Changchai Company, Limited
Financial Report For the Year 2014
I. Auditor’s Report
All shareholders of Changchai Co., Ltd.:
We have audited the attached financial statements of Changchai Co., Ltd. (hereinafter referred to as ―the
Company‖), including the consolidated and the Company’s financial statements as at 31 Dec. 2014, the
consolidated and the Company’s income statement, the consolidated and the Company’s cash flow statement,
and the consolidated and the Company’s statement of changes in equity for the year then ended, as well as the
notes to the financial statements.
I. Responsibility of the management on the financial statements
It is the responsibility of the Company’s management to prepare the financial statements according to the
enterprise accounting standards, which includes: (1) designing, implementing and maintaining the internal
control related to the financial statement preparation, so as to avoid significant errors in the financial statements
caused by malpractices or mistakes; (2) choosing and adopting proper accounting policies; and (3) making
rational accounting estimates.
II. Responsibility of the certified public accountants
Our responsibility is to express our auditing opinion based on our audit. And we have conducted the audit
according to the Auditing Standards for Chinese Registered Accountants, which requires us to conform to
ethical standards, plan and carry out the audit, so as to reasonably ensure that there exist no significant errors in
the financial statements.
The audit work involves implementing the auditing procedure so as to acquire audit evidences for the data
carried in the financial statements. The choice of auditing procedures depends on the judgment of the registered
accountants, including the risk assessment of significant financial statement errors caused by malpractices or
mistakes. When conducting the risk assessment, we will consider the internal control related to financial
statement preparation so as to design a proper auditing procedure, with no purpose to express opinions on the
effectiveness of the internal control. Our audit work also involves evaluating the rationality of the accounting
policy chosen and the accounting estimates made by the management, as well as the general presentation of the
financial statements.
We believe that the auditing evidences we obtained are sufficient and proper, which provides a foundation for us
to express our auditing opinion.
III. Audit opinion
We believe that the financial statements of the Company have been prepared in accordance with the
requirements of the Enterprises Accounting Standards, and presented fairly, in all material respects, the financial
position of the Company as at 31 Dec. 2014, and the results of its operations and its cash flows for the year then
ended.
Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. (LLP) CPA of China: Wang Wenkai
Wuxi China CPA of China: He Taifeng
20 Apr. 2015
II. Financial statements
Monetary unit of notes to financial statements: RMB Yuan
1. Consolidated balance sheet
Prepared by Changchai Company, Limited
31 Dec. 2014
Unit: RMB Yuan
Item 31 Dec. 2014 31 Dec. 2013
Current Assets:
Monetary funds 531,969,747.91 688,297,469.30
Settlement reserves
Intra-group lendings
Financial assets measured at fair
value of which changes are recorded in 2,109,642.19
current profits and losses
Derivative financial assets
Notes receivable 314,236,128.92 257,845,729.93
Accounts receivable 374,335,355.22 317,295,375.34
Accounts paid in advance 15,092,855.36 14,659,048.00
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract
reserves
Interest receivable
Dividend receivable
Other accounts receivable 8,662,701.30 12,723,300.47
Financial assets purchased under
agreements to resell
Inventories 497,588,717.86 473,238,876.29
Assets held for sale
Non-current assets due within 1 year
Other current assets 31,729,042.18 39,990,829.02
Total current assets 1,775,724,190.94 1,804,050,628.35
Non-current assets:
Loans by mandate and advances
granted
Available-for-sale financial assets 497,850,000.00 413,954,000.00
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment 20,459,975.99 19,548,325.73
Investing real estate 59,489,370.83 61,697,711.63
Fixed assets 572,785,946.61 619,468,246.18
Construction in progress 134,948,317.87 78,207,347.80
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 104,441,092.62 84,217,899.70
R&D expense
Goodwill
Long-term deferred expenses
Deferred income tax assets 1,084,863.32 1,195,990.26
Other non-current assets
Total of non-current assets 1,391,059,567.24 1,278,289,521.30
Total assets 3,166,783,758.18 3,082,340,149.65
Current liabilities:
Short-term borrowings 20,000,000.00 30,000,000.00
Borrowings from Central Bank
Customer bank deposits and due to
banks and other financial institutions
Intra-group borrowings
Financial liabilities measured at fair
value of which changes are recorded in
current profits and losses
Derivative financial liabilities
Notes payable 218,351,400.00 246,300,000.00
Accounts payable 550,858,517.60 577,327,834.60
Accounts received in advance 29,364,756.16 38,090,958.80
Financial assets sold for repurchase
Handling charges and commissions
payable
Payroll payable 61,303,762.60 57,122,045.12
Tax payable 14,511,976.27 16,228,953.19
Interest payable
Dividend payable 3,891,433.83 3,891,433.83
Other accounts payable 196,560,865.32 174,454,382.17
Reinsurance premiums payable
Insurance contract reserves
Payables for acting trading of
securities
Payables for acting underwriting of
securities
Liabilities held for sale
Non-current liabilities due within 1
year
Other current liabilities 2,992,996.74 1,939,407.40
Total current liabilities 1,097,835,708.52 1,145,355,015.11
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables
Specific payables
Estimated liabilities
Deferred income 54,185,979.32 61,894,052.94
Deferred income tax liabilities 61,616,325.00 49,031,925.00
Other non-current liabilities
Total non-current liabilities 115,802,304.32 110,925,977.94
Total liabilities 1,213,638,012.84 1,256,280,993.05
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves 164,328,665.43 171,016,154.25
Less: Treasury stock
Other comprehensive income 349,159,175.00 277,780,844.33
Specific reserves 8,332,077.21 6,996,256.56
Surplus reserves 298,151,696.96 289,629,574.39
Provisions for general risks
Retained profits 555,590,894.67 502,779,906.92
Total equity attributable to owners of
1,936,936,835.27 1,809,577,062.45
the Company
Minority interests 16,208,910.07 16,482,094.15
Total owners’ equity 1,953,145,745.34 1,826,059,156.60
Total liabilities and owners’ equity 3,166,783,758.18 3,082,340,149.65
Legal representative: Xue Guojun Person-in-charge of the accounting work: He
Jianguang
Chief of the accounting division: Jiang He
2. Balance sheet of the Company
Unit: RMB Yuan
Item 31 Dec. 2014 31 Dec. 2013
Current Assets:
Monetary funds 494,366,603.39 649,755,641.89
Financial assets measured at fair
value of which changes are recorded in
current profits and losses
Derivative financial assets
Notes receivable 312,466,128.92 257,695,729.93
Accounts receivable 331,239,446.99 287,405,670.66
Accounts paid in advance 10,139,747.15 10,821,513.13
Interest receivable
Dividend receivable
Other accounts receivable 5,712,047.44 10,397,443.72
Inventories 426,235,429.74 401,992,702.79
Assets held for sale
Non-current assets due within 1 year
Other current assets 20,637,141.03 29,892,916.57
Total current assets 1,600,796,544.66 1,647,961,618.69
Non-current assets:
Available-for-sale financial assets 490,650,000.00 406,754,000.00
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment 204,926,475.99 150,666,565.73
Investing real estate 59,489,370.83 61,697,711.63
Fixed assets 454,717,057.95 496,473,706.65
Construction in progress 134,948,317.87 77,785,739.64
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 81,914,372.57 82,161,279.41
R&D expense
Goodwill
Long-term deferred expenses
Deferred income tax assets 1,084,863.32 1,195,990.26
Other non-current assets
Total of non-current assets 1,427,730,458.53 1,276,734,993.32
Total assets 3,028,527,003.19 2,924,696,612.01
Current liabilities:
Short-term borrowings
Financial liabilities measured at fair
value of which changes are recorded in
current profits and losses
Derivative financial liabilities
Notes payable 206,351,400.00 239,300,000.00
Accounts payable 501,904,239.41 534,436,105.73
Accounts received in advance 37,247,846.51 48,173,277.25
Payroll payable 56,426,935.61 52,616,431.17
Tax payable 12,438,714.42 13,672,231.50
Interest payable
Dividend payable 3,243,179.97 3,243,179.97
Other accounts payable 191,066,117.22 167,758,011.92
Liabilities held for sale
Non-current liabilities due within 1
year
Other current liabilities
Total current liabilities 1,008,678,433.14 1,059,199,237.54
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables
Specific payables
Estimated liabilities
Deferred income 54,185,979.32 61,894,052.94
Deferred income tax liabilities 61,616,325.00 49,031,925.00
Other non-current liabilities
Total non-current liabilities 115,802,304.32 110,925,977.94
Total liabilities 1,124,480,737.46 1,170,125,215.48
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves 183,071,147.70 183,044,309.95
Less: Treasury stock
Other comprehensive income 349,159,175.00 277,847,575.00
Specific reserves 8,332,077.21 6,996,256.56
Surplus reserves 298,151,696.96 289,629,574.39
Retained profits 503,957,842.86 435,679,354.63
Total owners’ equity 1,904,046,265.73 1,754,571,396.53
Total liabilities and owners’ equity 3,028,527,003.19 2,924,696,612.01
3. Consolidated income statement
Unit: RMB Yuan
Item 2014 2013
I. Total operating revenues 2,489,792,063.33 2,927,593,052.78
Including: Sales income 2,489,792,063.33 2,927,593,052.78
Interest income
Premium income
Handling charge and commission
income
II. Total operating costs 2,418,623,839.64 2,845,243,353.68
Including: Cost of sales 2,157,062,245.66 2,530,625,259.11
Interest expenses
Handling charge and commission
expenses
Surrenders
Net claims paid
Net amount withdrawn for the
insurance contract reserve
Expenditure on policy dividends
Reinsurance premium
Taxes and associate charges 749,136.23 401,625.56
Selling and distribution expenses 92,235,311.13 122,731,331.97
Administrative expenses 146,002,446.70 165,237,477.97
Financial expenses -10,932,468.28 -12,404,044.54
Asset impairment loss 33,507,168.20 38,651,703.61
Add: Gain/(loss) from change in fair
109,642.19
value (―-‖ means loss)
Gain/(loss) from investment (―-‖
12,014,333.27 15,969,511.56
means loss)
Including: share of profits in
1,366,650.26 929,669.90
associates and joint ventures
Foreign exchange gains (―-‖ means
loss)
III. Business profit (―-‖ means loss) 83,292,199.15 98,319,210.66
Add: non-operating income 12,619,459.28 5,039,710.56
Including: Gains on disposal of
437,606.94 617,108.66
non-current assets
Less: non-operating expense 10,654,493.23 4,367,523.58
Including: Losses on disposal of
318,704.95 49,053.88
non-current assets
IV. Total profit (―-‖ means loss) 85,257,165.20 98,991,397.64
Less: Income tax expense 19,587,550.64 23,190,324.77
V. Net profit (―-‖ means loss) 65,669,614.56 75,801,072.87
Net profit attributable to owners of
64,202,144.29 75,712,361.04
the Company
Minority shareholders’ income 1,467,470.27 88,711.83
VI. After-tax net amount of other
71,378,330.67 -100,121,309.92
comprehensive incomes
After-tax net amount of other
comprehensive incomes attributable to 71,378,330.67 -100,121,309.92
owners of the Company
(I) Other comprehensive incomes
that will not be reclassified into gains and
losses
1. Changes in net liabilities or
assets with a defined benefit plan upon
re-measurement
2. Enjoyable shares in other
comprehensive incomes in investees that
cannot be reclassified into gains and
losses under the equity method
(II) Other comprehensive incomes
that will be reclassified into gains and 71,378,330.67 -100,121,309.92
losses
1. Enjoyable shares in other
comprehensive incomes in investees that
will be reclassified into gains and losses
under the equity method
2. Gains and losses on fair
71,311,600.00 -100,086,650.00
value changes of available-for-sale
financial assets
3. Gains and losses on
reclassifying held-to-maturity
investments into available-for-sale
financial assets
4. Effective hedging gains and
losses on cash flows
5. Foreign-currency financial
66,730.67 -34,659.92
statement translation difference
6. Other
After-tax net amount of other
comprehensive incomes attributable to
minority shareholders
VII. Total comprehensive incomes 137,047,945.23 -24,320,237.05
Attributable to owners of the
135,580,474.96 -24,408,948.88
Company
Attributable to minority
1,467,470.27 88,711.83
shareholders
VIII. Earnings per share
(I) Basic earnings per share 0.11 0.13
(II) Diluted earnings per share 0.11 0.13
Legal representative: Xue Guojun Person-in-charge of the accounting work: He
Jianguang
Chief of the accounting division: Jiang He
4. Income statement of the Company
Unit: RMB Yuan
Item 2014 2013
I. Total sales 2,494,339,556.14 2,941,316,332.95
Less: cost of sales 2,186,465,573.99 2,572,113,340.98
Business taxes and surcharges
Distribution expenses 87,132,202.53 117,569,014.76
Administrative expenses 129,574,125.75 149,382,515.66
Financial costs -13,220,902.08 -14,380,093.58
Impairment loss 15,048,198.38 36,286,559.05
Add: gain/(loss) from change in fair
value (―-‖ means loss)
Gain/(loss) from investment (―-‖
13,682,952.59 15,529,669.90
means loss)
Including: income form investment
1,366,650.26 929,669.90
on associates and joint ventures
II. Business profit (―-‖ means loss) 103,023,310.16 95,874,665.98
Add: non-operating income 11,180,798.60 3,020,552.53
Including: Gains on disposal of
257,729.86 437,188.33
non-current assets
Less: non-operating expense 10,476,546.75 4,267,410.08
Including: Losses on disposal of
318,266.72 49,053.88
non-current assets
III. Total profit (―-‖ means loss) 103,727,562.01 94,627,808.43
Less: Income tax expense 18,506,336.32 21,981,238.15
IV. Net profit (―-‖ means loss) 85,221,225.69 72,646,570.28
V. After-tax net amount of other
71,311,600.00 -100,086,650.00
comprehensive incomes
(I) Other comprehensive incomes that
will not be reclassified into gains and
losses
1. Changes in net liabilities or
assets with a defined benefit plan upon
re-measurement
2. Enjoyable shares in other
comprehensive incomes in investees
that cannot be reclassified into gains
and losses under the equity method
(II) Other comprehensive incomes
that will be reclassified into gains and 71,311,600.00 -100,086,650.00
losses
1. Enjoyable shares in other
comprehensive incomes in investees
that will be reclassified into gains and
losses under the equity method
2. Gains and losses on fair value
changes of available-for-sale financial 71,311,600.00 -100,086,650.00
assets
3. Gains and losses on
reclassifying held-to-maturity
investments into available-for-sale
financial assets
4. Effective hedging gains and
losses on cash flows
5. Foreign-currency financial
statement translation difference
6. Other
VI. Total comprehensive incomes 156,532,825.69 -27,440,079.72
VII. Earnings per share
(I) Basic earnings per share
(II) Diluted earnings per share
5. Consolidated cash flow statement
Unit: RMB Yuan
Item 2014 2013
I. Cash flows from operating activities:
Cash received from sale of
2,688,286,109.60 3,257,078,344.84
commodities and rendering of service
Net increase of deposits from
customers and dues from banks
Net increase of loans from the central
bank
Net increase of funds borrowed from
other financial institutions
Cash received from premium of
original insurance contracts
Net cash received from reinsurance
business
Net increase of deposits of policy
holders and investment fund
Net increase of disposal of financial
assets measured at fair value of which
changes are recorded into current gains
and losses
Cash received from interest, handling
charges and commissions
Net increase of intra-group
borrowings
Net increase of funds in repurchase
business
Tax refunds received 33,639,405.87 48,010,329.98
Other cash received relating to
14,125,214.83 12,409,392.86
operating activities
Subtotal of cash inflows from operating
2,736,050,730.30 3,317,498,067.68
activities
Cash paid for goods and services 2,375,158,372.15 2,860,474,897.96
Net increase of customer lendings
and advances
Net increase of funds deposited in the
central bank and amount due from
banks
Cash for paying claims of the original
insurance contracts
Cash for paying interest, handling
charges and commissions
Cash for paying policy dividends
Cash paid to and for employees 286,745,413.05 297,595,259.85
Various taxes paid 40,280,909.48 31,596,731.79
Other cash payment relating to
85,373,391.14 96,424,329.60
operating activities
Subtotal of cash outflows from
2,787,558,085.82 3,286,091,219.20
operating activities
Net cash flows from operating activities -51,507,355.52 31,406,848.48
II. Cash flows from investing activities:
Cash received from withdrawal of
investments
Cash received from return on
11,151,322.56 15,039,841.66
investments
Net cash received from disposal of
fixed assets, intangible assets and other 336,880.83 1,566,155.00
long-term assets
Net cash received from disposal of
subsidiaries or other business units
Other cash received relating to
investing activities
Subtotal of cash inflows from investing
11,488,203.39 16,605,996.66
activities
Cash paid to acquire fixed assets,
intangible assets and other long-term 60,611,666.98 67,808,515.95
assets
Cash paid for investment 2,000,000.00
Net increase of pledged loans
Net cash paid to acquire subsidiaries
22,600,000.00
and other business units
Other cash payments relating to
investing activities
Subtotal of cash outflows from
85,211,666.98 67,808,515.95
investing activities
Net cash flows from investing activities -73,723,463.59 -51,202,519.29
III. Cash Flows from Financing
Activities:
Cash received from capital
280,600.00 250,000.00
contributions
Including: Cash received from
minority shareholder investments by 280,600.00 250,000.00
subsidiaries
Cash received from borrowings 20,000,000.00 60,000,000.00
Cash received from issuance of
bonds
Other cash received relating to
financing activities
Subtotal of cash inflows from financing
20,280,600.00 60,250,000.00
activities
Repayment of borrowings 30,000,000.00 50,000,000.00
Cash paid for interest expenses and
10,794,562.05 16,114,667.28
distribution of dividends or profit
Including: dividends or profit paid
553,400.00
by subsidiaries to minority shareholders
Other cash payments relating to
400,000.00 400,000.00
financing activities
Sub-total of cash outflows from
41,194,562.05 66,514,667.28
financing activities
Net cash flows from financing activities -20,913,962.05 -6,264,667.28
IV. Effect of foreign exchange rate
24,385.48 -62,269.00
changes on cash and cash equivalents
V. Net increase in cash and cash
-146,120,395.68 -26,122,607.09
equivalents
Add: Opening balance of cash and
610,882,216.18 637,004,823.27
cash equivalents
VI. Closing balance of cash and cash
464,761,820.50 610,882,216.18
equivalents
6. Cash flow statement of the Company
Unit: RMB Yuan
Item 2014 2013
I. Cash flows from operating activities:
Cash received from sale of
2,699,873,240.85 3,231,684,006.61
commodities and rendering of service
Tax refunds received 33,639,405.87 48,010,329.98
Other cash received relating to
11,580,677.83 10,372,226.32
operating activities
Subtotal of cash inflows from operating
2,745,093,324.55 3,290,066,562.91
activities
Cash paid for goods and services 2,426,842,672.28 2,884,278,297.49
Cash paid to and for employees 252,341,688.21 264,654,948.92
Various taxes paid 29,401,425.57 24,780,441.70
Other cash payment relating to
77,786,287.60 89,199,191.26
operating activities
Subtotal of cash outflows from
2,786,372,073.66 3,262,912,879.37
operating activities
Net cash flows from operating activities -41,278,749.11 27,153,683.54
II. Cash flows from investing activities:
Cash received from retraction of
investments
Cash received from return on
13,022,100.00 14,600,000.00
investments
Net cash received from disposal of
fixed assets, intangible assets and other 838,078.00 395,430.00
long-term assets
Net cash received from disposal of 1,027,642.33
subsidiaries or other business units
Other cash received relating to
investing activities
Subtotal of cash inflows from investing
14,887,820.33 14,995,430.00
activities
Cash paid to acquire fixed assets,
intangible assets and other long-term 54,243,469.12 55,433,565.57
assets
Cash paid for investment 33,500,000.00 3,500,000.00
Net cash paid to acquire subsidiaries
21,126,700.00
and other business units
Other cash payments relating to
investing activities
Subtotal of cash outflows from
108,870,169.12 58,933,565.57
investing activities
Net cash flows from investing activities -93,982,348.79 -43,938,135.57
III. Cash Flows from Financing
Activities:
Cash received from capital
contributions
Cash received from borrowings
Cash received from issuance of
bonds
Other cash received relating to
financing activities
Subtotal of cash inflows from financing
activities
Repayment of borrowings
Cash paid for interest expenses and
8,420,614.89 14,034,358.15
distribution of dividends or profit
Other cash payments relating to
financing activities
Sub-total of cash outflows from
8,420,614.89 14,034,358.15
financing activities
Net cash flows from financing activities -8,420,614.89 -14,034,358.15
IV. Effect of foreign exchange rate
changes on cash and cash equivalents
V. Net increase in cash and cash -143,681,712.79 -30,818,810.18
equivalents
Add: Opening balance of cash and
574,440,388.77 605,259,198.95
cash equivalents
VI. Closing balance of cash and cash
430,758,675.98 574,440,388.77
equivalents
7. Consolidated statement of changes in owners’ equity
2014
Unit: RMB Yuan
2014
Equity attributable to owners of the Company
Other equity
Other Minorit Total
Item instruments Less: General
Share Capital compre Specific Surplus Retaine y owners’
Prefer Perpet treasury risk
capital reserve hensive reserve reserve d profit interests equity
red ual Other stock reserve
incomes
shares bonds
I. Balance at the 561,37 1,826,0
171,016 277,780 6,996,2 289,629 502,779 16,482,
end of the 4,326. 59,156.
,154.25 ,844.33 56.56 ,574.39 ,906.92 094.15
previous year 00 60
Add: change of
accounting policy
Correction of
errors in previous
periods
Business
mergers under the
same control
Other
II. Balance at the 561,37 1,826,0
171,016 277,780 6,996,2 289,629 502,779 16,482,
beginning of the 4,326. 59,156.
,154.25 ,844.33 56.56 ,574.39 ,906.92 094.15
year 00 60
III. Increase/
decrease in the -6,687,4 71,378, 1,335,8 8,522,1 52,810, -273,18 127,086
period (―-‖ means 88.82 330.67 20.65 22.57 987.75 4.08 ,588.74
decrease)
(I) Total
71,378, 64,202, 1,467,4 137,047
comprehensive
330.67 144.29 70.27 ,945.23
incomes
(II) Capital -6,714,3 4,210,9 -2,503,4
increased and 26.57 26.57 00.00
reduced by owners
1. Common
20,250, 20,250,
shares increased
000.00 000.00
by shareholders
2. Capital
increased by
holders of other
equity instruments
3. Amounts
of share-based
payments
recognized in
owners’ equity
-6,714,3 -16,039, -22,753,
4. Other
26.57 073.43 400.00
(III) Profit 8,522,1 -16,942, -400,00 -8,820,6
distribution 22.57 737.46 0.00 14.89
1.
8,522,1 -8,522,1
Appropriations to
22.57 22.57
surplus reserves
2.
Appropriations to
general risk
provisions
3.
Appropriations to -8,420,6 -400,00 -8,820,6
owners (or 14.89 0.00 14.89
shareholders)
4. Other
(IV) Internal
carry-forward of
owners’ equity
1. New
increase of capital
(or share capital)
from capital public
reserves
2. New
increase of capital
(or share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
4. Other
(V) Specific 1,335,8 1,335,8
reserve 20.65 20.65
1. Withdrawn 4,841,3 4,841,3
for the period 16.33 16.33
2. Used in the 3,505,4 3,505,4
period 95.68 95.68
26,837. 5,551,5 -5,551,5 26,837.
(VI) Other
75 80.92 80.92 75
561,37 1,953,1
IV. Closing 164,328 349,159 8,332,0 298,151 555,590 16,208,
4,326. 45,745.
balance ,665.43 ,175.00 77.21 ,696.96 ,894.67 910.07
00 34
2013
Unit: RMB Yuan
2013
Equity attributable to owners of the Company
Other equity Minorit
Other Total
Item instruments y
Less: General
Share Capital compre Specific Surplus Retaine owners’
treasury risk interest
Prefer Perpet equity
capital reserve hensive reserve reserve d profit
red ual Other stock reserve s
incomes
shares bonds
I. Balance at the 561,37 1,861,3
171,016 377,902 4,169,0 282,364 448,366 16,143,
end of the 4,326. 36,582.
,154.25 ,154.25 87.73 ,917.36 ,561.06 382.32
previous year 00 97
Add: change of
accounting policy
Correction of
errors in previous
periods
Business
mergers under the
same control
Other
II. Balance at the 561,37 171,016 377,902 4,169,0 282,364 448,366 16,143, 1,861,3
beginning of the 4,326. ,154.25 ,154.25 87.73 ,917.36 ,561.06 382.32 36,582.
year 00 97
III. Increase/
-100,12
decrease in the 2,827,1 7,264,6 54,413, 338,711 -35,277,
1,309.9
period (―-‖ means 68.83 57.03 345.86 .83 426.37
2
decrease)
(I) Total -100,12
75,712, 88,711. -24,320,
comprehensive 1,309.9
361.04 83 237.05
incomes 2
(II) Capital
250,000 250,000
increased and
.00 .00
reduced by owners
1. Common
250,000 250,000
shares increased
.00 .00
by shareholders
2. Capital
increased by
holders of other
equity instruments
3. Amounts
of share-based
payments
recognized in
owners’ equity
4. Other
(III) Profit 7,264,6 -21,299, -14,034,
distribution 57.03 015.18 358.15
1.
7,264,6 -7,264,6
Appropriations to
57.03 57.03
surplus reserves
2.
Appropriations to
general risk
provisions
3.
Appropriations to -14,034, -14,034,
owners (or 358.15 358.15
shareholders)
4. Other
(IV) Internal
carry-forward of
owners’ equity
1. New
increase of capital
(or share capital)
from capital public
reserves
2. New
increase of capital
(or share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
4. Other
(V) Specific 2,827,1 2,827,1
reserve 68.83 68.83
1. Withdrawn 4,865,2 4,865,2
for the period 06.81 06.81
2. Used in the 2,038,0 2,038,0
period 37.98 37.98
(VI) Other
561,37 1,826,0
IV. Closing 171,016 277,780 6,996,2 289,629 502,779 16,482,
4,326. 59,156.
balance ,154.25 ,844.33 56.56 ,574.39 ,906.92 094.15
00 60
8. Statement of changes in owners’ equity of the Company
2014
Unit: RMB Yuan
2014
Other equity instruments Other
Less: Total
Item Share Capital comprehe Specific Surplus Retaine
Preferre Perpetu treasury owners’
capital Other reserve nsive reserve reserve d profit
d shares al bonds stock equity
incomes
I. Balance at the
561,374, 183,044,3 277,847,5 6,996,256 289,629,5 435,679 1,754,571
end of the previous
326.00 09.95 75.00 .56 74.39 ,354.63 ,396.53
year
Add: change of
accounting policy
Correction of
errors in previous
periods
Other
II. Balance at the
561,374, 183,044,3 277,847,5 6,996,256 289,629,5 435,679 1,754,571
beginning of the
326.00 09.95 75.00 .56 74.39 ,354.63 ,396.53
year
III. Increase/
decrease in the 71,311,60 1,335,820 8,522,122 68,278, 149,474,8
26,837.75
period (―-‖ means 0.00 .65 .57 488.23 69.20
decrease)
(I) Total
71,311,60 85,221, 156,532,8
comprehensive
0.00 225.69 25.69
incomes
(II) Capital
increased and
reduced by owners
1. Common
shares increased
by shareholders
2. Capital
increased by
holders of other
equity instruments
3. Amounts
of share-based
payments
recognized in
owners’ equity
4. Other
(III) Profit 8,522,122 -16,942, -8,420,61
distribution .57 737.46 4.89
1.
8,522,122 -8,522,1
Appropriations to
.57 22.57
surplus reserves
2.
Appropriations to -8,420,6 -8,420,61
owners (or 14.89 4.89
shareholders)
3. Other
(IV) Internal
carry-forward of
owners’ equity
1. New
increase of capital
(or share capital)
from capital public
reserves
2. New
increase of capital
(or share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
4. Other
(V) Specific 1,335,820 1,335,820
reserve .65 .65
1. Withdrawn 4,841,316 4,841,316
for the period .33 .33
2. Used in the 3,505,495 3,505,495
period .68 .68
(VI) Other 26,837.75 26,837.75
IV. Closing 561,374, 183,071,1 349,159,1 8,332,077 298,151,6 503,957 1,904,046
balance 326.00 47.70 75.00 .21 96.96 ,842.86 ,265.73
2013
Unit: RMB Yuan
2013
Other equity instruments Other
Less: Total
Item Share Capital comprehe Specific Surplus Retaine
Preferre Perpetu treasury owners’
capital Other reserve nsive reserve reserve d profit
d shares al bonds stock equity
incomes
I. Balance at the
561,374, 183,044,3 377,934,2 4,169,087 282,364,9 384,331 1,793,218
end of the previous
326.00 09.95 25.00 .73 17.36 ,799.53 ,665.57
year
Add: change of
accounting policy
Correction of
errors in previous
periods
Other
II. Balance at the
561,374, 183,044,3 377,934,2 4,169,087 282,364,9 384,331 1,793,218
beginning of the
326.00 09.95 25.00 .73 17.36 ,799.53 ,665.57
year
III. Increase/
decrease in the -100,086, 2,827,168 7,264,657 51,347, -38,647,2
period (―-‖ means 650.00 .83 .03 555.10 69.04
decrease)
(I) Total
-100,086, 72,646, -27,440,0
comprehensive
650.00 570.28 79.72
incomes
(II) Capital
increased and
reduced by owners
1. Common
shares increased
by shareholders
2. Capital
increased by
holders of other
equity instruments
3. Amounts
of share-based
payments
recognized in
owners’ equity
4. Other
(III) Profit 7,264,657 -21,299, -14,034,3
distribution .03 015.18 58.15
1.
7,264,657 -7,264,6
Appropriations to
.03 57.03
surplus reserves
2.
Appropriations to -14,034, -14,034,3
owners (or 358.15 58.15
shareholders)
3. Other
(IV) Internal
carry-forward of
owners’ equity
1. New
increase of capital
(or share capital)
from capital public
reserves
2. New
increase of capital
(or share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
4. Other
(V) Specific 2,827,168 2,827,168
reserve .83 .83
1. Withdrawn 4,865,206 4,865,206
for the period .81 .81
2. Used in the 2,038,037 2,038,037
period .98 .98
(VI) Other
IV. Closing 561,374, 183,044,3 277,847,5 6,996,256 289,629,5 435,679 1,754,571
balance 326.00 09.95 75.00 .56 74.39 ,354.63 ,396.53
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 Jan. 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 Mar.
1994 to 30 Mar. 1994. As approved by the Shenzhen Stock Exchange through document SZSFZ (1994) No. 15, such tradable
shares of the public got listing on 1 Jul. 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 Aug.
1996 to 30 Aug. 1996, getting listed on 13 Sep. 1996.
On 9 Jun. 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 Jun. 2006.
As examined and approved at the 2009 2nd Extraordinary Shareholders’ General Meeting in Sep. 2009, based on the total share
capital of 374,249,551 shares as at 30 Jun. 2009, the Company implemented the profit distribution plan, i.e. to distribute 5 bonus
shares and cash of RMB 0.8 for every 10 shares, with registered capital increased by RMB 187,124,775.00, as well as registered
capital of RMB 561,374,326.00 after change. As at 31 Dec. 2013, the total share capital of the Company is 561,374,326 shares, as
well as registered capital of RMB 561,374,326.00, which verified by Jiangsu Gongzheng Tianye Certified Public Accountants
Company Limited with issuing Capital Verification Report SGC [2010] No. B002. The Company had registered the change with
the administrative authorities for industry and commerce, and obtained the renewed business license as legal person with No.
320400000004012.
The Company’s registered address is situated at No. 123 Huaide Middle Road, Changzhou, Jiangsu, as well as its head office
located at No. 123 Huaide Middle Road, Changzhou, Jiangsu.
The Company belongs to manufacturing with business scope including manufacturing and sale of diesel engine, diesel engines part
and casting, grain harvesting machine, rotary cultivators, walking tractor, mould and fixtures, assembling and sale of diesel
generating set and pumping unit. The Company mainly engaged in the production and sales of small and medium-sized single
cylinders and multi-cylinder diesel engine with the label of Changchai Brand. The diesel engine produced and sold by the
Company were mainly used in tractors, combine harvest models, light commercial vehicle, farm equipment, small-sized
construction machinery, generating sets and shipborne machinery and equipment, etc. The Company’s main business remained
unchanged in the reporting period.
The Company established the Shareholders’ General Meeting, the Board of Directors and the Board of Supervisors，Corporate
office, Financial Department, Political Department, Investment and Development Department, Enterprise Management Department,
Human Recourses Department, Production Department, Procurement Department, Sales Company, Market Department, Chief
Engineer Office, Technology Center, QA Department, Foundry Branch, Machine Processing Branch, Single-cylinder Engine
branch, Multi-cylinder Engine Branch and Overseas Business Department in the Company.
The financial report has been approved to be issued by the Board of Directors on 20 Apr. 2015.
The consolidated scope of the Company of the reporting period including the parent company and 4 subsidiaries, which decrease 1
subsidiary compared with the last period. The reason was the Company written the Changsheng International Co., Ltd. during the
reporting period and would not be included in the consolidated scope at the period-end. 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 issued by
the Ministry of Finance with Decree No. 33 and revised with Decree No. 76, the 41 specific accounting standards, the Application
Guidance of Accounting Standards for Business Enterprises, the Interpretation of Accounting Standards for Business Enterprises
and other regulations issued and revised from 15 Feb. 2006 onwards (hereinafter jointly referred to as ―the Accounting Standards
for Business Enterprises‖, ―China Accounting Standards‖ or ―CAS‖), as well as the Rules for Preparation Convention of Disclosure
of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by China Securities
Regulatory Commission.
In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the Group adopted the accrual basis
in accounting. Except for some financial instruments, where impairment occurred on an asset, an impairment reserve was
withdrawn accordingly pursuant to relevant requirements.
2. Continuation
The Company comprehensively evaluated the information acquired recently that there would be no such factors in the 12 months
from the end of the reporting period that would obviously influence the continuation capability of the Company and predicted that
the operating activities would continue in the future 12 months of the Company. The financial statement compiled base on the
continuous operation.
V. Important accounting policies and estimations
The Company and each subsidiary according to the actual production and operation characteristics and in accord with the
regulations of the relevant ASBE, formulated certain specific accounting polices and accounting estimations, which mainly
reflected in the withdrawal method of the bad debt provision of the accounts receivable (Notes III, 11), the measurement of the
inventory (Notes III, 12) and the depreciation of the fixed assets (Notes III, 16) etc. As for the details of the significant accounting
judgment and the estimations made by the management layer, please refer to Notes III, 30 ―Important accounting judgment and
estimations‖.
1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Group are in compliance with in compliance with the Accounting Standards for Business
Enterprises, which factually and completely present the Company’s and the Group’s financial positions, business results and cash
flows and other relevant information.
2. Fiscal period
The fiscal periods are divided into fiscal year and metaphase, the fiscal year is from Jan. 1 to Dec. 31 and as the metaphase
included monthly, quarterly and semi-yearly periods.
3. Operating cycle
A normal operating cycle refers to a period from the Group purchasing assets for processing to realizing cash or cash equivalents.
An operating cycle for the Group is 12 months, which is also the classification criterion for the liquidity of its assets and liabilities.
4. Currency used in bookkeeping
Renminbi is functional currency of the Company.
5. Accounting methods for business combinations under the same control and business combinations not under the same
control
(1) Business combinations under the same control:
A business combination under the same control is a business combination in which all of the combining enterprises are ultimately
controlled by the same party or the same parties both before and after the business combination and on which the control is not
temporary.
For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it makes payment in cash,
transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share of the book value of the owner's equity of
the merged enterprise as the initial cost of the long-term equity investment. The difference between the initial cost of the long-term
equity investment and the payment in cash, non-cash assets transferred as well as the book value of the debts borne by the merging
party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.
If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger, regard the share of the
book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment. The total face value
of the stocks issued shall be regarded as the capital stock, while the difference between the initial cost of the long-term equity
investment and total face value of the shares issued shall offset against the capital reserve. If the capital reserve is insufficient to
dilute, the retained earnings shall be adjusted.
All direct costs for the business combination, including expenses for audit, evaluating and legal services shall be recorded into the
profits and losses at the current period. The expenses such as the handling charges and commission etc, premium income of
deducting the equity securities, and as for the premium income was insufficient to dilute, the retained earnings shall be written
down.
Owning to the reasons such as the additional investment, for the equity investment held before acquiring the control right of the
combined parties, the confirmed relevant gains and losses, other comprehensive income and the changes of other net assets since
the date of the earlier one between the date when acquiring the original equity right and the date when the combine parties and
combined ones were under the same control to the combination date, should be respectively written down and compared with the
beginning balance of retained earnings or the current gains and losses during the statement period.
(2) Business combinations not under the same control
A business combination not under the same control is a business combination in which the combining enterprises are not ultimately
controlled by the same party or the same parties both before and after the business combination.
The combination costs of the acquirer and the identifiable net assets obtained by the acquirer in a business combination shall be
measured at the fair values. The acquirer shall recognize the positive balance between the combination costs and the fair value of
the identifiable net assets it obtains forms the acquiree as business reputation. The direct relevant expenses occurred from the
enterprise combination should be included in the current gains and losses when occurred. The combination costs of the acquirer and
the identifiable net assets obtained by it in the combination shall be measured according to their fair values at the acquiring date.
The difference between the fair value of the assets paid out by the Company and its book value should be included in the current
gains and losses. The purchase date refers to the date that the purchaser acquires the control right of the acquiree.
For the business combinations not under the same control realized through step by step multiple transaction, as for the equity
interests that the Group holds in the acquiree before the acquiring date, they shall be re-measured according to their fair values at
the acquiring date; the positive difference between their fair values and carrying amounts shall be recorded into the investment
gains for the period including the acquiring date. The equity holed by the acquiree which involved with the other comprehensive
income and the other owners’ equities changes except for the net gains and losses, other comprehensive income and the profits
distribution and other related comprehensive gains and other owners’ equities which in relation to the equity interests that the
Group holds in the acquiree before the acquiring date should be transferred into the current investment income on the acquiring
date, except for the other comprehensive income occurred from the re-measurement of the net profits of the defined benefit plans or
the changes of the net assets of the investees.
6. Methods for preparing consolidated financial statements
The Company confirms the consolidated scope based on the control and includes the subsidiaries with actual control right into the
consolidated financial statement.
The consolidated financial statement of the Company is compiled according to the regulations of No. 33 of ASBE-Consolidated
Financial Statement and the relevant regulations and as for the whole significant come-and-go balance, investment, transaction and
the unrealized profits should be written off when compiling the consolidated financial statement. The portion of a subsidiary’s
shareholders’ equity and the portion of a subsidiary’s net profits and losses for the period not held by the Group are recognized as
minority interests and minority shareholder profits and losses respectively and presented separately under shareholders’ equity and
net profits in the consolidation financial statements. The portion of a subsidiary’s net profits and losses for the period that belong to
minority interests is presented as the item of ―minority shareholder profits and losses‖ under the bigger item of net profits in the
consolidated financial statements. Where the loss of a subsidiary shared by minority shareholders exceeds the portion enjoyed by
minority shareholders in the subsidiary’s opening owners’ equity, minority interests are offset.
The accounting policy or accounting period of each subsidiary is different from which of the Company, which shall be adjusted as
the Company; or subsidiaries shall prepare financial statement again required by the Company when preparing the consolidated
financial statements.
As for the added subsidiary company not controlled by the same enterprise preparing the consolidated financial statement, shall
adjust individual financial statement based on the fair value of the identifiable net assets on the acquisition date; as for the added
subsidiary companies controlled by the same enterprise preparing the financial statement, shall not adjust the financial statement of
the subsidiaries, namely survived by integration as participating in the consolidation when the final control party starts
implementing control and should adjust the period-begin amount of the consolidated balance sheet and at the same time adjust the
relevant items of the compared statement.
As for the disposed subsidiaries, the operation result and the cash flow should be included in the consolidated income statement
and the consolidated cash flow before the disposing date; the disposed subsidiaries of the current period, should not be adjusted the
period-begin amount of the consolidated balance sheet.
Where the Group losses control on its original subsidiaries due to disposal of some equity investments or other reasons, the residual
equity interests are re-measured according to the fair value on the date when such control ceases. The summation of the
consideration obtained from the disposal of equity interests and the fair value of the residual equity interests, minus the portion in
the original subsidiary’s net assets measured on a continuous basis from the acquisition date that is enjoyable by the Group
according to the original shareholding percentage in the subsidiary, is recorded in investment gains for the period when the Group’s
control on the subsidiary ceases. Other comprehensive incomes in relation to the equity investment and the other owners’ equities
changes except for the net gains and losses, other comprehensive income and profits distribution in the original subsidiary are
treated on the same accounting basis as the acquiree directly disposes the relevant assets or liabilities (that is, except for the
changes in the net liabilities or assets with a defined benefit plan resulted from re-measurement of the original subsidiary, the rest
shall all be transferred into current investment gains) when such control ceases. And subsequent measurement is conducted on the
residual equity interests according to the No.2 Accounting Standard for Business Enterprises-Long-term Equity Investments or the
No.22 Accounting Standard for Business Enterprises-Recognition and Measurement of Financial Instruments.
For the disposal of equity investment belongs to a package deal, should be considered as a transaction and conduct accounting
treatment. However, Before losing control, every disposal cost and corresponding net assets balance of subsidiary of disposal
investment are confirmed as other comprehensive income in consolidated financial statements, which together transferred into the
current profits and losses in the lose of control, when the Group losing control on its subsidiary.
For the disposal of the equity investment not belongs to a package deal, should be executed accounting treatment according to the
relevant policies of partly disposing the equity investment of the subsidiaries under the situation not lose the control right before
losing the control right; when losing the control right, the former should be executed accounting treatment according to the general
disposing method of the disposal of the subsidiaries.
7. Classification of joint arrangements and accounting treatment of joint operations
The Group classifies joint arrangements into joint operations and joint ventures。
A joint operation refers to a joint arrangement where the Group is the joint operations party of the joint arrangement and enjoys
assets and has to bear liabilities related to the arrangement. The Company confirms the following items related to the interests share
among the joint operations and executes accounting treatment according to the regulations of the relevant ASBE:
(1) Recognizes the assets that it holds and bears in the joint operation and recognizes the jointly-held assets according to the
Group’s stake in the joint operation;
(2) Recognizes the liabilities that it holds and bears in the joint operation and recognizes the jointly-held liabilities according to the
Group’s stake in the joint operation;
(3) Recognizes the income from sale of the Group’s share in the output of the joint operation
(4) Recognizes the income from sale of the joint operation’s outputs according to the Group’s stake in it
(5) Recognizes the expense solely incurred to the Group and the expense incurred to the joint operation according to the Group’s
stake in it.
8. Recognition standard for cash and cash equivalents
In the Group’s understanding, cash and cash equivalents include cash on hand, any deposit that can be used for cover, and
short-term (usually due within 3 months since the day of purchase) and high circulating investments, which are easily convertible
into known amount of cash and whose risks in change of value are minimal.
9. Foreign currency businesses and translation of foreign currency financial statements
(1) Foreign currency business
Concerning the foreign-currency transactions that occurred, the foreign currency shall be converted into the recording currency
according to the middle price of the market exchange rate disclosed by the People’s Bank of China on the date of the transaction.
Among the said transactions that occurred, those involving foreign exchanges shall be converted according to the exchange rates
adopted in the actual transactions.
On the balance sheet date, the foreign-currency monetary assets and the balance of the liability account shall be converted into the
recoding currency according to the middle price of the market exchange rates disclosed by the People’s Bank of China on the
Balance Sheet Date. The difference between the recording-currency amount converted according to the exchange rate on the
Balance Sheet Date and the original book recording-currency amount shall be recognized as gains/losses from foreign exchange.
And the exchange gain/loss caused by the foreign-currency borrowings related to purchasing fixed assets shall be handled
according to the principle of capitalizing borrowing expenses; the exchange gain/loss incurred in the establishment period shall be
recorded into the establishment expense; others shall be recorded into the financial expenses for the current period.
On the balance sheet date, the foreign-currency non-monetary items measured by historical cost shall be converted according to the
middle price of the market exchange disclosed by the People’s Bank of China on the date of the transaction, with no changes in the
original recording-currency amount; while the foreign-currency non-monetary items measured by fair value shall be converted
according to the middle price of the market exchange disclosed by the People’s Bank of China on the date when the fair value is
recognized, and the exchange gain/loss caused thereof shall be recognized as the gain/loss from fair value changes and recorded
into the gain/loss of the current period.
(2) Translation of foreign currency
The assets and liabilities items among the balance sheet of the foreign operation shall be translated at a spot exchange rate on the
balance sheet date. Among the owner’s equity items, except for the items as ―undistributed profits‖, other items shall be translated
at the spot exchange rate at the time when they are incurred. And the revenues and expenses items among the balance sheet of the
foreign operation shall be translated at the approximate exchange rate of the transaction date. The difference caused from the above
transaction of the foreign currency statement should be listed in the other comprehensive income among the owners’ equities.
10. Financial instruments
(1) Category of financial instruments
The Company classifies the financial assets into four kinds such as trading financial assets, available-for-sale financial assets,
accounts receivable and held-to-maturity investment according to the investment purpose and the economy nature.
The Company classifies the financial liabilities into two kinds such as the financial liabilities measured by fair value with the
changes included in the current gains and losses and the other financial liabilities measured by amortized cost according to the
economy nature.
(2) Recognition basis and measurement methods of financial instruments
The trading financial assets should be measured by fair value with the changes of fair value included in the current gains and losses;
the available-for-sale financial assets should be measured by fair value with the changes of fair value included in the owners’
equities; and the accounts receivable and the held-to-maturity investment should be measured by amortized cost.
(3) Recognition basis and measurement methods of financial instruments transformation
The Company transfers or delivers a financial asset to a party other than the issuer of the financial asset and the transformation of
the financial assets could be whole of the financial assets or a part of it, which including two methods:
The enterprise transfers the right to another party for receiving the cash flow of the financial asset;
The enterprise transfers the financial asset to another party, but maintains the right to receive the cash flow of the financial asset
and undertakes the obligation to pay the cash flow it receives to the final recipient.
Where the Company has transferred a part or nearly all of the risks and rewards related to the ownership of the financial asset to the
transferee, it shall stop recognizing the financial asset and the difference between the consideration received and the book value of
the transferred financial assets should be recognized as gains and losses and at the same time transfers the accumulative gains or
losses from the recognized financial assets among the original owners’ equities in the gains and losses; if it retained nearly all of the
risks and rewards related to the ownership of the financial asset, it shall continue to recognize the whole or part of the financial
assets and the consideration received be recognized as financial liabilities.
Where the Company neither transfers nor retains nearly all of the risks and rewards related to the ownership of a financial asset,
and it does not cease its control on the said financial asset, it recognizes the relevant financial asset and liability accordingly
according to the extent of its continuous involvement in the transferred financial asset.
(4) De-recognition conditions of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial
liability be terminated in all or partly.
(5) Recognition methods of the fair value of main financial assets and financial liabilities
As for the financial assets held by the Company or the financial liabilities plans to undertake, if there exists active market, should
adopt the current offering price in the active market, and as for the financial assets plans to be purchased by the Company or the
financial liabilities undertook, should adopt the current offering in the active market, and if there is no current offering price or
asking price, should adopt the market quotation of the recent transactions or the adjusted market quotation of the recent transactions,
except for there is definite evidence indicate the market quotation is not the fair value.
Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques,
including the prices adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own free
will, the current fair value obtained by referring to other financial instruments of the same essential nature etc.
(6) Impairment test method and withdrawal methods of impairment provision of financial assets (excluding accounts receivable)
The Company shall carry out an inspection, on the balance sheet day, on the carrying amount of the financial assets other than those
measured at their fair values and of which the variation is recorded into the profits and losses of the current period. Where there is
any objective evidence proving that such financial asset has been impaired, an impairment provision shall be made. For the
financial assets with significant single amount, if there is objective evidence indicates the occurred impairment, should recognize
the impairment losses and should include which in the current gains and losses. As for the financial assets with insignificant single
amount but not occur impairment, the Company should execute the impairment test by credit groups according to the credit degree
of the customers and the actual situation of the happen of the bad debts over the years for recognizing the impairment losses.
The expression ―objective evidence proving that the financial asset has been impaired‖ refers to the actually incurred events which,
after the financial asset is initially recognized, have an impact on the predicted future cash flow of the said financial asset that can
be reliably measured by the enterprise.
The objective evidences that can prove the impairment of a financial asset shall include:
A serious financial difficulty occurs to the issuer or debtor;
The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of interests or the principal,
etc.;
The creditor makes any concession to the debtor who is in financial difficulties due to economic or legal factors, etc.;
The debtor will probably become bankrupt or carry out other financial reorganizations;
The financial asset can no longer continue to be traded in the active market due to serious financial difficulties of the issuer;
It is impossible to identify whether the cash flow of a certain asset within a certain combination of financial assets has decreased or
not. But after making an overall appraisal according to the public data available, it is found that the predicted future cash flow of
the said combination of financial assets has indeed decreased since it was initially recognized and such decrease can be measured,
for example, the ability of the debtor of the said combination of financial assets worsens gradually, the unemployment rate of the
country or region where the debtor is situated increases, the prices of the region where the guaranty is situated are obviously
dropping, or the industrial sector concerned is in slump, etc.;
Any seriously disadvantageous change has occurred to technical, market, economic or legal environment, etc. wherein the debtor
operates its business, which makes the investor of an equity instrument unable to take back its investment;
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 was directly included shall be transferred out and
recorded into the profits and losses of the current period.
11. Receivables
(1) Accounts receivable with significant single amount for which the bad debt provision is made individually
Recognition criteria of accounts receivable with individual and significant amount: significant single amounts refers to the accounts
receivable of the single amount more than RMB 1 million (RMB 1 million include) (including accounts receivable and other
accounts receivable)
Withdrawal method of the bad debt provision of the accounts receivable with significant single amounts: The Company makes an
independent impairment test on the accounts receivable with significant single amount, and provision for bad debts shall withdrawn
on the basis of the balance between the current values of the predicted future cash flow lower than book value. Upon independent
impairment test, the accounts receivable with significant single amounts has not been impaired, it shall be withdrawn bad debt
provision based on ending balance by adopting aging analysis method.
(2) Method of recognizing the group basis and bad debt provision according to the accounts receivable which withdrew the bad
debt provision by group:
The Company divided the groups by taking the age of the accounts receivable as the credit risk portfolio and withdrew the bad debt
provision by adopting aging analysis method.
(3) Receivables with insignificant amount but being individually withdrawn the provision for bad debts
Recognition criteria of accounts receivable with individual but insignificant amount: insignificant single amounts refers to the
accounts receivable of the single amount lower than RMB 1 million (RMB 1 million include) (including accounts receivable and
other accounts receivable).
The reason and the withdrawal method of the bad debt provision of the accounts receivable with insignificant single amounts: As
for an account receivable with an insignificant single amount and which can not show its risk feature when withdrawing a bad-bet
provision for it on the group basis, the bad-debt provision for the account receivable shall be withdrawn based on the difference of
the expected present value of the future cash flows of the account 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.
(4) Proportion of the withdrawal of bad debts provision of accounts receivable by adopting aging analysis method:
Withdrawal proportion of accounts Withdrawal proportion of other accounts
Aging
receivable (%) receivable (%)
Within 1 year 2 2
1 to 2 years 5 5
2 to 3 years 15 15
3 to 4 years 30 30
4 to 5 years 60 60
Over 5 years 100 100
Withdrawal policy of bad debts provision of the related parties: According to the 4th Session of the 9th Board of Directors, as for the
accounts receivable of the related parties of the Company which owned the sustainable operation ability, the bad debts provision
should not exceed 60% at best.
12. Inventory
(1) Category of Inventory
Inventory refers to the held-for-sale finished products or commodities, goods in process, materials consumed in the production
process or the process providing the labor service etc. Inventory is mainly including the raw materials, low priced and easily worn
articles, unfinished products, inventories and work in process–outsourced etc.
(2) Pricing method
Purchasing and storage of the various inventories should be valued according to the planed cost and the dispatch be calculated
according to the weighted average method; carried forward the cost of the finished products according to the actual cost of the
current period and the sales cost according to the weighted average method.
(3) Determination basis of the net realizable value of inventory and withdrawal method of the provision for falling price of
inventory
At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. When all the inventories are
checked roundly, for those which were destroyed, outdated in all or in part, sold at a loss, etc, the Company shall estimate the
irrecoverable part of its cost and withdrawal the inventory falling price reserve at the year-end. Where the cost of the single
inventory item is higher than the net realizable value, the inventory falling price reserve shall be withdrawn and recorded into
profits and losses of the current period. Of which: in the normal production and operating process, as for the commodities inventory
directly for sales such as the finished products, commodities and the materials for sales, should recognize the net realizable value
according to the amount of the estimated selling price of the inventory minuses the estimated selling expenses and the relevant
taxes; as for the materials inventory needs to be processed in the normal production and operating process, should recognize its net
realizable value according to the amount of the estimated selling price of the finished products minuses the cost predicts to be occur
when the production completes and the estimated selling expenses as well as the relevant taxes; on the balance sheet date, for the
same inventory with one part agreed by the contract price and other parts not by the contract price, should be respectively
recognized the net realizable value. For items of inventories relating to a product line that are produced and marketed in the same
geographical area, have the same or similar end users or purposes, and cannot be practicably evaluated separately from other items
in that product line provision for decline in value is determined on an aggregate basis; for large quantity and low value items of
inventories, provision for decline in value is made based on categories of inventories.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method of low-value consumption goods and packages
Is one time amortization method of low-value consumption goods and packages when consuming.
13. Divided as assets held for sale
The Company recognizes the components (or the non-current assets) which meet with the following conditions as assets held for
sale:
(1) The components must be immediately sold only according to the usual terms of selling this kind of components under the
current conditions;
(2) The Company had made solutions on disposing the components (or the non-current assets), for example, the Company should
gain the approval from the shareholders according to the regulations and had acquired the approved from the Annual General
Meeting or the relevant authority institutions;
(3) The Company had signed the irrevocable transformation agreement with the transferee;
(4) The transformation should be completed within 1 year.
14. Long-term equity investments
(1) Judgment standard of joint control and significant influences
Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement by the Company and the
relevant activities of the arrangement should be decided only after the participants which share the control right make consensus.
Significant influence refers to the power of the Group which could anticipate in the finance and the operation polices of the
investees, but could not control or jointly control the formulation of the policies with the other parties.
(2) Recognition for initial investment cost
The initial investment cost of the long-term equity investment shall be recognized by adopting the following ways in accordance
with different methods of acquisition:
① As for those forms under the same control of the enterprise combine, if the combine party takes the cash payment, non-cash
assets transformation, liabilities assumption or equity securities issuance as the combination consideration, should take the shares
of the book value by the ultimate control party in the consolidate financial statement of the owners’ equities of the combiners
acquired on the merger date as the initial investment cost. The difference between the initial investment cost and the book value of
the paid combination consideration or the total amount of the issued shares of the long-term equity investment should be adjusted
the capital reserve; If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. To include each direct
relevant expense occurred when executing the enterprise merger into the current gains and losses; while the handling charges and
commission occurs from the issuing the equity securities or the bonds for the enterprise merger should be included in the initial
measurement amount of the shareholders’ equities or the liabilities.
② As for long-term equity investment acquired through the merger of enterprises not under the same control, its initial investment
cost shall regard as the combination cost calculated by the fair value of the assets, equity instrument issued and liabilities incurred
or undertaken on the purchase date adding the direct cost related with the acquisition. The identifiable assets of the combined party
and the liabilities (including contingent liability) undertaken on the combining date shall be measured at the fair value without
considering the amount of minority interest. The acquirer shall recognize the positive balance between the combination costs and
the fair value of the identifiable net assets it obtains from the acquiree as business reputation. The acquirer shall record the negative
balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree into the
consolidated income statement directly. The agent expense and other relevant management expenses such as the audit, legal service
and evaluation consultation occurs from the enterprise merger, should be included in the current gains and losses when occur; while
the handling charges and commission occurs from the issuing the equity securities or the bonds for the enterprise merger should be
included in the initial measurement amount of the shareholders’ equities or the liabilities.
③ Long-term equity investment obtained by other means
The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost which is actually
paid.
The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair value of the
equity securities issued.
The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment contract or agreement,
the unfair value stipulated in the contract or agreement shall be measured at fair value.
As for long-term investment obtained by the exchange of non-monetary assets, where it is commercial in nature, the fair value of
the assets surrendered shall be recognized as the initial cost of the long-term equity investment received; where it is not commercial
in nature, the book value of the assets surrendered shall be recognized as the initial cost of the long-term equity investment
received.
The initial cost of a long-term equity investment obtained by recombination of liabilities shall be recognized at fair value of
long-term equity investment.
(3) Subsequent measurement and recognition of profits and losses
① An investment in the subsidiary company shall be measured by employing the cost method
Where the Company hold, and is able to do equity investment with control over an invested entity, the invested entity shall be its
subsidiary company. Where the Company holds the shares of an entity over 50%, or, while the Company holds the shares of an
entity below 50%, but has a real control to the said entity, then the said entity shall be its subsidiary company.
② An investment in the joint enterprise or associated enterprise shall be measured by employing the equity method
Where the Company hold, and is able to do equity investment with joint control with other parties over an invested entity, the
invested entity shall be its joint enterprise. Where the Company hold, and is able to have equity investment with significant
influences on an invested entity, the invested entity shall be its associated entity.
After the Company acquired the long-term equity investment, should respectively recognize investment income and other
comprehensive income according to the net gains and losses as well as the portion of other comprehensive income which should be
enjoyed or be shared, and at the same time adjust the book value of the long-term equity investment; corresponding reduce the
book value of the long-term equity investment according to profits which be declared to distribute by the investees or the portion of
the calculation of cash dividends which should be enjoyed; for the other changes except for the net gains and losses, other
comprehensive income and the owners’ equity except for the profits distribution of the investees, should adjust the book value of
the long-term equity investment as well as include in the owners’ equity .
The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity when it obtains the
investment, recognize the attributable share of the net profits and losses of the invested entity after it adjusts the net profits of the
invested entity.
If the accounting polices adopted by the investees is not accord with that of the Group, should be adjusted according to the
accounting policies of the Group and the financial statement of the investees during the accounting period and according which to
recognize the investment income as well as other comprehensive income.
For the transaction happened between the Company and associated enterprises as well as joint ventures, if the assets launched or
sold not form into business, the portion of the unrealized gains and losses of the internal transaction, which belongs to the Group
according to the calculation of the enjoyed proportion, should recognize the investment gains and losses on the basis. But the losses
of the unrealized internal transaction happened between the Company and the investees which belongs to the impairment losses of
the transferred assets, should not be neutralized.
The Company shall recognize the net losses of the invested enterprise according to the following sequence: first of all, to write
down the book value of the long-term equity investment. Secondly, if the book value of the long-term equity investment is
insufficient for written down, should be continued to recognized the investment losses limited to the book value of other long-term
equity which forms of the net investment of the investees and to written down the book value of the long-term accounts receivable
etc. Lastly, through the above handling, for those should still undertake the additional obligations according to the investment
contracts or the agreements, it shall be recognized as the estimated liabilities in accordance with the estimated duties and then
recorded into investment losses at current period. If the invested entity realizes any net profits later, the Group shall, after the
amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume recognizing its
attributable share of profits.
In the preparation for the financial statements, the balance existed between the long-term equity investment increased by acquiring
shares of minority interest and the attributable net assets on the subsidiary calculated by the increased shares held since the
purchase date (or combination date), the capital reserves shall be adjusted, if the capital reserves are not sufficient to offset, the
retained profits shall be adjusted; the Company disposed part of the long-term equity investment on subsidiaries without losing its
controlling right on them, the balance between the disposed price and attributable net assets of subsidiaries by disposing the
long-term equity investment shall be recorded into owners’ equity.
For other ways on disposal of long-term equity investment, the balance between the book value of the disposed equity and its actual
payment gained shall be recorded into current profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained equity after disposal still adopts the
equity method for measurement, the other comprehensive income originally recorded into owners’ equity should adopt the same
basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees according to the corresponding
proportion. The owners’ equity recognized owning to the changes of the other owners’ equity except for the net gains and losses,
other comprehensive income and the profits distribution of the investees, should be transferred into the current gains and losses
according to the proportion.
For the long-term equity investment which adopts the cost method of measurement, if the remained equity still adopt the cost
method, the other comprehensive income recognized owning to adopting the equity method for measurement or the recognition and
measurement standards of financial instrument before acquiring the control of the investees, should adopt the same basis of the
accounting disposal of the relevant assets or liabilities directly disposed by the investees and should be carried forward into the
current gains and losses according to the proportion; the changes of the other owners’ equity except for the net gains and losses,
other comprehensive income and the profits distribution among the net assets of the investees which recognized by adopting the
equity method for measurement, should be carried forward into the current gains and losses according to the proportion.
For those the Company lost the control of the investees by disposing part of the equity investment as well as the remained equity
after disposal could execute joint control or significant influences on the investees, should change to measure by equity method
when compiling the individual financial statement and should adjust the measurement of the remained equity to equity method as
adopted since the time acquired; if the remained equity after disposal could not execute joint control or significant influences on the
investees, should change the accounting disposal according to the relevant regulations of the recognition and measurement
standards of financial instrument, and its difference between the fair value and book value on the date lose the control right should
be included in the current gains and losses. For the other comprehensive income recognized by adopting equity method for
measurement or the recognition and measurement standards of financial instrument before the Group acquired the control of the
investees, should execute the accounting disposal by adopting the same basis of the accounting disposal of the relevant assets or
liabilities directly disposed by the investees when lose the control of them, while the changes of the other owners’ equity except for
the net gains and losses, other comprehensive income and the profits distribution among the net assets of the investees which
recognized by adopting the equity method for measurement, should be carried forward into the current gains and losses according
to the proportion. Of which, for the disposed remained equity which adopted the equity method for measurement, the other
comprehensive income and the other owners’ equity should be carried forward according to the proportion; for the disposed
remained equity which changed to execute the accounting disposal according to the recognition and measurement standards of
financial instrument, the other comprehensive income and the other owners’ equity should be carried forward in full amount.
For those the Company lost the control of the investees by disposing part of the equity investment, the disposed remained equity
should change to calculate according to the recognition and measurement standards of financial instrument, and difference between
the fair value and book value on the date lose the control right should be included in the current gains and losses. For the other
comprehensive income recognized from the original equity investment by adopting the equity method, should execute the
accounting disposal by adopting the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by
the investees when terminate the equity method for measurement, while for the owners’ equity recognized owning to the changes of
the other owner’s equity except for the net gains and losses, other comprehensive income and the profits distribution of the
investees, should be transferred into the current investment income with full amount when terminate adopting the equity method.
15. Investment real estates
Measurement mode of investment real estates:
Measurement of cost method
Depreciation or amortization method:
The investment real estate shall be measured at its cost. Of which, the cost of an investment real estate by acquisition consists of
the acquisition price, relevant taxes, and other expense directly relegated to the asset; the cost of a self-built investment real estate
composes of the necessary expenses for building the asset to the hoped condition for use. The investment real estates invested by
investors shall be recorded at the value stipulated in the investment contracts or agreements, but the unfair value appointed in the
contract or agreement shall be entered into the account book at the fair value.
As for withdrawal basis of provision for impairment of investment real estates, please refer to withdrawal method for provision for
impairment of fixed assets.
16. Fixed assets
(1) Conditions for recognition
Fixed assets refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for the sake of
producing commodities, rendering labor service, renting or business management; and (b) their useful life is in excess of one fiscal
year. The fixed assets are only recognized when the relevant economic benefits probably flow in the Company and its cost could be
reliable measured.
(2) Depreciation method of various fixed assets
Category of fixed assets Method Useful life (Year) Annual deprecation (%)
Houses and buildings Average method of useful
20-40 2.50-5
life
Machine equipment Average method of useful
6-15 6.67-16.67
life
Average method of useful
Transportation equipment 5-10 10-20
life
Other equipment Average method of useful
5-10 10-20
life
(3) Recognition basis, pricing and depreciation method of fixed assets by finance lease
The Company recognizes those meet with the following one or certain standards as the fixed assets by finance lease:
① The leasing contract had agreed that (or made the reasonable judgment according to the relevant conditions on the lease starting
date) when the lease term expires, the ownership of leasing the fixed assets could be transferred to the Company;
② The Company owns the choosing right for purchasing and leasing the fixed assets, with the set purchase price which is
estimated far lower than the fair value of the fixed assets by finance lease when executing the choosing right, so the Company
could execute the choosing right reasonably on the lease starting date;
③ Even if the ownership of the fixed assets not be transferred, the lease period is of 75% or above of the useful life of the lease
fixed assets;
④ The current value of the minimum lease payment on the lease starting date of the Company is equal to 90% or above of the fair
value of the lease fixed assets on the lease starting date; the current value of the minimum lease receipts on the lease starting date of
the leaser is equal to 90% or above of the fair value of the lease fixed assets on the lease starting date;
⑤ The nature of the lease assets is special that only the Company could use it if not execute large transformation.
The fixed assets by finance lease should take the lower one between the fair value of the leasing assets and the current value of the
minimum lease payment on the lease starting date as the entry value. As for the minimum lease payment which be regarded as the
entry value of the long-term accounts payable, its difference should be regarded as the unrecognized financing expense. For the
initial direct expenses occur in the lease negotiations and the signing process of the lease contracts that attribute to the handling
expenses, counsel fees, travel expenses and stamp taxes of the lease items, should be included in the charter-in assets value. The
unrecognized financing expenses should be amortized by adopting the actual interest rate during the period of the lease term.
The fixed assets by finance lease shall adopt the same depreciation policy for self-owned fixed assets. If it is reasonable to be
certain that the lessee will obtain the ownership of the leased asset when the lease term expires, the leased asset shall be fully
depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain the ownership of the leased asset at the
expiry of the lease term, the leased asset shall be fully depreciated over the shorter one of the lease term or its useful life
17. Construction in process
(1) Valuation of the progress in construction
Construction in progress shall be measured at actual cost. Self-operating projects shall be measured at direct materials, direct wages
and direct construction fees; construction contract shall be measured at project price payable; project cost for plant engineering
shall be recognized at value of equipments installed, cost of installation, trail run of projects. Costs of construction in process also
include borrowing costs and exchange gains and losses, which should be capitalized.
(2) Standardization on construction in process transferred into fixed assets and time point
The construction in process, of which the fixed assets reach to the predicted condition for use, shall carry forward fixed assets on
schedule. The one that hasn’t audit the final accounting shall recognize the cost and make depreciation in line with valuation value.
The construction in process shall adjust the original valuation value at its historical cost but not adjust the depreciation that has
been made after auditing the final accounting.
18. Borrowing costs
(1) Recognition principle of capitalization of borrowing costs
The borrowing costs shall include the interest on borrowings, amortization of discounts or premiums on borrowings, ancillary
expenses, and exchange balance on foreign currency borrowings. Where the borrowing costs occurred belong to specifically
borrowed loan or general borrowing used for the acquisition and construction of investment real estates and inventories over one
year (including one year) shall be capitalized, and record into relevant assets cost. Other borrowing costs shall be recognized as
expenses on the basis of the actual amount incurred, and shall be recorded into the current profits and losses. The borrowing costs
shall not be capitalized unless they simultaneously meet the following three requirements: (1) The asset disbursements have already
incurred; (2) The borrowing costs have already incurred; and (3) The acquisition and construction or production activities which
are necessary to prepare the asset for its intended use or sale have already started.
(2) The period of capitalization of borrowing costs
The borrowing costs arising from acquisition and construction of fixed assets, investment real estates and inventories, if they meet
the above-mentioned capitalization conditions, the capitalization of the borrowing costs shall be measured into asset cost before
such assets reach to the intended use or sale, Where acquisition and construction of fixed assets, investment real estates and
inventories is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing
costs shall be suspended, and recorded into the current expense, till the acquisition and construction of the assets restarts. When the
qualified asset is ready for the intended use or sale, the capitalization of the borrowing costs shall be ceased, the borrowing costs
occurred later shall be included into the financial expense directly at the current period.
(3) Measurement method of capitalization amount of borrowing costs
As for specifically borrowed loans for the acquisition and construction or production of assets eligible for capitalization, the
to-be-capitalized amount of interests shall be determined in light of the actual cost incurred of the specially borrowed loan at the
present period minus the income of interests earned on the unused borrowing loans as a deposit in the bank or as a temporary
investment.
Where a general borrowing is used for the acquisition and construction or production of assets eligible for capitalization, the
enterprise shall calculate and determine the to-be-capitalized amount of interests on the general borrowing by multiplying the
weighted average asset disbursement of the part of the accumulative asset disbursements minus the general borrowing by the
capitalization rate of the general borrowing used. The capitalization rate shall be calculated and determined in light of the weighted
average interest rate of the general borrowing.
19. Intangible assets
(1) Pricing method 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.
The rights to use land of the Company shall be amortized according to the rest service life.
(3) 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 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
Only if the obligation pertinent to a contingencies shall be recognized as an estimated debts when the following conditions are
satisfied simultaneously:
① That obligation is a current obligation of the Company;
② It is likely to cause any economic benefit to flow out of the Company as a result of performance of the obligation; and
③ The amount of the obligation can be measured in a reliable way.
(2) Measurement of estimated liabilities
The Company shall measure the estimated debts in accordance with the best estimate of the necessary expenses for the
performance of the current obligation.
The Company shall check the book value of the estimated debts on the Balance Sheet Date. If there is any conclusive evidence
proving that the said book value can’t truly reflect the current best estimate, the Company shall, subject to change, make
adjustment to carrying value to reflect the current best estimate.
24. Revenue
(1) Recognition of revenue from sale of goods: the revenue from selling shall be recognized by the following conditions: The
significant risks and rewards of ownership of the goods have been transferred to the buyer by the Company; the Company retains
neither continuous management right that usually keeps relation with the ownership nor effective control over the sold goods; the
relevant amount of revenue can be measured in a reliable way; the relevant revenue and costs of selling goods can be measured in a
reliable way. The amount of the revenue from selling shall ascertain the revenue incurred by selling goods in accordance with the
received or receivable price stipulated in the contract or agreement signed between the enterprise and the buyer, unless the received
or receivable amount as stipulated in the contract or agreement is unfair.
(2) Recognition of revenue from providing labor services: When the total revenue and costs from providing labor can be measured
in a reliable way; the relevant economic benefits are likely to flow into the enterprise; the schedule of completion under the
transaction can be measured in a reliable way, the revenue from providing labor shall be recognized. If the Company can reliably
estimate the outcome of a transaction concerning the labor services it provides, it shall recognize the revenue from providing
services employing the percentage-of-completion method on the date of the balance sheet, otherwise the revenue from the
providing of labor services shall be recognized in accordance with the amount of the cost of labor services incurred and expected to
be compensated. The Company recognized the completion process of the transaction concerning the labor services according to the
proportion of the occurred cost of the estimated total cost. The total amount of the revenue from providing services should be
recognized according to the contract price received or receivable from the accepting of the labor services or the agreement price
except for those unfair prices.
(3) Recognition of the revenue from transferring use rights of assets: When the relevant economic benefits are likely to flow into
the enterprises and the amount of revenues can be measured in a reliable way, the revenue from abalienating the right to use assets
shall be recognized. The amount of interest revenue should be measured and confirmed in accordance with the length of time for
which the enterprise's cash is used by others and the actual interest rate；the amount of royalty revenue should be measured and
confirmed in accordance with the period and method of charging as stipulated in the relevant contract or agreement；as for the
rental revenue: the amount of the rental revenue from the operation lease should be recognized according to the straight-line
method during each period of the lease term or accrued into the current gains and losses if rental actual occurred.
25. Government subsidies
(1) Category
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 the 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 treatments
The government subsidies pertinent to assets shall be recognized as deferred income, equally distributed within the useful lives of
the relevant assets, and included in the current profits and losses. The government subsidies pertinent to incomes shall be treated
respectively in accordance with the circumstances as follows: those subsidies used for compensating the related future expenses or
losses of the enterprise shall be recognized as deferred income and shall included in the current profits and losses during the period
when the relevant expenses are recognized; or those subsidies used for compensating the related expenses or losses incurred to the
enterprise shall be directly included in the current profits and losses.
26. Deferred income tax assets and liabilities
(1) Basis of recognizing the deferred income tax assets
According to the difference between the book value of the assets and liabilities and their tax basis, A deferred tax assets shall be
measured in accord with the tax rates that are expected to apply to the period when the asset is realized or the liability is settled.
The recognition of the deferred income tax assets is limited by the income tax payable that the Company probably gains for
deducting the deductible temporary differences. At the balance sheet date, where there is strong evidence showing that sufficient
taxable profit will be available against which the deductible temporary difference can be utilized, the deferred tax asset
unrecognized in prior period shall be recognized.
The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If it’s probable that sufficient taxable
profit will not be available against which the deductible temporary difference can be utilized, the Company shall write down the
carrying amount of deferred tax asset, or reverse the amount written down later when it’s probable that sufficient taxable profit will
be available
(2) Basis of recognizing the deferred income tax liabilities
According to the difference between the book value of the assets and liabilities and their tax basis, A deferred tax liabilities shall be
measured in accord with the tax rates that are expected to apply to the period when the asset is realized or the liability is settled.
27. Lease
(1) Accounting treatment of operating lease
Lessee in an operating lease shall treat the lease payment under an operating lease as a relevant asset cost or the current profit or
loss on a straight-line basis over the lease term. The initial direct costs incurred shall be recognized as the current profit or loss;
Contingent rents shall be charged as expenses in the periods in which they are incurred.
Lessors in an operating lease shall be recognized as the current profit or loss on a straight-line basis over the lease term; Initial
direct costs incurred by lessors shall be recognized as the current profit or loss; the initial direct expenses occur should be directly
included in the current gains and losses except for those with larger amount and be capitalized as well as be included in the gains
and losses by stages. Contingent rents shall be charged as expenses in the periods in which they are incurred.
(2) Accounting treatments of financial lease
When the Company as the lessee, On the lease beginning date, the Company shall record the lower one of the fair value of the
leased asset and the present value of the minimum lease payments on the lease beginning date as the entering value in an account,
recognize the amount of the minimum lease payments as the entering value in an account of long-term account payable, and treat
the balance between the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges
and the occurred initial direct expenses, should be recorded in the lease assets value. During each lease period, should recognize the
current financing expenses by adopting the actual interest rate.
When the Company as the leasor and on the beginning date of the lease term, the Company shall recognize the sum of the
minimum lease receipts on the lease beginning date and the initial direct costs as the entering value in an account of the financing
lease values receivable, and record the unguaranteed residual value at the same time. The balance between the sum of the minimum
lease receipts, the initial direct costs and the unguaranteed residual value and the sum of their present values shall be recognized as
unrealized financing income. During each lease period, should recognize the current financing revenues adopting the actual interest
rate.
28. Other significant accounting policies and estimates
(1) Operation termination
Operation termination refers to the compose part that meet with one of the following conditions which had been disposed by the
Group or be classified to held-to-sold as well as could be individually distinguished in operating and compiling the financial
statement:
① The compose part represents an individual main business or a main operation area;
② The compose part is a part intends to dispose and plan an individual main business or a main operation area;
③ The compose part is a subsidiary which be acquired only for resold.
（2） Hedging accounting
The term ―hedging‖ refers to one or more hedging instruments which are designated by an enterprise for avoiding the risks of
foreign exchange, interest rate, commodity price, stock price, credit and etc., and which is expected to make the changes in fair
value or cash flow of hedging instrument(s) to offset all or part of the changes in the fair value or cash flow of the hedged item.
The term ―hedging instrument‖ shall refer to a derivative instrument which is designated by an enterprise for hedging and by which
it is expected that changes in its fair value or cash flow can offset the changes in fair value or cash flow of the hedged item. For a
hedging of foreign exchange risk, a non-derivative financial asset or non-derivative financial liability may be used as a hedging
instrument.
The ―hedged item‖ shall refer to the following items which make an enterprise faced to changes in fair value or cash flow and are
designated as the hedged objectives.
The hedging should be executed by the hedging accounting methods when satisfying the following conditions at the same time:
① At the commencement of the hedging, the enterprise shall specify the hedging relationship formally (namely the relationship
between the hedging instrument and the hedged item) and prepare a formal written document on the hedging relationship, risk
management objectives and the strategies of hedging.
② The hedging expectation is highly efficient and meets the risk management strategy, which is confirmed for the hedging
relationship by enterprise at the very beginning.
③ For a cash flow hedging of forecast transaction, the forecast transaction shall be likely to occur and shall make the enterprise
faced to the risk of changes in cash flow, which will ultimately affect the profits and losses.
④ The effectiveness of hedging can be reliably measured.
⑤ The hedging is highly effective in accounting period in which the hedging relationship is specified.
29. Changes in main accounting policies and estimates
(1) Change of accounting policies
Alteration of the accounting polices led by executing the new ASBE
At the year-begin of 2014, the Ministry of Finance issued No. 39 of ASBE—Fair Value Measurement, No. 30 of
ASBE—Presentation of Financial Statements (revised in 2014), No. 9 of ASBE—Employee Compensation (revised in 2014), No.
33 of ASBE—Consolidation Financial Statement (revised in 2014). No. 40 of ASBE—Joint Venture Arrangement, No. 2 of
ASBE—Long-term Investment (revised in 2014) and No. 41 of ASBE—Equity Disclosure of Other Entities which respectively by
C-H [2014] No.6, No. 7, No. 8, No. 10, No. 11, No. 14 and No. 16 which be required to execute among the enterprises that applied
the ASBE since 1 Jul. 2014 as well as encouraged the enterprises listed overseas to execute in advance. At the same time, the
Ministry of Finance issued No. 37 of ASBE—Presentation of Financial Instruments (revised in 2014) as C-H [2014] No. 23
(hereinafter referred to Presentation Guidelines of Financial Instruments for short), which be required to present the financial
instruments according to the requirements of the guidelines in Y2014 and the following period among the financial statement.
The Company began to execute the above 7 new issued or revised enterprises principles except for the presentation guidelines of
financial instruments since 1 Jul. 2014 and began to execute the presentation guidelines of financial instruments when compiling
the 2014 financial report.
The Company adjusted according to the relative requirements of each guideline, while the influences on the financial statement
items during each term of the comparable period of the presentation as well as the amount were as follows:
Content of the changed accounting Report items significantly
2013 2012
influenced
policies
-45,200,000.00 -45,200,000.00
According to No. 2 of ASBE-Long-term Long-term equity investment
Equity Investment (revised in 2014)
Available-for-sale financial
45,200,000.00 45,200,000.00
assets
-61,894,052.94 -62,558,726.56
Other non-current liabilities
61,894,052.94 62,558,726.56
According to No. 30 of Deferred income
-277,847,575.00 -377,934,225.00
ASBE-Presentation of Financial Capital reserve
Statement (revised in 2014) 66,730.67 32,070.75
Translation reserve
277,780,844.33 377,902,154.25
Other comprehensive income
(2) Change of main accounting estimates
There was no any change of main accounting estimates during the reporting period.
30. Critical accounting judgments and estimates
Due to the inside uncertainty of operating activity, the Group needed to make judgments, estimates and assumption on the book
value of the accounts without accurate measurement during the employment of accounting policies. And these judgments, estimates
and assumption were made basing on the prior experience of the senior executives of the Group, as well as in consideration of other
factors. These judgments, estimates and assumption would also affect the report amount of income, costs, assets and liabilities, as
well as the disclosure of contingent liabilities on balance sheet date. However, the uncertainty of these estimates was likely to cause
significant adjustment on the book value of the affected assets and liabilities.
The Group would check periodically the above judgments, estimates and assumption on the basis of continuing operation. For the
changes in accounting estimates only affected on the current period, the influence should be recognized at the period of change
occurred; for the changes in accounting estimates affected the current period and also the future period, the influence should be
recognized at the period of change occurred and future period.
On the balance sheet date, the Group needed to make judgments, estimates and assumption on the accounts in the following
important items:
(1) Provision for bad debts
In accordance with the accounting policies of accounts receivable, the Group measured the losses for bad debts by adopting
allowance method. The impairment of accounts receivable was based on the appraisal of the recoverability of accounts receivable.
The impairment of accounts receivable was dependent on the judgment and estimates. The actual amount and the difference of
previous estimates would affect the book value of accounts receivable and the withdrawal and reversal on provision for bad debts
of accounts receivable during the period of estimates being changed.
(2) Provision for falling price of inventories
In accordance with the accounting policies of inventories, for the inventories that the costs were more than the net realizable value
as well as out-of-date and dull-sale inventories, the Group withdrawn the provision for falling price of inventories on the lower one
between costs and net realizable value. Evaluating the falling price of inventories needed the management level gain the valid
evidence and take full consideration of the purpose of inventories, influence of events after balance sheet date and other factors,
and then made relevant judgments and estimates. The actual amount and the difference of previous estimates would affect the book
value of inventories and the withdrawal and reversal on provision for bad debts of inventories during the period of estimates being
changed.
(3) Held-to-maturity investment
The Company classifies the non-derivative financial assets which meet with conditions with fixed or confirmable repayment
amount and fixed maturity date as well as the Company owns definite intention and ability to hold until mature as the
held-to-maturity investment. To execute the classification needs large judgment. In the process of executing the judgment, the
Company would assess the intention and ability of the investment which hold until the due date. Except for the particular situation
(for example, selling the investment with insignificant amount when approaching the due date), if the Company fails to hold the
investment until the due date, should re-classify the investment to the available-for-sale financial assets and would no more be
classified as the held-to-maturity investment in the current fiscal year as well as the afterward two complete fiscal years. If there
exits such situation, that would probably cause significant influences on the value of the relevant financial assets presented on the
financial statement and may influence the risks management strategies of the financial instruments of the Company.
(4) Held-to-maturity investment impairment
The Company confirms whether the held-to-maturity investment has impairment depends on the judgment from the management
layer to a large extent. The objective evidences of the impairments including the issuers which occur serious financial difficulties
that lead the financial assets could not continue to trade in the active market and to execute the contracts regulations (for example,
to return the interests or the principal violates a treaty) etc. In the process of executing judgment, the Company needs to evaluate
the influences of the objective evidences of the impairment on the estimated future cash flow.
(5) The impairment of financial assets available for sale
The Group judged whether the financial assets available for sale were impaired relying heavily on the judgment and assumption of
the management team, so as to decide whether recognized the impairment losses in the income statement. During the process of
making the judgment and assumption, the Group needed to appraise the balance of the cost of the investment exceeding its fair
value and the continuous period, the financial status and business forecast in a short period, including the industrial situation,
technical reform, credit level, default rate and risk of counterparty.
(6) Provision for impairment of non-financial non-current assets
The Group made a judgment on the non-current assets other than financial assets whether they had any indication of impairment on
the balance sheet date. For the intangible assets without finite service life, other than the annual impairment test, they should be
subject to the impairment test when there was any indication of impairment. For other non-current non-financial assets, which
should be subjected to impairment test when there was indication of impairment indicated that the book value can’t be recoverable.
When the book value of the assets or assets portfolio was more than the recoverable amount, which was the higher one between the
net amount of fair value after deducting the disposal expenses and the discounted amount of the estimated future cash flow, it
means impairment incurred.
The net amount of fair value after deducting the disposal expenses should be fixed the price in the sale agreement 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 of the reporting period
Type of tax Taxation basis Tax rates
VAT Payable to sales revenue 13%, 17%
Business tax Taxable operating revenue 5%
Tax paid in accordance with the tax
Urban maintenance and construction tax Taxable turnover amount
regulations of tax units location
Education surcharge Taxable turnover amount 5%
Corporate income tax Taxable income 25% or 15%
2. Tax preference
In 2012, 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 Jan. 2011 to 31 Dec. 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 on major items in consolidated financial statements of the Company (The unit
was RMB, if there was no special illustration)
1. Monetary funds
Unit: RMB Yuan
Item Closing balance Opening balance
Cash on hand 557,508.42 626,951.84
Bank deposits 464,204,312.08 610,255,264.34
Other monetary funds 67,207,927.41 77,415,253.12
Total 531,969,747.91 688,297,469.30
At period end, the restricted monetary fund was RMB 67,207,927.41 in total, of which: the bank acceptance
deposit was RMB 67,207,927.41.
2. Financial assets measured by fair value and the changes be included in the current gains and losses
Unit: RMB Yuan
Item Closing balance Opening balance
Tradable financial assets 2,109,642.19
Total 2,109,642.19
Tradable financial assets in period end was Hai Heng Xin No. 5 priority growth funds
3. Notes receivable
(1) Notes receivable listed by category
Unit: RMB Yuan
Item Closing balance Opening balance
Bank acceptance bill 314,236,128.92 257,845,729.93
Total 314,236,128.92 257,845,729.93
(2) Notes receivable pledged by the Company at the period-end
N/A
(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 Yuan
Amount of recognition termination Amount of not terminated
Item
at the period-end recognition at the period-end
Bank acceptance bill 398,890,678.46
Total 398,890,678.46
(4) There was no notes transferred to accounts receivable because drawer of the notes fails to executed the
contract or agreement
4. Accounts receivable
(1) Accounts receivable disclosed by category
Unit: RMB Yuan
Closing balance
Category Book balance Bad debt provision
Withdrawal Book value
Amount Proportion Amount
proportion
Accounts receivable with
significant single amount
for which bad debt 28,819,671.25 4.75% 23,459,404.33 81.40% 5,360,266.92
provision separately
accrued
Accounts receivable
withdrawn bad debt
576,527,035.06 94.96% 207,915,091.26 36.06% 368,611,943.80
provision according to
credit risks characteristics
Accounts receivable with
insignificant single amount
for which bad debt 1,776,159.00 0.29% 1,413,014.50 79.55% 363,144.50
provision separately
accrued
Total 607,122,865.31 100.00% 232,787,510.09 38.34% 374,335,355.22
Unit: RMB Yuan
Opening balance
Category Book balance Bad debt provision
Withdrawal Book value
Amount Proportion Amount
proportion
Accounts receivable with
significant single amount
for which bad debt 23,125,776.05 4.26% 19,563,556.61 84.60% 3,562,219.44
provision separately
accrued
Accounts receivable
withdrawn bad debt
519,100,454.00 95.53% 205,629,123.10 39.61% 313,471,330.90
provision according to
credit risks characteristics
Accounts receivable with
insignificant single amount
for which bad debt 1,155,900.00 0.21% 894,075.00 77.35% 261,825.00
provision separately
accrued
Total 543,382,130.05 100.00% 226,086,754.71 41.61% 317,295,375.34
Accounts receivable with significant single amount for which bad debt provision separately accrued at period end
Unit: RMB Yuan
Withdrawal
Account receivable Book balance Bad debt provision Withdrawal reason
proportion
Customer 1 Estimated difficult
7,063,600.00 3,531,800.00 50.00
to recover
Customer 2 Difficult to
1,902,326.58 1,902,326.58 100.00
recovered
Customer 3 Difficult to
6,215,662.64 6,188,445.25 99.56
recovered
Customer 4 Estimated difficult
3,562,225.80 2,199,465.49 61.74
to recover
Customer 5 Estimated difficult
1,096,223.05 657,733.83 60.00
to recover
Customer 6 Difficult to
1,035,446.35 1,035,446.35 100.00
recovered
Customer 7 Difficult to
5,359,381.00 5,359,381.00 100.00
recovered
Customer 8 Difficult to
2,584,805.83 2,584,805.83 100.00
recovered
Total 28,819,671.25 23,459,404.33
In the groups, accounts receivable adopting aging analysis method to accrue bad debt provision:
Unit: RMB Yuan
Closing balance
Aging
Accounts receivable Bad debt provision Withdrawal proportion
Within 1 year 367,801,403.14 7,356,028.60 2.00
1 to 2 years 1,177,407.16 58,870.40 5.00
2 to 3 years 7,510,469.63 1,126,570.48 15.00
Over 3 years 740,345.40 222,103.63 30.00
3 to 4 years 364,728.92 218,837.34 60.00
4 to 5 years 198,932,680.81 198,932,680.81 100.00
Over 5 years 576,527,035.06 207,915,091.26
(2) Accounts receivable withdraw, reversed or collected during the reporting period
The withdrawal amount of the bad debt provision during the reporting period was of RMB 8,568,158.91; the amount of the
reversed or collected part during the reporting period was of RMB 1,867,403.53.
(3) The actual write-off accounts receivable
N/A
(4) Top 5 of the closing balance of the accounts receivable collected according to the arrears party
At period end, the total amount of top 5 of the closing balance of the accounts receivable collected according to
the arrears party was RMB 175,947,397.35, 28.98% of the closing balance of the accounts receivable and the
relevant closing balance of bad debt provision was RMB 4,222,196.60.
5. Prepayment
(1) List by aging analysis:
Unit: RMB Yuan
Aging Closing balance Opening balance
Amount Proportion Amount Proportion
Within 1 year 14,026,514.13 92.93 13,699,155.24 93.45
1 to 2 years 127,345.30 0.84 70,049.80 0.48
2 to 3 years 70,049.80 0.46 3,075.10 0.02
3 to 4 years
4 to 5 years
Over 5 years 868,946.13 5.77 886,767.86 6.05
Total 15,092,855.36 100.00 14,659,048.00 100.00
(2) Top 5 of the closing balance of the prepayment collected according to the prepayment target
At period end, the total amount of top 5 of the closing balance of the prepayment collected according to the
prepayment target was RMB 13,505,769.61, 89.48% of the closing balance of the accounts receivable.
6. Other accounts receivable
(1) Other accounts receivable disclosed by category
Unit: RMB Yuan
Closing balance
Category Book balance Bad debt provision
Withdrawal Book value
Amount Proportion Amount
proportion
Other accounts receivable
with significant single
amount for which bad debt 2,853,188.02 7.24% 2,853,188.02 100.00%
provision separately
accrued
Other accounts receivable
withdrawn bad debt
34,618,397.46 87.90% 25,955,696.16 74.98% 8,662,701.30
provision according to
credit risks characteristics
Other accounts receivable
with insignificant single
amount for which bad debt 1,910,737.23 4.86% 1,910,737.23 100.00%
provision separately
accrued
Total 39,382,322.71 100.00% 30,719,621.41 78.00% 8,662,701.30
Unit: RMB Yuan
Opening balance
Category Book balance Bad debt provision
Withdrawal Book value
Amount Proportion Amount
proportion
Other accounts receivable
with significant single
amount for which bad debt 2,853,188.02 6.59% 2,853,188.02 100.00%
provision separately
accrued
Other accounts receivable
withdrawn bad debt
38,550,324.54 89.01% 25,827,024.07 67.00% 12,723,300.47
provision according to
credit risks characteristics
Other accounts receivable
with insignificant single
amount for which bad debt 1,907,662.13 4.40% 1,907,662.13 100.00%
provision separately
accrued
Total 43,311,174.69 100.00% 30,587,874.22 70.62% 12,723,300.47
Other accounts receivable with significant single amount for which bad debt provision separately accrued
Unit: RMB Yuan
Withdrawal
Other account receivable Book balance Bad provision Withdrawal reason
proportion (%)
Changchai Group Import & Export
2,853,188.02 2,853,188.02 100 Difficult to recover
Company
Total 2,853,188.02 2,853,188.02
In the groups, other accounts receivable adopting aging analysis method to accrue bad debt provision:
Unit: RMB Yuan
Closing balance
Aging
Other accounts receivable Bad debt provision Withdrawal proportion (%)
Within 1 year 6,031,900.41 120,638.00 2.00
1 to 2 years 906,804.30 45,340.21 5.00
2 to 3 years 508,076.57 76,211.49 15.00
3 to 4 years 1,503,366.49 451,009.95 30.00
4 to 5 years 1,014,382.94 608,629.76 60.00
Over 5 years 24,653,866.75 24,653,866.75 100.00
Total 34,618,397.46 25,955,696.16
(2) Accounts receivable withdraw, reversed or collected during the reporting period
The withdrawal amount of the bad debt provision during the reporting period was of RMB 773,812.15; the amount of the reversed
or collected part during the reporting period was of RMB 642,064.96.
(3) The actual write-off other accounts receivable
N/A
(4) Other accounts receivable classified by the nature of accounts
Unit: RMB Yuan
Nature Closing book balance Opening book balance
Margin and cash pledge 2,004,200.00 2,004,200.00
Unit current amount 20,035,808.86 23,934,917.69
Employee loan 2,584,081.29 2,620,427.28
Other 14,758,232.56 14,751,629.72
Total 39,382,322.71 43,311,174.69
(5) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party
Unit: RMB Yuan
Proportion of the Closing balance of
total year end bad debt provision
Name of units Nature Closing balance Aging balance of the
accounts
receivable (%)
Changzhou Compressor Co., Ltd. Current 2,940,000.00 Over 5 years 7.47 2,940,000.00
Import and Export Company of
Current 2,853,188.02 Over 5 years 7.24 2,853,188.02
Changchai Group
Chongqing Wanzhou District
State-Owned Assets Guarantee Co., Current 2,000,000.00 Within 1 years 5.08 40,000.00
Ltd
Changzhou New District Accounting
Current 1,626,483.25 Over 5 years 4.13 1,626,483.25
Center
OEM Group Settlement Center Current 1,140,722.16 Over 5 years 2.90 1,140,722.16
Total 10,560,393.43 26.82 8,600,393.43
7. Inventory
(1) Category of inventory
Unit: RMB Yuan
Item Closing balance Opening balance
Falling price Falling price
Book balance Book value Book balance Book value
reserves reserves
Raw material 121,329,364.38 2,739,224.97 118,590,139.41 101,823,136.99 2,816,113.21 99,007,023.78
Materials
processed on 12,478,276.04 12,478,276.04 7,970,829.33 7,970,829.33
commission
Goods in process 134,613,551.41 19,830,684.94 114,782,866.47 128,872,052.38 18,032,036.95 110,840,015.43
Finished product 269,416,214.26 19,634,150.34 249,782,063.92 272,010,816.14 18,035,127.65 253,975,688.49
Low price and
easily worn 1,955,372.02 1,955,372.02 1,445,319.26 1,445,319.26
articles
Total 539,792,778.11 42,204,060.25 497,588,717.86 512,122,154.10 38,883,277.81 473,238,876.29
(2) Falling price reserves of inventory
Unit: RMB Yuan
Increased amount Decreased amount
Item Opening balance Reverse or Closing balance
Withdrawal Other Other
write-off
Raw materials 2,816,113.21 45,266.73 122,154.97 2,739,224.97
Goods in process 18,035,127.65 5,495,313.65 3,896,290.96 19,634,150.34
Inventory goods 18,032,036.95 19,830,684.94 18,032,036.95 19,830,684.94
Total 38,883,277.81 25,371,265.32 22,050,482.88 42,204,060.25
8. Other current assets
Unit: RMB Yuan
Item Closing balance Opening balance
The VAT tax credits 28,131,657.32 39,990,829.02
Export drawback receivable 3,597,384.86
Total 31,729,042.18 39,990,829.02
9. Available-for-sale financial assets
(1) List of available-for-sale financial assets
Unit: RMB Yuan
Item Closing balance Opening balance
Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Available-for-sale
equity instruments:
Measured by fair value 452,650,000.00 452,650,000.00 368,754,000.00 368,754,000.00
Measured by cost
46,410,000.00 1,210,000.00 45,200,000.00 46,410,000.00 1,210,000.00 45,200,000.00
method
Total 499,060,000.00 1,210,000.00 497,850,000.00 415,164,000.00 1,210,000.00 413,954,000.00
(2) Available-for-sale financial assets measured by fair value at the period-end
Unit: RMB Yuan
Category Available-for-sale equity instruments Total
Cost of equity instruments 41,874,500.00 41,874,500.00
Fair value 452,650,000.00 452,650,000.00
Changes of fair value accumulated recorded into other
349,159,175.00 349,159,175.00
comprehensive income
Amount withdrawn bad debt provision
(3) Available-for-sale financial assets measured by cost at the period-end
Unit: RMB Yuan
Book balance Impairment provision Shareho
lding
proporti
In Cash bonus of
De Inc Dec on
Investee cr the reporting
Period-begin cre Period-end Period-begin rea reas Period-end among
ea period
ase se e the
se
investee
s
Jiangsu Bank 38,000,000.00 38,000,000.00 0.42 3,040,000.00
Qidong
Liantong 7,200,000.00 7,200,000.00 4
Dynamometer
Co., Ltd.
Others 1,210,000.00 1,210,000.00 1,210,000.00 1,210,000.00
Total 46,410,000.00 46,410,000.00 1,210,000.00 1,210,000.00
Other: RMB 510,000 in Chengdu Changwan Diesel Engine Marketing Corp., and RMB 2900,000 in Wanzhou Changwan Diesel
Engine Fitting Corp. and RMB 20,000 in Changzhou Economic and Technological Development Co., Ltd., RMB 100,000 in
Changzhou Tractors Co., Ltd., RMB 200,000 in the Industrial Financing Mutual Benefit Association of Changzhou Economic and
Information Technology Commission and RMB 90,000 in Beijing Engineering and Agricultural Machinery Co., Ltd.. Due to
difficulty in recovery, full-amount impairment provisions were made for the aforesaid accounts.
(4) Changes of the impairment of the available-for-sale financial assets during the reporting period
Unit: RMB Yuan
Category Available for sale equity instruments Total
Balance of the withdrawn impairment at the
1,210,000.00 1,210,000.00
period-begin
Balance of the withdrawn impairment at the
period-begin
Decrease in reporting period
Balance of the withdrawn impairment at the period-end 1,210,000.00 1,210,000.00
10. Long-term equity investment
Unit: RMB Yuan
Increase/decrease
Investees Opening balance Gains and losses
Additional Reduced Adjustment of other
recognized under
investment investment comprehensive income
the equity method
Associated enterprises
Changzhou Fuji
Changchai Robin
19,548,325.73 1,366,650.26
Gasoline Engine Co.,
Ltd.
Beijing Tsinghua
Industrial Investment
Management Co., Ltd.
Total 19,548,325.73 1,366,650.26
(Continued) Unit: RMB Yuan
Investees Increase/decrease Closing balance Closing balance of
Withdra impairment provision
Cash bonus or wal of
Changes of profits impairm
Other
other equity announced to ent
issue provisio
n
Associated enterprises
Changzhou Fuji
Changchai Robin
455,000.00 20,459,975.99
Gasoline Engine Co.,
Ltd.
Beijing Tsinghua
Industrial Investment 44,182.50
Management Co., Ltd.
Total 455,000.00 20,459,975.99 44,182.50
11. Investment property
(1) Investment property adopted the cost measurement mode
Unit: RMB Yuan
construction in
Item Houses and buildings Land use right Total
progress
I. Original book value
1. Opening balance 87,632,571.14 87,632,571.14
2. Increased amount of the period
(1) Outsourcing
(2) Transfer of inventory\fixed
assets\project under construction
3. Decreased amount of the period
(1) Disposal
(2) Other transfer
4.Closing balance 87,632,571.14 87,632,571.14
II. The accumulative depreciation and
accumulative amortization
1. Opening balance 25,934,859.51 25,934,859.51
2. Increased amount of the period 2,208,340.80 2,208,340.80
(1) The depreciation or amortization 2,208,340.80 2,208,340.80
3. Decreased amount of the period
(1) Disposal
(2) Other transfer
4.Closing balance 28,143,200.31 28,143,200.31
III. Impairment provision
1. Opening balance
2. Increased amount of the period
(1) Disposal
3. Decreased amount of the period
(1) Disposal
(2) Other transfer
4.Closing balance
IV. Book value
1.Closing book value 59,489,370.83 59,489,370.83
2.Opening book value 61,697,711.63 61,697,711.63
12. Fixed assets
(1) List of fixed assets
Unit: RMB Yuan
Houses and Machinery Electronic Transportation
Item Other
buildings equipment equipment equipment
I. Original book value
1. Opening balance 405,042,760.27 755,476,414.32 24,733,895.14 34,613,775.99 1,219,866,845.72
2. Increased amount of
3,131,844.58 25,232,994.08 1,385,542.08 2,656,913.83 32,407,294.57
the period
(1) Purchase 241,618.68 2,012,104.36 12,820.51 530,761.52 2,797,305.07
(2) Construction project
2,890,225.90 23,220,889.72 1,372,721.57 2,126,152.31 29,609,989.50
transfer
3. Decreased amount of the
11,350,440.58 10,394,349.36 1,147,128.92 3,086,827.58 25,978,746.44
period
(1) Disposal or Scrap 11,350,440.58 10,394,349.36 1,147,128.92 3,086,827.58 25,978,746.44
4. Closing balance 396,824,164.27 770,315,059.04 24,972,308.30 34,183,862.24 1,226,295,393.85
II. The accumulative
depreciation
1. Opening balance 182,152,928.40 366,362,257.67 14,762,073.63 26,649,504.88 589,926,764.58
2. Increased amount of
14,714,069.10 56,451,259.38 2,184,942.29 2,484,919.34 75,835,190.11
the period
(1) Withdrawal 14,714,069.10 56,451,259.38 2,184,942.29 2,484,919.34 75,835,190.11
(2) Enterprise combination
and increase
3. Decreased amount of the
3,454,029.33 8,739,197.73 1,086,654.52 3,006,078.46 16,285,960.04
period
(1) Disposal or Scrap 3,454,029.33 8,739,197.73 1,086,654.52 3,006,078.46 16,285,960.04
4. Closing balance 193,412,968.17 414,074,319.32 15,860,361.40 26,128,345.76 649,475,994.65
III. Impairment provision
1. Opening balance 7,633,328.53 2,838,506.43 10,471,834.96
2. Increased amount of
1,303,400.31 1,303,400.31
the period
(1) Withdrawal 1,303,400.31 1,303,400.31
3. Decreased amount of the
7,633,328.53 108,454.15 7,741,782.68
period
(1) Disposal or Scrap 7,633,328.53 108,454.15 7,741,782.68
4. Closing balance 4,033,452.59 4,033,452.59
IV. Book value
1.Closing book value 203,411,196.10 352,207,287.13 9,111,946.90 8,055,516.48 572,785,946.61
2.Opening book value 215,256,503.34 386,275,650.22 9,971,821.51 7,964,271.11 619,468,246.18
The accumulative depreciation in reporting period was RMB 75,835,190.11; the original value of construction in progress transfer
into fix assets was RMB 29,609,989.50.
13. Construction in progress
(1) List of construction in progress
Unit: RMB Yuan
Item Closing amount Opening amount
Book balance Bad debt Book value Book balance Bad debt Book value
provision provision
Trial production
workshop project 27,883,095.92 27,883,095.92 27,883,095.92 27,883,095.92
technology center
Casting
renovation 741,568.90 741,568.90 1,233,832.09 1,233,832.09
project
Expansion
capacity of
27,757,667.58 27,757,667.58 2,609,879.95 2,609,879.95
multi-cylinder
(The 2nd Period)
Non-road electric
336,503.39 336,503.39
generator Project
Base of land in
748,806.82 748,806.82 3,661,472.03 3,661,472.03
Hehai Road
Diesel Engine
Cylinder Body
Flexible 10,913,075.99 10,913,075.99 7,845,686.59 7,845,686.59
Manufacturing
Line
Equipment to be
installed and
66,904,102.66 66,904,102.66 34,636,877.83 34,636,877.83
payment for
projects
Total 134,948,317.87 134,948,317.87 78,207,347.80 78,207,347.80
(2) Changes of significant construction in progress
Unit: RMB Yuan
Amount that Other Capitalization
Increased
transferred to decreased rate of the Capital
Name o f item Opening balance amount of the Closing balance
fixed assets of the amount of the interests of the resources
period
period period period
Trial production
workshop project 27,883,095.92 27,883,095.92 Self raised
technology center
Casting renovation
1,233,832.09 196,919.57 689,182.76 741,568.90 Self raised
project
Expansion capacity
of multi-cylinder 2,609,879.95 25,206,580.63 38,793.00 20,000.00 27,757,667.58 Self raised
nd
(The 2 Period)
Non-road electric
336,503.39 336,503.39 Self raised
generator Project
Base of land in
3,661,472.03 1,563,435.24 4,096,100.45 380,000.00 748,806.82
Hehai Road
Diesel Engine
Cylinder Body
Flexible 7,845,686.59 3,417,139.44 349,750.04 10,913,075.99 Self raised
Manufacturing
Line
Total 43,570,469.97 30,384,074.88 5,510,329.64 400,000.00 68,044,215.21
14. Intangible assets
Unit: RMB Yuan
Item Land use right Software Other Total
I. Original book value
1. Opening balance 117,212,266.30 518,119.66 117,730,385.96
2. Increased amount of the
20,570,679.00 2,476,639.31 23,047,318.31
period
(1) Purchase 2,476,639.31 2,476,639.31
(2) Equity investment 20,570,679.00 20,570,679.00
3. Decreased amount of the
period
(1) Withdrawal
4. Closing balance 137,782,945.30 2,994,758.97 140,777,704.27
II. Accumulated amortization
1. Opening balance 33,411,740.79 100,745.47 33,512,486.26
2. Increased amount of the
2,307,514.96 516,610.43 2,824,125.39
period
(1) Withdrawal 2,307,514.96 516,610.43 2,824,125.39
3. Decreased amount of the
period
(1) Disposal
4. Closing balance 35,719,255.75 617,355.90 36,336,611.65
III.Impairment provision
1. Opening balance
2. Increased amount of the
period
(1) Withdrawal
3. Decreased amount of the
period
(1) Disposal
4. Closing balance
IV. Book value
1.Closing book value 102,063,689.55 2,377,403.07 104,441,092.62
2.Opening book value 83,800,525.51 417,374.19 84,217,899.70
15. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets had not been off-set
Unit: RMB Yuan
Closing balance Opening balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Assets impairment
7,232,422.11 1,084,863.32 7,973,268.43 1,195,990.26
provision
Total 7,232,422.11 1,084,863.32 7,973,268.43 1,195,990.26
(2) Deferred income tax liabilities had not been off-set
Unit: RMB Yuan
Closing balance Opening balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference liabilities difference liabilities
Change in fair value of
410,775,500.00 61,616,325.00 326,879,500.00 49,031,925.00
available financial assets
Total 410,775,500.00 61,616,325.00 326,879,500.00 49,031,925.00
(3) List of unrecognized deferred income tax assets
Unit: RMB Yuan
Item Closing amount Opening amount
Bad debt provision 256,274,709.39 248,701,360.50
Inventory falling price
42,204,060.25 38,883,277.81
reserves
Total 298,478,769.64 287,584,638.31
16. Other non-current assets
Unit: RMB Yuan
Item Closing
Opening impairment
Closing balance impairment Opening balance
provision
provision
Entrust loans 14,000,000.00 14,000,000.00 14,000,000.00 14,000,000.00
Total 14,000,000.00 14,000,000.00 14,000,000.00 14,000,000.00
17. Short-term loans
(1) Category of short-term loans
Unit: RMB Yuan
Item Closing balance Opening balance
Guaranteed loan 20,000,000.00 20,000,000.00
Mortgage loan 10,000,000.00
Total 20,000,000.00 30,000,000.00
(2) List of the short-term loans overdue but not return
18. Notes payable
Unit: RMB Yuan
Category Closing balance Opening balance
Bank acceptance bill 218,351,400.00 246,300,000.00
Total 218,351,400.00 246,300,000.00
There was no due but not pay notes payable at the period-end.
19. Accounts payable
(1) List of accounts payable
Unit: RMB Yuan
Category Closing balance Opening balance
Payment for goods 550,858,517.60 577,327,834.60
Total 550,858,517.60 577,327,834.60
(2) Notes of the accounts payable aging over one year
20. Advance from customers
(1) List of advance from customers
Unit: RMB Yuan
Item Closing balance Opening balance
Payment for goods 29,364,756.16 38,090,958.80
Total 29,364,756.16 38,090,958.80
(2) Significant advance from customers aging over one year
21. Payroll payable
(1) List of Payroll payable
Unit: RMB Yuan
Item Opening balance Increase Decrease Closing balance
I. Short-term salary 57,122,045.12 253,543,512.24 249,361,794.76 61,303,762.60
II. welfare after departure- defined
37,383,618.29 37,383,618.29
contribution plan
III. Termination benefits
Total 57,122,045.12 290,927,130.53 286,745,413.05 61,303,762.60
(2) List of Short-term salary
Unit: RMB Yuan
Item Opening balance Increase Decrease Closing balance
1. Salary, bonus, allowance, subsidy 51,549,910.49 208,372,596.45 204,525,107.32 55,397,399.62
2. Employee welfare 6,599,933.75 6,599,933.75
3. Social insurance 18,178,873.25 18,178,873.25
Including: 1. Medical insurance
13,878,068.74 13,878,068.74
premiums
Work-related injury insurance 3,039,400.04 3,039,400.04
Maternity insurance 1,261,404.47 1,261,404.47
4. Housing fund 16,240,542.37 16,240,542.37
5. Labor union budget and employee
5,572,134.63 4,151,566.42 3,817,338.07 5,906,362.98
education budget
6. Other short-term compensation
Total 57,122,045.12 253,543,512.24 249,361,794.76 61,303,762.60
(3) List of drawing scheme
Unit: RMB Yuan
Item Opening balance Increase Decrease Closing balance
1. Basic endowment insurance 34,779,621.15 34,779,621.15
2. Unemployment insurance expense 2,603,997.14 2,603,997.14
Total 37,383,618.29 37,383,618.29
22. Taxes payable
Unit: RMB Yuan
Item Closing balance Opening balance
VAT 2,537.79 207,491.91
Business tax 2,235.00
Urban maintenance and construction tax 830,449.50 834,829.37
Corporate income tax 11,517,844.35 12,330,315.34
Property tax 343,204.46 343,204.41
Personal income tax 211,204.93 703,880.69
Education Surcharge 136.60 4,471.75
The comprehensive fee 1,606,598.64 1,802,524.72
Total 14,511,976.27 16,228,953.19
23. Dividends payable
Unit: RMB Yuan
Item Closing balance Opening balance
Common stock dividends 3,243,179.97 3,243,179.97
Minority shareholder dividends 648,253.86 648,253.86
Total 3,891,433.83 3,891,433.83
Reason of unpaid dividends payable over one year: the shareholder has not get.
24. Other accounts payable
(1) Other accounts payable listed by nature of the account
Unit: RMB Yuan
Item Closing balance Opening balance
Margin and cash pledge 3,260,188.79 3,064,963.79
Unit current amount 10,133,775.91 10,741,412.54
Personal amount payable 965,413.51 2,727,538.53
Sales discount and promotion 141,620,797.47 119,099,482.76
Three guarantees 40,580,689.64 38,820,984.55
Other 196,560,865.32 174,454,382.17
Total 3,260,188.79 3,064,963.79
(2) Other significant accounts payable with aging over one year
Other significant accounts payable with aging over one year mainly was temporarily closed and owe payment unsettled.
25. Other current-liabilities
Unit: RMB Yuan
Item Closing balance Opening balance
Sewage charge 200,000.00 105,000.00
Electric charge 2,214,092.24 1,663,500.90
Other 578,904.50 170,906.50
Total 2,992,996.74 1,939,407.40
26. Deferred income
Unit: RMB Yuan
Item Opening balance Increase Decrease Closing balance Formation reasons
Government Government
61,894,052.94 7,708,073.62 54,185,979.32
subsidies allocations
Total 61,894,052.94 7,708,073.62 54,185,979.32
Items involved in government subsidies:
Unit: RMB Yuan
Amount of newly Amount accrued Related to the
Item Opening balance Other changes Closing balance
subsidy in non-business assets/ income
income
National high technology Related to the
research and development 2,720,000.00 2,720,000.00
plan income
Electric control of diesel
engine research and Related to the
development and 6,562,500.00 4,322,100.00 2,240,400.00
industrialization assets/ income
allocations
National major project Related to the
28,770,000.00 28,770,000.00
special allocations assets
Related to the
23,841,552.94 665,973.62 23,175,579.32
Remove compensation assets
Total 61,894,052.94 7,708,073.62 54,185,979.32
27. Share capital
Unit: RMB Yuan
Increase/decrease (+/-)
Capitalization
Opening balance Newly issue Bonus Closing balance
of public Other Subtotal
share shares
reserves
The sum of
561,374,326.00 561,374,326.00
shares
28. Capital reserves
Unit: RMB Yuan
Item Opening balance Increase Decrease Closing balance
Capital premium 150,705,016.81 6,714,326.57 143,990,690.24
Other capital reserves 20,311,137.44 26,837.75 20,337,975.19
Total 171,016,154.25 26,837.75 6,714,326.57 164,328,665.43
Increase of RMB 26,837.75 was obtained from the sale of odd lots formed by equity distribution due to history reason that
transferred by China Securities Depository and Clearing Co. , Ltd. entrusted by the Company. Decrease of RMB 6,714,326.57 was
the minority holding of 15.34% remained from the Company purchasing subsidiary Changzhou Changchai Benniu Diesel Engine
Fittings Co., Ltd., difference between the considerations of payment and share of net assets should enjoy from subsidiary
continuously calculated since purchase date and in line with the new shareholding proportion, adjusting capital reserves (equity
premium).
29. Other comprehensive income
Unit: RMB Yuan
Reporting period
Less:
Amount
transferred After
into profit -tax
and loss in attrib
the current Less: ute
Opening Amount After-tax
Item period that income to Closing balance
balance incurred before attribute to the
recognized tax mino
income tax parent company
into other expense rity
comprehen share
sive hold
income in er
prior
period
I. Other comprehensive
income can not
reclassify into profits
and losses in future
Of which: changes of
net assets and liabilities
of defined benefit plans
recalculated
Share in other
comprehensive income
can not be reclassified
into profits or losses in
investment entity under
the equity method
II. Other
comprehensive income
reclassify into profits
and losses in future
Of which: Share in
other comprehensive
income reclassify into
profits or losses in
investment entity under
the equity method in
future
Changes of fair value
12,584,4
of available for sale 277,847,575.00 83,896,000.00 71,311,600.00 349,159,175.00
00.00
financial assets
Converting difference
of foreign currency -66,730.67 -66,730.67 66,730.67
financial statements
Total of other 12,584,4
277,780,844.33 83,896,000.00 -66,730.67 71,378,330.67 349,159,175.00
comprehensive income 00.00
30. Specific reserves
Unit: RMB yuan
Item Opening balance Increase Decrease Closing balance
Safety production cost 6,996,256.56 4,841,316.33 3,505,495.68 8,332,077.21
Total 6,996,256.56 4,841,316.33 3,505,495.68 8,332,077.21
31 Specific reserves
Unit: RMB yuan
Item Opening balance Increase Decrease Closing balance
Statutory surplus reserves 276,472,716.49 8,522,122.57 284,994,839.06
Discretional surplus reserves 13,156,857.90 13,156,857.90
Total 289,629,574.39 8,522,122.57 298,151,696.96
32. Retained profits
Unit: RMB yuan
Item 2014 2013
Closing balance of retained profits before adjustments of last period 502,779,906.92 448,366,561.06
Total opening balance of retained profits before adjustments (Increase+，
decrease-)
Opening balance of retained profits after adjustments 502,779,906.92 448,366,561.06
Add: Net profit attributable to owners of the Company 64,202,144.29 75,712,361.04
Less: Withdrawal of statutory surplus
8,522,122.57 7,264,657.03
reserves
Withdrawal of discretional surplus reserves
Dividend of common stock payable 8,420,614.89 14,034,358.15
Dividend of common stock transfer into share capital
Other transferation(Minority shareholders accumulated excess
5,551,580.92
losses born by the parent Company)
Closing retained profits 555,590,894.67 502,779,906.92
33. Revenue and Cost of Sales
(1) Revenue, Cost of Sales
Unit: RMB Yuan
Item 2014 2013
Revenue Cost Revenue Cost
Main operation 2,461,692,196.75 2,141,415,126.02 2,895,264,442.45 2,510,740,550.52
Other operation 28,099,866.58 15,647,119.64 32,328,610.33 19,884,708.59
Total 2,489,792,063.33 2,157,062,245.66 2,927,593,052.78 2,530,625,259.11
34. Business tax and surcharges
Unit: RMB Yuan
Item 2014 2013
Business tax 9,950.00 56,535.00
Urban maintenance and construction tax 369,692.62 173,141.25
Education surtax 369,493.61 171,949.31
Total 749,136.23 401,625.56
35. Sales expenses
Unit: RMB Yuan
Item 2014 2013
Office expenses 26,726,523.60 25,008,399.92
Employee’s remuneration 28,030,498.73 27,319,148.35
Sales promotional expense 9,108,769.40 12,643,326.08
three guarantees 19,044,277.38 45,118,964.23
Transportation 9,026,772.82 11,922,564.96
Other 298,469.20 718,928.43
Total 92,235,311.13 122,731,331.97
36. Administrative expenses
Unit: RMB Yuan
Item 2014 2013
Office expenses 18,191,537.02 25,875,598.14
Employee’s remuneration 73,871,877.47 78,587,858.78
Depreciation and amortization 14,832,161.62 13,979,514.99
Research and development expense 7,596,151.45 6,652,451.30
Transportation 2,663,610.42 3,081,317.58
Repair charge 4,713,258.37 2,784,171.32
Taxation expense 8,691,401.52 9,207,768.39
Safety expenses 3,157,253.68 4,865,206.81
Other 12,285,195.15 20,203,590.66
Total 146,002,446.70 165,237,477.97
37. Financial expenses
Unit: RMB Yuan
Item 2014 2013
Interest expenses 2,185,973.83 2,387,638.46
Less: Interest income 6,996,180.56 9,374,958.31
Exchange net profit or loss -350,929.60 3,079,454.55
Other -5,771,331.95 -8,496,179.24
Total -10,932,468.28 -12,404,044.54
38. Asset impairment loss
Unit: RMB Yuan
Item 2014 2013
Bad debt loss 6,832,502.57 1,789,143.05
Inventory falling price loss 25,371,265.32 36,862,560.56
Fixed assets impairment losses 1,303,400.31
Total 33,507,168.20 38,651,703.61
39. Gains on the changes in the fair value
Unit: RMB Yuan
Item 2014 2013
Financial assets measured by fair value and changes
109,642.19
recorded into current profits or losses
Of which: income from changes of fair value of
derivative financial instruments
Total 109,642.19
40. Investment income
Unit: RMB Yuan
Item 2014 2013
Income of long term equity investment measured by
1,366,650.26 929,669.90
equity method
Investment income from disposal of long term equity
-48,639.55
investment
Investment income obtained from the disposal of
financial assets measured by fair value and changes 463,170.51 439,841.66
recorded into current profit and losses
Investment income achieved during the period of
10,120,500.00 14,600,000.00
holding transactional financial assets
Investment income from disposal of bank financial
112,652.05
products
Total 12,014,333.27 15,969,511.56
41. Non-operating gains
Unit: RMB Yuan
Recorded in the
amount of the
Item 2014 2013
non-recurring gains
and losses
Total gains from disposal of non-current assets 437,606.94 617,108.66 437,606.94
Including: Gains from disposal of fixed assets 437,606.94 617,108.66 437,606.94
Gains from disposal of intangible assets
Insurance compensation 640,183.28 287,174.94 640,183.28
Penalty incomes 107,879.30 113,834.00 107,879.30
Governmental subsidy 10,344,073.62 2,022,736.01 10,344,073.62
Income from disposal of current assets 480,726.00 1,038,172.00 480,726.00
Donation 218,803.40
Account payable no need to pay 233,293.74 426,537.36 233,293.74
Other 375,696.40 315,344.19 375,696.40
Total 12,619,459.28 5,039,710.56 12,619,459.28
(2) Lists of government subsidies
Unit: RMB Yuan
Related to the assets/
Item 2014 2013
income
The central budget investment plans 1,000,000.00 Related to the income
Ultra-low emissions of non-road diesel engine
800,000.00 Related to the income
new clean combustion key technology
Special fund for Promoting the transformation of
30,000.00 780,000.00 Related to the income
industrial economy steady growth
The mayor award 100,000.00 100,000.00 Related to the income
Energy conservation and circular economy
260,000.00 Related to the income
development special funds
Science and Technology Progress Award 70,000.00 Related to the income
Water saving measures project subsidies 60,000.00 Related to the income
Talent development funds 10,000.00 56,200.00 Related to the income
Other science and technology project allocations 310,000.00 50,000.00 Related to the income
Other incentives and subsidies 126,000.00 240,562.39 Related to the income
compensation for demolition 665,973.62 665,973.62 Related to the assets
The special national high technology research and
2,720,000.00 Related to the income
development plan
Related to the assets/
R & D and industrialization of electric non-road 4,322,100.00
diesel engine income
Total 10,344,073.62 2,022,736.01
42. Non-operating expenses
Unit: RMB Yuan
The amount included in
the current
Item 2014 2013
non-recurring gains and
losses
Loss on disposal of non-current assets 318,704.95 49,053.88 318,704.95
Including: Loss on disposal of fixed assets 318,704.95 49,053.88 318,704.95
Loss on disposal of intangible assets
Donation 320,000.00 180,000.00 320,000.00
Penalty expense 205,760.11 113.50 205,760.11
The flood control security fund 2,468,996.84 2,917,920.63
Loss on disposal of current assets 7,130,347.68 1,188,442.48 7,130,347.68
Other 210,683.65 31,993.09 210,683.65
Total 10,654,493.23 4,367,523.58 8,185,496.39
43. Income tax expense
(1) Lists of income tax expense
Unit: RMB Yuan
Item 2014 2013
Current income tax expense accounted by tax and relevant
19,476,423.70 23,634,115.03
regulations
Deferred income taxes 111,126.94 -443,790.26
Total 19,587,550.64 23,190,324.77
(2) Adjustment process of accounting profit and income tax expense
Unit: RMB Yuan
Item Reporting period
Total profits 85,257,165.20
Current income tax expense accounted by tax and relevant
12,788,574.78
regulations
Influence of different tax rate suitable to subsidiary 128,066.79
Influence of income tax before adjustment 35,489.82
Influence of non taxable income
Influence of not deductable costs, expenses and losses 4,304,136.05
Influence of deductable losses of deferred income tax assets
derecognized used in previous period
Influence of deductible temporary difference or deductible losses
7,012,734.29
of deferred income tax assets derecognized in reporting period.
Tax preference incurred from qualified expense -4,681,451.09
Deferred income tax 19,587,550.64
44. Supplementary information to cash flow statement
(1) Other cash received relevant to operating activities
Unit: RMB Yuan
Item 2014 2013
Subsidies and grants 2,636,000.00 1,356,762.39
Cash received from other current account 4,493,034.27 1,677,672.16
Interest income 6,996,180.56 9,374,958.31
Total 14,125,214.83 12,409,392.86
(2) Other cash paid relevant to operating activities
Unit: RMB Yuan
Item 2014 2013
Sale expense paid into cash 48,804,990.49 48,599,932.86
Management expense paid into cash 35,320,350.77 46,490,588.97
Commission Expenses 533,714.59 672,032.33
Other 714,335.29 661,775.44
Total 85,373,391.14 96,424,329.60
45. Supplementary information to the Cash Flow Statement
(1) Supplementary information to the Cash Flow Statement
Unit: RMB yuan
Amount in the reporting Amount in the previous
Supplementary information
period period
1. Information about converting net profits into cash for
operating activities:
Net income 65,669,614.56 75,801,072.87
Add: Asset impairment reserves 33,507,168.20 38,651,703.61
Depreciation of fixed assets, oil and gases and productive
78,043,530.91 72,360,868.84
biological assets
Amortization of intangible assets 2,824,125.39 2,363,831.90
Amortization of long-term expenses to be apportioned
Loss on disposal of fixed assets, intangible assets and other -118,901.99 -568,054.78
long-term assets
Losses on scrapping of fixed assets
Losses on change of fair value -109,642.19
Financial expenses 2,185,973.83 2,787,638.46
Investment losses -12,014,333.27 -15,969,511.56
Decrease in deferred income tax assets 111,126.94 -443,790.26
Increase of deferred income tax liabilities
Decrease in inventories -49,721,106.89 -31,969,689.87
Decrease in operating receivables -76,391,851.77 -108,447,828.87
Increase of operating payables -99,328,131.98 -36,061,072.37
Other 3,835,072.74 32,901,680.51
Net cash flows from operating activities -51,507,355.52 31,406,848.48
2. Investing and financing activities that do not involve cash
receipts and payments:
Conversion of debt into capital
Convertible bonds to be expired within one year
Fixed assets under finance lease
3. Net increase in cash and cash equivalents
Cash at the end of the period 464,761,820.50 610,882,216.18
Less: Cash at the beginning of the period 610,882,216.18 637,004,823.27
Add: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the period
Net increase in cash and cash equivalents -146,120,395.68 -26,122,607.09
(2) Net Cash paid of obtaining the subsidiary
Unit: RMB Yuan
Item Amount
Cash and cash equivalents received from the disposal of subsidiary in reporting
1,027,642.33
period. .
Of which: Chansun International (Pte.) Ltd. 1,027,642.33
Less: Cash and cash equivalents held by the subsidiary on the date that losing
1,027,642.33
control
Of which: Chansun International (Pte.) Ltd. 1,027,642.33
Net cash received from disposal of subsidiary
(3) Composition of cash and cash equivalents
Unit: RMB yuan
Item Closing amount Opening amount
1.Cash 464,761,820.50 610,882,216.18
Of which: cash in hand 557,508.42 626,951.84
Bank deposits available for payment at any time 464,204,312.08 610,255,264.34
Other monetary capital available for payment at any time
2. Cash equivalents
Of which: Bond investment due with 3 months
3. Balance of cash and cash equivalents at the period-end 464,761,820.50 610,882,216.18
46. The assets with the ownership or use right restricted
Unit: RMB Yuan
Item Closing book value Restricted reason
Bank acceptance draft deposited in the
Monetary capital 67,207,927.41
margin
Total 67,207,927.41
47. Foreign currency monetary items
Unit: RMB Yuan
Closing foreign currency Closing convert to RMB
Item Exchange rate
balance balance
Monetary capital
Of which: USD 2,119,923.57 6.119 12,971,812.32
HKD 1,388.09 0.7889 1,095.02
SGD 54,427.95 4.6396 252,523.92
accounts receivable
Of which: USD 13,900,324.27 6.119 85,056,084.24
VIII. Changes of merge scope
The subsidiary of the Company Chansun International (Pte.) Ltd. was cancelled in reporting period, and will not be included in the
consolidated financial statement scope
IX. Equity in other entities
1. Equity in subsidiary
(1) The structure of the enterprise group
Nature Proportion of
Main
Registratio of shareholding (%)
Name of the subsidiary operating Way of gaining
n place busines
place Directly Indirectly
s
Changchai Wanzhou Diesel Engine Co., Chongqin Chongqing Indust
60 Set-up
Ltd. g City City ry
Changzhou Changchai Benniu Diesel Changzho Changzho Indust
99 1 Set-up
Engine Fittings Co., Ltd. u City u City ry
Changzho Changzho Servic
Changzhou Housheng Investment Co., Ltd. 100 Set-up
u City u City e
Changzhou Changchai Housheng Changzho Changzho Indust
70 25 Set-up
Agricultural Equipment Co., Ltd. u City u City ry
(2) Significant not wholly owned subsidiary
Unit: RMB Yuan
Declaring
Shareholding The profits and Balance of
dividends
proportion of losses arbitrate to minority
Name distribute to
minority the minority shareholder at
minority
shareholder shareholders closing period
shareholder
CHANGCHAI WANZHOU DIESEL
40 1,771,429.80 400,000.00 15,819,848.88
ENGINE CO., LTD.
Changzhou Changchai Housheng
5 -110,758.02 389,061.19
Agricultural Equipment Co., Ltd.
(3) The main financial information of significant not wholly owned subsidiary
Unit: RMB 00000 Yuan
Name Closing balance
Current Non-current Current Non-current
Total assets Total liability
assets assets liabilities liability
CHANGCHAI
WANZHOU 5,520.35 2,964.02 8,484.37 4,529.41 4,529.41
DIESEL ENGINE
CO., LTD.
Changzhou
Changchai
Housheng 1,034.87 49.13 1,084.00 305.88 305.88
Agricultural
Equipment Co., Ltd.
Unit: RMB 00000 Yuan
Name Opening balance
Current Non-current Current Non-current
Total assets Total liability
assets assets liabilities liability
CHANGCHAI
WANZHOU
3,653.59 957.25 4,610.84 5,998.73 5,998.73
DIESEL ENGINE
CO., LTD.
Changzhou
Changchai
Housheng 499.64 499.64
Agricultural
Equipment Co., Ltd.
Unit: RMB 00000 Yuan
2014 2013
Total Total
Name Operation compreh Operating Operation compreh Operating
Net profit Net profit
revenue ensive cash flow revenue ensive cash flow
income income
CHANGCHAI
WANZHOU
DIESEL 10,025.71 442.86 442.86 -2,372.81 11,020.77 354.51 354.51 -44.18
ENGINE CO.,
LTD.
Changzhou
Changchai
Housheng
175.25 -221.52 -221.52 -372.34 -0.36 -0.36 -54.18
Agricultural
Equipment Co.,
Ltd.
2. The transaction of the Company with its owner’s equity share changed but still controlling the
subsidiary
(1) Note to owner’s equity share changed in subsidiary
The Company’s remaining minority equity of 15.34% from the purchase of Changchai Benniu Diesel Engine Fittings Co., Ltd., of
which, the parent company purchasing 14.34% share equity, the wholly controlling subsidiary Changzhou Housheng Investment
Co., Ltd. purchasing 1% share equity, the parent company’s holding’s of Changchai Benniu Diesel Engine Fittings Co., Ltd., share
equity of 84.66%, after the purchase, the parent company directly held 99% share equity, indirectly held 1%.
(2) The transaction’s influence to equity of minority shareholders and attributable to the owner's equity
of the parent company
Unit: RMB Yuan
Changzhou Changchai Benniu Diesel Engine
Fittings Co., Ltd.
Purchase cost/ Disposal of consideration
-Cash 22,600,000.00
Total purchase cost/ disposal of consideration 22,600,000.00
Less: Share of net assets in line with obtained/ disposal of subsidiary
15,885,673.43
calculated by equity proportion
Difference 6,714,326.57
Of which: adjusting the capital reserves -6,714,326.57
3. Equity in joint venture arrangement or associated enterprise
(1) Significant joint venture arrangement or associated enterprise
Proportion (%) Accounting treatment
Main Registrat
Busines of the investment of
Name operating ion
s nature Directly Indirectly joint venture or
place place
associated enterprise
Changzhou Fuji Changchai Robin Gasoline Changzh Changzh Industr
33 Equity method
Engine Co., Ltd. ou ou ial
(2) Main financial information of significant joint venture
Unit: RMB Yuan
Item Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd.
Closing balance / 2014 Opening balance/ 2013
Current assets 87,055,557.40 84,885,665.88
Non-current assets 13,200,248.78 14,189,958.27
Total assets 100,255,806.18 99,075,624.15
Current liabilities 38,255,878.32 39,820,128.67
Non-current liabilities
Total liabilities 38,255,878.32 39,820,128.67
Minority interests
equity attributable to owners of the Company 61,999,927.86 59,255,495.48
Net assets proportion calculated by shareholding ratio 20,459,975.99 19,548,325.73
Adjusting events
-Goodwill
-Retained profits of internal transaction
-Other
Book value of investment to associated enterprise 20,459,975.99 19,548,325.73
Operating income 223,014,821.84 213,038,991.55
Net profits 4,326,770.93 3,635,371.58
Other comprehensive income
Total comprehensive income 4,326,770.93 3,635,371.58
Equity received from associated enterprises in reporting
455,000.00
period
(3) Summary financial information of insignificant joint venture or associated enterprise
Unit: RMB Yuan
Closing balance / 2014 Opening balance/ 2013
Joint venture:
The total of following items according to the shareholding
proportions
Total of the following items in line with shareholding -- --
proportion calculated
-Net profits
- Other comprehensive income
- Total comprehensive income
X. Risk related to financial instruments
The goal of the Company’s risk management was gaining the balance between the risk and income, and reduced the negative
impact to the operation performance of the Company in the lowest level and maximized the interests of shareholders and other
equity investors, base on the risk management goal, the basis strategy of the Company’s risk management was to recognized and
analyse 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 that the financial instruments of the Company faced 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 is referred to the one party of financial instrument fail to perform its obligation lead to the financial losses 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 capital shortage when performing the obligation of cash or other financial assets settlement.
The policy o f the Company was to ensure sufficient cash to pay the due liabilities.
Liquidity risk was centrally controlled by the financial department of the Company, the financial department through supervising
the balance of cash and securities that can be converted into cash at any time and roll forecast of cash flow in future 12 months,
ensured the Company own sufficient cash to pay the maturity loan under the condition of reasonable forecast.
(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 referred to risk of the fair value or future cash flow of financial instrument changed due to the change of market
interest risk.
2. Foreign exchange rate risk
Foreign exchange rate risk is referred to the risk incurred form the change of exchange rate. The export sales of the Company
mainly was market of Southeast Asia region which settled by USD. Though the Company’s export business receiving part of
payment for goods in advance, but the balance had a certain credit term, if the RMB appreciates against the dollar, the company's
accounts receivable will incur foreign currency exchange loss.
XI. The disclosure of the fair value
1. Closing fair value of assets and liabilities calculated by fair value
Unit: RMB Yuan
Closing fair value
Fair value Fair value Fair value
Item
measurement items measurement measurement items Total
at level 1 items at level 2 at level 3
I. Consistent fair value measurement
(I) Financial assets measured by fair value and
2,109,642.19 2,109,642.19
changes recorded into current profits and losses
1. Tradable financial assets 2,109,642.19 2,109,642.19
(1) Debt instruments investment
(2) Equity instrument investment 2,109,642.19 2,109,642.19
(3) Derivative financial assets
2. Financial assets appointed measuring by fair
value and changes recorded into current profits and
losses
(1) Debt instruments investment
(2) Equity instrument investment
（II）(II) Available for sale financial assets 452,650,000.00 452,650,000.00
(1) Debt instruments investment
(2) Equity instrument investment 452,650,000.00 452,650,000.00
(3) Other
Total assets inconsistently calculated by fair value 454,759,642.19 454,759,642.19
2. Market price recognition basis for consistent and inconsistent fair value measurement items at level 1
Tradable financial assets and available for sale financial assets of the Company were funds and shares with the closing price as the
basis of fair value calculation at period-end.
XII. Related party and related Transaction
1. Information related to parent company of the Company
The actual controller of the Company is Changzhou Government State-owned Assets Supervision and Administration Commission.
As of Dec. 31 2014, it held 30.02% shares of the Company (state owned shares).
2. Subsidiaries of the Company
The details of subsidiaries of the Company please refer to equity in other entities in note to financial statements.
3. Information on the joint ventures and associated enterprises of the Company
The details of the joint ventures and associated enterprises of the Company please refer to equity in other entities in note to
financial statements.
4. The Company had no other related party.
5. The Company had no other related transaction need to be disclosed.
XIII. Commitments and contingency
1. Significant commitments
As of 31 Dec. 2014, there was no significant commitment or contingency in the Company.
2. Contingency
Litigation and arbitration in the reporting period
1. In the reporting period, the litigation the Company involved in from previous year continuing to the reporting period：
Name of the litigation or Amount involved
Name of the entity Date of accepted Remark
arbitration institutions (RMB ten thousand)
Shandong Hongli Group Co., Ltd. 1,436.00 Under the
Changzhou Intermediate
2001.6.27 bankruptcy and
People's Court
liquidation
Beijing Beiqi Changsheng Automobile Beijing Shunyi District 806.36
2013.8.12 Enforcing conduct
Co., Ltd. People's Court
Total 2,242.36
Note to the case:
(1) As the litigation of Shandong Hongli Group Co., Ltd. the company owned our Company RMB of 14.36 million payments for
good. In 2001, the Company instituted litigation from Changzhou Intermediate People's Court, in Apr. 2002, applied to the court
for compulsory execution, so far, the company has entered bankruptcy proceedings, the aforesaid payment has arranged for the full
provision for bad debts.
(2) As the litigation of Beijing Beiqi Changsheng Automobile Co., Ltd., the company owned our Company 8.0636 million; Beijing
Shunyi District People's Court accepted the case on Aug. 12 2013. Under the auspices, two sides concluded mediation agreement.
Beiqi Changsheng pays RMB 8,063,600.00 to the Company by stage.
Although the Company bombarded many times, Beijing Beiqi Changsheng Automobile Co., Ltd did not perform its obligation of
payment in line with mediation agreement. As of the end of reporting period, the Company had paid the payment of goods RMB
4.1 million, the Company had applied to the Court for compulsory execution.
XIV. Events after balance sheet date
Profit distribution after balance sheet date
Unit: RMB Yuan
Profits or dividends plan to distributed 11,227,486.52
Profits or dividends declare to distribute through reviewed and approved 11,227,486.52
XV. Other significant events
1. Segment Information
Due to the operation scope of the Company and subsidiaries were similar, the Company conduct common management, did not
divide business unit, so the Company only made single branch report.
2. Other important transactions and events have an impact on investor’s decision-making
As of the approval issue date of financial statements, the Company did not complete the liquidation procedures of 2014 annual
enterprise income tax.
XVI . Notes of main items in the financial statements of the Company
1. Accounts receivable
(1) Accounts receivable classified by category
Unit: RMB Yuan
Closing balance
Book balance Provision for bad debts
Category
Withdrawal
Proportion Book value
Amount Amount proportion
(%)
(%)
Accounts receivable with
43,791,478.96 7.96 31,949,287.94 72.96 11,842,191.02
significant single amount
and individually withdrawn
bad debt provision
Accounts receivable
withdrawal of bad debt
504,838,706.00 91.72 185,804,594.53 36.80 319,034,111.47
provision of by credit risks
characteristics:
Accounts receivable with
insignificant single amount
1,776,159.00 0.32 1,413,014.50 79.55 363,144.50
and individually withdrawn
bad debt provision
Total 550,406,343.96 100.00 219,166,896.97 39.82 331,239,446.99
Unit: RMB Yuan
Opening balance
Book balance Provision for bad debts
Category
Withdrawal
Proportion Book value
Amount Amount proportion
(%)
(%)
Accounts receivable with
significant single amount
68,044,928.76 13.14 45,827,025.23 67.35 22,217,903.53
and individually withdrawn
bad debt provision
Accounts receivable
withdrawal of bad debt
448,468,597.96 86.63 183,542,655.83 40.93 264,925,942.13
provision of by credit risks
characteristics:
Accounts receivable with
insignificant single amount
1,155,900.00 0.23 894,075.00 77.35 261,825.00
and individually withdrawn
bad debt provision
Total 517,669,426.72 100.00 230,263,756.06 44.48 287,405,670.66
Accounts receivable with significant single amount and individually withdrawn bad debt provision
Unit: RMB Yuan
Provision for bad Withdrawal
Item Book balance Withdrawal reason
debts proportion (%)
Customer 1
Estimated difficult
7,063,600.00 3,531,800.00 50.00
to recover
Customer 2
1,902,326.58 1,902,326.58 100.00 Difficult to recover
Customer 3 Difficult to recover
6,215,662.64 6,188,445.25 99.56
Customer 4 Estimated difficult
3,562,225.80 2,199,465.49 61.74
to recover
Customer 5 Estimated difficult
1,096,223.05 657,733.83 60.00 to recover
Customer 6 Difficult to recover
1,035,446.35 1,035,446.35 100.00
Customer 7 Difficult to recover
5,359,381.00 5,359,381.00 100.00
Customer 8 Difficult to recover
2,584,805.83 2,584,805.83 100.00
Estimated difficult
Customer 9 14,971,807.71 8,489,883.61 56.71
to recover
Total 43,791,478.96 31,949,287.94
In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
Unit: RMB Yuan
Closing balance
Aging
Account receivable Provision for bad debts Withdrawal proportion (%)
Within 1 year 317,211,777.82 6,344,235.61 2.00
1-2 years 1,177,407.16 58,870.40 5.00
2-3 years 7,510,469.63 1,126,570.48 15.00
3-4 years 740,345.40 222,103.63 30.00
4-5 years 364,728.92 218,837.34 60.00
Over 5 years 177,833,977.07 177,833,977.07 100.00
Total 504,838,706.00 185,804,594.53
(2) Bad debt provision withdrawal, reversed or recovered in the report period
The amount of bad debt provision was RMB 8,544,129.45; the amount of reversed or recovered bad debt provision in the report
period was of RMB 19,640,988.54.
Significant amount of reversed or recovered bad debt provision
Unit: RMB Yuan
Basis of recognition of
Entity Amount Method Reason
bad debt provision
CHANGCHAI WANZHOU DIESEL Long aging， estimated
30,000,000.00 Cash Repay loan
ENGINE CO., LTD. difficult to recover
Long aging， estimated
Total 30,000,000.00 Cash Repay loan
difficult to recover
(3) Particulars of the actual verification of accounts receivable during the reporting period
N/A
(4) Top five of account receivable of closing balance collected by arrears party
At period-end, the total amount of top five of account receivable of closing balance collected by arrears party was of
RMB175,947,397.35 and 31.97 % of relevant account receivable withdrawn bad debt provision, and the closing amount bad debt
provision was RMB 4,222,196.60.
2. Other account receivable
(1) Other account receivable classified by category
Unit: RMB Yuan
Closing balance
Book balance Provision for bad debts
Category
Withdrawal
Proportion Book value
Amount Amount proportion
(%)
(%)
Other accounts receivable
with significant single
2,853,188.02 8.44 2,853,188.02 100
amount and individually
withdrawn bad debt
provision
Other accounts receivable
withdrawal of bad debt
29,055,589.24 85.91 23,343,541.80 80.34 5,712,047.44
provision of by credit risks
characteristics:
Other accounts receivable
with insignificant single
amount and individually 1,910,737.23 5.65 1,910,737.23 100
withdrawn bad debt
provision
Total 33,819,514.49 100.00 28,107,467.05 83.11 5,712,047.44
Unit: RMB Yuan
Opening balance
Book balance Provision for bad debts
Category
Withdrawal
Proportion Book value
Amount Amount proportion
(%)
(%)
Other accounts receivable
with significant single
amount and individually 2,853,188.02 7.56 2,853,188.02 100
withdrawn bad debt
provision
Other accounts receivable
withdrawal of bad debt
32,970,268.47 87.38 22,572,824.75 68.46 10,397,443.72
provision of by credit risks
characteristics:
Other accounts receivable
with insignificant single
amount and individually 1,907,662.13 5.06 1,907,662.13 100
withdrawn bad debt
provision
Total 37,731,118.62 100.00 27,333,674.90 72.44 10,397,443.72
Closing other accounts receivable with significant single amount and individually withdrawn bad debt provision
Unit: RMB Yuan
Provision for bad Withdrawal
Other account receivable Book balance Withdrawal reason
debts proportion (%)
Changchai Group Import & Export
2,853,188.02 2,853,188.02 100 Irrecovable
Co., Ltd.
Total 2,853,188.02 2,853,188.02
In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:
Unit: RMB Yuan
Closing amount
Aging
Other account receivable Provision for bad debts Withdrawal proportion (%)
Within 1 year 3,200,521.73 64,010.43 2.00
1-2 years 844,618.61 42,230.93 5.00
2-3 years 503,130.38 75,469.56 15.00
3-4 years 1,503,366.09 451,009.83 30.00
4-5 years 732,828.44 439,697.06 60.00
Over 5 years 22,271,123.99 22,271,123.99 100.00
Total 29,055,589.24 23,343,541.80
(2) Bad debt provision withdrawal, reversed or recovered in the report period
The amount of bad debt provision was RMB 773,792.15; the amount of reversed or recovered bad debt provision in the report
period was of RMB 0.
(3) Particulars of the actual verification of accounts receivable during the reporting period
N/A
(4) Other account receivable classified by nature
Unit: RMB Yuan
Nature of the item Closing amount Opening amount
Guarantee and cash pledge a 4,200.00 4,200.00
Unit current amount 17,481,166.27 21,218,401.11
Employee borrowing 1,575,915.66 1,756,887.79
Other 14,758,232.56 14,751,629.72
Total 33,819,514.49 37,731,118.62
(5) Top five of account receivable of closing balance collected by arrears party
Unit: RMB Yuan
Proportion in
total closing
Nature of the
Entity Closing balance Aging balance of other Bad debt provision
account
account
receivable (%)
Changzhou Compressor Co., Ltd. Current amount 2,940,000.00 Over 5 years 8.69 2,940,000.00
Import and Export Company of
Current amount 2,853,188.02 Over 5 years 8.44 2,853,188.02
Changchai Group
Changzhou New District Accounting
Current amount 1,626,483.25 Over 5 years 4.81 1,626,483.25
Center
OEM Group Settlement Center Current amount 1,140,722.16 Over 5 years 3.37 1,140,722.16
Changzhou Xingsheng Property
Current amount 717,813.89 Within 1 year 2.12 14,356.28
Management Co., Ltd.
Total 9,278,207.32 27.43 8,574,749.71
3. Long-term equity investment
Unit: RMB Yuan
Closing balance Opening balance
Investees Book balance Bad debt Book value Book balance Bad debt Book value
provision provision
Investment to the subsidiary 184,466,500.00 184,466,500.00 131,118,240.00 131,118,240.00
Investment to joint venture
20,504,158.49 44,182.50 20,459,975.99 19,592,508.23 44,182.50 19,548,325.73
and associated enterprise
Total 204,970,658.49 44,182.50 204,926,475.99 150,710,748.23 44,182.50 150,666,565.73
(1) Investment to the subsidiary
Unit: RMB Yuan
Investee Opening Increase Decrease Closing balance Withdrawal Closing
balance of bad debt balance of
provision bad debt
provision
Changchai Wanzhou Diesel
21,000,000.00 30,000,000.00 51,000,000.00
Engine Co., Ltd.
Changzhou Changchai 75,339,800.00 21,126,700.00 96,466,500.00
Benniu Diesel Engine
Fittings Co., Ltd.
Changzhou Housheng
30,000,000.00 30,000,000.00
Investment Co., Ltd.
Chansun International
1,278,440.00 1,278,440.00
(Pte.) Ltd.
Changzhou Changchai
Housheng Agricultural 3,500,000.00 3,500,000.00 7,000,000.00
Equipment Co., Ltd.
131,118,240.0
Total 54,626,700.00 1,278,440.00 184,466,500.00
0
(2) Investment to associated enterprise and joint venture
Unit: RMB yuan
Increase/decrease
Investee Opening balance Gains and losses
Additional Reduced Adjustment of other
recognized under
investment investment comprehensive income
the equity method
Associated enterprises
Changzhou Fuji
Changchai Robin Diesel 19,548,325.73 1,366,650.26
Engine Co., Ltd.
Beijing Tsinghua Xingye
Industrial Investment 44,182.50
Management Co., Ltd.
Total 19,592,508.23 1,366,650.26
(Continued)
Unit: RMB yuan
Increase/decrease
Withdra
Cash bonus or wal of Closing balance of
Investee Closing balance
Changes of profits impairm impairment provision
Other
other equity announced to ent
issue provisio
n
Associated enterprises
Changzhou Fuji
455,000.00 20,459,975.99
Changchai Robin Diesel
Engine Co., Ltd.
Beijing Tsinghua Xingye
Industrial Investment 44,182.50 44,182.50
Management Co., Ltd.
Total 455,000.00 20,504,158.49 44,182.50
4. Revenue, Cost of Sales
Unit: RMB Yuan
Item Reporting period Same period of last year
Revenue Cost Revenue Cost
Main business 2,469,762,995.76 2,172,427,255.26 2,914,260,438.20 2,557,397,591.91
Other business 24,576,560.38 14,038,318.73 27,055,894.75 14,715,749.07
Total 2,494,339,556.14 2,186,465,573.99 2,941,316,332.95 2,572,113,340.98
5. Investment income
Unit: RMB Yuan
Item Same period of last
Reporting period
year
Long-term equity investment income accounted by cost method 2,446,600.00
Long-term equity investment income accounted by equity method 1,366,650.26 929,669.90
Investment income from the disposal of long term equity investment -250,797.67
Investment income from available for sale assets during holding period 10,120,500.00 14,600,000.00
Total 13,682,952.59 15,529,669.90
XVII. Supplementary materials
1. Items and amounts of extraordinary gains and losses
Unit: RMB Yuan
Item 2014 2013
Gains/losses on the disposal of non-current assets 118,901.99
Government grants recognized in the current period, except for those
acquired in the ordinary course of business or granted at certain 10,344,073.62
quotas or amounts according to the government’s unified standards
Included in current profit and loss against the non-financial
1,505,666.68
enterprises occupation fee funds collected
Gain/loss from change of fair value of transactional assets and
liabilities, and investment gains from disposal of transactional
financial assets and liabilities and available-for-sale financial assets, 572,812.70
other than valid hedging related to the Company’s common
businesses
Reversal of impairment provisions of receivables separately
conducted for impairment test
Other non-business income and expenditures other than the
-6,029,012.72
above
Influenced amount of income tax 995,341.14
Influenced amount of minor shareholders’ gains and losses -8.59
Total 5,517,109.72
2. Return on equity (ROE) and earnings per share (EPS)
Unit: RMB Yuan
EPS (Yuan/share)
Profit as of reporting period Weighted average ROE (%)
EPS-basic EPS-diluted
Net profit attributable to common
3.28 0.11 0.11
shareholders of the Company
Net profit attributable to common
shareholders of the Company after
3.00 0.10 0.10
deduction of non-recurring profit and
loss
3. Supplementary materials of changes in accounting policies
√ Applicable □ Inapplicable
The Company according to such eight accounting rules of Accounting Standards for Enterprises No. 2—Long Term Equity
Investment released in 2014 by Ministry of Finance change related accounting policies and retroactive restate the comparative
financial statements, after restatement, the consolidated balance sheet of 1 Jan. 2013 and 31 Dec. 2013:
Unit: RMB Yuan
Item 1 Jan. 2013 31 Dec. 2013 31 Dec. 2014
Current Assets:
Monetary funds 744,494,588.07 688,297,469.30 531,969,747.91
Deposit reservation for balance
Lending funds
Financial assets measured by fair value and
changes recorded into current profits and 2,109,642.19
assets
Derivative financial assets
Notes receivable 205,845,568.10 257,845,729.93 314,236,128.92
Accounts receivable 299,208,278.88 317,295,375.34 374,335,355.22
Accounts paid in advance 15,111,761.78 14,659,048.00 15,092,855.36
Receivable premium
Reinsurance accounts receivable
Provision of cession receivable
Interest receivable
Dividend receivable
Other account receivable 12,892,742.09 12,723,300.47 8,662,701.30
Redemptory monetary capital for sale
Inventory 452,271,304.37 473,238,876.29 497,588,717.86
Classified as holding available for sale assets
Non-current assets due within one year
Other current assets 64,814,786.45 39,990,829.02 31,729,042.18
Total current assets 1,794,639,029.74 1,804,050,628.35 1,775,724,190.94
Non- current assets:
loans and payments on behalf
Available for sale financial assets 531,703,000.00 413,954,000.00 497,850,000.00
Investment held to maturity
Long term receivable
Long term equity investment 18,618,655.83 19,548,325.73 20,459,975.99
Investment property 63,906,052.43 61,697,711.63 59,489,370.83
Fix assets 566,044,962.19 619,468,246.18 572,785,946.61
Construction in progress 119,576,338.33 78,207,347.80 134,948,317.87
Engineering material
Disposal of fixed assets
Productive biological asset
Oil and gas assets
Intangible assets 86,063,611.94 84,217,899.70 104,441,092.62
Development expenditure
Goodwill
Long-term unamortized expenses
Deferred income tax assets 752,200.00 1,195,990.26 1,084,863.32
Other non-current assets
Total non- current assets 1,386,664,820.72 1,278,289,521.30 1,391,059,567.24
Total assets 3,181,303,850.46 3,082,340,149.65 3,166,783,758.18
Current liabilities:
Short term loan 20,000,000.00 30,000,000.00 20,000,000.00
Borrowings from central bank
Deposits from customers and interbank
Borrowing funds
Financial liabilities measured by fair value and
changes recorded into current profits and
losses
Derivative financial liabilities
Note payable 346,039,002.00 246,300,000.00 218,351,400.00
Account payable 599,455,800.00 577,327,834.60 550,858,517.60
Account receivable in advance 31,650,567.34 38,090,958.80 29,364,756.16
Sale of financial assets for repurchase
Handling charges and commissions payable
Payroll payable 44,726,018.55 57,122,045.12 61,303,762.60
Tax payable 7,078,014.74 16,228,953.19 14,511,976.27
Accrual interest payable
Dividends payable 3,891,433.83 3,891,433.83 3,891,433.83
Other amounts payable 135,442,533.37 174,454,382.17 196,560,865.32
Dividend payable for reinsurance
Reserve fund for insurance contracts
Acting trading securities
Acting underwriting securities
Classified as holding available for sale
liabilities
Non-current liabilities due within year
Other current liabilities 2,430,896.10 1,939,407.40 2,992,996.74
Total current liabilities 1,190,714,265.93 1,145,355,015.11 1,097,835,708.52
Non current liabilities
Long term loan
Bond payable
Of which: preferred stock
Perpetual capital securities
Long term account receivable
Long term payroll payable
Special account payable
Estimated liabilities
Deferred income 62,558,726.56 61,894,052.94 54,185,979.32
Deferred income tax liabilities 66,694,275.00 49,031,925.00 61,616,325.00
Other non-current liabilities
Total non-current liabilities 129,253,001.56 110,925,977.94 115,802,304.32
Total liabilities 1,319,967,267.49 1,256,280,993.05 1,213,638,012.84
Owner’s equity:
Share capital 561,374,326.00 561,374,326.00 561,374,326.00
Deferred income tax liabilities
Of which: preferred stock
Perpetual capital securities
Capital reserve 171,016,154.25 171,016,154.25 164,328,665.43
Less: treasury stock
Other comprehensive income 377,902,154.25 277,780,844.33 349,159,175.00
Special reserve 4,169,087.73 6,996,256.56 8,332,077.21
Surplus reserves 282,364,917.36 289,629,574.39 298,151,696.96
General risk preparation
Retained profits 448,366,561.06 502,779,906.92 555,590,894.67
Total equity attributable to owners of the
1,845,193,200.65 1,809,577,062.45 1,936,936,835.27
Company
Minority interests 16,143,382.32 16,482,094.15 16,208,910.07
Total owners’ (or shareholders’) equity 1,861,336,582.97 1,826,059,156.60 1,953,145,745.34
Total liabilities and owners’ (or shareholders’)
3,181,303,850.46 3,082,340,149.65 3,166,783,758.18
equity
