinder (The 2nd
24 8.24 .49 06.49
Period)
Diesel Engine Cylinder
19,061,813. 19,061,81 20,125,955 20,125,9
Body Flexible
95 3.95 .51 55.51
Manufacturing Line
1,321,959.4 1,321,959 1,218,587. 1,218,58
35KV Substation
1 .41 83 7.83
Equipment to be
42,590,051. 42,590,05 47,274,277 47,274,2
installed and payment
31 1.31 .43 77.43
for projects
89,090,384. 89,090,38 94,581,989 94,581,9
Total
71 4.71 .06 89.06
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
Propo Of Capit
Accu
rtion which alizati
mulat
of : on
ed
Begi Incr Trans Other accu amou rate
Endin amou Capit
Bu nnin ease ferred decre mulat Job nt of of
g nt of al
Item dge g d in ased ed sched capita intere
balan intere resou
t bala amo fixed amou invest ule lized sts for
ce st rces
nce unt assets nt ment intere the
capita
in sts for Repor
lizati
constr the ting
on
uctio Repor Perio
81
ns to ting d
budge Perio
t d
Trial
production 14,3
2,2 14,34 Unco
workshop 49,4 62.67
89. 9,461 mplet Other
project 61.8 %
63 .80 ed
0
technolog
y center
Expansion
11,2
capacity of 7,0 172, 11,37 Unco
17,7 18,69 91.94
multi-cyli 19. 084. 1,098 mplet Other
06.4 3.16 %
00 91 .24 ed
nder (The 9
2nd Period)
Diesel
Engine
20,1
Cylinder 11, 1,16 2,231 19,06 Unco
25,9 35.24
Body 604 7,19 ,338. 1,813 mplet Other
55.5 %
Flexible .00 7.29 85 .95 ed
1
Manufactu
ring Line
1,21 103, 1,321 Unco
35KV
8,58 371. ,959. mplet Other
Substation
7.83 58 41 ed
46,9
20, 1,44 2,250 46,10
11,7
Total 912 2,65 ,032. 4,333 --
11.6
.63 3.78 01 .40
3
12. Intangible Assets
(1) List of Intangible Assets
Unit: RMB
Item Land use right Software Patent Total
I. Original carrying value
82
1. Beginning balance 144,770,507.85 10,972,366.81 5,488,000.00 161,230,874.66
2. Increased amount of the
545,213.13 545,213.13
period
(1) Purchase 545,213.13 545,213.13
(2) Internal R&D
(3) Business combination
increase
3. Decreased amount of the
period
(1) Disposal
4. Ending balance 144,770,507.85 11,517,579.94 5,488,000.00 161,776,087.79
II. Accumulated amortization
1. Beginning balance 45,156,044.23 7,821,750.27 457,333.30 53,435,127.80
2. Increased amount of the
2,971,978.28 1,727,302.37 548,799.96 5,248,080.61
period
(1) Withdrawal 2,971,978.28 1,727,302.37 548,799.96 5,248,080.61
3. Decreased amount of the
period
(1) Disposal
4. Ending balance 48,128,022.51 9,549,052.64 1,006,133.26 58,683,208.41
III. Depreciation reserves
1. Beginning balance
2. Increased amount of the
period
(1) Withdrawal
3. Decreased amount of the
period
(1) Disposal
4. Ending balance
83
IV. Carrying value
1. Ending carrying value 96,642,485.34 1,968,527.30 4,481,866.74 103,092,879.38
2. Beginning carrying value 99,614,463.62 3,150,616.54 5,030,666.70 107,795,746.86
13. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets that Had not Been Set-off
Unit: RMB
Ending balance Beginning balance
Item Deductible Deferred Deductible Deferred
temporary income tax temporary income tax
difference assets difference assets
Provision for impairment of assets 6,401,000.68 979,822.71 6,519,959.41 1,006,953.81
Total 6,401,000.68 979,822.71 6,519,959.41 1,006,953.81
(2) Deferred Income Tax Liabilities Had Not Been Off-set
Unit: RMB
Ending balance Beginning balance
Item Deductible Deductible Deferred
Deferred income
temporary temporary income tax
tax liabilities
difference difference liabilities
Assets evaluation appreciation for
business combination not under 5,247,821.44 1,311,955.36 6,061,317.56 1,515,329.39
the same control
Changes in fair value of
311,065,500.00 46,659,825.00 605,963,000.00 90,894,450.00
available-for-sale financial assets
Total 316,313,321.44 47,971,780.36 612,024,317.56 92,409,779.39
(3) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
Item Ending balance Beginning balance
84
Bad debt provision 271,239,638.98 265,661,576.96
Inventory falling price reserves 49,242,025.52 41,331,450.55
Total 320,481,664.50 306,993,027.51
14. Other Non-current Assets
Unit: RMB
Ending
Beginning
Item Ending balance depreciation Beginning balance
depreciation reserve
reserve
Entrusted loans 4,000,000.00 4,000,000.00 14,000,000.00 14,000,000.00
Total 4,000,000.00 4,000,000.00 14,000,000.00 14,000,000.00
15. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Mortgage loans 7,000,000.00 14,900,000.00
Guaranteed loans 10,000,000.00 10,000,000.00
Credit loans 10,000,000.00
Total 27,000,000.00 24,900,000.00
16. Notes Payable and Accounts Payable
Unit: RMB
Item Ending balance Beginning balance
Notes payable 438,375,400.00 347,070,500.00
Accounts payable 591,754,875.77 616,228,500.18
Total 1,030,130,275.77 963,299,000.18
85
(1) List of Notes Payable
Unit: RMB
Category Ending balance Beginning balance
Bank acceptance bill 438,375,400.00 347,070,500.00
Total 438,375,400.00 347,070,500.00
There was no overdue notes payable at the period-end.
(2) List of Accounts Payable
Unit: RMB
Item Ending balance Beginning balance
Loans 591,754,875.77 616,228,500.18
Total 591,754,875.77 616,228,500.18
(3) There Were No Significant Accounts Payable Aging over One Year
17. Advances from Customers
(1) List of Advances from Customers
Unit: RMB
Item Ending balance Beginning balance
Loans 34,500,232.97 40,153,984.91
Total 34,500,232.97 40,153,984.91
(2) There Were No Significant Advances from Customers Aging over One Year
18. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
I. Short-term salary 51,247,112.66 280,901,398.81 281,647,918.48 50,500,592.99
86
II.Post-employment
benefit-defined contribution 40,098,239.15 40,098,239.15
plans
III. Termination benefits
IV. Current portion of other
welfares
Total 51,247,112.66 320,999,637.96 321,746,157.63 50,500,592.99
(2) List of Short-term Salary
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Salary, bonus, allowance,
42,781,111.59 232,330,506.45 233,171,760.21 41,939,857.83
subsidy
2.Employee welfare 177,592.74 4,437,251.44 4,525,251.44 89,592.74
3. Social insurance 19,902,879.86 19,902,879.86
Of which: Medical insurance
16,483,144.57 16,483,144.57
premiums
Work-related injury insurance 1,810,165.12 1,810,165.12
Maternity insurance 1,609,570.17 1,609,570.17
4. Housing fund 19,768,075.80 19,768,075.80
5. Labor union budget and
8,288,408.33 4,462,685.26 4,279,951.17 8,471,142.42
employee education budget
6. Short-term absence with salary
7 Short-term profit sharing
scheme
Total 51,247,112.66 280,901,398.81 281,647,918.48 50,500,592.99
(3) List of Defined Contribution Plans
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
87
1. Basic pension benefits 39,068,369.04 39,068,369.04
2. Unemployment insurance 1,029,870.11 1,029,870.11
3. Annuity
Total 40,098,239.15 40,098,239.15
19. Taxes Payable
Unit: RMB
Item Ending balance Beginning balance
VAT 876,055.81 257,634.15
Corporate income tax 3,665,483.92 1,220,803.03
Personal income tax 140,662.05 397,114.88
Urban maintenance and
993,210.56 850,853.05
construction tax
Property tax 94,256.40 173,200.76
Land use tax 100,135.19 21,000.00
Stamp duty 4,594.61 7,508.61
Education Surcharge 116,355.46 14,671.54
Comprehensive fees 1,075,134.76 1,075,134.76
Environmental protection tax 197.13
Total 7,066,085.89 4,017,920.78
20. Other Payables
Unit: RMB
Item Ending balance Beginning balance
Dividends payable 3,891,433.83 3,891,433.83
Other payables 195,520,817.07 192,094,243.08
Total 199,412,250.90 195,985,676.91
88
(1) Dividends Payable
Unit: RMB
Item Ending balance Beginning balance
Ordinary share dividends 3,243,179.97 3,243,179.97
Dividends for non-controlling shareholders 648,253.86 648,253.86
Total 3,891,433.83 3,891,433.83
The reason for non-payment for over one year: not gotten by shareholders yet.
(2) Other Payables
1) Other Payables Listed by Nature of Account
Unit: RMB
Item Ending balance Beginning balance
Margin & cash pledged 3,369,213.08 3,266,453.59
Intercourse funds among units 10,977,924.77 10,838,311.11
Intercourse funds among individuals 375,201.04 457,465.63
Sales discount and three guarantees 144,278,468.99 142,449,844.40
Other 36,520,009.19 35,082,168.35
Total 195,520,817.07 192,094,243.08
2) Significant Other Payables Aging over One Year
The significant other payables aging over one year at the period-end mainly referred to the unsettled
temporary credits and charges owned.
21. Current Portion of Non-current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Current portion of long-term
18,500,000.00
borrowings
Total 18,500,000.00
89
The current portion of long-term borrowings was RMB18,500,000.00 which was the borrowing for technical
transformation project of the Company as the parent provided by China Merchants Bank Changzhou Branch with
the term from 20 September 2017 to 19 September 2019 and the interest rate of 4.75%.
22. Other Current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Sewage charge 54,000.00
Electric charge 2,082,985.18 1,974,937.59
Total 2,082,985.18 2,028,937.59
23. Long-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Mortgage borrowings 2,000,000.00 2,000,000.00
Loan on credit 19,500,000.00
Total 2,000,000.00 21,500,000.00
The mortgage loan at the period-end was RMB2,000,000.00, which was the loan by the subsidiary-Changchai
Wanzhou from Gaosuntang Branch of Chongqing Three Gorges Bank with the duration from 14 December 2017
to 6 November 2020 and the interest rate of 6.15%.
24. Deferred Income
Unit: RMB
Reason for
Item Beginning balance Increase Decrease Ending balance
formation
Government Government
60,992,858.46 — 1,064,373.62 59,928,484.84
subsidies appropriation
Total 60,992,858.46 — 1,064,373.62 59,928,484.84 --
Item involving government subsidies:
Unit: RMB
90
Amount
recorded Amount
into recorded Amount Related
Amount
Beginni non-oper into other offset cost to
of Other Ending
Item ng ating income in in the assets/r
newly changes balance
balance income in the Reporting elated
subsidy
the Reporting Period income
Reporting Period
Period
Electric
control of
diesel
engine
Related
research and 1,045,20 646,800.
398,400.00 to ass
developmen 0.00 00
ets
t and
industrializa
tion
allocations
National
major Related
28,770,0 28,770,0
project to
00.00 00.00
assets
special
allocations
Remove Related
21,177,6 20,511,6
compensatio 665,973.62 to
58.46 84.84
assets
n
Research
and
developmen Related
10,000,0 10,000,0
t and to
00.00 00.00
assets
industrializa
tion
allocations
91
of national
III/IV
standard
high-powere
d efficient
diesel
engine for
agricultural
use
25. Share Capital
Unit: RMB
Increase/decrease (+/-)
Beginning Ending
balance New shares Bonus Bonus issue balance
Other Subtotal
issued shares from profit
The sum of 561,374,32
561,374,326.00
shares 6.00
26. Capital Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Capital premium (premium on stock) 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
27. Other Comprehensive Income
Unit: RMB
Reporting Period
Endin
Beginnin Income Less: Attribut Attribut g
Item Less:
g balance before recorded able to able to balanc
Income
taxation in other owners non-con e
tax
in the comprehen of the trolling
92
Current sive expense Compan interests
Period income in y as the after tax
prior parent
period and after tax
transferred
in profit or
loss in the
Current
Period
I. Other comprehensive
income that will not be
reclassified to profit or loss
Of which: Changes caused by
re-measurements on defined
benefit pension schemes
Share of other comprehensive
income of investees that will
not be reclassified to profit or
loss under equity method
II. Other comprehensive -167,89 -250,66 264,40
515,068,5 107,950,0 -25,184,
income that may subsequently 7,500.0 2,875.0 5,675.
50.00 00.00 625.00
be reclassified to profit or loss 0 0 00
Of which: Share of other
comprehensive income of
investees that will be
reclassified to profit or loss
under equity method
Gain/Loss on changes in fair -167,89 -250,66 264,40
515,068,5 107,950,0 -25,184,
value of available-for-sale 7,500.0 2,875.0 5,675.
50.00 00.00 625.00
financial assets 0 0 00
Gain/Loss arising from
reclassification of
held-to-maturity investments
to available-for-sale financial
assets
Effective gain/loss on cash
flow hedges
Differences arising from
93
translation of foreign
currency-denominated
financial statements
-167,89 -250,66 264,40
Total of other comprehensive 515,068,5 107,950,0 -25,184,
7,500.0 2,875.0 5,675.
income 50.00 00.00 625.00
0 0 00
28. Specific Reserve
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Safety production cost 13,289,059.21 4,135,805.99 2,241,906.37 15,182,958.83
Total 13,289,059.21 4,135,805.99 2,241,906.37 15,182,958.83
29. Surplus Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Statutory surplus reserves 300,548,352.26 6,427,839.99 306,976,192.25
Discretional surplus reserves 13,156,857.90 13,156,857.90
Total 313,705,210.16 6,427,839.99 320,133,050.15
30. Retained Earnings
Unit: RMB
Item Reporting Period Same period of last year
Beginning balance of retained earnings
679,131,047.06 651,365,935.39
before adjustments
Total retained earnings at the beginning of the
adjustment period (“+” means up, “-“ means
down)
Beginning balance of retained earnings after
679,131,047.06 651,365,935.39
adjustments
Add: Net profit attributable to owners of the 62,021,374.04 46,431,302.73
94
Company as the parent
Less: withdrawal of statutory surplus reserves 6,427,839.99 1,824,961.28
Withdrawal of discretional surplus
reserves
Withdrawal of general reserve
Dividend of ordinary shares payable 16,841,229.78 16,841,229.78
Dividend of ordinary shares transferred
as share capital
Ending retained earnings 717,883,351.33 679,131,047.06
31. Operating Revenue and Cost of Sales
Unit: RMB
Reporting Period Same Period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main operations 2,093,039,249.58 1,782,146,126.35 2,393,799,573.65 2,053,982,326.15
Other operations 39,863,469.02 31,298,459.31 29,259,384.64 18,895,650.62
Total 2,132,902,718.60 1,813,444,585.66 2,423,058,958.29 2,072,877,976.77
32. Taxes and Surtaxes
Unit: RMB
Item Reporting Period Same Period of last year
Urban maintenance and construction tax 1,538,140.51 2,565,415.20
Education Surcharge 1,098,335.32 1,832,439.41
Property tax 4,720,363.62 4,650,467.91
Land use tax 3,813,015.72 3,659,038.57
Vehicle and vessel use tax 1,920.00 1,920.00
Stamp Duty 1,046,929.90 1,151,693.01
Environment tax 194,011.91
95
Other 120,012.70 43,324.35
Total 12,532,729.68 13,904,298.45
33. Selling Expense
Unit: RMB
Item Reporting Period Same Period of last year
Office expenses 15,226,739.67 16,073,409.43
Employee’s remuneration 30,898,847.11 30,109,247.54
Sales promotional expense 11,065,465.84 17,037,228.20
Three guarantees 59,459,243.39 28,911,112.28
Transport charge 7,875,890.07 7,199,785.26
Other 2,470,880.79 2,966,930.66
Total 126,997,066.87 102,297,713.37
34. Administrative Expense
Unit: RMB
Item Reporting Period Same Period of last year
Office expenses 13,620,335.64 14,110,423.74
Employee’s remuneration 63,552,532.88 56,985,514.29
Depreciation and amortization 12,141,787.46 13,290,918.09
Transport fees 2,203,781.08 2,699,980.24
Repair charge 918,265.20 1,831,393.13
Safety expenses 4,135,805.99 4,161,424.06
Other 19,455,330.71 14,755,965.56
Total 116,027,838.96 107,835,619.11
96
35. R&D Expense
Unit: RMB
Item Reporting Period Same Period of last year
Direct input expense 44,893,971.91 51,378,796.38
Employee’s remuneration 22,101,113.31 20,303,733.38
Depreciation and amortization 2,812,179.10 2,833,926.92
Entrusted R&D charges 700,000.00
Other 1,675,576.46 2,198,839.47
Total 72,182,840.78 76,715,296.15
36. Finance Costs
Unit: RMB
Item Reporting Period Same Period of last year
Interest expense 4,553,608.46 2,119,903.67
Less: Interest income 4,665,445.23 7,613,535.50
Net foreign exchange gains or losses -6,194,688.23 6,421,288.87
Other 5,402,762.70 -3,218,451.43
Total -903,762.30 -2,290,794.39
37. Asset Impairment Loss
Unit: RMB
Item Reporting Period Same Period of last year
Bad debt loss 5,459,103.29 5,093,473.40
Loss on inventory valuation 42,139,394.79 35,867,310.34
Other -10,000,000.00
Total 37,598,498.08 40,960,783.74
97
38. Other Income
Unit: RMB
Resource Reporting Period Same Period of last year
Government subsidies 6,291,685.65 8,456,560.85
Total 6,291,685.65 8,456,560.85
List of government subsidies recorded into other income
Unit: RMB
Same period Related to
Item Reporting Period
of last year assets/income
Subsidy for the transformation and upgrading of
150,000.00 2,070,000.00 Related to income
industrial and information sectors
Trinity subsidy 2,300,000.00 1,696,000.00 Related to income
Subsidy for stabilizing posts 992,136.63 1,355,883.23 Related to income
Subsidy for the special rectification of coal fired
60,000.00 Related to income
boilers
Subsidy for participating in the international brand
300,000.00 Related to income
campaign
Commercial development fund 511,400.00 21,700.00 Related to income
Development funds for small and medium-sized
32,000.00 Related to income
enterprises
Relocation compensation 665,973.62 1,780,757.62 Related to assets
R & D and industrialization of off-road diesel
398,400.00 398,400.00 Related to assets
engine controlled by electricity
Industry-university-research cooperation subsidy 200,000.00 Related to income
One Belt and One Road Project Fund 30,000.00 Related to income
Other rewards and subsidies 235,775.40 110,820.00 Related to income
Appropriation of other technological projects 808,000.00 631,000.00 Related to income
Total 6,291,685.65 8,456,560.85
98
39. Investment Income
Unit: RMB
Item Reporting Period Same Period of last year
Investment income from holding of available for sale
7,607,870.00 10,709,750.99
financial assets
Investment income from disposal of available-for-sale
104,824,084.63
financial assets
Investment income from disposal of financial products
838,870.20 654,862.68
of securities companies
Gains or losses generated from re-measurement on stock
rights at fair value held before the purchase date for the 1,751,203.43
business combination not under the same control
Total 113,270,824.83 13,115,817.10
40. Asset Disposal Income
Unit: RMB
Sources Reporting Period Same period of last year
Fixed asset disposal income 662,151.89 1,373,236.33
Total 662,151.89 1,373,236.33
41. Non-operating Income
Unit: RMB
Amount recorded in the
Same Period of last
Item Reporting Period current non-recurring
year
profit or loss
Insurance indemnity 1,179,518.37 1,453,805.83 1,179,518.37
Income from penalty 112,645.60 218,421.07 112,645.60
Income generated from
502,640.00 303,456.00 502,640.00
disposal of current assets
Other 144,191.79 1,007,709.34 144,191.79
99
Negative goodwill generated
from business combination 19,924,486.12
not under the same control
Total 1,938,995.76 22,907,878.36 1,938,995.76
42. Non-operating Expense
Unit: RMB
Amount recorded in the
Reporting Same Period of
Item current non-recurring
Period last year
profit or loss
Donation 210,000.00
Loss on disposal of non-current assets 928,118.57 367,435.71 928,118.57
Of which: loss on disposal of fixed assets 928,118.57 367,435.71 928,118.57
Loss on disposal of current assets 539,665.92 7,047,215.23 539,665.92
Other 6,434.00 168,007.06 6,434.00
Total 1,474,218.49 7,792,658.00 1,474,218.49
43. Income Tax Expense
(1) List of Income Tax Expense
Unit: RMB
Item Reporting Period Same Period of last year
The current income tax calculated as stipulated in
13,721,905.60 2,030,954.40
the tax law and relevant regulations
Deferred income tax expense -176,242.93 -349,287.14
Total 13,545,662.67 1,681,667.26
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
Item Reporting Period
100
Profit before taxation 75,712,360.51
Current income tax expense accounted at statutory/applicable tax rate 11,356,854.08
Influence of applying different tax rates by subsidiaries 362,218.33
Influence of income tax before adjustment 247,877.80
Influence of non-taxable income -1,301,828.54
Influence of non-deductable costs, expenses and losses 4,128,125.59
Influence of deductable loss of unrecognized deferred income tax assets at
23,218.23
the beginning of the Reporting Period
Influence of deductable temporary difference or deductable losses of
2,295,717.17
unrecognized deferred income tax assets in the Reporting Period
Tax preference generated from eligible expense -3,566,519.99
Income tax expense 13,545,662.67
44. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Unit: RMB
Item Reporting Period Same Period of last year
Subsidy and appropriation 5,227,312.03 8,003,187.23
Other intercourses in cash 2,429,574.19 5,034,680.92
Interest income 4,665,445.23 7,665,735.50
Total 12,322,331.45 20,703,603.65
(2) Cash Used in Other Operating Activities
Unit: RMB
Item Reporting Period Same Period of last year
Selling expense paid in cash 70,472,280.14 42,623,103.17
Administrative expense paid in cash 44,119,952.70 42,894,223.56
Handling charge 517,221.04 797,242.10
101
Other 1,494,483.87 1,786,264.01
Total 116,603,937.75 88,100,832.84
45. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Unit: RMB
Same period of last
Supplemental information Reporting Period
year
1. Reconciliation of net profit to net cash flows
-- --
generated from operating activities
Net profit 62,166,697.84 47,137,232.47
Add: Provision for impairment of assets 37,598,498.08 40,960,783.74
Depreciation of fixed assets, of oil-gas assets, of
86,806,660.70 90,190,434.30
productive biological assets
Amortization of intangible assets 5,248,080.61 6,018,505.30
Amortization of long-term deferred expenses
Losses on disposal of fixed assets, intangible assets and
-662,151.89 -1,373,236.33
other long-term assets (gains by "-")
Losses on the scrapping of fixed assets (gains by “-”) 928,118.57 367,435.71
Losses on the changes in fair value (gains by “-”)
Financial expenses (gains by "-") 4,553,608.46 2,119,903.67
Investment losses (gains by "-") -113,270,824.83 -13,115,817.10
Decrease in deferred income tax assets (increase by "-") 27,131.10 -95,724.39
Increase in deferred income tax liabilities (decrease by
-203,374.03 -253,562.75
“-”)
Decrease in inventory (increase by "-") -91,846,479.01 -16,207,075.64
Decrease in accounts receivable from operating
232,739,906.78 -255,524,512.29
activities (increase by "-")
Increase in payables from operating activities (decrease 63,742,812.33 15,592,612.02
102
by "-")
Other -14,009,157.82 -37,486,258.10
Net cash flows generated from operating activities 273,819,526.89 -121,669,279.39
2. Investing and financing activities that do not
-- --
involving cash receipts and payment:
Debt transferred as capital
Convertible corporate bond due within one year
Fixed assets from financing lease
3. Net increase in cash and cash equivalents -- --
Closing balance of cash 687,079,639.59 325,263,654.43
Less: Opening balance of cash 325,263,654.43 583,278,129.09
Add: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents 361,815,985.16 -258,014,474.66
(2) Cash and Cash Equivalents
Unit: RMB
Item Ending balance Beginning balance
I. Cash 687,079,639.59 325,263,654.43
Including: Cash on hand 441,363.70 466,356.31
Bank deposit on demand 684,620,907.41 324,781,747.27
Other monetary capital on demand 2,017,368.48 15,550.85
Accounts deposited in the central bank available for payment
Deposits in other banks
Accounts of interbank
II. Cash equivalents
Of which: bond investment expired within three months
103
III. Ending balance of cash and cash equivalents 687,079,639.59 325,263,654.43
Of which: cash and cash equivalents with restriction in use for
the Company as the parent or subsidiaries of the Group
46. Assets with Restricted Ownership or Right to Use
Unit: RMB
Item Ending carrying value Reason for restriction
Monetary capital 113,880,397.10 As cash deposit for bank acceptance bill and L/C
Houses and buildings 9,151,848.69 Mortgaged for borrowings from banks
Land use right 1,005,328.00 Mortgaged for borrowings from banks
Machinery equipment 51,191,810.97 Mortgaged for borrowings from banks
Total 175,229,384.76 --
47. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Unit: RMB
Ending foreign currency Ending balance
Item Exchange rate
balance converted to RMB
Monetary capital -- --
Of which: USD 8,960,950.31 6.8632 61,500,794.17
HKD 254,028.39 0.8762 222,579.68
SGD 54,427.95 5.0062 272,477.20
JPY 52,511,025.00 0.061887 3,249,749.80
Accounts receivable -- -- --
Of which: USD 8,969,144.29 6.8632 61,557,031.09
Accounts payable -- -- --
Of which: USD 302.60 6.8632 2,076.80
104
48. Government Subsidy
(1) Basic Information on Government Subsidy
Unit: RMB
Amount recorded in the
Category Amount Listed items
current profit or loss
Subsidy for the transformation and upgrading
150,000.00 Other income 150,000.00
of industrial and information sectors
Trinity subsidy 2,300,000.00 Other income 2,300,000.00
Subsidy for stabilizing posts 992,136.63 Other income 992,136.63
Commercial development fund 511,400.00 Other income 511,400.00
Relocation compensation 665,973.62 Other income 665,973.62
R & D and industrialization of off-road diesel
398,400.00 Other income 398,400.00
engine controlled by electricity
Industry-university-research cooperation
200,000.00 Other income 200,000.00
subsidy
One Belt and One Road Project Fund 30,000.00 Other income 30,000.00
Other rewards and subsidies 235,775.40 Other income 235,775.40
Appropriation of other technological projects 808,000.00 Other income 808,000.00
Appropriation for R & D and industrialization
Deferred
of off-road diesel engine controlled by 646,800.00
income
electricity
Deferred
National major special appropriation 28,770,000.00
income
Deferred
Relocation compensation 20,511,684.84
income
Appropriation or research and development
and industrialization allocations of national Deferred
10,000,000.00
III/IV standard high-powered efficient diesel income
engine for agricultural use
105
(2) Return of Government Subsidy
□ Applicable √ Not applicable
VIII. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
Nature Holding
Main percentage (%)
Registration of Way of
Name operating
place busines Directl Indirect gaining
place
s y ly
Changchai Wanzhou
Chongqing Chongqing Industry 60.00% Set-up
Diesel Engine Co., Ltd.
Changzhou Changchai
Changzhou Changzhou
Benniu Diesel Engine Industry 99.00% 1.00% Set-up
City City
Fittings Co., Ltd.
Changzhou Housheng Changzhou Changzhou
Service 100.00% Set-up
Investment Co., Ltd. City City
Changzhou Changchai
Changzhou Changzhou
Housheng Agricultural Industry 70.00% 25.00% Set-up
City City
Equipment Co., Ltd.
Combinat
Changzhou Fuji ion not
Changzhou Changzhou
Changchai Robin Gasoline Industry 100.00% under the
City City
Engine Co., Ltd. same
control
(2) Significant Non-wholly-owned Subsidiary
Unit: RMB
Declaring
Shareholding The profit or loss Balance of
dividends
proportion of attributable to the non-controlling
Name distributed to
non-controlling non-controlling interests at the
non-controlling
interests interests period-end
interests
106
Changchai
Wanzhou Diesel 40.00% 447,173.52 19,549,806.55
Engine Co., Ltd.
Changzhou
Changchai
Housheng
5.00% -301,849.72 68,673.56
Agricultural
Equipment Co.,
Ltd.
Holding proportion of non-controlling interests in subsidiary different from voting proportion: not applicable
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
Unit: RMB
Ending balance Beginning balance
Curr Tota Non-
Curr Non- Non-c Non- Curre
Name ent l Curre curre Total
ent curre Total urrent curre Total nt
liabi liabi nt nt liabili
asset nt assets liabili nt assets liabili
litie litie assets liabili ties
s assets ty assets ties
s s ty
Changch
ai 44,9 20,7 22,7
26,69 71,64 2,000, 51,97 27,42 79,39 29,63 2,000 31,63
Wanzho 46,8 66,1 66,1
3,776 0,662. 000.0 4,844. 0,469 5,314 8,731 ,000. 8,731
u Diesel 86.2 45.9 45.9
.10 30 0 72 .36 .08 .50 00 .50
Engine 0 2 2
Co., Ltd.
Changzh
ou
Changch
ai
35,7 35,0 35,0
Houshen 36,40 38,59 38,94 31,53 31,53
76,3 625,6 28,5 28,5 346,5
g 1,983. 7,424. 3,951 3,485 3,485
02.7 80.72 12.3 12.3 26.83
Agricult 51 23 .06 .51 .51
9 0 0
ural
Equipm
ent Co.,
Ltd.
Unit: RMB
107
Reporting Period Same period of last year
Cash Cash
Total Total
Name flows flows
Operating comprehe Operating comprehe
Net profit from Net profit from
revenue nsive revenue nsive
operating operating
income income
activities activities
Changcha
i
Wanzhou 46,653,66 1,117,933 1,117,933 64,348,50 1,759,213 1,759,213 6,032,875
Diesel 0.46 .80 .80 8.86 .66 .66 .55
Engine
Co., Ltd.
Changzh
ou
Changcha
i
Houshen
17,505,78 -6,036,99 -6,036,99 15,715,16 -10,230,8
g 44,885.51 44,885.51
4.08 4.34 4.34 6.92 32.08
Agricultu
ral
Equipme
nt Co.,
Ltd.
2. Equity in the Structured Entity Excluded in the Scope of Consolidated Financial Statements
Notes to the structured entity excluded in the scope of consolidated financial statements:
In 2017, the Company set up Changzhou Xietong Private Equity Fund (Limited Partnership) together with
Synergetic Innovation Fund Management Co., Ltd. through joint investment. On 18 October 2018, new partners
were added. In line with the revised Partnership Agreement, the general partner is Synergetic Innovation Fund
Management Co., Ltd., and the limited partners are Changchai Company, Limited, Changzhou Zhongyou
Petroleum Sales Co., Ltd., Changzhou Fuel Co., Ltd., Tong Yinzhu and Tong Yinxin. In accordance with the
Partnership Agreement, the limited partner does not execute the partnership affairs. Thus, the Company does not
control Changzhou Xietong Private Equity Fund (Limited Partnership) and did not include it into the scope of
consolidated financial statements.
IX. The Risk Related to Financial Instruments
The goal of the Company’s risk management was gaining the balance between the risk and income, and
108
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 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 has 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. As for the
Company’s export business, customers will be given a certain credit term, if the RMB appreciates against the
dollar, the company's accounts receivable will incur foreign currency exchange loss.
X. The Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMB
Ending fair value
Item
Fair value Fair value Fair value Total
109
measurement measurement measurement items
items at level 1 items at level 2 at level 3
I. Consistent fair value
-- -- -- --
measurement
(I) Financial assets at fair
value through profit or loss
1. Trading financial assets
(1) Debt instrument
investment
(2) Equity instrument
investment
(3) Derivative financial assets
2. Financial assets designated
to be measured at fair value
and the changes included into
the current profit or loss
(1) Debt instrument
investment
(2) Equity instrument
investment
(II) Available-for-sale
370,940,000.00 370,940,000.00
financial assets
(1) Debt instrument
investment
(2) Equity instrument
370,940,000.00 370,940,000.00
investment
(3) Other
(III) Investment property
1. Land use right for lease
2. Buildings leased out
3. Land use right held and
plan to be transferred once
110
appreciating
(IV) Living assets
1. Consumptive living assets
2. Productive living assets
Total assets consistently
370,940,000.00 370,940,000.00
measured by fair value
(V) Trading financial
liabilities
Of which: issued trading
bonds
Derivative financial
liabilities
Other
(VI) Financial liabilities
designated to be measured at
fair value and the changes
recorded into the current
profit or loss
Total liabilities consistently
measured by fair value
II. Inconsistent fair value
-- -- -- --
measurement
(1) Held-to-sale assets
Total assets inconsistently
measured by fair value
Total liabilities inconsistently
measured by fair value
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level
1
The available-for-sale financial assets measured at fair value of the Company were shares with the closing
price as the basis of fair value calculation at period-end.
111
XI. Related Party and Related-party Transactions
1. Information Related to the Company as the Parent of the Company
Proportion of Proportion of
share held by voting rights
Registration Nature of Registered the Company as owned by the
Name
place business capital the parent Company as the
against the parent against
Company the Company
Investment and
operations of
state-owned
assets, assets
management
(excluding
Changzhou financial
Investment Changzhou business), RMB1.2 billion 30.43% 30.43%
Group Co., Ltd. investment
consulting
(excluding
consulting on
investment in
securities and
options), etc.
Notes: information on the Company as the parent
On 22 November 2018, Changzhou Government State-owned Assets Supervision and Administration
Commission transferred all 170,845,236 shares of the Company (accounting for 30.43% of the total share capital
of the Company) to Changzhou Investment Group Co., Ltd. for free. In accordance with Changzhou People’s
Government Document (CZF [2006] No. 62), both the Company and Changzhou Investment Group Co., Ltd. are
enterprises which Changzhou People’s Government authorizes Changzhou Government State-owned Assets
Supervision and Administration Commission to perform duties of investors. Thus, after the sharer transfer,
Changzhou Investment Group Co., Ltd. is the controlling shareholder of the Company and Changzhou
Government State-owned Assets Supervision and Administration Commission is still the actual controller of the
Company.
The final controller of the Company is Changzhou Government State-owned Assets Supervision and
Administration Commission.
2. Subsidiaries of the Company
Refer to Note IX for details.
112
3. Information on Other Related Parties
Name Relationship with the Company
The director of the Company serves as the senior
Synergetic Innovation Fund Management Co., Ltd.
management of the company
4. Related-party Transactions
There was no related-party transaction during the Reporting Period.
XII. Commitments and Contingency
1. Significant Commitments
As of 31 December 2018, there was no significant commitment for the Company to disclose.
2. Contingency
(1) Significant Contingency on Balance Sheet Date
Previous litigations continuing to the Reporting Period the Company involved:
Name of defendant Date of Name of the litigation or Amount Remark
accepted arbitration institutions involved
(RMB’0,000)
Shandong Hongli Group Co., 1,436.00 Under the
Changzhou Intermediate
Ltd. 27 June 2001 bankruptcy and
People's Court
liquidation
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.
XIII. Events after Balance Sheet Date
1. Profit Distribution
Unit: RMB
Profits or dividends to be distributed 14,034,358.2
Profits or dividends announced to be distributed after the approval
113
XVI. Other Significant Events
1. Segment Information
(1) If there Was no Reportable Segment, or the Total Amount of Assets and Liabilities of Each Reportable
Segment Could not Be Reported, Relevant Reasons Shall Be Clearly Stated
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.
(2) Other Notes
2. Other Significant Transactions and Events with Influence on Investors’ Decision-making
As of the approval issue date of financial statements, the Company did not complete the liquidation
procedures of 2018 annual enterprise income tax.
XV. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Notes Receivable and Accounts Receivable
Item Ending balance Beginning balance
Notes receivable 490,519,795.91 711,474,345.57
Accounts receivable 300,357,283.81 319,887,051.70
Total 790,877,079.72 1,031,361,397.27
(1) Notes Payable
1) Notes Receivable Listed by Category
Unit: RMB
Item Ending balance Beginning balance
Bank acceptance bill 490,519,795.91 711,474,345.57
Total 490,519,795.91 711,474,345.57
Unit: RMB
2) There Was No Notes Receivable Pledged by the Company at the Period-end
3) Notes Receivable Endorsed by the Company or Discounted and not due on the Balance Sheet Date at the
Period-end
Unit: RMB
114
Derecognized Amount at the Non-derecognized amount at the
Item
period-end period-end
Bank acceptance bill 379,379,946.33
Total 379,379,946.33
4) There Was No Notes Transferred to Accounts Receivable because Drawer of the Notes Failed to Execute
the Contract or Agreement
(2) Accounts Receivable
1) Accounts Receivable Classified by Category
Unit: RMB
Ending balance Beginning balance
Carrying Bad debt Carrying Bad debt
amount provision amount provision
Category Carryi
Carryin
Withd ng Withdra
Amou Propo Amou rawal Amo Propo Amou wal g value
value
nt rtion nt propo unt rtion nt proporti
rtion on
Accounts
receivable with
significant 35,2
32,00 28,99 3,017, 30,401
single amount 90.57 74,6 4,873,6
8,110. 6.12% 0,420. 689.8 6.52% ,000.8 86.18%
for which bad % 03.6 02.82
06 19 7 5
debt provision 7
separately
accrued
Accounts
receivable
505,
withdrawal of 487,5 190,2 297,3 190,12
93.15 39.02 142, 93.30 315,013
bad debt 66,50 26,91 39,59 9,532. 37.64%
% % 981. % ,448.88
provision of by 7.88 3.94 3.94 72
60
credit risks
characteristics:
Accounts
receivable with 3,815, 3,815, 974,
100.0 974,98 100.00
insignificant 656.9 0.73% 656.9 986. 0.18%
0% 6.14 %
single amount 5 5 14
for which bad
115
debt provision
separately
accrued
541,
523,3 223,0 300,3 221,50
100.0 42.61 392, 100.0 319,887
Total 90,27 32,99 57,28 5,519. 40.91%
0% % 571. 0% ,051.70
4.89 1.08 3.81 71
41
Accounts receivable with single significant amount for which bad debt provision separately accrued at the end of
the period
√ Applicable □ not applicable
Unit: RMB
Ending balance
Accounts receivable
(by units) Accounts Withdrawal
Bad debt provision Withdrawal reason
receivable proportion
Customer 1 1,902,326.58 1,902,326.58 100.00% Difficult to recover
Customer 2 Expected to
1,161,700.00 580,850.00 50.00%
difficultly recover
Customer 3 6,215,662.64 6,215,662.64 100.00% Difficult to recover
Customer 4 Expected to
2,484,497.34 2,177,910.92 87.66%
difficultly recover
Customer 5 Expected to
3,279,100.00 3,279,100.00 100.00%
difficultly recover
Customer 6 Expected to
2,068,377.01 2,068,377.01 100.00%
difficultly recover
Customer 7 5,359,381.00 5,359,381.00 100.00% Difficult to recover
Customer 8 2,584,805.83 2,584,805.83 100.00% Difficult to recover
Customer 9 1,679,109.54 1,679,109.54 100.00% Difficult to recover
Customer 10 Expected to
1,470,110.64 1,470,110.64 100.00%
difficultly recover
Customer 11 Expected to
3,803,039.48 1,672,786.03 43.99%
difficultly recover
Total 32,008,110.06 28,990,420.19 -- --
116
In the groups, accounts receivable adopted aging analysis method to withdraw bad debt provision:
√ Applicable □ not applicable
Unit: RMB
Ending balance
Aging
Accounts receivable Bad debt provision Withdrawal proportion
Subentry within 1 year
Subtotal of within 1 year 289,548,156.74 5,790,963.13 2.00%
1 to 2 years 12,197,754.24 609,887.71 5.00%
2 to 3 years 1,376,768.52 206,515.28 15.00%
3 to 4 years 929,020.59 278,706.18 30.00%
4 to 5 years 434,915.38 260,949.23 60.00%
Over 5 years 183,079,892.41 183,079,892.41 100.00%
Total 487,566,507.88 190,226,913.94
In the groups, accounts receivable adopted balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB5,902,476.58; the
amount of the reversed or collected part during the Reporting Period was of RMB4,375,005.21.
(3) There Was No Particulars of the Actual Verification of Accounts Receivable during the Reporting
Period
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
At the period-end, the total top 5 of the ending balance of the accounts receivable collected according to
arrears party was RMB206,150,555.84, accounting for 39.39% of the total ending balance of accounts receivable.
The ending balance of bad debt provision withdrawn was RMB4,123,011.12.
2. Other Receivables
Item Ending balance Beginning balance
Other receivables 21,681,331.85 11,798,211.40
117
Total 21,681,331.85 11,798,211.40
(1) Other Receivables
1) Other Receivables Disclosed by Category
Unit: RMB
Ending balance Beginning balance
Carrying Bad debt Carrying Bad debt
amount provision amount provision
Category Carryi
Withd Withdra Carryin
ng
Amou Propo Amou rawal Amo Propo Amou wal g value
value
nt rtion nt propo unt rtion nt proporti
rtion on
Other
receivables with
significant
2,853, 2,853, 2,85
single amount 100.0 2,853, 100.00
188.0 5.46% 188.0 3,18 6.83%
for which bad 0% 188.02 %
2 2 8.02
debt provision
separately
accrued
Other
receivables
36,8
withdrawn bad 47,22 25,53 21,68 25,017
90.41 54.09 15,6 88.14 11,798,
debt provision 1,087. 9,755. 1,331. ,453.1 67.95%
% % 64.5 % 211.40
according to 70 85 85 9
9
credit risks
characteristics
Other
receivables with
insignificant
2,158, 2,158, 2,09
single amount 100.0 2,099, 100.00
775.1 4.13% 775.1 9,38 5.03%
for which bad 0% 382.02 %
4 4 2.02
debt provision
separately
accrued
52,23 100.0 30,55 58.49 21,68 41,7 100.0 29,970 11,798,
Total 71.75%
3,050. 0% 1,719. % 1,331. 68,2 0% ,023.2 211.40
118
86 01 85 34.6 3
3
Other receivables with significant single amount for which bad debt provision separately accrued at the end of the
period
√ Applicable □ Not applicable
Unit: RMB
Ending balance
Other receivables (unit)
Other Bad debt Withdrawal Withdrawal
receivables provision proportion reason
Difficult to
Changchai Group Imp. & Exp. Co., Ltd. 2,853,188.02 2,853,188.02 100.00%
recover
Total 2,853,188.02 2,853,188.02 -- --
Among these groups, other receivables adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Ending balance
Aging
Other receivables Bad debt provision Withdrawal proportion
Subentry within 1 year
Subtotal within 1 year 20,056,261.64 401,125.23 2.00%
1 to 2 years 1,795,421.38 89,771.07 5.00%
2 to 3 years 269,006.89 40,351.03 15.00%
3 to 4 years 96,930.77 29,079.23 30.00%
4 to 5 years 60,094.33 36,056.60 60.00%
Over 5 years 24,943,372.69 24,943,372.69 100.00%
Total 47,221,087.70 25,539,755.85
Among these groups, other receivables adopting balance percentage method to withdraw bad debt provision
□ Applicable √ Not applicable
Among these groups, other receivables adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
119
2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB581,695.78; the
amount of the reversed or collected part during the Reporting Period was of RMB0.00.
3) There Was No Particulars of the Actual Verification of Other Receivables during the Reporting Period
4) Other Receivables Classified by Nature
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Cash deposit & Margin 4,200.00 4,200.00
Intercourse funds among units 36,267,607.16 25,497,534.34
Petty cash and borrowings by employees 596,876.87 912,133.46
Other 15,364,366.83 15,354,366.83
Total 52,233,050.86 41,768,234.63
5) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to Ending
Ending ending balance balance of
Name of the entity Nature Aging
balance of total other bad debt
receivables% provision
Changzhou Changchai
Intercourse
Benniu Diesel Engine 10,000,000.00 Within 1 year 19.14% 200,000.00
funds
Fittings Co., Ltd.
Changzhou Changchai
Intercourse
Housheng Agricultural 8,165,948.87 Within 1 year 15.63% 163,318.98
funds
Equipment Co., Ltd.
Changzhou Compressors Intercourse
2,940,000.00 Over 5 years 5.63% 2,940,000.00
Factory funds
Changchai Group Imp. & Intercourse
2,853,188.02 Over 5 years 5.46% 2,853,188.02
Exp. Co., Ltd. funds
Changzhou New District Intercourse
1,626,483.25 Over 5 years 3.11% 1,626,483.25
Accounting Centre funds
120
Total -- 25,585,620.14 -- 48.97% 7,782,990.25
3. Long-term Equity Investment
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciation Carrying Carrying Depreciation Carrying
amount reserve value amount reserve value
Investment to 241,752,730. 241,752,730. 231,752,730. 231,752,730.
subsidiaries 03 03 03 03
Investment to
joint ventures
and 44,182.50 44,182.50 44,182.50 44,182.50
associated
enterprises
241,796,912. 241,752,730. 231,796,912. 231,752,730.
Total 44,182.50 44,182.50
53 03 53 03
(1) Investment to Subsidiaries
Unit: RMB
Ending
Depreciati
Beginning Decre Ending balance of
Investee Increase on reserve
balance ase balance depreciati
withdrawn
on reserve
Changchai
Wanzhou Diesel 51,000,000.00 51,000,000.00
Engine Co., Ltd.
Changzhou
Changchai Benniu
96,466,500.00 96,466,500.00
Diesel Engine
Fittings Co., Ltd.
Changzhou
Housheng
30,000,000.00 10,000,000.00 40,000,000.00
Investment Co.,
Ltd.
121
Changzhou
Changchai
Housheng 7,000,000.00 7,000,000.00
Agricultural
Equipment Co., Ltd.
Changzhou Fuji
Changchai Robin
47,286,230.03 47,286,230.03
Gasoline Engine
Co., Ltd.
241,752,730.0
Total 231,752,730.03 10,000,000.00
3
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
Increase/decrease
Gains Endin
Adjust
and Cash g
ment Withd
Begin losses bonus Endin balanc
of rawal
Invest ning Additi Reduc recogn Chang or g e of
other of
ee balanc onal ed ized es of profits balanc deprec
compr impair Other
e invest invest under other annou e iation
ehensi ment
ment ment the equity nced reserv
ve provis
equity to e
incom ion
metho issue
e
d
I. Joint ventures
II. Associated enterprises
Beijin
g
Tsingh
ua
Xingy
44,182 44,182 44,182
e
.50 .50 .50
Indust
rial
Invest
ment
Mana
122
gemen
t Co.,
Ltd.
Subtot 44,182 44,182 44,182
al .50 .50 .50
44,182 44,182 44,182
Total
.50 .50 .50
(3)Other Notes
4. Operating Revenue and Cost of Sales
Unit: RMB
Reporting Period Same period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main operations 1,929,864,957.32 1,659,272,787.45 2,208,546,755.61 1,913,570,161.64
Other operations 38,862,108.04 30,434,073.18 27,259,235.38 18,109,162.04
Total 1,968,727,065.36 1,689,706,860.63 2,235,805,990.99 1,931,679,323.68
5. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Investment income from holding of
7,597,950.00 10,709,750.99
available-for-sale financial assets
Investment income from disposal of
104,866,770.49
available-for-sale financial assets
Total 112,464,720.49 10,709,750.99
XVI. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
√ Applicable □ Not applicable
Unit: RMB
123
Item Amount Note
Gains/losses on the disposal of non-current assets -265,966.68
Government grants recognized in the current period, except for
those acquired in the ordinary course of business or granted at
6,291,685.65
certain quotas or amounts according to the government’s
unified standards
Capital occupation charges on non-financial enterprises that
938,737.87
are recorded into current gains and losses
Gain/loss from change of fair value of transactional assets and
liabilities, and investment gains from disposal of transactional Sale of the 20,000,000
financial assets and liabilities and available-for-sale financial 105,672,874.83 Bank of Jiangsu shares
assets, other than valid hedging related to the Company’s in the Reporting Period
common businesses
Reverse of bad debt provision of account receivable
10,000,000.00
individually conducting impairment test
Other non-operating income and expenses other than the above 1,392,895.84
Less: Income tax effects 18,670,371.98
Non-controlling interests effects 5,285.36
Total 105,354,570.17 --
Explain the reasons if the Company classifies an item as an non-recurring gain/loss according to the definition in
the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Non-recurring 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 Equity and Earnings Per Share
Weighted average EPS (Yuan/share)
Profit as of Reporting Period
ROE (%) EPS-basic EPS-diluted
Net profit attributable to ordinary shareholders of the
2.84% 0.11 0.11
Company
124
Net profit attributable to ordinary shareholders of the
-1.99% -0.08 -0.08
Company after deduction of non-recurring profit or loss
The Board of Directors
Changchai Company, Limited
April 11, 2019
125
Changchai Company, Limited Annual Report 2017
126
