Changchai Company, Limited Annual Report 2017
CHANGCHAI COMPANY, LIMITED
ANNUAL REPORT 2017
April 2018
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Changchai Company, Limited Annual Report 2017
Table of Contents
Part I Important Notes, Table of Contents and Definitions............................................3
Part II Company Profile and Key Financial Information...............................................5
Part III Business Summary........................................................................................... 10
Part IV Company Performance Discussion and Analysis............................................ 12
Part V Significant Events.............................................................................................. 27
Part VI Share Changes and Shareholder Information.................................................. 39
Part VII Preferred Shares.............................................................................................. 45
Part VIII Directors, Supervisors, Senior Management and Staff.................................46
Part IX Corporate Governance..................................................................................... 53
Part X Corporate Bonds................................................................................................ 59
Part XI Financial Statements........................................................................................ 60
Part XII Documents Available for Reference............................................................. 176
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Changchai Company, Limited Annual Report 2017
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Board as well as the Directors,
Supervisors and senior management of Changchai Company, Limited (the “Company”) hereby
guarantee the factuality, accuracy and completeness of the contents of this Report, and shall be
jointly and severally liable for any misrepresentations, misleading statements or material omissions
in this Report.
Shi Xinkun, the Company’s legal representative, Zhang Xin, the Company’s General Manager,
and Jiang He, head of the Company’s financial department (equivalent to financial manager) hereby
guarantee that the Financial Statements carried in this Report are factual, accurate and complete.
The independent director Mr. Jia Bin was not present at the board session for reviewing this
annual report and its summary and thus entrusted the independent director Mr. Feng Genfu to vote
on behalf of him.
Any plans for the future and other forward-looking statements mentioned in this Report shall
NOT be considered as absolute promises of the Company to investors. Therefore, investors are
kindly reminded to pay attention to possible investment risks.
The Company has described in detail the risks it might face in “Part IV Company Performance
Discussion and Analysis”, IX, “4. Possible Risks in Future” herein.
The Board has considered and approved a dividend payout proposal for the Reporting Period:
Based on the total shares of 561,374,326, a cash dividend of RMB0.3 (tax inclusive) per 10 shares
would be distributed to all the shareholders, with no share dividend in any form.
This Report has been prepared in both Chinese and English. Should there be any discrepancies
or misunderstandings between the two versions, the Chinese version shall prevail.
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Changchai Company, Limited Annual Report 2017
Definitions
Term Refers to Definition
Changchai Company, Limited and its
The “Company”, “Changchai” or
Refers to consolidated subsidiaries, except where the
“we”
context otherwise requires
Changchai Company, Limited exclusive of
Parent, Parent Company Refers to subsidiaries, except where the context otherwise
requires
Changzhou Changchai Benniu Diesel Engine
Changchai Benniu Refers to
Fittings Co., Ltd.
Changchai Wanzhou Refers to Changchai Wanzhou Diesel Engine Co., Ltd.
Housheng Investment Refers to Changzhou Housheng Investment Co., Ltd.
Changzhou Changchai Housheng Agricultural
Housheng Agricultural Equipment Refers to
Equipment Co., Ltd.
Changzhou Fuji Changchai Robin Gasoline
Changchai Robin Refers to
Engine Co., Ltd.
RMB, RMB’0,000 Refers to In RMB yuan, in RMB ten thousand yuan
The “Reporting Period” or “Current The period from January 1, 2017 to December 31,
Refers to
Period” 2017
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Changchai Company, Limited Annual Report 2017
Part II Company Profile and Key Financial Information
I Corporate Information
Stock name Changchai A, Changchai B Stock symbol 000570, 200570
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 常柴股份有限公司
Abbr. 苏常柴
Company name in English CHANGCHAI COMPANY, LIMITED
Abbr. CHANGCAHI CO., LTD.
Legal representative Shi Xinkun
Registered address 123 Huaide Middle Road, Changzhou, Jiangsu, China
Zip code 213002
Office address 123 Huaide Middle Road, Changzhou, Jiangsu, China
Zip code 213002
Company website http://www.changchai.com.cn
Email address cctqm@public.cz.js.cn
II Contact Information
Board Secretary Securities Representative
Name He Jianjiang
123 Huaide Middle Road,
Address
Changzhou, Jiangsu, China
Tel. （86）519-68683155
Fax （86）519-86630954
Email address cchjj@changchai.com
III Media for Information Disclosure and Place where this Report Is Kept
Newspapers designated by the
Securities Times, Ta Kung Pao (HK)
Company for information disclosure
Website designated by CSRC for
http://www.cninfo.com.cn
publication of this Report
Place where this Report is kept Board Secretariat of the Company and the Shenzhen Stock Exchange
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Changchai Company, Limited Annual Report 2017
IV Company Registered Information and Alterations
Unified social credit code 91320400134792410W
Change in main business scope of the
No change
Company since going public
Change of controlling shareholder No change
V Other Information
Independent certified public accounting (or “CPA”) firm hired by the Company:
Name Jiangsu Gongzheng Tianye Certified Public Accountants LLP
Office address Yingtong Commerce Building, Changzhou, Jiangsu, China
Accountants writing signatures Dai Weizhong, He Taifeng
Independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting
Period:
□ Applicable √ Not applicable
Independent financial advisor hired by the Company to exercise constant supervision over the Company in the
Reporting Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
2017-over-2016
2017 2016 2015
change
Operating revenue (RMB) 2,423,058,958.29 2,283,028,855.52 6.13% 2,519,799,547.29
Net income attributable to
shareholders of the listed 46,431,302.73 62,539,896.17 -25.76% 71,102,792.49
company (RMB)
Net income attributable to
shareholders of the listed
18,818,435.16 56,835,566.28 -66.89% 61,588,462.29
company before nonrecurring
gains and losses (RMB)
Net cash flows from
-121,669,279.39 99,473,944.04 - 127,926,882.95
operating activities (RMB)
Basic earnings per share
0.08 0.11 -27.27% 0.13
(RMB/share)
Diluted earnings per share
0.08 0.11 -27.27% 0.13
(RMB/share)
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Changchai Company, Limited Annual Report 2017
Weighted average return on
2.00% 3.00% -1.00% 3.53%
equity (%)
Change of
December 31, 2017
December 31, 2017 December 31, 2016 December 31, 2015
over December 31,
2016
Total assets (RMB) 3,722,905,285.05 3,724,857,266.71 -0.05% 3,232,406,102.20
Equity attributable to
shareholders of the listed 2,246,896,857.86 2,323,712,892.92 -3.31% 2,002,910,311.01
company (RMB)
VII Accounting Data Differences under Chinese Accounting Standards (CAS) and
International Financial Reporting Standards (IFRS) and Foreign Accounting Standards
1. Net Income and Equity Differences under CAS and IFRS
□ Applicable √ Not applicable
No such differences for the Reporting Period.
2. Net Income and Equity Differences under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 723,164,530.66 584,941,650.26 551,411,429.29 563,541,348.08
Net income attributable to shareholders of
34,991,536.70 4,687,621.43 3,072,285.14 3,679,859.46
the listed company
Net income attributable to shareholders of
the listed company before nonrecurring 14,440,682.83 6,333,364.66 629,008.33 -2,584,620.66
gains and losses
Net cash flows from operating activities -52,599,067.83 116,978,391.14 -125,431,296.93 -60,617,305.77
Indicate by tick mark whether any of the financial data in the table above or their summations differs materially
from what have been disclosed in the Company’s quarterly or semi-annual reports.
□ Yes √ No
IX Nonrecurring Gains and Losses
√ Applicable □ Not applicable
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Changchai Company, Limited Annual Report 2017
Unit: RMB
Item 2017 2016 2015 Note
Gains and losses on disposal of
non-current assets (inclusive of offset 1,005,800.62 6,254,028.26 211,929.61
allowance for asset impairments)
Government subsidies charged to
current profit and loss (exclusive of
government subsidies given in the
8,456,560.85 7,948,135.65 11,903,636.62
Company’s ordinary course of business
at fixed quotas or amounts as per
government’s uniform standards )
Capital occupation charges on
non-financial enterprise that are
1,200,592.21 1,340,364.82 1,523,155.52
charged to the profit/loss for this
reporting period
In case of the negative
goodwill resulting from
non-identical control after
the merger of FCR,
Changchai decided to
complete the transfer of
shares of Changzhou Fuji
Income equal to the amount by which
Changchai Robin Gasoline
investment costs for the Company to
Engine Co., Ltd. On
obtain subsidiaries, associates and joint
January 20, 2017. So FCR
ventures are lower than the Company’s 19,924,486.12
has incorporated into
enjoyable fair value of identifiable net
Changchai company's
assets of investees when making
consolidated statement
investments
since January 20, 2017.
Then the difference of
identifiable net assets share
less the combined cost was
included in the current
profit and loss as 19.9245
million yuan.
Gains and losses on changes in fair
value of trading financial assets and
liabilities & investment income from
disposal of trading financial assets and
liabilities and available-for-sale 654,862.68 1,058,569.81 1,793,021.58
financial assets (exclusive of effective
portion of hedges that arise in the
Company’s ordinary course of
business)
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Changchai Company, Limited Annual Report 2017
Non-operating income and expense
1,751,203.43
other than above
Gains/losses on re-measurement by fair
value of equity interests in joint
-4,441,830.05 -9,328,953.27 -4,109,778.32
ventures before acquisition dates in
mergers not under same control
Less: Income tax effects 951,629.77 1,294,119.50 1,747,894.80
Non-controlling interests effects (net of
-12,821.48 273,695.88 59,740.01
tax)
Total 27,612,867.57 5,704,329.89 9,514,330.20
Explanation of why the Company classifies an item as a nonrecurring gain/loss according to the definition in the
Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Nonrecurring Gains and Losses, or reclassifies any nonrecurring gain/loss item listed in the said
explanatory announcement as a recurring gain/loss:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
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Changchai Company, Limited Annual Report 2017
Part III Business Summary
I Main Business Scope of the Company in Reporting Period
As a manufacturer, we specialize in the manufacture and sale of diesel engines, diesel engine fittings and
castings, gasoline engines, gasoline engine fittings, rotovators, walking tractors, molds and jigs as well as the
assembly and sale of diesel engine and gasoline engine supporting sets.
We mainly manufacture and sell small and medium-sized single-cylinder and multi-cylinder diesel engines
under the brand of “Changchai”, which are often used in tractors, combine-harvesters, light commercial vehicles,
agriculture equipment, small-sized engineering machinery, generator sets, ship machines, etc.
II Material Change in Main Assets
1. Material Change in Main Assets
Main assets Reason for material change in the period
Closing amount stood at RMB430,305,367.71, down 35.84% from opening amount,
primarily driven by payment of RMB100 million for incorporation of joint venture
Monetary assets
with Synergetic Innovation Fund Management Co., Ltd. and payment of RMB26.28
million for acquisition of equity interests in Changchai Robin
Closing amount stood at RMB716,404,345.57, up 42.97% from opening amount,
Notes receivable
primarily driven by increase in undue bank acceptance notes
Closing amount stood at RMB5,794,971.22, up 39.11% from opening amount,
Other receivables
primarily driven by receivable security deposits on export sales
Closing amount stood at RMB0.00, down 100% from opening amount, primarily
Long-term equity driven by acquisition of controlling equity interests in former joint venture
investments Changchai Robin, which became a wholly-owned subsidiary of the Company and
was included in the Company’s consolidated financial statements
2. Main Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness Analysis
1. Advantages in Brand
Changchai is a national industrial enterprise with a history of over one hundred years. It is one of the earliest
professional manufacturers of internal combustion engines in China. The brand "Changchai" is the earliest
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Changchai Company, Limited Annual Report 2017
domestic trademark of production goods known as China's well-known trademarks. The diesel engine of
"Changchai" brand is China's brand-name product. The enterprise has been certified by ISO9000 quality system,
ISO14001 environmental management system, ISO/TS16949 automotive product quality management system,
and accessed to the national export-free enterprise qualification. Changchai was honorably ranked among “the
Top One Hundred Chinese Enterprises in Engineering Industry” and “China Pacesetter Enterprise of Industrial
Industry” for several times, and was awarded the honorary title of “State-level Enterprise of Observing Contracts
and Keeping Promise”, “China's Agricultural Machinery Parts and Components Leading Enterprises”, “China's
Agricultural Machinery AAA Credit Enterprise”, “Jiangsu Independent Industries Brand Top 50”, “Quality
Management Excellence Award of Jiangsu Province”, “Mayor Quality Award of Changzhou City”, also our
company won as the 10 users most satisfied leading brands in “Jing Geng” competition in the last five years. In
2017, the Company’s 4G33 product won the Quality New Product Award at the China (Jiangsu) International
Agricultural Machinery Fair, and the Company won the third prize in the Changzhou Entrepreneurship &
Innovation Contest organized by the local government. Besides, the Company was titled a “Top 100 Innovative
Enterprises of Jiangsu Province” and won the China Quality Sincerity Enterprise Award. For many years, in the
process of achieving steady economic development of the enterprise, we developed in a sound manner and
cultivated the “Changchai” brand, a famous small diesel engine brand of China with independent intellectual
property rights
2. Advantages in Technology
The Company has a state-level technology center and post-doctoral research station, and a research center of
small and medium-power internal combustion engine engineering and technology in Jiangsu Province. Currently,
it is mainly engaged in production of small and medium-power single-cylinder and multi-cylinder diesel engine. It
has a complete product range, a wide power level coverage, a high reputation and intellectual property rights for
its main products. Its 4G33TC diesel engine has been included in the provincial catalog of key new technologies
and products to be promoted. Its 4G33TC and 3M78 diesel engines have been recognized as “high-tech products”
at the provincial level. Its 4G33 multi-cylinder diesel engines have won the Annual Innovative Product Award in
the agricultural machinery industry. And its 3M78 light engine won the New Proprietary Product Golden Award
for Equipment Manufacturing Sector at the provincial level. Currently, the Company has a total of 131 patents
granted by authorities at home and abroad, including 11 invention patents.
3. Advantages in Marketing
Changchai has built up a sales service network covering the whole country, with 12 sales business units, 31
sales service centers, over 400 service stations and 600 designated maintenance stations. With a perfect diesel
sales service network system, the Company is able to provide high quality, efficient and timely services for
customers. In 2017, the Company passed the customs’ high-level enterprise certification, providing more
assurance and convenience for it to expand export sales.
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Changchai Company, Limited Annual Report 2017
Part IV Company Performance Discussion and Analysis
I Overview
In 2017, the macro-economy was stabilizing, with the agricultural machinery industry undergoing a key stage
characterized by deep changes in the market and product innovation and upgrading. Agricultural equipment
manufacturers were busy destocking and improving their new outputs. Amid increasingly fierce competition, the
Company focused more on improving product quality, management, appraisal and its talent structure, while
continuing to upgrade technology, restructure products and optimize marketing channels. The total market of
diesel engines in total dropped slightly, but despite a harsh market environment,, it took up a larger share in the
single-cylinder diesel engine market against all the unfavorable factors. As such, it is safe to say the Company has
been a leading seller in the industry. For 2017, the Company sold 836,100 units of diesel engines, gasoline
engines and generator sets in total,including 160,000 units of gasoline engines, generated sales revenue of
RMB2,423,058,958.29, and increased 6.13% a year-over-year .
The Company has adjusted its product mix. Regarding diesel engines for automobile, the Company’s two
products meeting the National Emission Standard V have been put into mass production for sales, and these two
products enjoy good market prospects for they are highly cost effective and competitive. As for diesel engines for
non-road sectors, the Company has had a wide range of products covering 20~160 horsepower for tractors,
harvesters and engineering machinery, as well as for peanut harvesters and ships, among others.
With respect to quality control and research and development, the Company adopted strict appraisals and
strengthened discipline to control and improve product quality; and it used four-valve, shared rail and other new
technologies to greatly improve its products in cost efficiency, reliability, etc., boosting market recognition and
helping generating better economic results. The Reporting Period has seen excellent outcomes of the Company’s
efforts in technology innovation. It has applied for 13 patents during the year, of which seven have been granted.
In marketing management, the Company attached importance to operating safety and sales benefits. It
strengthened and expanded its competitive products, vigorously promoted new products, tapped new markets and
improved customer service. The Company is proceeding well with marketing.
Concerning internal management in 2017, the Company fully promoted information-technology-based
management for better management efficiency; and it improved its internal control system by strengthening
supervision over key programs and launching various specialized audits, which has further improved its risk
control ability and internal audit quality.
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Changchai Company, Limited Annual Report 2017
II Analysis of Main Business
1. Summary
See “Part IV Company Performance Discussion and Analysis”, “I Overview” herein.
2. Revenue and Cost
(1) Breakdown of Operating Revenue
Unit: RMB
2017 2016
Percentage of total Percentage of
Change
Revenue operating revenue Revenue total operating
(%) revenue (%)
Total 2,423,058,958.29 100% 2,283,028,855.52 100% 6.13%
By operating division
Internal
combustion 2,393,799,573.65 98.79% 2,258,400,410.51 98.92% 6.00%
engines
Other 29,259,384.64 1.21% 24,628,445.01 1.08% 18.80%
By product category
Diesel 2,232,948,960.31
92.15% 2,258,400,410.51 98.92% -1.13%
engines
Gasoline 160,850,613.34
6.64% 0.00 0.00% ——
engines
Other 29,259,384.64 1.21% 24,628,445.01 1.08% 18.80%
By operating segment
Domestic 2,067,943,295.18 85.34% 1,974,994,464.83 86.51% 4.71%
Overseas 355,115,663.11 14.66% 308,034,390.69 13.49% 15.28%
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of Operating
Revenue or Income
√ Applicable □ Not applicable
Is the Company subject to any disclosure requirements for special industries?
No.
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Changchai Company, Limited Annual Report 2017
Unit: RMB
Gross YoY change YoY change in YoY change in
Operating Cost of operating
margin in operating cost of operating gross margin
revenue revenue
percentage revenue revenue percentage
By operating division
Internal
combustion 2,393,799,573.65 2,053,982,326.15 16.54% 6.00% 11.04% -1.55%
engines
By product category
Diesel engines 2,232,948,960.31 1,912,557,827.15 16.75% -1.13% 3.39% -1.55%
Gasoline
160,850,613.34 141,424,499.00 13.74% —— —— ——
engines
By operating segment
Domestic 2,067,943,295.18 1,726,819,061.05 16.50% 6.03% 11.28% -3.94%
Overseas 355,115,663.11 346,058,915.72 2.55% 15.28% 16.12% -0.70%
Main business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
Operating division Item Unit 2017 2016 Change
Unit sales Unit 686,264 724,452 -5.27%
Diesel engines Output Unit 661,077 745,941 -11.38%
Inventory Unit 59,816 85,003 -29.63%
Reason for any over 30% YoY movements in the data above:
□ Applicable √ Not applicable
(4) Execution Progress of Major Signed Sales Contracts in Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Operating Revenue
Unit: RMB
2017 2016
Product
Item Percentage of Percentage of Change
category Cost of operating Cost of operating
total cost of total cost of
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Changchai Company, Limited Annual Report 2017
revenue operating revenue operating
revenue (%) revenue (%)
Diesel engines Raw materials 1,625,846,295.28 78.43% 1,504,920,345.33 80.62% 8.04%
Diesel engines Labor cost 272,591,904.14 13.15% 227,952,039.91 12.21% 19.58%
Diesel engines Depreciation 76,438,334.33 3.69% 81,531,657.35 4.37% -6.25%
Diesel engines Energy 32,657,278.01 1.58% 28,880,577.08 1.55% 13.08%
Note:
(6) Change in Scope of Consolidated Financial Statements for Reporting Period
√ Yes □ No
The consolidation scope for the Reporting Period included Changchai Company, Limited (as the Parent
Company) and five of its subsidiaries. Among them, Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd.
(Changchai Robin) was newly added for it has become a wholly-owned subsidiary of the Company and included
into the Company’s consolidated financial statements since January 20, 2017. For further information, see
“Changes in Consolidation Scope and Holdings in Other Entities” in “Notes to Financial Statements” in this
Report.
(7) Major Change in Business Scope or Product or Service Range in Reporting Period
□ Applicable √ Not applicable
(8) Main Customers and Suppliers
Main customers:
Total sales to top five customers (RMB) 1,009,787,686.52
Total sales to top five customers as a percentage of total sales of Reporting Period
41.67%
(%)
Total sales to related parties among top five customers as a percentage of total
0.00%
sales of Reporting Period (%)
Information about top five customers:
Sales revenue generated Percentage of total sales of
No. Customer
(RMB) Reporting Period (%)
1 Customer 1 501,670,983.76 20.70%
2 Customer 2 212,946,293.33 8.79%
3 Customer 3 123,324,402.75 5.09%
4 Customer 4 91,678,304.05 3.78%
5 Customer 5 80,167,702.63 3.31%
Total -- 1,009,787,686.52 41.67%
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Changchai Company, Limited Annual Report 2017
Other information about the main customers
□ Applicable √ Not applicable
Main suppliers:
Total purchases from top five suppliers (RMB) 262,321,625.44
Total purchases from top five suppliers as a percentage of total purchases of
16.13%
Reporting Period (%)
Total purchases from related parties among top five suppliers as a percentage of
0.00%
total purchases of Reporting Period (%)
Information about top 5 suppliers
Payment for purchases Percentage of total purchases
No. Supplier
(RMB) of Reporting Period (%)
1 Supplier 1 109,895,520.00 6.76%
2 Supplier 2 54,027,671.15 3.32%
3 Supplier 3 36,005,032.31 2.21%
4 Supplier 4 34,896,410.00 2.15%
5 Supplier 5 27,496,991.98 1.69%
Total -- 262,321,625.44 16.13%
Other information about the main suppliers:
□ Applicable √ Not applicable
3. Expense
Unit: RMB
2017 2016 Change Reason for material change
Sales expenses 102,297,713.37 103,969,577.79 -1.61%
Management
184,550,915.26 207,582,213.98 -11.10%
expenses
Mainly due to the increase of
Financial
-2,290,794.39 -11,542,165.08 —— interests income and net exchange
expenses
profits and losses of the Company
4. Research and Development Expense
√ Applicable □ Not applicable
Details about R&D expense:
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Changchai Company, Limited Annual Report 2017
2017 2016 Changes of ratio
Number of the R&D personnel (person) 373 365 2.19%
Ratio to the R&D personnel 10.87% 10.55% 0.32%
Investment amount of the R&D (RMB) 77,215,889.04 78,811,840.43 -2.03%
Ratio of the R&D investment to the operating income 3.19% 3.45% -0.26%
Amount of the capitalized R&D investment (RMB) 0.00 0.00 0.00%
Ratio of the capitalized R&D investment to the R&D
0.00% 0.00% 0.00%
investment
Reason for any significant YoY change in the proportion of R&D expense in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of the capitalized R&D expense and rationale
□ Applicable √ Not applicable
5. Cash Flows
Unit: RMB
Item 2017 2016 YoY +/-
Subtotal of cash generated by operating activities 2,406,119,189.23 2,505,758,062.18 -3.98%
Subtotal of cash used in operating activities 2,527,788,468.62 2,406,284,118.14 5.05%
Net cash flows from operating activities -121,669,279.39 99,473,944.04 ——
Subtotal of cash generated by investing activities 21,199,959.56 45,132,445.41 -53.03%
Subtotal of cash used in investing activities 175,764,577.00 67,310,667.45 161.12%
Net cash flows from investing activities -154,564,617.44 -22,178,222.04 ——
Subtotal of cash generated by financing activities 51,900,000.00 15,000,000.00 246.00%
Subtotal of cash used in financing activities 33,680,577.83 35,733,831.12 -5.75%
Net cash flows from financing activities 18,219,422.17 -20,733,831.12 ——
Net increase in cash and cash equivalents -258,014,474.66 56,561,890.88 ——
Notes of the major effects on the YoY significant changes occurred of the data above
√ Applicable □ Not applicable
The significant changes of cash flows from operating activities are mainly due to the decrease of payments in
cash from selling products and providing labor service of the Company with a dramatic increase of YoY notes
receivable.
The reason for significant changes of cash flows from investing activities is that the Company set up a
partnership firm with Synergetic Innovation Fund Management Co., Ltd. with RMB100 million, and purchased
the share held by the controlling shareholders of Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd.
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Changchai Company, Limited Annual Report 2017
with RMB26.28 million.
The significant changes of cash flows from financing activities are mainly due to the increase of bank
long-term loans of the Company.
Reason for any material difference between the net operating cash flows and the net income of the Reporting
Period:
√ Applicable □ Not applicable
Mainly due to the decrease of payments in cash from selling products and providing labor service of the
Company.
III Non-Core Business Analysis
□ Applicable √ Not applicable
IV Analysis of Assets and Liabilities
1. Material Change in Asset Composition
Unit: RMB
December 31, 2017 December 31, 2016
Proporti Proport Proporti
on in ion in on Explain any major change
Amount Amount
total total change
assets assets
Closing amount stood at
RMB430,305,367.71, down
35.84% from opening
amount, primarily driven by
payment of RMB100 million
for incorporation of joint
Monetary funds 430,305,367.71 11.56% 670,703,802.02 18.01% -6.45% venture with Synergetic
Innovation Fund
Management Co., Ltd. and
payment of RMB26.28
million for acquisition of
equity interests in Changchai
Robin
Accounts receivable 392,010,953.55 10.53% 359,279,821.69 9.65% 0.88%
Inventories 508,246,807.48 13.65% 494,046,458.44 13.26% 0.39%
Investing real estate 52,864,348.43 1.42% 55,072,689.23 1.48% -0.06%
Long-term equity
0.00 0.00% 21,006,230.03 0.56% -0.56%
investment
18
Changchai Company, Limited Annual Report 2017
Fixed assets 560,049,970.50 15.04% 553,678,938.87 14.86% 0.18%
Construction in
94,581,989.06 2.54% 89,781,047.21 2.41% 0.13%
progress
Short-term loans 24,900,000.00 0.67% 10,000,000.00 0.27% 0.40%
Advance payment 40,153,984.91 1.08% 40,890,620.69 1.10% -0.02%
Payroll payable 51,247,112.66 1.38% 58,549,908.90 1.57% -0.19%
Tax payable 4,017,920.78 0.11% 9,622,332.76 0.26% -0.15%
2. Assets and Liabilities Measured at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Gain/loss
on fair Cumulative
Impairment Purchased Sold amount
value fair value
provisions in amount in the in the Closing
Item Opening amount change in change
the Reporting Reporting Reporting amount
the recorded into
Period Period Period
Reporting equity
Period
Financial
assets
Available-for
-sale -127,035, 515,068,550. 685,837,50
812,872,500.00
financial 000.00 00 0.00
assets
Subtotal of
-127,035, 515,068,550. 685,837,50
financial 812,872,500.00
000.00 00 0.00
assets
Total of -127,035, 515,068,550. 685,837,50
812,872,500.00
above 000.00 00 0.00
Financial
0.00 0.00 0.00
liabilities
Significant changes in the measurement attributes of the main assets in the Reporting Period:
□ Yes √ No
19
Changchai Company, Limited Annual Report 2017
3. Restricted Asset Rights as of End of Reporting Period
Item Closing book value Reasons
Monetary funds 105,041,713.28Security deposits for bank acceptance bills and credit guarantee
House constructions 9,597,056.53Collaterals for loan
Land use right 18,940,882.28Collaterals for loan
Total 133,579,652.09
V Investments Made
1. Total Investment Amount
√ Applicable □ Not applicable
Investments made in Reporting Investments made in same period of
+/-%
Period (RMB) last year (RMB)
126,280,000.00 0.00 ——
2. Material Equity Investments Made in Reporting Period
√ Applicable □ Not applicable
Unit: RMB
Invest
Whet
Sh ment
progress up her Discl
Inve are Est gains Disclo
Invest to the date invol osur
stm ho Funds Invest Produ ima and sure
Major ment Partne of the ved e
Name ent ldi resour ment cts ted losses index
business amou rs assets with date
met ng ces period type pro of the (if
nt liabilities the (if
hod rat fits Report any)
statement lawsu any)
io ing
its
period
Changz
hou Fuji Relevant 2016-
Japan
Changc industrial 014,
Fuji
hai Gasoline 67 Long-t and 2016-
Acq 26,28 Self-o Heavy Equity 21,675
Robin Engine, .0 erm commercial 0.0 015,
uisit 0,000. wned Indust invest ,689.5 No
Gasolin assembly 0 invest registration 0 2016-
ion 00 funds ries ment 5
e and etc % ment of equity 016,
Co.,
Engine transfer has 2017-
Ltd
Co., changed 001
Ltd.
20
Changchai Company, Limited Annual Report 2017
Relevant
Be
Changz industrial
entrusted
hou and
with
Synerge Syner commercial
manageme 2017-
tic getic registration
nt of equity 024,
Innovati Ne Innov Privat of
investment 99 Long-t 2017-
on wly 100,0 Self-o ation e partnership 09/2
funds; .0 erm 0.0 025,
Private esta 00,00 wned Fund equity enterprises 0.00 No 6/20
investment 1 invest 0 2017-
Equity blis 0.00 funds Mana invest has 17
consultancy % ment 027,
Fund hed gemen ment finished,
, equity 2018-
(Limite t Co., and have
investment, 001
d Ltd. conducted
and real
Partners external
estate
hip) projects
investment.
investment
126,2 21,675
0.0
Total 80,00 ,689.5
0
0.00 5
3. Material Non-Equity Investments Ongoing in Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Investments in Derivative Financial Instruments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Use of Funds Raised
□ Applicable √ Not applicable
No such cases in this Reporting Period.
21
Changchai Company, Limited Annual Report 2017
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII Main Controlled and Joint Stock Companies
√ Applicable □ Not applicable
Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profit
Unit: RMB
Company Company Main Registere Total Operating Operatin Net
Industry Net assets
name variety business d capital assets revenues g profit profit
Production Machin
Changchai of diesel ery 55,063,00 183,851,8 91,227,78 147,447,10 -1,572,8 -515,644.
Subsidiary
Benniu engine manufa 0.00 27.89 3.71 1.68 89.81 01
accessories cture
Machin
Diesel
Changchai ery 85,000,00 140,820,2 115,355,1 64,348,508 2,374,56 1,760,10
Subsidiary engine
Wanzhou manufa 0.00 77.04 94.03 .86 0.42 5.50
assembly
cture
External
Housheng investment 30,000,00 36,337,95 35,661,81 1,249,536. 1,100,42 786,113.
Subsidiary Service
Investment and 0.00 6.38 2.87 22 3.10 28
consulting
agricultural
machinery Machin
Housheng
product of ery 10,000,00 38,943,95 7,410,465 15,715,166 44,885.5 44,885.5
Agricultural Subsidiary
rice manufa 0.00 1.06 .55 .92 1 1
Equipment
transplanter cture
etc.
Machin
Gasoline
Changchai ery 37,250,00 90,336,96 70,057,93 160,850,61 9,077,29 6,402,69
Subsidiary engines
Robin manufa 0.00 9.38 3.99 3.34 4.72 0.82
assembly
cture
Subsidiaries obtained or disposed in this Reporting Period
22
Changchai Company, Limited Annual Report 2017
√ Applicable □ Not applicable
Company Ways of the Company to obtain or Impact on overall production management and
name dispose subsidiaries performance.
It is helpful for the company to make large gasoline
engine products, improve the market competitiveness, and
Changchai promote the steady ； The share purchase transaction
Acquisition
Robin generated revenue of RMB 21,675,689.55, which was
included in the investment income and non-operation
income of the current period.
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Outlook for the Future Development of the Company
1. Industry competition structure and development tendency
The year 2017 was a crucial year for the transformation of traditional agriculture to modern agriculture in
China, and it was also the first year for the “tackling and upgrading” of supply-side structural reforms in the
agricultural machinery industry. In 2018, China's agricultural machinery market will continue to develop steadily
and the development focus will transfer from speed to the quality. On the one hand, the share of the diesel engine
market will be directly determined by the comprehensive competitiveness of various products such as
technological advancement and environmental protection; on the other hand, the continuous escalation of national
emission standards prompts engine manufacturers to keep improving their own technological level, and
accelerates the upgrading of engine products.
In addition, the huge pressure brought by the new energy industry to traditional internal-combustion engine
companies has forced traditional engine manufacturers to actively or passively become involved in the
development of new energy automotive industries.
At present, the development trend and market situation of the industry are mainly as follows: firstly, the
demand for agricultural machinery and commercial vehicles slows down, bringing further competition of the
industry; secondly, the rising cost of product emission upgrade is difficult for the market to accept; thirdly, users
are very concerned about reliability, vibration, noise and appearance quality of diesel engines, and expectation of
"Three Guarantees" extension increased significantly in the market. Overall, the diesel market competition is
fierce. The industry will further reshuffle, and there will be better market prospects for diesel engines with
high-performance in energy saving and environmental protection.
2. Company development strategies:
To base on the farm machinery, do stronger in the power, develop the fields and develop scientifically.
The current products market structure of the Company mainly distributed in the farm equipment such as the
walking, small four-wheeler, big small and medium-sized wheeled tractors, tractors used for paddy field,
gardening tractors, plant protection tractors, tractors for peanut harvest, and combine harvesters; agricultural small
23
Changchai Company, Limited Annual Report 2017
construction machinery, three rounds and low-speed vehicles; light trucks, pickups automobile industry; generator
and water pump, small ship auxiliary machinery. The Company would take the market and users’ demands as the
orientation to seize the main line of the products and to improve the quality and increase the efficiency as well as
to do better in the power and to constantly enhance the market competitiveness.
In the field of agricultural machinery, the Company maintained a leading position in the horsepower segment
and continues to expand the market share, and actively explored and entered the market in large-horse-powered
vehicles and non-road-specific power supporting areas for engineering use. In the terminal area, the Company
actively expanded the market share of transplanter products. In addition, the Company extended its product
structure to the gasoline engine field by acquiring Fuji Robin Company. The Company will further innovate the
management mechanism, accelerate the progress of product development and vigorously expand the market to
promote the sustained and steady development of the Company.
3. Operation Plan for the Year 2018:
We will perfect single-cylinder engines and strengthen multi-cylinder engines; further quality standard, and
develop both gasoline engine and diesel engine. The sales income achieves RMB 2.4 billion and sales of new
products exceed 90,000 sets are expected in 2018. The above operation plan does not represent the profit forecast
of Y2018 by the listed company, and whether can be realized depends on various factors on the changes of market
conditions and the effort level of the management team. There is a lot of uncertainty, and investors should pay
special attention on it.
4. Possible risks and countermeasures:
(1) Market risk:
With fierce competition, over-capacity of some products and the total available market of the single cylinder
engine were in a decline tendency as well as the demand from the industry was insufficient. And the profitability
of the enterprises faced with rather great pressure.
Countermeasures:
Firstly is to strengthen the production and sales management, to determine the production by the sales and to
reasonably control the inventories.
Secondly is to make use of the leading position and brand advantages of the Company in the single-cylinder
diesel engine market and expand the sales of non road air-cooled single-cylinder diesel engines and the
high-power diesel engines.
Thirdly is to improve the R&D level of the Company, lean to medium-and high-class multi-cylinder diesel
engines in product development and vigorously develop high-power diesel engines with high added value for
non-road vehicles.
Fourthly is to strengthen the quality management, constantly enhance the customers’ satisfaction and the
brand value as well as to enhance the products quality.
Fifthly is to update the service and management ideas, optimize the resources and to further enhance the
after-sales service ability.
(2) Industrial risk:
The process of transform from fuel vehicle to new energy vehicle may require a transition period of several
years, decades, or even longer, but the trend is inevitable. In response to the upgrading of emission standards and
the rapid development of new energy industries, enterprises in the traditional internal-combustion engine industry
need to seek new development opportunities to shift industrial risks.
Countermeasures:
24
Changchai Company, Limited Annual Report 2017
The first measure is to prepare layout in new energy industries in advance to seize the opportunity for
industry development.
The second one is to increase the R&D intensity of products that meets the standards of national Grade V and
Grade VI, increase product emission standards, and take advanced diesel engine products as the basis of the
Company to explore the development direction of new industries and meet the industrial upgrading and
transformation.
(3) Policy risk:
The macro-economic environment is complex and changeable, economic growth is slowing down and the
policy on the diesel engine emissions is becoming stricter and stricter, which increased the operating difficulties
and the pressure. As such, the market demands for some products of the Company will be affected to some extent.
Countermeasures: The Company will pay close attention to the government’s economic macro-control
policies and market developments. To promote the work such as “promote the products upgrade and quality
enhancing”, to embrace the upgrading of the engine emission standards, to accelerate the forging of the new
“Standard V” platform, and to execute the necessary products resources reserves in advance.
(4) Talent risk:
With escalation of national environmental policy and fierce competition in the market, the social and
customer requirements of product quality, performance and other aspects are getting higher and higher,
meanwhile our company’s needs of high-ranking talents are also growing as our resources in research and
development increased.
Solutions: introduce all kinds of high-ranking talents through varieties of channels and strengthen personnel
training.
X Visits Paid to the Company for Purposes of Research, Communication, Interview, etc.
1. In this Reporting Period
√ Applicable □ Not applicable
Way of
Time of reception Visitor type Index of the researches basic information
reception
12/26/2017 Other Individual List of the periodical reports of the Company
12/22/2017 Other Individual List of the talent introduction of the Company
12/01/2017 Other Individual List of the stock of the Company
List of the project of external investment of industry
11/08/2017 Other Individual
investment funds established by the Company
10/30/2017 Other Individual List f the operation of the Company
09/21/2017 Other Individual List of the progress of state-owned enterprise reform
09/14/2017 Other Individual List of the future plan of the Company
09/14/2017 Other Individual List of the affiliated enterprises of the Company
09/13/2017 Other Individual List f the operation of the Company
08/27/2017 Other Individual List of the future plan of the Company
08/21/2017 Other Individual List of the reform of state-owned enterprise
25
Changchai Company, Limited Annual Report 2017
08/04/2017 Other Individual List of the numbers of shareholders
08/03/2017 Other Individual List of the numbers of shareholders
07/25/2017 Other Individual List of the stock of the Company
07/24/2017 Other Individual List f the operation of the Company
07/24/2017 Other Individual List of the progress of state-owned enterprise reform
07/21/2017 Other Individual List f the operation of the Company
07/20/2017 Other Individual List of the numbers of shareholders
07/06/2017 Other Individual List of the reform of state-owned enterprise
06/22/2017 Other Individual List of the stock of Jiangsu Bank held by the Company
06/05/2017 Other Individual List of the stock of Jiangsu Bank held by the Company
05/24/2017 Other Individual List of the future plan of the Company
05/10/2017 Other Individual List of the future plan of the Company
05/09/2017 Other Individual List of the future plan of the Company
05/08/2017 Other Individual List of the products of the Company
05/02/2017 Other Individual List of the products development of the Company
04/27/2017 Other Individual List f the operation of the Company
04/24/2017 Other Individual List of the future plan of the Company
04/24/2017 Other Individual List of the production and management of the Company
04/17/2017 Other Individual List of the future plan of the Company
04/13/2017 Other Individual List of the future plan of the Company
04/05/2017 Other Individual List of the production and management of the Company
04/05/2017 Other Individual List of the production and management of the Company
03/30/2017 Other Individual List of the future plan of the Company
02/28/2017 Other Individual List of the production and management of the Company
01/17/2017 Other Individual List of the production and management of the Company
01/17/2017 Other Individual List of the future development strategy of the Company
01/06/2017 Other Individual List of the progress of state-owned enterprise reform
Times of visit 38
Number of visiting institutions 0
Number of visiting individuals 38
Number of other visitors 0
Significant undisclosed information
No
disclosed, revealed or leaked
26
Changchai Company, Limited Annual Report 2017
Part V Significant Events
I Profit Distribution and Converting Capital Reserve into Share Capital for Common
Shareholders
Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, for common
shareholders in this Reporting Period
√ Applicable □ Not applicable
In Articles of Association, which had confirmed the specific profits distribution and cleared out the
conditions, standards and proportion of the cash bonus, stipulated the decision-making progress of the formulation
and alternation of the profits distribution policies and the chapters as well as the regulations fully ensure the
opportunities for the medium and small shareholders to exert the functions and to provide advices as well as
appeals. The cash bonus of recent 3 years of the Company met with the regulations of the Articles of Association
and during the decision-making process of the profits distribution proposal, the Independent Directors stated the
independent advices and fully respected the advices from the medium and small shareholders. The profits
distribution preplan and the turning capital reserve into share capital preplan of the Company were both met with
the relevant regulations of the Articles of Association and so on.
Special explanation of cash dividend policy
Whether conformed with the regulations of the Articles of association or the
Yes
requirements of the resolutions of the shareholders’ meeting:
Whether the dividend standard and the proportion were definite and clear: Yes
Whether the relevant decision-making process and the system were complete: Yes
Whether the independent director acted dutifully and exerted the proper function: Yes
Whether the medium and small shareholders had the chances to fully express their
Yes
suggestions and appeals, of which their legal interest had gained fully protection:
Whether the conditions and the process met the regulations and was transparent of
Yes
the adjustment or altered of the cash dividend policy:
Plans/proposals for profit distribution and converting capital reserve into share capital for common shareholders
for the past three years (including this Reporting Period):
Dividend Profits distribution proposal Turning capital reserve Execution
year into share capital proposal
2017 Distributed RMB0.30 of every 10 No Still needed to submit to the
shares (taxes including) Annual General Meeting
2016 Distributed RMB0.30 of every 10 No Finished the execution
shares (taxes including)
2015 Distributed RMB0.23 of every 10 No Finished the execution
shares (taxes including)
Cash dividend distribution of the common shares of the Company of the recent 3 years (including the Reporting
Period)
27
Changchai Company, Limited Annual Report 2017
Unit: RMB
Net profit belonging
The ratio accounting in net
to shareholders of the Amount of the Ratio of the
Amount of cash profit which belongs to
Dividend listed company in cash dividend cash dividend
dividend shareholders of the listed
year consolidated by other by other
(including tax) company in consolidated
statement of dividend methods methods
statement
year
2017 16,841,229.78 46,431,302.73 36.27% 0.00 0.00%
2016 16,841,229.78 62,539,896.17 26.93% 0.00 0.00%
2015 12,911,609.50 71,102,792.49 18.16% 0.00 0.00%
Indicate by tick mark whether the Company made profit in this Reporting Period and the profit distributable to
common shareholders of the Company was positive, but it did not put forward a proposal for cash dividend
distribution to its common shareholders
□ Applicable √ Not applicable
II Proposal for Profit Distribution and Converting Capital Reserve into Share Capital for this
Reporting Period
√ Applicable □ Not applicable
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB) (tax included) 0.30
Turning capital reserve into share capital for every 10 shares (share) 0
Total shares as the basis for the allocation preplan (share) 561,374,326
Total cash dividends (RMB) (tax included) 16,841,229.78
Distributable profit (RMB) 602,959,135.85
Percentage of the cash bonus of the total profits dividends 100.00%
Cash dividend situation
Others.
Details about the profit allocation or turning capital reserve into share capital
The preplan of the profits distribution reviewed and approved by the Board of Directors of the Company was:
based on the total share capital of the Company on December 31, 2017, the Company distributed the cash bonus
of RMB0.30 (tax included) of every 10 shares for the whole shareholders. There was no bonus share and no turn
from capital reserve to share capital of 2017.
28
Changchai Company, Limited Annual Report 2017
III Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirer, as well
as the Company and Other Commitment Makers, Fulfilled in this Reporting Period or Ongoing at the
Period-end
√ Applicable □ Not applicable
Type of Date of Period of
Commitment Fulfillme
Commitment commitm Contents commitment commitme
maker nt
ent making nt
Rewards Plan for
Shareholders in Next Three
Years(2017-2019)
Under the premise of positive
distributive profit (remaining
after-tax profits after making
up for the loss and extracting
for the common reserves) in
this year or half year and
abundant money flow and no
influence on the following-up
Other commitments Changchai
going concern after cash Year
made to minority Company, bonus 05/11/2017 Ongoing
bonus, the profits allocated by 2017-2019
shareholders Limited
cash every year shouldn’t be
lower than 10% of the
allocable profits from parent
company. Meanwhile, the
accumulated allocable profits
by cash in the arbitrary
continuous three accounting
years should not be lower
than 30% of the annual
average allocable profits in
those three years.
Fulfilled on time Yes
Specific reasons for
failing to fulfill
commitments on time N/A
and plans for next
step (if any)
29
Changchai Company, Limited Annual Report 2017
2. Where there had been an Earnings Forecast for an Asset or Project and this Reporting Period was still
within the Forecast Period, Explain why the Forecast has been Reached for this Reporting Period.
□Applicable √ Not applicable
IV Occupation of the Company’s Funds by the Controlling Shareholder or its Related Parties
for Non-operating Purposes
□ Applicable √ Not applicable
No such cases in this Reporting Period.
V Explanations Given by the Board of Directors, the Supervisory Board and the Independent
Directors (if any) regarding the “Modified Auditor’s Report” Issued by the CPAs Firm for
this Reporting Period
□ Applicable √ Not applicable
VI YoY changes in accounting policies, estimations and methods
√ Applicable □ Not applicable
On April 28, 2017, the Ministry of Finance issued and printed the Accounting Standard No. 42 for Business
Enterprises—Non-Current Assets and Disposal Groups Classified as Held for Sale and Discontinued Operations,
which was implemented from May 28, 2017. The non-current assets and disposal groups classified as held for sale
and discontinued operations existed on the implemented date were dealt with prospective application method.
On May 10, 2017, the Ministry of Finance promulgated the Accounting Standard No. 16 for Business
Enterprises—Government Subsidies (Revised), which was implemented from June 12, 2017. The Company dealt
with the government subsidies existed on January 1, 2017 by adopting prospective application method, and
adjusted the newly added government subsidies from January 1, 2017 to the implemented date according to the
Standard.
According to the relevant regulations of the 2 above-mentioned accounting standards, the Ministry of
Finance revised the format of general financial statements of enterprises, and issued the Notice on Revision and
Issuance of Format of General Financial Statements of Enterprises On December 25, 2017; line item of “Assets
Held for Sale” and “Liabilities Held for Sale” were newly added to the Balance Sheet; line item of “Assets
Disposal Income” and “Other Income” were newly added to Income Statement; line item of “(I) Net Profits of
Continuing Operation” and “(II) Net Profits of Discontinued Operation” were newly added to the item of Net
Profits. The Ministry of Finance issued Interpretation on Related Questions of Format of General Financial
Statements of Enterprises on January 12, 2018, according to the relevant regulations of the Interpretation:
For the line item of “Assets Disposal Income” newly added to Income Statement, the Company adjusted the
comparative data in comparative period according to the Notice based on the relevant regulations of the
Accounting Standard No. 30 for Business Enterprises—List and Presentation of Financial Statement.
For the line item of “Other Income” newly added to Income Statement, the Company dealt with the
government subsidies existed on January 1, 2017 by adopting prospective application method, no need to adjust
the comparative data in comparative period according to the relevant regulations of the Accounting Standard No.
16 for Business Enterprises—Government Subsidies.
30
Changchai Company, Limited Annual Report 2017
Due to the retroactive adjustment to the item of “Assets Disposal Income”, the influences on the statement
for 2016 are as follows:
Unit: RMB
Before the change After the change
Assets disposal income 6,433,767.68
Non-operating income 15,602,392.47 9,156,923.41
Non-operating expenses 10,729,181.83 10,717,480.45
VII Retroactive Restatement due to Correction of Material Accounting Errors in this
Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
VIII YoY Changes in the Scope of the Consolidated Financial Statements
√ Applicable □ Not applicable
The Company held an extraordinary meeting of the board of directors on August 26, 2016. The Proposal on
the Transferee of 67% Equity Interest in Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. held by Fuji
Heavy Industries Co., Ltd. of Japan was reviewed and passed in the meeting. The Company holds the 100%
equity interest in Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. after completion of the acquisition,
and Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. was changed from a Chinese-foreign joint
venture to a domestic-funded enterprise. On January 20, 2017, the registration procedures for industrial and
commercial changes related to equity transfer of Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. was
completed, and the business license renewed by Changzhou National High-Tech Industrial Development Zone
(Xinbei District) Market Supervision Administration was issued to the company, which stated a registered
capital of RMB 37.25 million, a business scope includes: production, processing, development, sales and technical
consultation of small general-purpose gasoline engines and the supporting units (including agricultural machinery,
engineering machinery, pump units and small generator sets) as well as the production, processing, development,
sales and technical consultation of related components, parts and accessories. Changzhou Fuji Changchai Robin
Gasoline Engine Co., Ltd. has been included in the scope of the consolidated financial statements of the Company
since January 20, 2017. The Company has paid for the equity transfer. The share purchase transaction generated
revenue of RMB 21,675,689.55, which was included in the investment income and non-operation income of the
current period.
IX Engagement and Disengagement of CPAs Firm
Current CPAs firm
Name of domestic CPAs firm Jiangsu Gongzheng Tianye Certified Public Accountants LLP
Remuneration for domestic CPAs firm for the
70
Reporting Period (RMB’0,000)
Consecutive years of the audit services provided
16
by domestic CPAs firm
Name of domestic CPAs from Accounting Firm Dai Weizhong, He Taifeng
31
Changchai Company, Limited Annual Report 2017
Indicate by tick mark whether the CPAs firm was changed in this Reporting Period.
□ Yes √ No
CPAs firm, financial advisor or sponsor engaged for internal control audit
√ Applicable □ Not applicable
During Reporting Period, the Company hired Jiangsu Gongzheng Tianye Certified Public Accountants LLP as the
internal control auditor at the cost of RMB150,000.
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable √ Not applicable
XI Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XII Significant Litigations and Arbitrations
√ Applicable □ Not applicable
Amount Forming Trial result Enforcement
involved in the Progress of and on the
Basic information of the Disclosure Disclosure
the lawsuit estimated the lawsuit influence of judgment of
lawsuit (arbitration) date index
(arbitration) liabilities or (arbitration) the lawsuit the lawsuit
(RMB’0,000) not (arbitration) (arbitration)
About the lawsuit case
of Shandong Hongli
Group Co., Ltd., the
accused company owed
Under the
accumulatively
compulsory
RMB14.36 million to
execution by
the Company. The Judged for
the court and
Company sued to 1,436 No the second N/A
in the process
Changzhou Intermediate trial
of liquidation
People’s Court in 2001
and
and sued for compulsory
bankruptcy
execution in April, 2002.
Currently, the defendant
has started the
bankruptcy procedure.
32
Changchai Company, Limited Annual Report 2017
XIII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XIV Credit Conditions of the Company as well as its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
XV Implementation of any Equity Incentive Plan, Employee Stock Ownership Plan or other
Incentive Measures for Employees
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XVI Significant Related-party Transactions
1. Related-party Transactions Relevant to Routine Operation
□ Applicable √ Not applicable
No such cases in this Reporting Period.
2. Related Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
√ Applicable □ Not applicable
Register Total assets Net assets Net profits
Main
Name of ed of the of the of the
Joint Association business of
the capital of investee investee investee
investor relationship the
investee the (RMB’0,000 (RMB’0,0 (RMB’0,0
investee
investee ) 00) 00)
Ms Zhang Changzhou Equity
Synergetic Qiong, the Synergetic investment
Innovation Director of Innovation , RMB101
Fund the Equity investment .00 10070 10070 -30
Manageme Company, Investment consultanc million
nt Co., Ltd. works as the Partnership y (financial
supervisor Enterprise or similar
33
Changchai Company, Limited Annual Report 2017
of (limited financial
Synergetic partnership business is
Innovation ) not
Fund allowed,
Managemen excluding
t Co., Ltd., those with
which forms permit and
associated filing
relationship. according
to law)
The progress of significant
projects in construction of
Naught
the investee enterprise (if
any)
4. Credits and Liabilities with Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Other Significant Related Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVII Significant Contracts and Execution
1. Entrustment, Contracting and Leasing
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leasing
□ Applicable √ Not applicable
No such cases in the Reporting Period.
34
Changchai Company, Limited Annual Report 2017
2. Significant Guarantees
√ Applicable □ Not applicable
(1) Guarantees Provided by the Company
Unit: RMB’0,000
Guarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries)
Disclosure
Actual Guarant
date of the
Line of occurrence Actual ee for a
guarantee Type of Term of Due or
Guaranteed party guarante date (date of guarantee related
line guarantee guarantee not
e agreement amount party or
announcem
signing) not
ent
Guarantees between the Company and its subsidiaries
Disclosure
Actual Guarant
date of the
Line of occurrence Actual ee for a
guarantee Type of Term of Due or
Guaranteed party guarante date (date of guarantee related
line guarantee guarantee not
e agreement amount party or
announcem
signing) not
ent
Changzhou
Changchai
Housheng Joint
11/29/2017 2,000 11/29/2017 2,000 1 year No No
Agricultural liability
Equipment Co.,
Ltd.
Total actual occurred
Total guarantee line approved amount of guarantee for
for the subsidiaries during the 2,000 the subsidiaries during 2,000
Reporting Period (B1) the Reporting Period
(B2)
Total actual guarantee
Total guarantee line that has
balance for the
been approved for the
2,000 subsidiaries at the end 2,000
subsidiaries at the end of the
of the Reporting Period
Reporting Period (B3)
(B4)
Guarantees between subsidiaries
Disclosur Actual Guarant
Actual
e date of Line of occurrence Type of Term of Due or ee for a
Guaranteed party guarantee
the guarantee date (date of guarantee guarantee not related
amount
guarantee agreement party or
35
Changchai Company, Limited Annual Report 2017
line signing) not
announce
ment
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total actual occurred
Total guarantee line approved
amount of guarantee
during the Reporting Period 2,000 2,000
during the Reporting
(A1+B1+C1)
Period (A2+B2+C2)
Total guarantee line that has Total actual guarantee
been approved at the end of balance at the end of
2,000 2,000
the Reporting Period the Reporting Period
(A3+B3+C3) (A4+B4+C4)
Proportion of total actual guarantee amount
0.89%
（A4+B4+C4）in the net assets of the Company
Of which:
Guarantee amount provided for shareholders, actual
0
controllers and its related parties(D)
Amount of debt guarantee provided for the guaranteed
party whose asset-liability ratio is not less than 70% 2000
directly or indirectly（E）
Part of the amount of the total guarantee over 50% of net
0
assets （F）
Total amount of the above three guarantees （D+E+F） 2000
Explanation on possibility to bear joint liability due to
Not applicable
undue guarantees
Explanation on the external guarantees in violation of
Not applicable
stipulated procedures
(2) Illegal Provision of Guarantees for External Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Entrusted Cash Management
(1) Entrusted Cash Management
√ Applicable □ Not applicable
Overviews of entrusted cash management during the Reporting Period
Unit: RMB’0,000
36
Changchai Company, Limited Annual Report 2017
Cumulative
Balance Before
Type Capital Resources Amount amount fail to
maturity
recover
Wealth management products
Self-owned raising funds 1,950 1,350 0
of brokers
Others Self-owned raising funds 200 0 0
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause
impairment for entrusted asset management
□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in this Reporting Period.
4. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XVIII Social Responsibilities
1. Social Responsibilities Taken
□ Applicable √ Not applicable
Whether publish social responsibility report?
□ Yes √ No
2. Targeted Measures Taken to Help People Lift themselves out of Poverty
The Company didn’t take any targeted measures to help people lift themselves out of poverty during the
Reporting Period, no subsequent plan temporarily too.
3. Particulars Relevant to Environmental Protection
□ Applicable √ Not applicable
Is the Company or any of its subsidiaries a heavily polluting business identified by the environmental protection
authorities of China?
No.
37
Changchai Company, Limited Annual Report 2017
XIX Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XX Significant Events of Subsidiaries
□ Applicable √ Not applicable
38
Changchai Company, Limited Annual Report 2017
Part VI Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before the change Increase/decrease (+/-) After the change
Newly Capitalize Ot
Proportio Bonus Subto Proportio
Amount issue d Capital he Amount
n shares tal n
share reserves rs
I. Restricted shares 0 0.00% 0 0.00%
1.Shares held by the state 0 0.00% 0 0.00%
2. Shares held by state-own
0 0.00% 0 0.00%
Legal-person
3. Shares held by other
0 0.00% 0 0.00%
domestic investors
Among which: shares held
0 0.00% 0 0.00%
by domestic legal person
Shares held by domestic
0 0.00% 0 0.00%
natural person
4.Oversea shareholdings 0 0.00% 0 0.00%
Among which: shares held
0 0.00% 0 0.00%
by oversea legal person
Shares held by oversea
0 0.00% 0 0.00%
natural person
II. Shares not subject to 561,374,32
100.00% 561,374,326 100.00%
trading moratorium 6
411,374,32
1. RMB ordinary shares 73.28% 411,374,326 73.28%
6
2. Domestically listed 150,000,00
26.72% 150,000,000 26.72%
foreign shares 0
3. Oversea listed foreign
0 0.00% 0 0.00%
shares
4. Other 0 0.00% 0 0.00%
561,374,32
III. Total shares 100.00% 561,374,326 100.00%
6
39
Changchai Company, Limited Annual Report 2017
Reason for the change in shares
□ Applicable √ Not applicable
Approval of the change in shares
□ Applicable √ Not applicable
Reason for the change in shares
□ Applicable √ Not applicable
Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to common
shareholders of the Company and other financial indexes over the last year and last period
□ Applicable √ Not applicable
Other contents that the Company considered necessary or were required by the securities regulatory authorities to
disclose
□ Applicable √ Not applicable
2. Changes in Restricted Shares
□ Applicable √ Not applicable
II Issuance and Listing of Securities
1. Securities (Excluding Preference Shares) Issued in this Reporting Period
□ Applicable √ Not applicable
2. Changes in Total Shares of the Company and the Shareholder Structure, as well as the Asset and
Liability Structures
□ Applicable √ Not applicable
3. Existing Employee-held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Total Number of Shareholders and their Shareholdings
Unit: share
40
Changchai Company, Limited Annual Report 2017
Total number of
Total number of Total number of preference
Total number common preference shareholders with
of common shareholders at shareholders resumed voting
shareholders 52,046 the prior 50,907 with resumed 0 rights at the prior 0
at the month-end before voting rights at month-end
period-end the disclosure of the period-end before the
this Report (if any) disclosure of this
Report (if any)
5% or greater shareholders or the top 10 shareholders
Increase/ Pledged or frozen
Shareho decrease shares
Total shares Number of Number of
Name of Nature of lding during
held at the restricted non-restricted
shareholder shareholder percenta this Numb
period-end shares held shares held Status
ge (%) Reporting er
Period
State-owned
Assets
Supervision and
Administration On behalf of
Commission of the 30.43% 170,845,236 170,845,236
Changzhou government
Municipal
People’s
Government
KGI Asia Foreign
0.57% 3,189,845 3,189,845
Limited corporation
Domestic
Cao Yuting 0.33% 1,828,000 1,828,000
individual
Vanguard Total
Foreign
Internation A 0.29% 1,626,592 1,626,592
corporation
Stock Index Fund
Domestic
Wan Peizhong 0.27% 1,530,700 1,530,700
individual
Domestic
Huang Guoliang 0.27% 1,528,891 1,528,891
individual
Domestic
Hu Wenyong 0.24% 1,365,836 1,365,836
individual
Domestic
Liang Nianyou 0.24% 1,339,452 1,339,452
individual
Li Suinan Domestic 0.24% 1,338,700 1,338,700
41
Changchai Company, Limited Annual Report 2017
individual
Vanguard
Investment
Australia Co.,
Ltd－Vanguard Foreign
0.21% 1,196,785 1,196,785
Emerging Market corporation
Stock Index
Funds (Stock
Exchange)
Strategic investors or general
corporations becoming top-ten
N/A
shareholders due to placing of
new shares
It is unknown whether there is among the top 10 tradable shareholders and the
Related or acting-in-concert
top 10 non-restrictedly tradable shareholders any related parties or
parties among the shareholders
acting-in-concert parties as defined in the Administrative Measures for
above
Information Regarding Shareholding Alteration.
Shareholdings of the top ten non-restricted shareholders
Number of non-restricted Type of shares
Name of shareholder
shares held at the period-end Type Number
State-owned Assets Supervision
and Administration Commission
170,845,236 RMB ordinary shares 170,845,236
of Changzhou Municipal
People’s Government
Domestically listed
KGI ASIA LIMITED 3,189,845 3,189,845
foreign shares
Cao Yuting 1,828,000 RMB ordinary shares 1,828,000
VANGUARD TOTAL
Domestically listed
INTERNATIONA STOCK 1,626,592 1,626,592
foreign shares
INDEX FUND
Wan Peizhong 1,530,700 RMB ordinary shares 1,530,700
Domestically listed
Huang Guoliang 1,528,891 1,528,891
foreign shares
Domestically listed
Hu Wenyong 1,365,836 1,365,836
foreign shares
Liang Nianyou 1,339,452 RMB ordinary shares 1,339,452
Domestically listed
Li Suinan 1,338,700 1,338,700
foreign shares
Vanguard Investment Australia
1,196,785 RMB ordinary shares 1,196,785
Co., Ltd－Vanguard Emerging
42
Changchai Company, Limited Annual Report 2017
Market Stock Index Funds
(Stock Exchange)
Related or acting-in-concert
parties among the top ten
It is unknown whether there is among the top 10 tradable shareholders and the
non-restrictedly tradable share
top 10 non-restrictedly tradable shareholders any related parties or
holders and between the top ten
acting-in-concert parties as defined in the Administrative Measures for
non-restrictedly tradable share
Information Regarding Shareholding Alteration.
holders and the top ten
shareholders
Top ten common shareholders
conducting securities margin Naught
trading
Indicate by tick mark whether any of the top ten common shareholders or the top ten non-restricted common
shareholders of the Company conducted any promissory repo during this Reporting Period.
□ Yea √ No
No such cases in this Reporting Period.
2. Information about the Controlling Shareholder
Nature of the controlling shareholder: Controlled by the local government
Type of the controlling shareholder: Corporation
Name of controlling Legal representative / Date of Organization
Business scope
shareholder company principal establishment code
State-owned Assets
Supervision and
Administration Commission of Liu Yuedong 01411025-1 Not applicable
Changzhou Municipal People’s
Government
Shares held by the controlling
shareholder in other listed
companies by holding or Not applicable
shareholding during the
Reporting Period
Change of the controlling shareholder during this Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
43
Changchai Company, Limited Annual Report 2017
3. Information about the Actual Controller
Nature of the actual controller: Local administrator for state-owned assets
Type of the actual controller: Corporation
Legal
Name of the actual representative / Date of
Organization code Business scope
controller company establishment
principal
State-owned Assets
Supervision and
Administration
Liu Yuedong 01411025-1 Not applicable
Commission of Changzhou
Municipal People’s
Government
Equity of shareholding and
participating shares of
actual controllers in other
Not applicable
domestic and foreign listed
company during the
Reporting Period
Change of the actual controller during this Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
Ownership and control relations between the actual controller and the Company
STATE-OWNED ASSETS SUPERVISION AND
ADMINISTRATION COMMISSION OF CHANGZHOU
30.43%
CHANGCHAI COMPANY, LIMITED
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset
management.
□ Applicable √ Not applicable
44
Changchai Company, Limited Annual Report 2017
4. 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
45
Changchai Company, Limited Annual Report 2017
Part VIII Directors, Supervisors, Senior Management and Staff
I Changes in Shareholdings of Directors, Supervisors and Executive Officers
Number of shares
Current/f Beginning date Ending date of held at
Name Position Gender Age
ormer of office term office term period-end
(share)
Chairman of the
Shi Xinkun Current Male 54 10/18/2016 10/17/2019 0
Board
Vice Chairman
He Jianguang Current Male 54 10/18/2016 10/17/2019 0
of the Board
Director,
Zhang Xin Current Male 52 10/18/2016 10/17/2019 0
General Manager
Director,
Shi Jianchun Vice-general Current Male 56 10/18/2016 10/17/2019 0
Manager
Xu Qian Director Current Female 55 10/18/2016 10/17/2019 0
Zhang Qiong Director Current Female 60 10/18/2016 10/17/2019 0
Independent
Li Minghui Current Male 44 10/18/2016 10/17/2019 0
director
Independent
Jia Bin Current Male 40 10/18/2016 10/17/2019 0
director
Independent
Feng Genfu Current Male 61 10/18/2016 10/17/2019 0
director
Vice-general
Yin Lihou Current Male 54 10/18/2016 10/17/2019 0
Manager
Vice-general
Xu Yi Current Male 54 10/18/2016 10/17/2019 0
Manager
Vice-general
Liu Xiaoyun Current Male 56 10/18/2016 10/17/2019 0
Manager
Vice-general
Wei Jinxiang Current Male 55 10/18/2016 10/17/2019 0
Manager
Chairman of the
Ni Mingliang Current Male 51 10/18/2016 10/17/2019 0
Supervisor
Zhu Min Supervisor Current Male 54 10/18/2016 10/17/2019 0
Xie Guozhong Supervisor Current Male 49 10/18/2016 10/17/2019 0
46
Changchai Company, Limited Annual Report 2017
Lu Zhonggui Supervisor Current Male 51 10/18/2016 10/17/2019 0
Liu Yi Supervisor Current Male 49 10/18/2016 10/17/2019 0
Secretary of the
He Jianjiang Current Male 39 10/18/2016 10/17/2019 0
Board
Total -- -- -- -- -- -- 0
II Changes in Directors, Supervisors and Executive Officers
□ Applicable √ Not applicable
III Brief Biographies
Major background, main working experiences and responsibilities of current directors, supervisors and senior
management staff
Shi Xinkun: He acted as vice-president of Changzhou Investment Group Co., Ltd. Now, he is the Chairman
of the Board in our company.
He Jianguang: He successively acted as General Manager, Director, and Chief Engineer in our company.
Now, he is the vice Chairman of the Board of our company.
Zhang Xin: He successively took the posts of Sales Manager, General Manager Assistant, and vice-general
manager in our company. Now, he acts as Director and General Manager of our company.
Shi Jianchun: He successively acted as Party Secretary, Director, Vice-general Manager and Secretary of the
Board of the Company. Now he is the Party Secretary, Director, Vice-general Manager and Chairman of the
Board of Housheng Investment Co., Ltd.
Xu Qian: She successively worked as Clerk of Commerce of Changzhou Bureau of Finance, section member
of Commercial Office, Deputy Principal Staff Member, Deputy Principal Staff Member, Deputy Section Chief of
State-owned office of Changzhou Bureau of Finance and Section Chief of Changzhou SASAC Property Rights
and Profits Management. Now, she is Deputy Researcher of Changzhou SASAC and the director of the Company.
Zhang Qiong: She successively acted as Lecturer and Associate Professor in Department of Law of Anhui
University, Deputy Director of Intellectual Property Office and Director of Legal Affairs Office in Shenzhen
Huawei Technologies Co., Ltd, Senior Manager, Assistant Secretary General of Shenzhen Innovation Investment
Group Ltd, Director, General Manager, and consultant of Anhui Hongtu Venture Capital Co., Ltd. Now, she
works as supervisor of Synergetic Funds Management Limited, and the director of the Company.
Feng Genfu: he held the post of Dean of Institute of Economics and Finance in Xi’an Jiaotong University.
Now, he is Professor and Doctoral Advisor of Institute of Economics and Finance in Xi’an Jiaotong University,
Independent Director of Tianmao Industry Group Co., Ltd, Xi’an Baode Automation Co., Ltd, and Datang
International Power Generation Co., Ltd., and China Securities Co., Ltd.
Li Minghui: He acted as Lecturer and Associate Professor of School of Accounting in Xiamen University,
Associate Professor and Professor of School of Accounting in Nanjing University Business School. Now he is the
Doctoral Supervisor of School of Accounting in Nanjing University Business School, independent director of
Baosheng Science & Technology Innovation Co., Ltd, Nanjing Securities Co., Ltd, and Jiangsu Fasten Co., Ltd.,
47
Changchai Company, Limited Annual Report 2017
and the director of the Company.
Jia Bin: He successively acted as the Deputy Director of No.1 Research office in Tianjin Research Institute
of Internal Combustion Engine, now he acts as the Director of No.1 Research office in Tianjin Research Institute
of Internal Combustion Engine and Secretary-general of CICEIA Small Gasoline Engine Branch.
Yin Lihou: He worked as Minister of Human Resources Department and General Manager Assistant. Now he
acts as Deputy General Manager of the Company, and the Chairman of the Board of Changchai Robin.
Xu Yi: He successively took the posts of Director of Technical Center and General Manager Assistant. Now
he is Vice-general Manager of the Company.
Liu Xiaoyun: He successively acted as Multi-cylinder Engine Factory Director, Minister of Purchase
Department, and General Manager Assistant in the Company. Now he acts as Deputy General Manager of the
Company.
Wei Jinxiang: He successively held the posts of Department Director of Quality Assurance Department,
General Manager Assistant of the Company. Now he acts as Deputy General Manager of the Company, and the
chairman of Changchai Wanzhou, Changchai Benniu, and Housheng Agricultural Equipment.
Ni Mingliang: Now he acts as Deputy Party Secretary, Secretary of Commission, Chairman of Labor Union
and Chairman of the Supervisory.
Zhu Min: Now he acts as Deputy Section Chief and Principal Staff Member of Changzhou SASAC Property
Rights, and Section Supervisor of Supervisory.
Xie Guozhong: Now he acts as General Manager Assistant of the Company, General Manager and Secretary
of Party General Branch of the Sales Company, and Supervisor of the Company and Director of Housheng
Agriculture Equipment.
Lu Zhonggui: Now he acts as Minister of political Department of the Company, Office Director, Secretary of
Organ Party General Branch as well as employee supervisor of the Company.
Liu Yi: He successively took the posts of Assistant Minister of Enterprise Management Department. Now he
acts as Deputy Director of Finance Department and Supervisor of the Company and Supervisor of Changchai
Wanzhou.
He Jianjiang: He successively acted as the Section Member, Assistant Minister, Vice Minister of Investment
and Development Department in our Company, Representative of Securities in the Company. Now he is Secretary
of the Board and Minister of Investment and Development Department in our Company, and Director of
Housheng Investment, Changchai Robin, Housheng Agricultural Equipment, and Changchai Wanzhou.
Post-holding in shareholder units
Name of the
person holding Receives
Name of the shareholder Position in the Beginning date Ending date
any post in any payment from the
unit shareholder unit of office term of office term
shareholder shareholder unit?
unit
State-owned Assets
Xu Qian Supervision and Deputy Researcher 07/01/2014 Yes
Administration
48
Changchai Company, Limited Annual Report 2017
Commission of Changzhou
Municipal People’s
Government
State-owned Assets
Supervision and
Administration Section Supervisor of
Zhu Min 06/01/2016 Yes
Commission of Changzhou Supervisory
Municipal People’s
Government
Post-holding in other units
Name of the Receives
Ending
person holding Position in the other Beginning date payment
Name of the other unit date of
any post in any unit of office term from other
office term
shareholder unit units?
Xie Tong Funds Management
Zhang Qiong Supervisor Yes
Limited
Nanjing University Doctoral Supervisor 04/01/2012
Baosheng Science & Technology
Independent Director 12/03/2014
Li Minghui Innovation Co., Ltd Yes
Nanjing Securities Co., Ltd Independent Director 05/12/2016
Jiangsu Fasten Co., Ltd Independent Director 04/20/2015
Tianjin Research Institute of the Director of No.1
03/01/2009
Internal Combustion Engine Research office
Secretary-general of
Yes
Jia Bin China Internal Combustion CICEIA Small
11/01/2011
Engine Industry Association Gasoline Engine
Branch.
Institute of Economics and
Professor and Doctoral
Finance in Xi’an Jiaotong 03/01/2016
Advisor
University
Feng Genfu Tianmao Industry Group Co., Ltd Independent Director 05/04/2016 Yes
Xi’an Baode Automation Co., Ltd Independent Director 08/03/2015
Datang International Power
Independent Director 06/30/2016
Generation Co., Ltd.
China Securities Co., Ltd. Independent Director 05/15/2015
Punishments imposed in the recent three years by the securities regulators on the incumbent directors, supervisors
and executive officers as well as those who left in this Reporting Period
49
Changchai Company, Limited Annual Report 2017
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Executive Officers
Decision-making procedure, determining basis and actual payment for the remuneration of directors, supervisors
and senior management
In 2017, the monthly salaries of directors, supervisors and senior executives in the Company were in line with the
stipulations of relevant salary management and grade standards, and the benefits of the Company and assessment
results. The Director Xu Qian, Supervisor Zhu Min obtained salaries in shareholders' entities.
Remuneration of the directors, supervisors and senior management of the Company during the Reporting Period is
as follows:
Unit: RMB’0,000
Total before-tax Whether gained
Current/ remuneration remuneration from the
Name Position Gender Age
former gained from the related parties of the
Company Company
Chairman of the
Shi Xinkun Male 54 Current 47.31 No
Board
Vice Chairman
He Jianguang Male 54 Current 47.31 No
of the Board
Director,
Zhang Xin General Male 52 Current 47.31 No
Manager
Director,
Shi Jianchun Vice-general Male 56 Current 47.31 No
Manager
Xu Qian Director Female 55 Current 0 Yes
Zhang Qiong Director Female 60 Current 0 No
Independent
Li Minghui Male 44 Current 5 No
director
Independent
Jia Bin Male 40 Current 5 No
director
Independent
Feng Genfu Male 61 Current 5 No
director
Vice-general
Yin Lihou Male 54 Current 39.60 No
Manager
Vice-general
Xu Yi Male 54 Current 41.30 No
Manager
50
Changchai Company, Limited Annual Report 2017
Vice-general
Liu Xiaoyun Male 56 Current 40.02 No
Manager
Vice-general
Wei Jinxiang Male 55 Current 39.60 No
Manager
Chairman of the
Ni Mingliang Male 51 Current 38.32 No
Supervisor
Zhu Min Supervisor Male 54 Current 0 Yes
Xie Guozhong Supervisor Male 49 Current 40.33 No
Lu Zhonggui Supervisor Male 51 Current 16.73 No
Liu Yi Supervisor Male 49 Current 15.32 No
Secretary of the
He Jianjiang Male 39 Current 29.35 No
Board
Total -- -- -- -- 504.81 --
Equity incentives for directors, supervisors and executive officers in this Reporting Period
□ Applicable √ Not applicable
V Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company 2,767
Number of in-service employees of main subsidiaries 665
Total number of in-service employees 3,432
Total number of employees with remuneration in this Reporting
3,432
Period
Number of retirees to whom the Company or its main
0
subsidiaries need to pay retirement pension
Functions
Function Number of employees
Production 2,400
Sales 237
Technical 373
Financial 41
51
Changchai Company, Limited Annual Report 2017
Administrative 339
Other 42
Total 3,432
Educational backgrounds
Educational background Number of employees
Junior high school graduates and below 1,555
High school graduates 963
College graduates and technical secondary school graduates 587
Bachelors 301
Masters and above 26
Total 3,432
2. Employee Remuneration Policy
The Company always adhered to the principle of tilting the remuneration incentive mechanism towards
excellent talents, so as to display the roles of various professional technicians, management staffs and skilled
backbones. Besides, it adhered to the principle of increasing the employee’s income integrated with increasing
labor production efficiency and production & operation efficiency, so as to perfect the salary structure and further
increase employees’ income steadily.
3. Employee Training Plans
The Company established the Management Rules on the Education & Training for Employees, aiming to
enhance employees’ quality and try its best to cultivate a team of faithful and highly professional talents. Besides,
it innovated the training mechanism, optimized the training environment, and reinforced to encourage employees
to attend various training, so as to inspire the employees’ potential to the maximum extent and further promote the
sustainable development of the Company.
4. Labor Outsourcing
□ Applicable √ Not applicable
52
Changchai Company, Limited Annual Report 2017
Part IX Corporate Governance
I Basic Situation of Corporate Governance
In the Reporting Period, the Company was strictly in line with laws, statutes such as Company Law,
Securities Laws, Code of Corporate Governance of Listed Companies, Guide Opinion on Establishment of
Independent Director System by Listed Companies and Guidelines on Internal Controls of Listed Companies and
so on, continuously perfected corporate governance, established and accomplished internal management and
control system, consistently and deeply put forward corporate governance activities, so as to further normalized
operation of the Company, raising corporate governance level, laying a guard for steady and healthy development
of the Company, protect legal rights and interests of the Company and all shareholders.
The Company promulgated or revised a series of internal control system through all aspects of normal
operation and management activities in accordance with each national laws and regulations, characteristics of the
industry, operation and self-managing business, and improved it continuously, and finally formed a normative
management system. And formulated a series of management system, process and standard covered each
operation link and level of the financial assets control, human resources management, quality environment
management and internal audit supervisor etc., which ensured all the work had rules to follow.
Was there any material incompliance with the regulatory documents issued by the CSRC governing the
governance of listed companies?
□ Yes √ No
No such cases in the Reporting Period.
II Independence of Businesses, Personnel, Asset, Organizations and Finance which are
Separate from the Controlling Shareholder
The Company was totally independent from the controlling shareholder State-owned Assets Supervision and
Administration Commission of Changzhou Municipal People’s Government in terms of assets, business,
personnel, organization and financing, with independent & complete business and capability to operate
independently.
III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Special Meetings of Shareholders Convened during this Reporting Period
1. Meetings of Shareholders Convened during this Reporting Period
Investor Convened Index to the disclosed
Meeting Type Disclosure date
participation ratio date information
2016 Annual Meeting of
Annual 0.05% 05/11/2017 05/12/2017 2017-011
Shareholders
The 1st Special Meeting
Special 0.04% 12/14/2017 12/15/2017 2017-033
of Shareholders in 2017
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Changchai Company, Limited Annual Report 2017
2. Special Meetings of Shareholders Convened at the Request of Preference Shareholders with Resumed
Voting Rights
□ Applicable √ Not applicable
V Performance of Independent Directors in this Reporting Period
1. Attendance of Independent Directors in Board Meetings and Meetings of Shareholders
Attendance of independent directors in board meetings
Due presence in Presence by Presence Absent for two
Independent Presence on Absence
this Reporting telecommunic through a consecutive
director site (times) (times)
Period (times) ation (times) proxy (times) times
Feng Genfu 9 3 6 0 0 No
Li Minghui 9 2 6 1 0 No
Jia Bin 9 2 6 1 0 No
Attendance of independent
directors in meetings of
2
shareholders as non-voting
delegates (times)
Note for absent for two consecutive times
Not applicable
2. Objections Raised by Independent Directors on Issues of the Company
Indicate by tick mark whether any independent directors raised any objections on issues of the Company.
□ Yes √ No
No such cases in this Reporting Period.
3. Other Details about the Performance of Duties by Independent Directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
Suggestions from independent directors adopted or not adopted by the Company:
The independent directors of the Company in line with the law, rules, normative documents and obligations
given by the Company of the Company law, Article of Associations and Independent Directors Work Rules,
comprehensively focused on the development and operation of the Company, actively attended the general
meeting of shareholder and meeting of board of directors, and given independent opinions for the significant
events of the Company, and effectively maintained the profits of the Company and all the shareholders. The
Company actively listened to the suggestions from the independent directors upon the significant events and
adopted them.
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Changchai Company, Limited Annual Report 2017
VI Performance of Duties by Specialized Committees under the Board during this Reporting
Period
1. Summary Report on Responsibility Performance of the Audit Committee under the Board of Directors:
During the Reporting Period, the Audit Committee under the Board of Directors performed its duty
according to the diligent and responsible principle, based on relevant regulations such as the Company Law, the
Guidelines for Corporate Governance of Listed Companies, the Articles of Association as well as provisions in
the Enforcement Regulation of the Audit Committee under the Board of Director of the Company.
(1) Major work of Audit Committee in Reporting Period:
1) Periodically examined the working plan and execution of inner control of the Company;
2) Communicated fully with the CPAs firm on plan and content of audit;
3) Urged the CPAs firm to summit report as scheduled;
4) The Audit Committee reviewed the financial statements of the Company before the audit and after the
issuance of preliminary opinion by the CPAs firm. After it communicated with the CPAs firm on some important
items as well as major accounting estimation items, audit adjustment items and important accounting policies
which were likely to have potential influence on the financial statements, it considered that the financial
statements reflected the overall situation of the Company authentically, accurately and completely.
5) Submitted the summary report on annual audit of the Company conducted by the CPAs firm to the Board
of Directors;
6) Advised to continue the appointment of Jiangsu Gongzheng Certified Public Accountants Co., Ltd as the
audit institution of the Company in 2017.
(2) Written opinions on financial statements of the Company issued by the Audit Committee
1) On March 21, 2018, the Audit Committee the Audit Committee examined the financial statements of the
Company after the certified public accountants had issued the preliminary opinion on the statements, and issued a
written opinion as follows: The financial statements of the Company were prepared in accordance with the New
Accounting Standards for Enterprises and relevant financial rules of the Company, and faithfully reflected the
financial position of the Company, as well as the business results and cash flows in 2017 in all material aspects.
2) With regard to the audited financial statements 2017, on April 11, 2018, the Audit Committee made the
following resolution: the Audit Committee reviewed the financial statements 2017 audited by auditors, and
believed that the said financial statements faithfully reflected the financial position of the Company as at
December 31, 2017, as well as the business results and cash flows in 2017 in all material aspects. It agreed to
submit the statements to the Board of Directors for examination and approval.
(3) Summary report on the audit work conducted by the CPAs firm in 2017:
According to the annual audit plan jointly formulated by the Audit Committee and Jiangsu Gongzheng
Tianye Certified Public Accountants Co., Ltd, auditors communicated fully with the management personnel of the
Company and members of the Audit Committee on the consolidation of financial statements, accounting
adjustment, accounting policy and other accounting work needed to be improved, which helped both parties
acquire a deeper understanding about the operation, financial process and implementation of the New Accounting
Standards for Business Enterprises in the Company. With such understanding, the annual audit accountants would
make more mature judgment to issue a fair audit conclusion.
The Audit Committee held that the CPAs firm conducted the audit strictly in accordance with provisions
stipulated in the Independent Auditing Standards for CPAs of the PRC. The time of audit was sufficient, and the
auditors with excellent ability to practice were deployed reasonably. The issued auditor’s report fully reflected the
financial position of the Company as at December 31, 2017, as well as the business results and cash flows in 2017,
55
Changchai Company, Limited Annual Report 2017
and the audit conclusion was in line with the actual situation of the Company.
(4) Resolution letter on renewing the employment of the CPAs firm:
The Audit Committee convened a meeting on April 11, 2018 to review the matter concerning the
employment of a CPAs firm for the audit in 2018, and the review opinion was as follows:
Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd had accomplished the audit of the
Company 2017, and the auditor’s report reflected the actual financial status of the Company in 2017 objectively
and fairly.
The Audit Committee was satisfied with the audit conducted by Jiangsu Gongzheng Tianye Certified Public
Accountants Co., Ltd and decided to continue to engage it as the audit institution of the Company in 2018.
The said proposal was agreed to be submitted to the 10th Session of the 8th Board of Directors for review.
2. Summary Report on Responsibility Performance of Remuneration & Appraisal Committee under the Board of
Directors:
The Remuneration & Appraisal Committee under the Board of Directors was composed of 3 Directors,
including 2 Independent Directors and 1 Inner Director. And one of the Independent Directors assumed the
position of Chairman of the Committee.
In the Reporting Period, the Remuneration & Appraisal Committee raised the proposal on implementing the
appraisal of senior executives in 2017, based on the fulfillment of the main financial indicators and operation
targets in 2017, which were determined in the Contract for Appraisal of Senior Executives in 2017.
In the Reporting Period, based on relevant regulations and rules, the Remuneration & Appraisal Committee
examined the remuneration of the Company’s senior executives in 2017 and issued opinions as follows:
The Remuneration & Appraisal Committee held that, the remuneration of the Company’s senior executives
in 2017 was in accordance with provisions in the Contract for Appraisal of Senior Executives in 2017, as well as
the laws, regulations and rules of the Company.
VII Performance of Duties by the Supervisory Board
Did the Supervisory Board find any risks to the Company during its supervision in this Reporting Period?
□ Yes √ No
The Supervisory Board raised no objections in this Reporting Period.
VIII Appraisal and Incentive for Executive Officers
The Company has established a fair and objective performance appraisal and incentive restraint mechanism
for senior management staffs. The annual remuneration of senior management staffs consisted of the basic annual
salary and performance appraisal bonus, and the basic annual salary was distributed monthly with a certain
proportion, while the performance appraisal bonus was distributed after being appraised according to the appraisal
scheme for senior management staffs signed between the Board of Directors and the managers for each year.
IX Internal Control
1. Serious Internal Control Defects Found in this Reporting Period
□ Yes √ No
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Changchai Company, Limited Annual Report 2017
2. Internal Control Self-evaluation Report
Disclosure date of the internal control self-evaluation report 04/13/2018
Index to the disclosed internal control self-evaluation report 2018-005
Total assets of the evaluated entities as a percentage in the consolidated total
100.00%
assets
Operating revenues of the evaluated entities as a percentage in the
100.00%
consolidated operating revenues
Defect identification standards
Type Financial-report related Non-financial-report related
The Company classified the defects as serious
defect, important defect and general defect
according to the influence degree from the
internal control:
Defects with the following random
(1) Serious defect: refers to one or multiple
characteristics should be
groups with control defect which may lead the
recognized as serious defect:
enterprise seriously deviates the control target;
1) Seriously violated the national
(2) Important defect: refers to one or multiple
laws and administrative regulations
groups with control defect with the severity
and the normative documents;
and the economic results lower than the great
2) “three significant one great”
defect but may still lead the enterprise
event had not been through the
seriously deviates the control target;
collective decision-making
(3) General defect: refers to other defect
process;
except for the great defect and significant
3) the significant events involved
defect.
Nature standard with the production and operation
Nature standards:
of the Company lacked of
defects with the following random
systematic control or the
characteristics should be recognized as serious
institutional system was invalid;
defect:
4) the internal control of the
1) the defect involves with the malpractice of
information disclosure was invalid,
the Directors, Supervisors and Senior
which led the Company be open
Executives;
condemned by the supervision
2) revised the disclosed financial report;
department;
3) CPAs discovered the great misstatement
5) the serious defect from the
among the current financial statement while
assessment results of the internal
which could not be found during the operating
control had not been revised.
process of the internal control;
4) the supervision from the Audit Committee
and the internal audit institution of the
enterprise was invalid.
Quantitative standards: Refer to the quantitative criteria of
Quantitative standard
The quantitative standards of recognizing the the internal control defect of the
57
Changchai Company, Limited Annual Report 2017
significant degree of the misstatement financial report, to recognize the
(including the false negatives) of the quantitative criteria of the
consolidated financial report of the Company significant degree of the internal
based on the data from the 2017 consolidated control defect of the non-financial
statements was as: report of the Company as:
Serious defect: misstatement≥5% of the Serious defect: possibly caused
annual profits directly losses≥0.1% of the net
Important defect: 2.5% of the annual assets
profits≤misstatement＜5% of the annual Important defect: 0.05% of the net
profits assets≤possibly caused directly
General defect＜2.5% of the annual profits losses＜0.1% of the net assets
General defect: possibly caused
directly losses＜0.05% of the net
assets
Number of serious
financial-report-related 0
defects
Number of serious
non-financial-report-related 0
defects
Number of important
financial-report-related 0
defects
Number of important
non-financial-report-related 0
defects
X Auditor’s Report on Internal Control
√ Applicable □ Not applicable
Opinion paragraph in the auditor’s report on internal control
We believed that Changchai Company, Limited maintained effective internal control of the financial report in
significant aspects according to the Basic Norms of Internal Control and relevant regulations on December 31,
2017.
Auditor’s report on internal control disclosed or not Disclosed
Disclosure date 04/13/2018
Index to the disclosed auditor’s report on internal
2018-005
control
Type of the auditor’s opinion Standard unqualified opinion
Serious non-financial-report-related defects None
Indicate by tick mark whether any modified opinions are expressed by the CPAs firm in its auditor’s report on the
58
Changchai Company, Limited Annual Report 2017
Company’s internal control.
□ Yes √ No
Indicate by tick mark whether the auditor’s report on the Company’s internal control issued by the CPAs firm is
consistent with the self-evaluation report of the Board.
√ Yes □ No
Part X Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the
approval date of this Report or were due but could not be redeemed in full?
No.
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Changchai Company, Limited Annual Report 2017
Part XI Financial Statements
I Independent Auditor’s Report
Type of auditor’s opinion Standard unqualified opinion
Date of signing the auditor’s report 04/11/2018
Name of the auditor Jiangsu Gongzheng Tianye Certified Public Accountants LLP
No. of the auditor’s report Sugong W[2018]A340
Name of CPA Dai Weizhong, He Taifeng
Text of the Auditor’s Report
To the Shareholders of Changchai Company, Limited,
I Opinion
We have audited the financial statements of Changchai Company Limited. (hereinafter referred to as the
“Company”) ,, which comprise the consolidated balance sheets as of December 31, 2017, the consolidated
statements of income, cash flows and changes in owners’ equity for the year then ended, as well as the notes to the
consolidated financial statements.
In our opinion, the attached consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Company at December 31, 2017, and the consolidated operating results and
cash flows for the year then ended, in conformity with the Chinese Accounting Standards (CAS).
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for Audit of Financial
Statements section of our report. We are independent of the Company in accordance with the China Code of
Ethics for Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance with
the said Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
III Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. And key audit matter identified in our audit is summarized as follows:
(I) Bad debt provision for accounts receivable
1. Description of the item
As stated in Notes V and 3 of the Financial Statements, as of December 31, 2017, book value of accounts
receivable of the Company is RMB392,010,953.55, accounting for 10.53% of the total assets. Bad debt provision
for accounts receivable of the Company is calculated by the assessment of accounts receivable’s return ability.
The assessment of accounts receivable’s return ability needs large judgment of the management, involving the
significant accounting estimations with significant influences on amounts. So, we take bad debt provision for
account receivable as a key audit item.
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Changchai Company, Limited Annual Report 2017
2. Response for audit
(1) Knowing, evaluating and testing the related internal control of bad debt provision for accounts receivable;
(2) Re-checking the related considerations and objective evidences of impairment test for accounts receivable,
paying attention to whether the management has fully recognized the impairment of items;
(3) For accounts receivable made bad debt provision separately, we re-check the basis and reasonability for
the estimated available cash flow in the future;
(4) For accounts receivable made bad debt provision by the credit risks characteristic group, we evaluate
whether the ratio of bad debt provision confirmed by management is reasonable;
(5) We request for confirmation of accounts receivable, and check the confirmation result with the carrying
amount;
(6) Checking the payment collection after the binding stage, and evaluating the reasonability of bad debt
provision made by management.
(II) List of acquisition of Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd.
1. Description of the item
As stated in Notes VI of the Financial Statements, the Company purchased the rest of 67% equity of
Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. (original shareholding ratio was 33%) in the
Reporting Period with RMB26,280,000.00, which constituted the combination not under the same control. The
fair value of the 33% equity held before the purchase date was RMB22,757,433.46 on purchase date, and the
combination cost was RMB49,037,433.46; the fair value share of the recognized net assets was
RMB68,961,919.58. The amount RMB19,924,486.12 that the combination cost less than the fair value share of
the recognized net assets was recorded into the current non-operating income in the consolidated financial
statements, accounting for 42.27% of the current net profits with great influences on the amounts. So, we take the
above-mentioned acquisition as a key audit item.
2. Response for audit
(1) Get and check the resolution on share acquisition, agreement materials, check the payment for equity,
inquire the industrial and commercial registration of changes, check the operation of Changzhou Fuji Changchai
Robin Gasoline Engine Co., Ltd. to verify the actual right of control of the Company, and then to confirm the
specific purchase date of share acquisition;
(2) Re-check the negative goodwill, and get the assets evaluation report of share transfer. Continuously
calculate the fair value of net assets of Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. as of the
purchase date according to the evaluation report, and calculate and confirm the negative goodwill in accordance
with the combination costs and its balance.
IV Other Information
The Company’s management (hereinafter referred to as “management”) is responsible for the other
information. The other information comprises all of the information included in the Company’s 2017 Annual
Report other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information; we are required to
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Changchai Company, Limited Annual Report 2017
report that fact. We have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance for Financial Statements
The management is responsible for the preparation of the financial statements that give a fair view in
accordance with CAS, and for designing, implementing and maintaining such internal control as the management
determines is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the management either intends to liquidate the Company or to cease operations,
or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with CAS will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required by CAS to draw users’ attention in our auditor’s report to the related
disclosures in the financial statements. If such disclosures are inadequate, we need to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events
or conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Company to express an opinion on the financial statements. We are responsible for the
direction, supervision and performance of the Company audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding the planned scope and timing of the audit
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Changchai Company, Limited Annual Report 2017
and significant audit findings, including any noteworthy deficiencies in internal control that we identify during
our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were
of most significance in the audit of the consolidated financial statements of the current period and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communicatio
Jiangsu Gongzheng Tianye Certified Public Accountants Chinese CPA Dai weizhong, He Taifeng
(LLP) (Engagement Partner)
Wuxi China April 11, 2018
63
Changchai Company, Limited Annual Report 2017
II Financial Statements
Currency unit for the statements in the notes to the financial statements: RMB
1. Consolidated Balance Sheet
Prepared by Changchai Company, Limited
Unit: RMB
Item December 31, 2017 December 31, 2016
Current assets:
Monetary assets 430,305,367.71 670,703,802.02
Settlement reserve
Interbank loans granted
Financial assets at fair value through profit or loss 0.00 0.00
Derivative financial assets
Notes receivable 716,404,345.57 501,070,279.01
Accounts receivable 392,010,953.55 359,279,821.69
Prepayments 17,781,007.77 15,483,475.43
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract reserve
Interest receivable
Dividends receivable
Other receivables 5,794,971.22 4,165,674.62
Financial assets purchased under resale agreements
Inventories 508,246,807.48 494,046,458.44
Assets classified as held for sale
Current portion of non-current assets
Other current assets 42,540,184.05 39,669,983.12
Total current assets 2,113,083,637.35 2,084,419,494.33
Non-current assets:
Loans and advances to customers
Available-for-sale financial assets 793,522,639.04 820,072,500.00
Held-to-maturity investments
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Changchai Company, Limited Annual Report 2017
Long-term receivables
Long-term equity investments 21,006,230.03
Investment property 52,864,348.43 55,072,689.23
Property, plant and equipment 560,049,970.50 553,678,938.87
Construction in progress 94,581,989.06 89,781,047.21
Construction materials
Proceeds from disposal of property, plant and equipment
Productive living assets
Oil and gas assets
Intangible assets 107,795,746.86 99,915,137.62
R&D expense
Goodwill
Long-term prepaid expense
Deferred income tax assets 1,006,953.81 911,229.42
Other non-current assets
Total non-current assets 1,609,821,647.70 1,640,437,772.38
Total assets 3,722,905,285.05 3,724,857,266.71
Current liabilities:
Short-term borrowings 24,900,000.00 10,000,000.00
Borrowings from central bank
Customer deposits and deposits from banks and other
financial institutions
Interbank loans obtained
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Notes payable 347,070,500.00 276,090,000.00
Accounts payable 616,228,500.18 605,424,726.65
Advances from customers 40,153,984.91 40,890,620.69
Financial assets sold under repurchase agreements
Handling charges and commissions payable
Payroll payable 51,247,112.66 58,549,908.90
Taxes payable 4,017,920.78 9,622,332.76
Interest payable
Dividends payable 3,891,433.83 3,891,433.83
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Changchai Company, Limited Annual Report 2017
Other payables 192,094,243.08 204,446,810.56
Reinsurance payables
Insurance contract reserve
Payables for acting trading of securities
Payables for acting underwriting of securities
Liabilities directly associated with assets classified as held
for sale
Current portion of non-current liabilities
Other current liabilities 2,028,937.59 2,454,381.75
Total current liabilities 1,281,632,633.03 1,211,370,215.14
Non-current liabilities:
Long-term borrowings 21,500,000.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payable
Specific payables
Provisions
Deferred revenue 60,992,858.46 61,057,232.08
Deferred income tax liabilities 92,409,779.39 109,949,700.00
Other non-current liabilities
Total non-current liabilities 174,902,637.85 171,006,932.08
Total liabilities 1,456,535,270.88 1,382,377,147.22
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 164,328,665.43 164,328,665.43
Less: Treasury shares
Other comprehensive income 515,068,550.00 623,048,300.00
Specific reserve 13,289,059.21 11,715,417.22
Surplus reserves 313,705,210.16 311,880,248.88
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Changchai Company, Limited Annual Report 2017
General reserve
Retained earnings 679,131,047.06 651,365,935.39
Total equity attributable to owners of Parent Company 2,246,896,857.86 2,323,712,892.92
Non-controlling interests 19,473,156.31 18,767,226.57
Total owners’ equity 2,266,370,014.17 2,342,480,119.49
Total liabilities and owners’ equity 3,722,905,285.05 3,724,857,266.71
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
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Changchai Company, Limited Annual Report 2017
2. Parent Company Balance Sheet
Unit: RMB
Item December 31, 2017 December 31, 2016
Current assets:
Monetary assets 366,907,287.64 637,109,762.94
Financial assets at fair value through profit or loss
Derivative financial assets
Notes receivable 711,474,345.57 500,870,279.01
Accounts receivable 319,887,051.70 308,800,670.90
Prepayments 9,815,561.98 9,845,904.32
Interest receivable
Dividends receivable
Other receivables 11,798,211.40 3,694,673.93
Inventories 376,814,388.82 430,345,089.36
Assets classified as held for sale
Current portion of non-current assets
Other current assets 20,692,057.15 24,225,031.87
Total current assets 1,817,388,904.26 1,914,891,412.33
Non-current assets:
Available-for-sale financial assets 785,837,500.00 812,872,500.00
Held-to-maturity investments
Long-term receivables
Long-term equity investments 231,752,730.03 205,472,730.03
Investment property 52,864,348.43 55,072,689.23
Property, plant and equipment 453,155,359.47 450,042,747.40
Construction in progress 93,681,793.26 89,781,047.21
Construction materials
Proceeds from disposal of property, plant and equipment
Productive living assets
Oil and gas assets
Intangible assets 75,623,219.49 78,558,644.37
R&D expense
Goodwill
Long-term prepaid expense
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Changchai Company, Limited Annual Report 2017
Deferred income tax assets 934,554.06 911,229.42
Other non-current assets
Total non-current assets 1,693,849,504.74 1,692,711,587.66
Total assets 3,511,238,409.00 3,607,602,999.99
Current liabilities:
Short-term borrowings
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Notes payable 323,030,500.00 251,220,000.00
Accounts payable 560,214,489.22 596,734,009.07
Advances from customers 38,382,261.14 37,250,941.51
Payroll payable 41,401,495.39 52,498,428.10
Taxes payable 1,373,036.64 6,587,374.37
Interest payable
Dividends payable 3,243,179.97 3,243,179.97
Other payables 182,738,709.26 194,596,980.96
Liabilities directly associated with assets classified as
held for sale
Current portion of non-current liabilities
Other current liabilities
Total current liabilities 1,150,383,671.62 1,142,130,913.98
Non-current liabilities:
Long-term borrowings 19,500,000.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payable
Specific payables
Provisions
Deferred revenue 60,992,858.46 61,057,232.08
Deferred income tax liabilities 90,894,450.00 109,949,700.00
Other non-current liabilities
Total non-current liabilities 171,387,308.46 171,006,932.08
69
Changchai Company, Limited Annual Report 2017
Total liabilities 1,321,770,980.08 1,313,137,846.06
Owners’ equity:
Share capital 561,374,326.00
Other equity instruments 561,374,326.00
Including: Preferred shares
Perpetual bonds
Capital reserves 183,071,147.70 183,071,147.70
Less: Treasury shares
Other comprehensive income 515,068,550.00 623,048,300.00
Specific reserve 13,289,059.21 11,715,417.22
Surplus reserves 313,705,210.16 311,880,248.88
Retained earnings 602,959,135.85 603,375,714.13
Total owners’ equity 2,189,467,428.92 2,294,465,153.93
Total liabilities and owners’ equity 3,511,238,409.00 3,607,602,999.99
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
70
Changchai Company, Limited Annual Report 2017
3. Consolidated Income Statement
Unit: RMB
Item 2017 2016
1. Revenue 2,423,058,958.29 2,283,028,855.52
Including: Operating revenue 2,423,058,958.29 2,283,028,855.52
Interest revenue
Premium revenue
Handling charge and commission revenue
2. Cost of revenue 2,412,300,893.20 2,217,112,902.09
Including: Cost of operating revenue 2,072,877,976.77 1,866,617,336.37
Interest expense
Handling charge and commission expense
Surrenders
Net claims paid
Net amount provided as insurance contract reserve
Expenditure on policy dividends
Reinsurance premium expense
Taxes and surtaxes 13,904,298.45 13,005,243.59
Selling expense 102,297,713.37 103,969,577.79
Administrative expense 184,550,915.26 207,582,213.98
Finance costs -2,290,794.39 -11,542,165.08
Asset impairment losses 40,960,783.74 37,480,695.44
Add: Gains on changes in fair value (“-” for losses)
Investment income (“-” for loss) 13,115,817.10 4,128,745.08
Including: Share of profit or loss of joint ventures and
236,925.27
associates
Foreign exchange gains (“-” for losses)
Asset disposal income (“-” for loss) 1,373,236.33 6,433,767.68
Other income 8,456,560.85
3. Operating income (“-” for loss) 33,703,679.37 70,044,698.51
Add: Non-operating income 22,907,878.36 9,156,923.41
Less: Non-operating expense 7,792,658.00 10,717,480.45
4. Pretax income (“-” for loss) 48,818,899.73 74,917,909.15
Less: Income tax expense 1,681,667.26 11,201,239.88
5. Net income (“-” for net loss) 47,137,232.47 63,716,669.27
5.1 Net income from continuing operations (“-” for net
47,137,232.47
loss)
5.2 Net income from discontinued operations (“-” for net
loss)
Attributable to owners of Parent Company 46,431,302.73 62,539,896.17
71
Changchai Company, Limited Annual Report 2017
Attributable to non-controlling interests 705,929.74 1,176,773.10
6. Other comprehensive income, net of tax -107,979,750.00 269,528,625.00
Attributable to owners of Parent Company -107,979,750.00 269,528,625.00
6.1 Items that will not be reclassified to profit or loss
6.1.1 Changes in net liabilities or assets caused by
remeasurements on defined benefit pension schemes
6.1.2 Share of other comprehensive income of
investees that will not be reclassified to profit or loss under
equity method
6.2 Items that may subsequently be reclassified to
-107,979,750.00 269,528,625.00
profit or loss
6.2.1 Share of other comprehensive income of
investees that will be reclassified to profit or loss under
equity method
6.2.2 Gains/Losses on changes in fair value of
-107,979,750.00 269,528,625.00
available-for-sale financial assets
6.2.3 Gains/Losses arising from reclassification of
held-to-maturity investments to available-for-sale financial
assets
6.2.4 Effective gains/losses on cash flow hedges
6.2.5 Differences arising from translation of foreign
currency-denominated financial statements
6.2.6 Other
Attributable to non-controlling interests
7. Total comprehensive income -60,842,517.53 333,245,294.27
Attributable to owners of Parent Company -61,548,447.27 332,068,521.17
Attributable to non-controlling interests 705,929.74 1,176,773.10
8. Earnings per share
8.1 Basic earnings per share 0.08 0.11
8.2 Diluted earnings per share 0.08 0.11
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
72
Changchai Company, Limited Annual Report 2017
4. Parent Company Income Statement
Unit: RMB
Item 2017 2016
1. Operating revenue 2,235,805,990.99 2,261,424,064.06
Less: Cost of operating revenue 1,931,679,323.68 1,872,397,292.00
Taxes and surtaxes 11,611,908.48 11,368,257.55
Selling expense 91,518,856.80 97,391,154.08
Administrative expense 166,602,546.60 192,068,868.64
Finance costs -5,269,152.69 -12,744,187.93
Asset impairment losses 36,843,390.33 36,296,470.30
Add: Gains on changes in fair value (“-” for losses)
Investment income (“-” for loss) 10,709,750.99 3,274,175.27
Including: Share of profit or loss of joint ventures and
236,925.27
associates
Asset disposal income (“-” for loss) 1,184,146.48
Other income 7,921,898.35
2. Operating income (“-” for loss) 22,634,913.61 67,920,384.69
Add: Non-operating income 1,324,306.44 14,298,854.08
Less: Non-operating expense 6,979,953.83 10,617,280.45
3. Pretax income (“-” for loss) 16,979,266.22 71,601,958.32
Less: Income tax expense -1,270,346.56 10,382,328.59
4. Net income (“-” for net loss) 18,249,612.78 61,219,629.73
4.1 Net income from continuing operations (“-” for net
18,249,612.78 61,219,629.73
loss)
4.2 Net income from discontinued operations (“-” for net
loss)
5. Other comprehensive income, net of tax -107,979,750.00 269,528,625.00
5.1 Items that will not be reclassified to profit or loss
5.1.1 Changes in net liabilities or assets caused by
remeasurements on defined benefit pension schemes
5.1.2 Share of other comprehensive income of investees
that will not be reclassified into profit or loss under equity
method
5.2 Items that may subsequently be reclassified to profit or
-107,979,750.00 269,528,625.00
loss
73
Changchai Company, Limited Annual Report 2017
5.2.1 Share of other comprehensive income of investees
that will be reclassified into profit or loss under equity
method
5.2.2 Gains/Losses on changes in fair value of
-107,979,750.00 269,528,625.00
available-for-sale financial assets
5.2.3 Gains/Losses arising from reclassification of
held-to-maturity investments to available-for-sale financial
assets
5.2.4 Effective gains/losses on cash flow hedges
5.2.5 Differences arising from translation of foreign
currency-denominated financial statements
5.2.6 Other
6. Total comprehensive income -89,730,137.22 330,748,254.73
7. Earnings per share
7.1 Basic earnings per share
7.2 Diluted earnings per share
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
74
Changchai Company, Limited Annual Report 2017
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2017 2016
1. Cash generated by or used in operating activities:
Proceeds from sale of commodities and rendering of services 2,340,135,466.05 2,449,124,878.50
Net increase in customer deposits and deposits from banks and
other financial institutions
Net increase in loans from central bank
Net increase in loans from other financial institutions
Premiums received on original insurance contracts
Net proceeds from reinsurance
Net increase in deposits and investments of policy holders
Net increase in proceeds from disposal of financial assets at fair
value through profit or loss
Interest, handling charges and commissions received
Net increase in interbank loans obtained
Net increase in proceeds from repurchase transactions
Tax rebates received 45,280,119.53 41,561,022.48
Cash generated by other operating activities 20,703,603.65 15,072,161.20
Subtotal of cash generated by operating activities 2,406,119,189.23 2,505,758,062.18
Payments for goods and services 2,068,207,850.42 1,900,783,453.31
Net increase in loans and advances to customers
Net increase in deposits in central bank and in interbank loans
granted
Payments for claims on original insurance contracts
Interest, handling charges and commissions paid
Policy dividends paid
Cash paid to and for employees 332,974,762.36 340,494,353.98
Taxes paid 38,505,023.00 64,165,805.35
Cash used in other operating activities 88,100,832.84 100,840,505.50
Subtotal of cash used in operating activities 2,527,788,468.62 2,406,284,118.14
Net cash flows from operating activities -121,669,279.39 99,473,944.04
2. Cash generated by or used in investing activities:
Proceeds from disinvestments 8,000,000.00 32,000,000.00
75
Changchai Company, Limited Annual Report 2017
Investment income received 11,364,613.67 3,891,819.81
Net proceeds from disposal of property, plant and equipment,
835,345.89 240,625.60
intangible assets and other long-lived assets
Net proceeds from disposal of subsidiaries or other business units
Cash generated by other investing activities 1,000,000.00 9,000,000.00
Subtotal of cash generated by investing activities 21,199,959.56 45,132,445.41
Payments for acquisition of property, plant and equipment,
57,507,086.97 59,310,667.45
intangible assets and other long-lived assets
Payments for investments 113,985,139.04 8,000,000.00
Net increase in pledged loans granted
Net payments for acquisition of subsidiaries and other business units 4,272,350.99
Cash used in other investing activities
Subtotal of cash used in investing activities 175,764,577.00 67,310,667.45
Net cash flows from investing activities -154,564,617.44 -22,178,222.04
3. Cash generated by or used in financing activities:
Capital contributions received
Including: Capital contributions by non-controlling interests to
subsidiaries
Increase in borrowings 51,900,000.00 15,000,000.00
Net proceeds from issuance of bonds
Cash generated by other financing activities
Subtotal of cash generated by financing activities 51,900,000.00 15,000,000.00
Repayment of borrowings 15,500,000.00 22,000,000.00
Payments for interest and dividends 18,180,577.83 13,715,123.57
Including: Dividends paid by subsidiaries to non-controlling interests
Cash used in other financing activities 18,707.55
Subtotal of cash used in financing activities 33,680,577.83 35,733,831.12
Net cash flows from financing activities 18,219,422.17 -20,733,831.12
4. Effect of foreign exchange rate changes on cash and cash
equivalents
5. Net increase in cash and cash equivalents -258,014,474.66 56,561,890.88
Add: Cash and cash equivalents, beginning of the period 583,278,129.09 526,716,238.21
6. Cash and cash equivalents, end of the period 325,263,654.43 583,278,129.09
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
76
Changchai Company, Limited Annual Report 2017
6. Parent Company Cash Flow Statement
Unit: RMB
Item 2017 2016
1. Cash generated by or used in operating activities:
Proceeds from sale of commodities and rendering of
2,272,196,372.83 2,508,387,008.21
services
Tax rebates received 29,635,115.60 41,561,022.48
Cash generated by other operating activities 16,533,875.78 11,890,841.69
Subtotal of cash generated by operating activities 2,318,365,364.21 2,561,838,872.38
Payments for goods and services 2,059,024,833.30 2,020,333,070.85
Cash paid to and for employees 277,811,436.98 301,052,336.85
Taxes paid 28,251,524.17 56,155,882.63
Cash used in other operating activities 81,615,494.68 93,256,112.12
Subtotal of cash used in operating activities 2,446,703,289.13 2,470,797,402.45
Net cash flows from operating activities -128,337,924.92 91,041,469.93
2. Cash generated by or used in investing activities:
Proceeds from disinvestments 20,000,000.00
Investment income received 10,709,750.99 3,037,250.00
Net proceeds from disposal of property, plant and
131,366.89 240,625.60
equipment, intangible assets and other long-lived assets
Net proceeds from disposal of subsidiaries or other
business units
Cash generated by other investing activities 1,000,000.00 9,000,000.00
Subtotal of cash generated by investing activities 11,841,117.88 32,277,875.60
Payments for acquisition of property, plant and equipment,
45,733,282.92 56,182,564.81
intangible assets and other long-lived assets
Payments for investments 126,280,000.00
Net payments for acquisition of subsidiaries and other
business units
Cash used in other investing activities
77
Changchai Company, Limited Annual Report 2017
Subtotal of cash used in investing activities 172,013,282.92 56,182,564.81
Net cash flows from investing activities -160,172,165.04 -23,904,689.21
3. Cash generated by or used in financing activities:
Capital contributions received
Increase in borrowings 20,000,000.00
Net proceeds from issuance of bonds
Cash generated by other financing activities
Subtotal of cash generated by financing activities 20,000,000.00
Repayment of borrowings 500,000.00
Payments for interest and dividends 17,084,535.34 12,911,609.50
Cash used in other financing activities
Sub-total of cash used in financing activities 17,584,535.34 12,911,609.50
Net cash flows from financing activities 2,415,464.66 -12,911,609.50
4. Effect of foreign exchange rate changes on cash and cash
equivalents
5. Net increase in cash and cash equivalents -286,094,625.30 54,225,171.22
Add: Cash and cash equivalents, beginning of the period 558,159,090.01 503,933,918.79
6. Cash and cash equivalents, end of the period 272,064,464.71 558,159,090.01
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
78
Changchai Company, Limited Annual Report 2017
7. Consolidated Statements of Changes in Owners’ Equity
2017
Unit: RMB
2017
Equity attributable to owners of Parent Company
Other equity instruments Other Non-con Total
Item Less:
Share Capital compreh Specific Surplus General Retained trolling owners’
Perpet Treasury
capital Preferred Ot reserves ensive reserve reserves reserve earnings interests equity
ual shares
shares her income
bonds
561,37
1. Balances as of end 164,328, 623,048, 11,715,4 311,880, 651,365, 18,767,2 2,342,48
4,326.
of prior year 665.43 300.00 17.22 248.88 935.39 26.57 0,119.49
00
Add: Adjustments for
changed accounting
policies
Adjustments for
corrections of
previous errors
Adjustments for
business mergers
under same control
Other adjustments
561,37
2. Balances as of 164,328, 623,048, 11,715,4 311,880, 651,365, 18,767,2 2,342,48
4,326.
beginning of the year 665.43 300.00 17.22 248.88 935.39 26.57 0,119.49
00
3. Increase/ decrease -107,979 1,573,64 1,824,96 27,765,1 705,929. -76,110,
in the period (“-” for ,750.00 1.99 1.28 11.67 74 105.32
79
Changchai Company, Limited Annual Report 2017
decrease)
3.1 Total
-107,979 46,431,3 705,929. -60,842,
comprehensive
,750.00 02.73 74 517.53
income
3.2 Capital
increased and reduced
by owners
3.2.1 Common
shares increased by
shareholders
3.2.2 Capital
increased by holders
of other equity
instruments
3.2.3
Share-based payments
included in owners’
equity
3.2.4 Other
3.3 Profit 1,824,96 -18,666, -16,841,
distribution 1.28 191.06 229.78
3.3.1
1,824,96 -1,824,9
Appropriation to
1.28 61.28
surplus reserves
3.3.2
Appropriation to
general reserve
3.3.3 -16,841, -16,841,
Appropriation to 229.78 229.78
80
Changchai Company, Limited Annual Report 2017
owners (or
shareholders)
3.3.4 Other
3.4 Carryforwards
within owners’ equity
3.4.1 Increase in
capital (or share
capital) from capital
reserves
3.4.2 Increase in
capital (or share
capital) from surplus
reserves
3.4.3 Surplus
reserves used to make
up losses
3.4.4 Other
1,573,64 1,573,64
3.5 Specific reserve
1.99 1.99
3.5.1 Withdrawn 4,161,42 4,161,42
for the period 4.06 4.06
3.5.2 Used 2,587,78 2,587,78
during the period 2.07 2.07
3.6 Other
561,37
4. Balances as of end 164,328, 515,068, 13,289,0 313,705, 679,131, 19,473,1 2,266,37
4,326.
of the period 665.43 550.00 59.21 210.16 047.06 56.31 0,014.17
00
Legal representative: Shi Xinkun General Manager: Zhang Xin Head of the accounting department: Jiang He
81
Changchai Company, Limited Annual Report 2017
2016
Unit: RMB
2016
Equity attributable to owners of Parent Company
Other equity
Other Non-con Total
Item instruments Less:
Share Capital compreh Specific Surplus General Retained trolling owners’
Preferr Perpet O Treasury
capital reserves ensive reserve reserves reserve earnings interests equity
ed ual th shares
income
shares bonds er
1. Balances as of end of 561,374,3 164,328, 353,519, 10,069,7 305,758, 607,859, 17,590,4 2,020,50
prior year 26.00 665.43 675.00 46.98 285.91 611.69 53.47 0,764.48
Add: Adjustments for
changed accounting
policies
Adjustments for
corrections of previous
errors
Adjustments for
business mergers under
same control
Other adjustments
2. Balances as of 561,374,3 164,328, 353,519, 10,069,7 305,758, 607,859, 17,590,4 2,020,50
beginning of the year 26.00 665.43 675.00 46.98 285.91 611.69 53.47 0,764.48
3. Increase/ decrease in
269,528, 1,645,67 6,121,96 43,506,3 1,176,77 321,979,
the period (“-” for
625.00 0.24 2.97 23.70 3.10 355.01
decrease)
3.1 Total 269,528, 62,539,8 1,176,77 333,245,
82
Changchai Company, Limited Annual Report 2017
comprehensive income 625.00 96.17 3.10 294.27
3.2 Capital increased
and reduced by owners
3.2.1 Common
shares increased by
shareholders
3.2.2 Capital
increased by holders of
other equity
instruments
3.2.3 Share-based
payments included in
owners’ equity
3.2.4 Other
6,121,96 -19,033, -12,911,
3.3 Profit distribution
2.97 572.47 609.50
3.3.1
6,121,96 -6,121,9
Appropriation to
2.97 62.97
surplus reserves
3.3.2
Appropriation to
general reserve
3.3.3
Appropriation to -12,911, -12,911,
owners (or 609.50 609.50
shareholders)
3.3.4 Other
3.4 Carryforwards
within owners’ equity
83
Changchai Company, Limited Annual Report 2017
3.4.1 Increase in
capital (or share capital)
from capital reserves
3.4.2 Increase in
capital (or share capital)
from surplus reserves
3.4.3 Surplus
reserves used to make
up losses
3.4.4 Other
1,645,67 1,645,67
3.5 Specific reserve
0.24 0.24
3.5.1 Withdrawn 4,416,86 4,416,86
for the period 5.61 5.61
3.5.2 Used during 2,771,19 2,771,19
the period 5.37 5.37
3.6 Other
4. Balances as of end of 561,374,3 164,328, 623,048, 11,715,4 311,880, 651,365, 18,767,2 2,342,48
the period 26.00 665.43 300.00 17.22 248.88 935.39 26.57 0,119.49
Legal representative: Shi Xinkun General Manager: Zhang Xin Head of the accounting department: Jiang H
84
Changchai Company, Limited Annual Report 2017
8. Parent Company Statements of Changes in Owners’ Equity
2017
Unit: RMB
2017
Other equity instruments Other
Less: Total
Item Share Capital comprehen Specific Surplus Retained
Preferre Perpetua Treasury owners’
capital Other reserves sive reserve reserves earnings
d shares l bonds shares equity
income
1. Balances as of end 561,374, 183,071,14 623,048,30 11,715,417 311,880,24 603,375, 2,294,465,
of prior year 326.00 7.70 0.00 .22 8.88 714.13 153.93
Add: Adjustments for
changed accounting
policies
Adjustments for
corrections of
previous errors
Other adjustments
2. Balances as of 561,374, 183,071,14 623,048,30 11,715,417 311,880,24 603,375, 2,294,465,
beginning of the year 326.00 7.70 0.00 .22 8.88 714.13 153.93
3. Increase/ decrease
-107,979,7 1,573,641. 1,824,961. -416,578 -104,997,7
in the period (“-” for
50.00 99 28 .28 25.01
decrease)
3.1 Total
-107,979,7 18,249,6 -89,730,13
comprehensive
50.00 12.78 7.22
income
3.2 Capital
85
Changchai Company, Limited Annual Report 2017
increased and reduced
by owners
3.2.1 Common
shares increased by
shareholders
3.2.2 Capital
increased by holders
of other equity
instruments
3.2.3
Share-based payments
included in owners’
equity
3.2.4 Other
3.3 Profit 1,824,961. -18,666, -16,841,22
distribution 28 191.06 9.78
3.3.1
1,824,961. -1,824,9
Appropriation to
28 61.28
surplus reserves
3.3.2
Appropriation to -16,841, -16,841,22
owners (or 229.78 9.78
shareholders)
3.3.3 Other
3.4 Carryforwards
within owners’ equity
3.4.1 Increase in
capital (or share
capital) from capital
86
Changchai Company, Limited Annual Report 2017
reserves
3.4.2 Increase in
capital (or share
capital) from surplus
reserves
3.4.3 Surplus
reserves used to make
up losses
3.4.4 Other
1,573,641. 1,573,641.
3.5 Specific reserve
99 99
3.5.1 Withdrawn 4,161,424. 4,161,424.
for the period 06 06
3.5.2 Used 2,587,782. 2,587,782.
during the period 07 07
3.6 Other
4. Balances as of end 561,374, 183,071,14 515,068,55 13,289,059 313,705,21 602,959, 2,189,467,
of the period 326.00 7.70 0.00 .21 0.16 135.85 428.92
Legal representative: Shi Xinkun General Manager: Zhang Xin Head of the accounting department: Jiang He
87
Changchai Company, Limited Annual Report 2017
2016
Unit: RMB
2016
Other equity instruments Other
Less: Total
Item Share Capital comprehen Specific Surplus Retained
Preferre Perpetua Treasury owners’
capital Other reserves sive reserve reserves earnings
d shares l bonds shares equity
income
1. Balances as of end 561,374, 183,071,14 353,519,67 10,069,746 305,758,28 561,189, 1,974,982,
of prior year 326.00 7.70 5.00 .98 5.91 656.87 838.46
Add: Adjustments for
changed accounting
policies
Adjustments for
corrections of
previous errors
Other adjustments
2. Balances as of 561,374, 183,071,14 353,519,67 10,069,746 305,758,28 561,189, 1,974,982,
beginning of the year 326.00 7.70 5.00 .98 5.91 656.87 838.46
3. Increase/ decrease
269,528,62 1,645,670. 6,121,962. 42,186,0 319,482,3
in the period (“-” for
5.00 24 97 57.26 15.47
decrease)
3.1 Total
269,528,62 61,219,6 330,748,2
comprehensive
5.00 29.73 54.73
income
3.2 Capital
increased and reduced
by owners
3.2.1 Common
88
Changchai Company, Limited Annual Report 2017
shares increased by
shareholders
3.2.2 Capital
increased by holders
of other equity
instruments
3.2.3
Share-based payments
included in owners’
equity
3.2.4 Other
3.3 Profit 6,121,962. -19,033, -12,911,60
distribution 97 572.47 9.50
3.3.1
6,121,962. -6,121,9
Appropriation to
97 62.97
surplus reserves
3.3.2
Appropriation to -12,911, -12,911,60
owners (or 609.50 9.50
shareholders)
3.3.3 Other
3.4 Carryforwards
within owners’ equity
3.4.1 Increase in
capital (or share
capital) from capital
reserves
3.4.2 Increase in
capital (or share
89
Changchai Company, Limited Annual Report 2017
capital) from surplus
reserves
3.4.3 Surplus
reserves used to make
up losses
3.4.4 Other
1,645,670. 1,645,670.
3.5 Specific reserve
24 24
3.5.1 Withdrawn 4,416,865. 4,416,865.
for the period 61 61
3.5.2 Used 2,771,195. 2,771,195.
during the period 37 37
3.6 Other
4. Balances as of end 561,374, 183,071,14 623,048,30 11,715,417 311,880,24 603,375, 2,294,465,
of the period 326.00 7.70 0.00 .22 8.88 714.13 153.93
Legal representative: Shi Xinkun General Manager: Zhang Xin Head of the accounting department: Jiang He
90
Changchai Company, Limited Annual Report 2017
III. Company Profile
Changchai Company, Limited (hereinafter referred to as “the Company”) was founded on 5 May 1994, which
is a company limited by shares promoted solely by Changzhou Diesel Engine Plant through the approval by the
State Commission for Restructuring the Economic Systems with document TGS [1993] No. 9 on 15 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 RMB0.8 for every 10 shares, with registered capital
increased by RMB187,124,775.00, as well as registered capital of RMB561,374,326.00 after change. As at 31 Dec.
2015, the total share capital of the Company is 561,374,326.00 shares, as well as registered capital of
RMB561,374,326.00, which verified by Jiangsu Gongzheng Tianye Certified Public Accountants Company
Limited with issuing Capital Verification Report SGC [2010] No. B002. And the unified social credit code of the
enterprise business license of the Company is 91320400134792410W.
The Company’s registered address is situated at No. 123 Huaide Middle Road, Changzhou, Jiangsu, as well
as its head office located at No. 123 Huaide Middle Road, Changzhou, Jiangsu.
The Company belongs to manufacturing with business scope including manufacturing and sale of diesel
engine, diesel engines part and casting, grain harvesting machine, rotary cultivators, walking tractor, mould and
fixtures, assembling and sale of diesel generating set and pumping unit. The Company mainly engaged in the
production and sales of small and medium-sized single cylinders and multi-cylinder diesel engine with the label of
Changchai Brand. The diesel engine produced and sold by the Company were mainly used in tractors, combine
harvest models, light commercial vehicle, farm equipment, small-sized construction machinery, generating sets
and shipborne machinery and equipment, etc. The Company’s main business remained unchanged in the
Reporting Period.
The Company established the Shareholders’ General Meeting, the Board of Directors and the 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 April 11, 2018.
The consolidated scope of the Company of the Reporting Period includes the parent company and 5
subsidiaries. For the details of the consolidated scope of the Reporting Period and the changes situation, please
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refer to the changes of the consolidated scope of the notes to the financial report and the notes to the equities
among other entities.
IV. Basis for Preparation of the Financial Report
1. Basis for Preparation
With the going-concern assumption as the basis and based on transactions and other events that actually
occurred, the Group prepared financial statements in accordance with The Accounting Standards for Business
Enterprises—Basic Standard issued by the Ministry of Finance with Decree No. 33 and revised with Decree No.
76, the 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
Does the Company need to comply with the disclosure requirements of special industry?
No
Notification of specific accounting policies and accounting estimations:
The Company and each subsidiary according to the actual production and operation characteristics and in
accord with the regulations of the relevant ASBE, formulated certain specific accounting policies and accounting
estimations, which mainly reflected in the withdrawal method of the bad debt provision of the accounts receivable
(Notes III, 11), the measurement of the inventory (Notes III, 12) and the depreciation of the fixed assets (Notes III,
16) etc. As for the details of the significant accounting judgment and the estimations made by the management
layer, please refer to Notes III, 30 “Important accounting judgment and estimations”.
1. Statement of Compliance with the Accounting Standards for Business Enterprises
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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 January 1 to December
31 and as the metaphase included monthly, quarterly and semi-yearly periods.
3. Operating Cycle
A normal operating cycle refers to a period from the Group purchasing assets for processing to realizing cash
or cash equivalents. An operating cycle for the Group is 12 months, which is also the classification criterion for
the liquidity of its assets and liabilities.
4. Currency Used in Bookkeeping
Renminbi is functional currency of the Company.
5. Accounting Methods for Business Combinations under the Same Control and Business Combinations not
under the Same Control
(1) Business combinations under the same control:
A business combination under the same control is a business combination in which all of the combining
enterprises are ultimately controlled by the same party or the same parties both before and after the business
combination and on which the control is not temporary.
For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it
makes payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share
of the book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity
investment. The difference between the initial cost of the long-term equity investment and the payment in cash,
non-cash assets transferred as well as the book value of the debts borne by the merging party shall offset against
the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.
If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger,
regard the share of the book value of the owner's equity of the merged enterprise as the initial cost of the
long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while
the difference between the initial cost of the long-term equity investment and total face value of the shares issued
shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be
adjusted.
All direct costs for the business combination, including expenses for audit, evaluating and legal services shall
be recorded into the profits and losses at the current period. The expenses such as the handling charges and
commission etc, premium income of deducting the equity securities, and as for the premium income was
insufficient to dilute, the retained earnings shall be written down.
Owning to the reasons such as the additional investment, for the equity investment held before acquiring the
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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.
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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 loss of control, when the
Group losing control on its subsidiary.
For the disposal of the equity investment not belongs to a package deal, should be executed accounting
treatment according to the relevant policies of partly disposing the equity investment of the subsidiaries under the
situation not lose the control right before losing the control right; when losing the control right, the former should
be executed accounting treatment according to the general disposing method of the disposal of the subsidiaries.
7. Classification of Joint Arrangements and Accounting Treatment of Joint Operations
The Group classifies joint arrangements into joint operations and joint ventures。
A joint operation refers to a joint arrangement where the Group is the joint operations party of the joint
arrangement and enjoys assets and has to bear liabilities related to the arrangement. The Company confirms the
following items related to the interests share among the joint operations and executes accounting treatment
according to the regulations of the relevant ASBE:
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(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.
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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
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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.
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Where a sellable financial asset is impaired, even if the recognition of the financial asset has not been
terminated, the accumulative losses arising from the decrease of the fair value of the owner’s equity which is
directly included shall be transferred out and recorded into the profits and losses of the current period.. The
accumulative losses are the initial cost after deducting the principal, the amortization amount, fair value of current
period and balance after originally recorded into impairment loss of profits or losses. After the recognition of
impairment losses, if there is any objective evidence indicated that the value of financial assets is resumed and
objectively related to the events after the recognition of impairment losses, transfer the impairment losses
originally recognized, transfer the impairment losses of available for sale equity instrument investment and
recognized as other comprehensive income, and transfer the impairment losses of available for sale liability
instruments and record into current profits or losses.
11. Receivables
(1) Accounts Receivable with Significant Single Amount for which the Bad Debt Provision is Made
Individually
Significant single amounts refers to the accounts
Recognition criteria of accounts receivable with receivable of the single amount more than RMB 1
individual and significant amount million (RMB 1 million include) (including accounts
receivable and other accounts receivable)
The Company makes an independent impairment
test on the accounts receivable with significant single
amount, and provision for bad debts shall withdrawn
on the basis of the balance between the current values
Withdrawal method of the bad debt provision of the of the predicted future cash flow lower than book
accounts receivable with significant single amounts 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) Accounts Receivable which the Bad Debt Provision is withdrawn by Credit Risk Characteristics
Group name Withdrawal method of bad debt provision
the age of the accounts receivable is divided by the groups
aging analysis method
of credit risk
In the groups, those adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Withdrawal proportion of account Withdrawal proportion of other
Aging
receivables account receivables
Within 1 year (including 1 year) 2.00% 2.00%
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1 to 2 years 5.00% 5.00%
2 to 3 years 15.00% 15.00%
3 to 4 years 30.00% 30.00%
4 to 5 years 60.00% 60.00%
Over 5 years 100.00% 100.00%
In the groups, those adopting balance percentage method to withdraw bad debt provision
□ Applicable √ Not applicable
In the groups, those adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
(3) Accounts Receivable with an Insignificant Single Amount but for which the Bad Debt Provision is Made
Independently
Insignificant single amounts refers to the accounts
Reason of individually withdrawing bad debt receivable of the single amount lower than RMB 1 million
provision (RMB1 million not include) (including accounts receivable
and other accounts receivable).
As for an account receivable with an insignificant single
amount and which can not show its risk feature when
withdrawing a bad-bet provision for it on the group basis,
the bad-debt provision for the account receivable shall be
withdrawn based on the difference of the expected present
Withdrawal method for bad debt provision 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.
12. Inventory
Is the Company subject to any disclosure requirements for special industries?
No
(1) Category of Inventory
Inventory refers to the held-for-sale finished products or commodities, goods in process, materials consumed
in the production process or the process providing the labor service etc. Inventory is mainly including the raw
materials, low priced and easily worn articles, unfinished products, inventories and work in process–outsourced
etc.
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(2) Pricing method
Purchasing and storage of the various inventories should be valued according to the planed cost and the
dispatch be calculated according to the weighted average method; carried forward the cost of the finished products
according to the actual cost of the current period and the sales cost according to the weighted average method.
(3) Determination basis of the net realizable value of inventory and withdrawal method of the provision for
falling price of inventory
At the balance sheet date, inventories are measured at the lower of the costs and net realizable value. When
all the inventories are checked roundly, for those which were destroyed, outdated in all or in part, sold at a loss,
etc, the Company shall estimate the irrecoverable part of its cost and withdrawal the inventory falling price
reserve at the year-end. Where the cost of the single inventory item is higher than the net realizable value, the
inventory falling price reserve shall be withdrawn and recorded into profits and losses of the current period. Of
which: in the normal production and operating process, as for the commodities inventory directly for sales such as
the finished products, commodities and the materials for sales, should recognize the net realizable value according
to the amount of the estimated selling price of the inventory minuses the estimated selling expenses and the
relevant taxes; as for the materials inventory needs to be processed in the normal production and operating process,
should recognize its net realizable value according to the amount of the estimated selling price of the finished
products minuses the cost predicts to be occur when the production completes and the estimated selling expenses
as well as the relevant taxes; on the balance sheet date, for the same inventory with one part agreed by the
contract price and other parts not by the contract price, should be respectively recognized the net realizable value.
For items of inventories relating to a product line that are produced and marketed in the same geographical area,
have the same or similar end users or purposes, and cannot be practicably evaluated separately from other items in
that product line provision for decline in value is determined on an aggregate basis; for large quantity and low
value items of inventories, provision for decline in value is made based on categories of inventories.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method of low-value consumables and packages
One time amortization method is adopted for low-value consumables and packages.
13. Assets Held for Sale
The Company recognizes the components (or the non-current assets) which meet with the following
conditions as assets held for sale:
(1) The components must be immediately sold only according to the usual terms of selling this kind of
components under the current conditions;
(2) The Company had made solutions on disposing the components (or the non-current assets), for example,
the Company should gain the approval from the shareholders according to the regulations and had acquired the
approved from the Annual General Meeting or the relevant authority institutions;
(3) The Company had signed the irrevocable transformation agreement with the transferee;
(4) The transformation should be completed within 1 year.
14. Long-term Equity Investments
(1) Judgment standard of joint control and significant influences
Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement by
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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.
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(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 policy adopted by the investees is not accord with that of the Group, should be adjusted
according to the accounting policies of the Group and the financial statement of the investees during the
accounting period and according which to recognize the investment income as well as other comprehensive
income.
For the transaction happened between the Company and associated enterprises as well as joint ventures, if the
assets launched or sold not form into business, the portion of the unrealized gains and losses of the internal
transaction, which belongs to the Group according to the calculation of the enjoyed proportion, should recognize
the investment gains and losses on the basis. But the losses of the unrealized internal transaction happened
between the Company and the investees which belongs to the impairment losses of the transferred assets, should
not be neutralized.
The Company shall recognize the net losses of the invested enterprise according to the following sequence:
first of all, to write down the book value of the long-term equity investment. Secondly, if the book value of the
long-term equity investment is insufficient for written down, should be continued to recognized the investment
losses limited to the book value of other long-term equity which forms of the net investment of the investees and
to written down the book value of the long-term accounts receivable etc. Lastly, through the above handling, for
those should still undertake the additional obligations according to the investment contracts or the agreements, it
shall be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into
investment losses at current period. If the invested entity realizes any net profits later, the Group shall, after the
amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume
recognizing its attributable share of profits.
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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
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disposed remained equity should change to calculate according to the recognition and measurement standards of
financial instrument, and difference between the fair value and book value on the date lose the control right should
be included in the current gains and losses. For the other comprehensive income recognized from the original
equity investment by adopting the equity method, should execute the accounting disposal by adopting the same
basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when
terminate the equity method for measurement, while for the owners’ equity recognized owning to the changes of
the other owner’s equity except for the net gains and losses, other comprehensive income and the profits
distribution of the investees, should be transferred into the current investment income with full amount when
terminate adopting the equity method.
15. Investment Real Estate
Measurement mode of investment real estate:
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 estate invested by investors shall be recorded at the value stipulated in the
investment contracts or agreements, but the unfair value appointed in the contract or agreement shall be entered
into the account book at the fair value.
As for withdrawal basis of provision for impairment of investment real estates, please refer to withdrawal
method for provision for impairment of fixed assets.
16. Fixed Assets
(1) Recognition Conditions
Fixed assets refers to the tangible assets that simultaneously possess the features as follows: (a) they are held
for the sake of producing commodities, rendering labor service, renting or business management; and (b) their
useful life is in excess of one fiscal year. The fixed assets are only recognized when the relevant economic
benefits probably flow in the Company and its cost could be reliable measured.
(2) Depreciation Method
Expected net
Category of fixed assets Method Useful life Annual deprecation
salvage value
Housing and building Average method of useful life 20-40 2.50%-5%
Machinery equipment Average method of useful life 6-15 6.67%-16.67%
Transportation
Average method of useful life 5-10 10%-20%
equipment
Electronic equipment Average method of useful life 5-10 10%-20%
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(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 Progress
Is the Company subject to any disclosure requirements for special industries?
No
(1) Valuation of the progress in construction
Construction in progress shall be measured at actual cost. Self-operating projects shall be measured at direct
materials, direct wages and direct construction fees; construction contract shall be measured at project price
payable; project cost for plant engineering shall be recognized at value of equipments installed, cost of installation,
trail run of projects. Costs of construction in process also include borrowing costs and exchange gains and losses,
which should be capitalized.
(2) Standardization on construction in process transferred into fixed assets and time point
The construction in process, of which the fixed assets reach to the predicted condition for use, shall carry
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forward fixed assets on schedule. The one that has not audited the final accounting shall recognize the cost and
make depreciation in line with valuation value. The construction in process shall adjust the original valuation
value at its historical cost but not adjust the depreciation that has been made after auditing the final accounting.
18. Borrowing Costs
(1) Recognition principle of capitalization of borrowing costs
The borrowing costs shall include the interest on borrowings, amortization of discounts or premiums on
borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. Where the borrowing
costs occurred belong to specifically borrowed loan or general borrowing used for the acquisition and construction
of investment real estates and inventories over one year (including one year) shall be capitalized, and record into
relevant assets cost. Other borrowing costs shall be recognized as expenses on the basis of the actual amount
incurred, and shall be recorded into the current profits and losses. The borrowing costs shall not be capitalized
unless they simultaneously meet the following three requirements: (1) The asset disbursements have already
incurred; (2) The borrowing costs have already incurred; and (3) The acquisition and construction or production
activities which are necessary to prepare the asset for its intended use or sale have already started.
(2) The period of capitalization of borrowing costs
The borrowing costs arising from acquisition and construction of fixed assets, investment real estates and
inventories, if they meet the above-mentioned capitalization conditions, the capitalization of the borrowing costs
shall be measured into asset cost before such assets reach to the intended use or sale, Where acquisition and
construction of fixed assets, investment real estates and inventories is interrupted abnormally and the interruption
period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended, and recorded
into the current expense, till the acquisition and construction of the assets restarts. When the qualified asset is
ready for the intended use or sale, the capitalization of the borrowing costs shall be ceased, the borrowing costs
occurred later shall be included into the financial expense directly at the current period.
(3) Measurement method of capitalization amount of borrowing costs
As for specifically borrowed loans for the acquisition and construction or production of assets eligible for
capitalization, the to-be-capitalized amount of interests shall be determined in light of the actual cost incurred of
the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing
loans as a deposit in the bank or as a temporary investment.
Where a general borrowing is used for the acquisition and construction or production of assets eligible for
capitalization, the enterprise shall calculate and determine the to-be-capitalized amount of interests on the general
borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset
disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The
capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general
borrowing.
19. Intangible Assets
(1) Pricing Method, Service Life, and Impairment Test
(1) Pricing method of intangible assets
Intangible assets purchased should take the actual payment and the relevant other expenses as the actual cost.
For the intangible assets invested by the investors should be recognized the actual cost according to the value
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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.
(2) Accounting Polices of Internal R & D Expenses
The internal research and development projects of an enterprise shall be classified into research phase and
development phase: the term “research” refers to the creative and planned investigation to acquire and understand
new scientific or technological knowledge; the term “development” refers to the application of research
achievements and other knowledge to a certain plan or design, prior to the commercial production or use, so as to
produce any new material, device or product, or substantially improved material, device and product.
The Company collects the expenses of the corresponding phases according to the above standard of
classifying the research phase and the development phase. The research expenditures for its internal research and
development projects of an enterprise shall be recorded into the profit or loss for the current period. The
development expenditures for its internal research and development projects of an enterprise may be capitalized
when they satisfy the following conditions simultaneously: it is feasible technically to finish intangible assets for
use or sale; it is intended to finish and use or sell the intangible assets; the usefulness of methods for intangible
assets to generate economic benefits shall be proved, including being able to prove that there is a potential market
for the products manufactured by applying the intangible assets or there is a potential market for the intangible
assets itself or the intangible assets will be used internally; it is able to finish the development of the intangible
assets, and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources
and other resources; the development expenditures of the intangible assets can be reliably measured.
20. Impairment of Long-term Assets
For non-current financial Assets of fixed Assets, projects under construction, intangible Assets with limited
service life, investing real estate with cost model, long-term equity investment of subsidiaries, cooperative
enterprises and joint ventures, the Group should judge whether decrease in value exists on the date of balance
sheet. Recoverable amounts should be tested for decrease in value if it exists. Other intangible Assets of reputation
and uncertain service life and other non-accessible intangible assets should be tested for decrease in value no
matter whether it exists.
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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
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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.
(4) Accounting Treatment of the Welfare of Other Long-term Staffs
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;
③ The amount of the obligation can be measured in a reliable way.
(2) Measurement of estimated liabilities
The Company shall measure the estimated debts in accordance with the best estimate of the necessary
expenses for the performance of the current obligation.
The Company shall check the book value of the estimated debts on the Balance Sheet Date. If there is any
conclusive evidence proving that the said book value can’t truly reflect the current best estimate, the Company
shall, subject to change, make adjustment to carrying value to reflect the current best estimate.
24. Revenue
Is the Company subject to any disclosure requirements for special industries?
No
(1) Recognition of revenue from sale of goods: the revenue from selling shall be recognized by the following
conditions: The significant risks and rewards of ownership of the goods have been transferred to the buyer by the
Company; the Company retains neither continuous management right that usually keeps relation with the
ownership nor effective control over the sold goods; the relevant amount of revenue can be measured in a reliable
way; the relevant revenue and costs of selling goods can be measured in a reliable way. The amount of the revenue
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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) Judgment Basis and Accounting Treatment of Government Subsidies Related to Assets
A government subsidy means the monetary or non-monetary assets obtained free by an enterprise from the
government. Government subsidies consist of the government subsidies pertinent to assets and government
subsidies pertinent to income according to the relevant government documents.
For those the government documents not definite stipulate the assistance object, the judgment basis of the
Company classifies the government subsidies pertinent to assets and government subsidies pertinent to income is:
whether are used for purchasing or constructing or for forming the long-term assets by other methods.
The government subsidies should be recognized only when meet with the attached conditions of the
government subsidies as well as could be acquired.
If the government subsidies are the monetary assets, should be measured according to the received or
receivable amount; and for the government subsidies are the non-monetary assets, should be measured by fair
value.
The government subsidies pertinent to assets shall be recognized as deferred income, and included in the
current gains and losses or offset the book value of related assets within the useful lives of the relevant assets with
a reasonable and systematic method.
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(2) Judgment Basis and Accounting Treatment of Government Subsidies Pertinent to Incomes
Government subsidies used to compensate the relevant costs, expenses or losses of the Company in the
subsequent period shall be recognized as deferred income, and shall be included in the current profit and loss
during the period of confirming the relevant costs, expenses or losses; those used to compensate the relevant costs,
expenses or losses of the Company already happened shall be included in the current gains and losses or used to
offset relevant costs directly.
For government subsidies that include both assets-related and income-related parts, they should be
distinguished separately for accounting treatment; for government subsidies that are difficult to be distinguished,
they should be classified as income-related.
Government subsidies related to the daily activities of the Company shall be included into other income or
used to offset relevant costs by the nature of economic business; those unrelated shall be included into
non-operating income.
The government subsidies recognized with relevant deferred income balance but need to return shall be used
to offset the book balance of relevant deferred income, the excessive part shall be included in the current gains
and losses or adjusting the book value of assets for the government subsidies assets-related that offset the book
value of relevant assets when they are initially recognized; those belong to other cases shall be directly included in
the current gains and losses.
26. Deferred Income Tax Assets and Liabilities
(1) Basis of recognizing the deferred income tax assets
According to the difference between the book value of the assets and liabilities and their tax basis, A deferred
tax assets shall be measured in accord with the tax rates that are expected to apply to the period when the asset is
realized or the liability is settled.
The recognition of the deferred income tax assets is limited by the income tax payable that the Company
probably gains for deducting the deductible temporary differences. At the balance sheet date, where there is strong
evidence showing that sufficient taxable profit will be available against which the deductible temporary difference
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
112
Changchai Company, Limited Annual Report 2017
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.
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The “hedged item” shall refer to the following items which make an enterprise faced to changes in fair value
or cash flow and are designated as the hedged objectives.
The hedging should be executed by the hedging accounting methods when satisfying the following
conditions at the same time:
① At the commencement of the hedging, the enterprise shall specify the hedging relationship formally
(namely the relationship between the hedging instrument and the hedged item) and prepare a formal written
document on the hedging relationship, risk management objectives and the strategies of hedging.
② The hedging expectation is highly efficient and meets the risk management strategy, which is confirmed
for the hedging relationship by enterprise at the very beginning.
③ For a cash flow hedging of forecast transaction, the forecast transaction shall be likely to occur and shall
make the enterprise faced to the risk of changes in cash flow, which will ultimately affect the profits and losses.
④ The effectiveness of hedging can be reliably measured.
⑤ The hedging is highly effective in accounting period in which the hedging relationship is specified.
29. Changes in Main Accounting Policies and Estimates
(1) Change of Accounting Policies
√ Applicable □ Not applicable
Content and reason for changes Approval procedures Remark
The Ministry of Finance released Accounting Standards for Business Reviewed and approved
Enterprises No. 42—Held-for-sale Non-current Assets, Disposal on the 11th Meeting of the
Groups and Discontinued Operation on April 28, 2017 which the 8th Board of Directors and
Company began to execute on May 28, 2017. This change of on the 9th Meeting of the
accounting policies was adjusted by prospective application. 8th Supervisory Board
The Ministry of Finance released Notice on Revising and Issuing the
Format of Financial Statement for General Enterprises on Dec. 25,
Reviewed and approved
2017 in which the amendment to the format of financial statements
on the 11th Meeting of the
for general enterprises was made, changing the presentation of gains
8th Board of Directors and
and losses arising from disposal of non-current assets from being
on the 9th Meeting of the
originally listed under Non-operating Revenues and Non-operating
8th Supervisory Board
Expenses into listed under Gains from Asset Disposal. This change
of accounting policy was adjusted by retrospective application.
The Ministry of Finance released the notice on revising Accounting
Standards for Business Enterprises No. 16—Government Subsidy Reviewed and approved
(CK [2017] No. 15) on May 10, 2017 which the Company began to on the 6th Meeting of the
execute on June 12, 2017. The government subsidies existing on Jan. 8th Board of Directors and
1, 2017 were treated by prospective applicable. While, those newly on the 6th Meeting of the
added from Jan. 1, 2017 to the executive date of the new code were 8th Supervisory Board
adjusted in line with the new code.
As for the item of Gains Arising from Asset Disposal newly added in the profit statement, the Company
adjusted the comparable data during the comparable period in line with the Notice according to regulations
114
Changchai Company, Limited Annual Report 2017
stipulated in Accounting Standards for Business Enterprises No. 30-Presentation of Financial Statements.
As for the item of Other Income newly added in the profit statement, the Company treated the government
subsidies existing on Jan. 1, 2017 by prospective application without the necessity to adjust the comparable data
in the comparable period in accordance with the governing regulations stipulated in Accounting Standards for
Business Enterprises No. 16-Government Subsidy.
Due to the retrospective adjustment of Gains Arising from Asset Disposal, the influence on the items in the
financial statements for 2016 was presented as follows: non-operating revenues in 2016 were decreased
RMB6,445,469.06; gains arising from asset disposal were increased RMB6,445,469.06; non-operating expenses
in 2016 were decreased RMB11,701.38; and gains arising from asset disposal were decreased RMB11,701.38.
(2) Significant Changes in Accounting Estimates
□ Applicable √ Not applicable
30. Other
Critical accounting judgments and estimates
Due to the inside uncertainty of operating activity, the Group needed to make judgments, estimates and
assumption on the book value of the accounts without accurate measurement during the employment of
accounting policies. And these judgments, estimates and assumption were made basing on the prior experience of
the senior executives of the Group, as well as in consideration of other factors. These judgments, estimates and
assumption would also affect the report amount of income, costs, assets and liabilities, as well as the disclosure of
contingent liabilities on balance sheet date. However, the uncertainty of these estimates was likely to cause
significant adjustment on the book value of the affected assets and liabilities.
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
115
Changchai Company, Limited Annual Report 2017
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.
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Changchai Company, Limited Annual Report 2017
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 Taxes
1. Main Taxes and Tax Rates
Type of tax Taxation basis Tax rates
VAT Payable to sales revenue 11%、13%、17%
Urban maintenance and Tax paid in accordance with the
Taxable turnover amount
construction tax tax regulations of tax units location
Enterprise income tax Taxable income 25% or15%
Educational surtax Taxable turnover amount 5%
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
Taxpayer Income tax rate
Changchai Co., Ltd. 15%
Changchai Wanzhou Diesel Engine Co., Ltd. 15%
Changzhou Changchai Benniu Diesel Engine Fittings Co., Ltd. 25%
Changzhou Housheng Investment Co., Ltd. 25%
Changzhou Changchai Housheng Agricultural Equipment Co., Ltd. 25%
Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. 25%
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Changchai Company, Limited Annual Report 2017
2. Tax Preference
In 2015, 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 Jan.
1, 2011 to Dec. 31, 2020 in accordance with the Notice of the Ministry of Finance, the General Administration of
Customs of PRC and the National Administration of Taxation about the Preferential Tax Policies for the Western
Development.
VII. Notes to Main Items of Consolidated Financial Statements
1. Monetary Funds
Unit: RMB
Item Closing balance Opening balance
Cash on hand 466,356.31 314,905.29
Bank deposits 324,781,747.27 582,963,123.80
Other monetary funds 105,057,264.13 87,425,772.93
Total 430,305,367.71 670,703,802.02
At the period-end, the restricted monetary fund was of RMB105,041,713.28 in total, of which the bank
acceptance deposit was of RMB102,862,822.93, and the credit deposit was of RMB2,178,890.35.
2. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
Item Closing balance Opening balance
Bank acceptance bill 716,404,345.57 501,070,279.01
Total 716,404,345.57 501,070,279.01
(2) Notes Receivable Pledged by the Company at the Period-end
Naught
(3) Notes Receivable which Had Endorsed by the Company or Had Discounted and Had not Due on the
Balance Sheet Date at the Period-end
Unit: RMB
Amount of recognition termination at the Amount of not terminated recognition at
Item
period-end the period-end
Bank acceptance bill 308,740,702.48
Total 308,740,702.48
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Changchai Company, Limited Annual Report 2017
(4) Notes Transferred to Accounts Receivable because Drawer of the Notes Fails to Executed the Contract
or Agreement
Naught
3. Accounts Receivable
(1) Accounts Receivable Disclosed by Category
Unit: RMB
Closing balance Opening balance
Bad debt Bad debt
Book balance Book balance
provision provision
Category Withdra Book Withdra Book
Amou Propor Am wal value Amo Propor Amou wal value
nt tion ount proporti unt tion nt proporti
on on
Accounts
receivable with
significant single 25,7
26,48 753, 27,50 25,391 2,117,
amount for which 29,4
2,933. 4.19% 97.15% 511. 8,638 4.62% ,099.2 92.30% 539.6
bad debt 22.0
51 42 .82 1 1
provision 9
separately
accrued
Accounts
receivable
212, 391,
withdrawn bad 604,2 567,6 210,51 357,1
95.65 952, 257, 95.33
debt provision 09,51 35.24% 73,71 1,429. 37.08% 62,28
% 068. 442. %
according to 0.47 1.72 64 2.08
34 13
credit risks
characteristics
Accounts
receivable with
insignificant
974,
single amount for 974,9 100.00 276,2 276,29 100.00
0.16% 986. 0.05%
which bad debt 86.14 % 98.29 8.29 %
14
provision
separately
accrued
239, 392,
631,6 595,4 236,17 359,2
100.00 656, 010, 100.0
Total 67,43 37.94% 58,64 8,827. 39.66% 79,82
% 476. 953. 0%
0.12 8.83 14 1.69
57 55
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Changchai Company, Limited Annual Report 2017
Accounts receivable with significant single amount for which bad debt provision separately accrued at the
period-end
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Accounts receivable（by unit） Accounts Bad debt Withdrawal
Withdrawal reason
receivable provision proportion
Customer 1 1,902,326.58 1,902,326.58 100.00% Difficult to recover
Customer 2 6,215,662.64 6,215,662.64 100.00% Difficult to recover
Customer 3 Estimated difficult to
2,347,839.17 2,175,177.75 92.65%
recover
Customer 4 Estimated difficult to
3,279,100.00 3,279,100.00 100.00%
recover
Customer 5 Estimated difficult to
2,068,377.01 2,068,377.01 100.00%
recover
Customer 6 5,359,381.00 5,359,381.00 100.00% Difficult to recover
Customer 7 2,584,805.83 2,584,805.83 100.00% Difficult to recover
Customer 8 1,563,741.28 1,563,741.28 100.00% Difficult to recover
Customer 9 Estimated difficult to
1,161,700.00 580,850.00 50.00%
recover
Total 26,482,933.51 25,729,422.09 -- --
In the groups, accounts receivable adopting aging analysis method to accrue bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Aging
Accounts receivable Bad debt provision Withdrawal proportion
Subitem within 1 year
Within 1 year 384,401,884.42 7,688,038.15 2.00%
1 to 2 years 13,207,493.22 660,374.66 5.00%
2 to 3 years 1,529,286.38 229,392.96 15.00%
3 to 4 years 901,193.92 270,358.18 30.00%
4 to 5 years 164,370.37 98,622.22 60.00%
Over 5 years 204,005,282.16 204,005,282.16 100.00%
Total 604,209,510.47 212,952,068.34
Notes of the basis for the recognition of the group:
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Changchai Company, Limited Annual Report 2017
In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision
□ Applicable √ Not applicable
In the groups, accounts receivable adopting other method to withdraw bad debt provision
□ Applicable √ Not applicable
(2) Bad Debt Provision Withdraw, Reversed or Collected during the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB7,751,495.98; the
amount of the reversed or collected part during the Reporting Period was of RMB2,863,905.96.
(3) The Actual Write-off Accounts Receivable
Unit: RMB
Item Amount
Wuxi Combine-harvester Co., Ltd. 148,840.10
Shanghe Xiyanghong Agricultural Machinery Trading
510,972.30
Company
Xinxiang Yituo Co., Ltd. 681,150.48
FAW Harbin K-Car Co., Ltd. 138,297.38
Total 1,479,260.26
(4) Top 5 of the Closing Balance of the Accounts Receivable Collected according to the Arrears Party
At the period-end, the total amount of top 5 of the closing balance of the accounts receivable collected
according to the arrears party was RMB218,623,071.69, which was 34.61% of the closing balance of the accounts
receivable and the relevant closing balance of bad debt provision was RMB9,673,874.34.
4. Prepayment
(1) Listed by Aging Analysis
Unit: RMB
Closing balance Opening balance
Aging
Amount Proportion Amount Proportion
Within 1 year 16,300,217.23 91.67% 13,981,887.79 90.30%
1 to 2 years 110,270.90 0.62% 515,122.72 3.33%
2 to 3 years 384,622.72 2.16% 7,418.00 0.05%
Over 3 years 985,896.92 5.55% 979,046.92 6.32%
Total 17,781,007.77 -- 15,483,475.43 --
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Changchai Company, Limited Annual Report 2017
(2) Top 5 of the Closing Balance of the Prepayment Collected according to the Prepayment Target
At the period-end, the total amount of top 5 of the closing balance of the prepayment collected according to
the prepayment target was RMB11,844,083.68, which was 66.61% of the closing balance of the accounts
receivable.
5. Other Accounts Receivable
(1) Other Accounts Receivable Disclosed by Category
Unit: RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Boo Boo
Withdra Withdra
Category Prop k k
Amou Amoun wal Amo Proport Amou wal
ortio val valu
nt t proporti unt ion nt proportio
n ue e
on n
Other accounts
receivable with
significant
2,85
single amount 2,853, 7.45 2,853,1 100.00 2,853,
3,18 7.82% 100.00%
for which bad 188.02 % 88.02 % 188.02
8.02
debt provision
separately
accrued
Other accounts
receivable
5,7 30,9
withdrawn bad 33,367 26,785 4,16
87.08 27,572, 94, 50,7
debt provision ,460.9 82.63% 84.83% ,062.6 86.54% 5,67
% 489.76 971 37.2
according to 8 0 4.62
.22 2
credit risks
characteristics
Other accounts
receivable with
insignificant
2,67
single amount 2,099, 5.47 2,099,3 100.00 2,679,
9,80 7.35% 100.00%
for which bad 382.02 % 82.02 % 801.13
1.13
debt provision
separately
accrued
Total 5,7 36,4
38,320 32,318 4,16
100.0 32,525, 94, 83,7 100.00
,031.0 84.88% ,051.7 88.58% 5,67
0% 059.80 971 26.3 %
2 5 4.62
.22 7
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Changchai Company, Limited Annual Report 2017
Other receivable with single significant amount and withdrawal bad debt provision separately at the end of the
Period:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Other account
Other account Withdrawal
receivable(by unit) Bad debt provision Withdrawal reason
receivable proportion (%)
Changchai Group
Import & Export 2,853,188.02 2,853,188.02 100.00% Difficult to recover
Company
Total 2,853,188.02 2,853,188.02 -- --
In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Aging Other accounts
Bad debt provision Withdrawal proportion
receivable
Subitem within 1 year
Subtotal within 1 year 5,105,269.36 102,105.39 2.00%
1 to 2 years 463,526.94 23,176.35 5.00%
2 to 3 years 106,930.77 16,039.62 15.00%
3 to 4 years 61,989.57 18,596.87 30.00%
4 to 5 years 542,931.99 325,759.19 60.00%
Over 5 years 27,086,812.35 27,086,812.35 100.00%
Total 33,367,460.98 27,572,489.76
Notes of the basis for the recognition of the group:
In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
Notes: write the name of groups in detail.
Notes of the basis for the recognition of the group:
In the groups, other accounts receivable adopting other method to withdraw bad debt provision:
□ Applicable √ Not applicable
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The amount of bad debt provision was RMB205,883.38, the amount of reversed or recovered bad debt provision
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Changchai Company, Limited Annual Report 2017
in the Reporting Period RMB0.00.
(3) Particulars of the Actual Verification of Other Accounts Receivable during the Reporting Period
Unit: RMB
Item Amount
Temporarily paid postage 5,695.50
Advance payment for procurement 3,768.65
Total 9,464.15
(4) Other Account Receivable Classified by Account Nature
Unit: RMB
Nature Closing book balance Opening book balance
Margin and cash pledge 4,200.00 4,200.00
Intercourse accounts among units 21,072,102.14 19,305,341.92
Employee loan 1,854,174.11 1,819,817.62
Other 15,389,554.77 15,354,366.83
Total 38,320,031.02 36,483,726.37
(5) The Top Five Other Account Receivable Classified by Debtor at Period-end
Unit: RMB
Closing balance
Closing Proportion
Name of units Nature Aging of bad debt
balance %
provision
Changzhou Compressor Intercourse
2,940,000.00 Over 5 years 7.67% 2,940,000.00
Co., Ltd. accounts
Import and Export Company Intercourse
2,853,188.02 Over 5 years 7.45% 2,853,188.02
of Changchai Group accounts
Changzhou New District Intercourse
1,626,483.25 Over 5 years 4.24% 1,626,483.25
Accounting Center accounts
OEM Group Settlement Intercourse
1,140,722.16 Over 5 years 2.98% 1,140,722.16
Center accounts
Jiangsu Branch of China
Intercourse Within 1
Export & Credit Insurance 684,008.33 1.78% 13,680.17
accounts year
Corporation
Total -- 9,244,401.76 -- 24.12% 8,574,073.60
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Changchai Company, Limited Annual Report 2017
6. Inventory
(1) Category of Inventory
Unit: RMB
Closing balance Opening balance
Falling
Item Book Book Falling price
price Book balance Book value
balance value reserves
reserves
137,637,917 5,646,775.1 131,991,1 100,813,666.2
Raw material 105,129,601.58 4,315,935.29
.36 6 42.20 9
Materials 183,111.28
processed on 17,692,442. 17,509,33 25,326,273.77 597,808.75 24,728,465.02
commission 71 1.43
Goods in 142,366,956 18,705,451. 123,661,5 21,803,781.1 105,574,863.3
127,378,644.50
process .08 92 04.16 8 2
Finished 247,668,232 15,020,818. 232,647,4 20,174,913.3 260,672,325.0
280,847,238.35
goods .73 93 13.80 4 1
Low-value 4,212,709.1 1,775,293.2 2,437,415.
3,557,926.14 1,300,787.34 2,257,138.80
fugitive items 5 6 89
549,578,258 41,331,450. 508,246,8 48,193,225.9 494,046,458.4
Total 542,239,684.34
.03 55 07.48 0 4
(2) Falling Price Reserves of Inventory
Unit: RMB
Increased amount Decreased amount
Closing
Item Opening balance Reverse or Othe
Withdrawal Other balance
write-off r
Raw material 4,315,935.29 1,327,300.54 29,318.33 25,779.00 5,646,775.16
Materials
processed on 597,808.75 414,697.47 183,111.28
commission
Goods in process 21,803,781.18 18,705,451.92 21,803,781.18 18,705,451.92
Finished goods 20,174,913.34 15,020,818.93 20,174,913.34 15,020,818.93
Low-value
1,300,787.34 813,738.95 339,233.03 1,775,293.26
fugitive items
Total 48,193,225.90 35,867,310.34 29,318.33 42,758,404.02 41,331,450.55
125
Changchai Company, Limited Annual Report 2017
(3) Notes of the Closing Balance of the Inventory which Includes Capitalized Borrowing Expenses
Naught
(4) Completed Unsettled Assets Formed from the Construction Contract at the Period-end
Naught
7. Other Current Assets
Unit: RMB
Item Closing balance Opening balance
The VAT tax credits 28,078,565.33 31,669,983.12
Export tax rebates receivable 825,933.00
Unamortized expenses 135,685.72
Securities company financing
13,500,000.00 6,000,000.00
product
Ju Pai financing product 2,000,000.00
Total 42,540,184.05 39,669,983.12
8. Available-for-sale Financial Assets
(1) List of Available-for-sale Financial Assets
Unit: RMB
Closing balance Opening balance
Item Book Depreciatio Book Depreciation
Book value Book value
balance n reserves balance reserves
Available-for-sale
equity instruments
Measured by 685,837,50 685,837,50 812,872,50 812,872,500.
fair value 0.00 0.00 0.00 00
Measured by 108,895,13 1,210,000. 107,685,13 8,410,000.0
1,210,000.00 7,200,000.00
cost 9.04 00 9.04 0
794,732,63 1,210,000. 793,522,63 821,282,50 820,072,500.
Total 1,210,000.00
9.04 00 9.04 0.00 00
(2) Available-for-sale Financial Assets Measured by Fair Value at the Period-end
Unit: RMB
126
Changchai Company, Limited Annual Report 2017
Available-for-sale equity
Category of the available-for-sale financial assets Total
instruments
Cost of the equity instruments/amortized cost of
the debt instruments 79,874,500.00 79,874,500.00
Fair value 685,837,500.00 685,837,500.00
Changed amount of the fair value that be
accumulatively recorded in other comprehensive
income 515,068,550.00 515,068,550.00
Withdrawn impairment amount
(3) Available-for-sale Financial Assets Measured by Cost at the Period-end
Unit: RMB
Book balance Depreciation reserves Sharehold Cash
ing bonus
Perio proportio of the
Investee Period Increa Decreas Period-en Increa Decre Period-
d-be n among Reporti
-begin se e d se ase end
gin the ng
investees Period
Liance 7,200, 7,200,000
3.2%
Tech 000.00 .00
Changzh
ou
Xietong
Innovati
on 100,0
100,000,0
Private 00,00 99.01%
00.00
Equity 0.00
Fund
(Limited
Partners
hip)
Guizhou
Warmen
200,1 200,104.8
Pharmac
04.80 0
eutical
Co., Ltd.
Guizhou 195,2 195,297.4
Anda 97.49 9
127
Changchai Company, Limited Annual Report 2017
Energy
Technol
ogy Co.,
Ltd.
FUNIK
Ultrahar
63,09
d 63,096.08
6.08
Material
Co., Ltd.
Epitop
Optoelec 26,64
26,640.67
tronic 0.67
Co., Ltd.
1,21
1,210, 1,210,000 1,210,0
Others 0,00
000.00 .00 00.00
0.00
100,4 1,21
8,410, 108,895,1 1,210,0
Total 85,13 0,00 --
000.00 39.04 00.00
9.04 0.00
Notes: Others respectively refer to RMB510,000 in Chengdu Changwan Diesel Engine Marketing Corp., and
RMB290,000 in Wanzhou Changwan Diesel Engine Fitting Corp. and RMB20,000 in Changzhou Economic and
Technological Development Co., Ltd., RMB100,000 in Changzhou Tractors Co., Ltd., RMB200,000 in the
Industrial Financing Mutual Benefit Association of Changzhou Economic and Information Technology
Commission and RMB90,000 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
Available-for-sale equity
Category of the available-for-sale financial assets Total
instruments
Withdrawn impairment balance at the period-begin 1,210,000.00 1,210,000.00
Withdrawal in the Reporting period
Of which: transferred from other comprehensive
income
Decrease in the Reporting Period
Of which: reversed due to the increase of fair value
after the Reporting Period
Withdrawn impairment balance at the period-end 1,210,000.00 1,210,000.00
128
Changchai Company, Limited Annual Report 2017
9. Long-term Equity Investment
Unit: RMB
Increase/decrease
Gains
Adjust
Ad and Cash Closing
ment Withd
diti losses bonus balance
Openin of rawal Closi
ona Reduc recogn Chang or of
g other of Other ng
Investee l ed ized es of profits impair
balanc compr impair decrea balan
inv invest under other annou ment
e ehensi ment se ce
est ment the equity nced provisio
ve provis
me equity to n
incom ion
nt metho issue
e
d
I. Joint ventures
II. Associated enterprises
Changzh
ou Fuji
Changch 21,006
21,006,
ai Robin ,230.0
230.03
Gasoline 3
Engine
Co., Ltd.
Beijing
Tsinghua
Industria
l
44,182. 44,18 44,182.
Investme
50 2.50 50
nt
Manage
ment
Co., Ltd.
21,006
21,050, 44,18 44,182.
Subtotal ,230.0
412.53 2.50 50
3
21,006
21,050, 44,18 44,182.
Total ,230.0
412.53 2.50 50
3
Notes: The Company held a special meeting of shareholders on August 26, 2016, on which the Proposal on
Being Transferred 67% of shares in Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. held by Fuji
Heavy Industries was reviewed and approved. After the acquisition, the Company held the whole shares of
Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd., and the latter became a domestic enterprise from a
129
Changchai Company, Limited Annual Report 2017
sino-foreign joint venture. Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. finished the change
procedures of industrial and commercial registration related to the stock transfer on Jan. 20, 2017, from which it
began to be recorded into the consolidated financial statements of the Company.
10. Investment Property
(1) Investment Property Adopted the Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMB
Houses and construction in
Item Land use right Total
buildings progress
I. Original book value
1. Opening
87,632,571.14 87,632,571.14
balance
2. Increased
amount of the period
(1) Outsourcing
(2) Transfer of
inventory\fixed
assets\project under
construction
（3）Enterprises merger
increase
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
32,559,881.91 32,559,881.91
balance
2. Increased
2,208,340.80 2,208,340.80
amount of the period
(1) The depreciation or
2,208,340.80 2,208,340.80
amortization
130
Changchai Company, Limited Annual Report 2017
3. Decreased amount of
the period
(1) Disposal
(2) Other transfer
4.Closing balance 34,768,222.71 34,768,222.71
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 52,864,348.43 52,864,348.43
2.Opening book value 55,072,689.23 55,072,689.23
11. Fixed Assets
(1) List of Fixed Assets
Unit: RMB
Houses and Machinery Transportation Other
Item Total
buildings equipment equipment equipment
I. Original book
value
1. Opening
balance 419,008,246.37 853,659,305.64 23,007,178.60 35,579,255.84 1,331,253,986.45
2. Increased
amount of the
period 26,324,925.35 73,986,607.74 2,438,084.02 10,012,890.62 112,762,507.73
(1) Purchase 665,992.60 2,991,265.91 91,282.06 990,976.13 4,739,516.70
(2) Construction
project transfer 11,337,226.11 65,910,481.82 673,059.84 1,919,827.88 79,840,595.65
131
Changchai Company, Limited Annual Report 2017
（3）Enterprises
merger increase 14,321,706.64 5,084,860.01 1,673,742.12 7,102,086.61 28,182,395.38
3. Decreased
amount of the
period 97,348.35 16,965,344.51 2,081,752.62 1,241,979.85 20,386,425.33
(1) Disposal or
Scrap 97,348.35 16,965,344.51 2,081,752.62 1,241,979.85 20,386,425.33
4. Closing
balance 445,235,823.37 910,680,568.87 23,363,510.00 44,350,166.61 1,423,630,068.85
II. The
accumulative
depreciation
1. Opening
balance 224,127,801.27 508,354,183.08 16,762,107.06 25,806,818.81 775,050,910.22
2. Increased
amount of the
period 25,160,349.06 68,623,939.75 3,197,113.98 8,782,382.33 105,763,785.12
(1) Withdrawal 16,872,689.15 65,430,713.16 2,069,990.60 3,608,700.59 87,982,093.50
(2) Enterprise
combination and
increase 8,287,659.91 3,193,226.59 1,127,123.38 5,173,681.74 17,781,691.62
3. Decreased
amount of the
period 84,531.37 15,354,550.74 2,055,653.58 1,233,976.30 18,728,711.99
(1) Disposal or
Scrap 84,531.37 15,354,550.74 2,055,653.58 1,233,976.30 18,728,711.99
4. Closing
balance 249,203,618.96 561,623,572.09 17,903,567.46 33,355,224.84 862,085,983.35
III. Impairment
provision
1. Opening
balance 2,524,137.36 2,524,137.36
2. Increased
amount of the
period
(1) Withdrawal
3. Decreased
amount of the
period 1,030,022.36 1,030,022.36
132
Changchai Company, Limited Annual Report 2017
(1) Disposal or
Scrap 1,030,022.36 1,030,022.36
4. Closing balance 1,494,115.00 1,494,115.00
IV. Book value
1.Closing book
value 196,032,204.41 347,562,881.78 5,459,942.54 10,994,941.77 560,049,970.50
2.Opening book
value 194,880,445.10 342,780,985.20 6,245,071.54 9,772,437.03 553,678,938.87
The accumulative depreciation in Reporting Period was RMB87,982,093.50; the original value of
construction in progress transfer into fix assets was RMB79,840,595.65.
12. Construction in Progress
(1) List of Construction in Progress
Unit: RMB
Closing balance Opening balance
Deprecia
Item Depreciati
Book balance tion Book value Book balance Book value
on reserves
reserves
Trial production
workshop project 14,349,461.80 14,349,461.80 4,233,919.80 4,233,919.80
technology center
Casting
396,000.00 396,000.00
renovation project 396,000.00 396,000.00
Expansion
capacity of
11,217,706.49 11,217,706.49 57,529,623.42 57,529,623.42
multi-cylinder
(The 2nd Period)
Diesel Engine
Cylinder Body
Flexible 20,125,955.51 20,125,955.51 15,110,073.95 15,110,073.95
Manufacturing
Line
35KV Substation 1,218,587.83 1,218,587.83
Equipment to be
installed and
12,511,430.04 12,511,430.04
payment for 47,274,277.43 47,274,277.43
projects
Total 94,581,989.06 94,581,989.06 89,781,047.21 89,781,047.21
133
Changchai Company, Limited Annual Report 2017
(2) Changes of Significant Construction in Progress
Unit: RMB
Of Capit
Propor Accu
Amount which: alizati
tion mulati
Est that Other the on
estima Proj ve Cap
ima Ope Incre transfer decrea Clo amount rate
ted of ect amou ital
Name of ted ning ased red to sed sing of the of the
the pro nt of reso
item nu bala amo fixed amoun bala capitali intere
project gres capita urce
mb nce unt assets t of the nce zed sts of
accum s lized s
er of the period interest the
ulative intere
period s of the perio
input sts
period d
Trial
producti
10,1 14,3 Inc
on 2,2 4,23 Self
15,5 49,4 62.67 om
worksho 89. 3,91 -rais
42.0 61.8 % plet
p project 63 9.80 ed
0 0 e
technolo
gy center
Expansi
on
capacity 57,5 11,2 Inc
7,0 6,82 Self
of 29,6 53,141, 17,7 91.69 om
19. 9,69 -rais
multi-cyl 23.4 616.69 06.4 % plet
00 9.76 ed
inder 2 9 e
(The 2nd
Period)
Diesel
Engine
Cylinder 15,1 20,1 Inc
11, 5,26 Self
Body 10,0 245,939 25,9 34.23 om
604 1,82 -rais
Flexible 73.9 .10 55.5 % plet
.00 0.66 ed
Manufac 5 1 e
turing
Line
Inc
35KV 1,21 1,21 Self
om
Substati 8,58 8,58 -rais
plet
on 7.83 7.83 ed
e
Total 76,8 23,4 46,9
Self
73,6 25,6 53,387, 11,7
-rais
17.1 50.2 555.79 11.6
ed
7 5 3
134
Changchai Company, Limited Annual Report 2017
13. Intangible Assets
(1) Particulars about Intangible Assets
Unit: RMB
Item Land use right Software Patent Total
I. Original book value
1. Opening balance 137,782,945.30 8,795,831.59 146,578,776.89
2. Increased amount of the
period 6,987,562.55 2,176,535.22 8,751,862.30 17,915,960.07
(1) Purchase 1,997,011.05 5,488,000.00 7,485,011.05
(2) Enterprises merger
increase 6,987,562.55 179,524.17 3,263,862.30 10,430,949.02
3. Decreased amount of the
period 3,263,862.30 3,263,862.30
(1) Disposal 3,263,862.30 3,263,862.30
4. Closing balance 144,770,507.85 10,972,366.81 5,488,000.00 161,230,874.66
II. Total accrued amortization
1. Opening balance 41,303,353.99 5,360,285.28 46,663,639.27
2. Increased amount of the
period 3,852,690.24 2,461,464.99 3,721,195.60 10,035,350.83
(1) Withdrawal 2,972,850.26 2,316,333.22 729,321.82 6,018,505.30
(2) Enterprises merger
increase 879,839.98 145,131.77 2,991,873.78 4,016,845.53
3. Decreased amount of the
period 3,263,862.30 3,263,862.30
(1) Disposal 3,263,862.30 3,263,862.30
4. Closing balance 45,156,044.23 7,821,750.27 457,333.30 53,435,127.80
III. Depreciation reserves
1. Opening balance
2. Increased amount of the
period
(1) Withdrawal
3. Decreased amount of the
period
(1) Disposal
4. Closing balance
135
Changchai Company, Limited Annual Report 2017
IV. Book value
1. Book value of the
period-end 99,614,463.62 3,150,616.54 5,030,666.70 107,795,746.86
2. Book value of the
period-begin 96,479,591.31 3,435,546.31 99,915,137.62
The proportion of the intangible assets formed from the internal R&D through the Company to the balance of
the intangible assets at the period-end was 0.00%.
14. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets Had not Been Off-set
Unit: RMB
Closing balance Opening balance
Deductible Deductible
Item Deferred income Deferred income
temporary temporary
tax assets tax assets
difference difference
Assets impairment
6,519,959.41 1,006,953.81 6,074,862.83 911,229.42
provision
Total 6,519,959.41 1,006,953.81 6,074,862.83 911,229.42
(2) Deferred Income Tax Liabilities Had not Been Off-set
Unit: RMB
Closing balance Opening balance
Item Taxable temporary Deferred income Taxable temporary Deferred income
difference tax liabilities difference tax liabilities
Changes in fair
value of
605,963,000.00 90,894,450.00 732,998,000.00 109,949,700.00
available-for-sale
financial assets
Consolidated assets
evaluation
appreciation not 6,061,317.56 1,515,329.39
under the same
controller
Total 612,024,317.56 92,409,779.39 732,998,000.00 109,949,700.00
136
Changchai Company, Limited Annual Report 2017
(3) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
Item Closing balance Opening balance
Deductible temporary difference 306,993,027.51 310,615,241.96
Total 306,993,027.51 310,615,241.96
15. Other Non-current Assets
Unit: RMB
Opening
Closing impairment
Item Closing balance Opening balance impairment
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
16. Short-term Loans
(1) Category of Short-term Loans
Unit: RMB
Item Closing balance Opening balance
Mortgage loan 10,000,000.00 5,000,000.00
Guaranteed loan 14,900,000.00 5,000,000.00
Total 24,900,000.00 10,000,000.00
17. Notes Payable
Unit: RMB
Category Closing balance Opening balance
Bank acceptance bill 347,070,500.00 276,090,000.00
Total 347,070,500.00 276,090,000.00
There was no unpaid notes payable due at the Period end.
18. Accounts Payable
(1) List of Accounts Payable
Unit: RMB
137
Changchai Company, Limited Annual Report 2017
Item Closing balance Opening balance
Loans 616,228,500.18 605,424,726.65
Total 616,228,500.18 605,424,726.65
(2) Notes of the Accounts Payable Aging Over One Year
Naught
19. Advance from Customers
(1) List of Advance from Customers
Unit: RMB
Item Closing balance Opening balance
Loans 40,153,984.91 40,890,620.69
Total 40,153,984.91 40,890,620.69
(2) Significant Advance from Customers Aging Over One Year
Naught
20. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
Item Opening balance Increase Decrease Closing balance
I. Short-term salary 58,549,908.90 285,465,135.70 292,767,931.94 51,247,112.66
II. Welfare after demission -
defined contribution plans 40,250,917.57 40,250,917.57
III. Termination benefits
Total 58,549,908.90 325,716,053.27 333,018,849.51 51,247,112.66
(2) List of Short-term Salary
Unit: RMB
Item Opening balance Increase Decrease Closing balance
1. Salary, bonus,
allowance, subsidy 50,720,926.61 235,243,296.81 243,183,111.83 42,781,111.59
2. Employee welfare 5,278,623.79 5,101,031.05 177,592.74
138
Changchai Company, Limited Annual Report 2017
3. Social insurance 20,405,748.93 20,405,748.93
Including: Medical
insurance premiums 16,493,117.13 16,493,117.13
Work-related injury
insurance 2,438,815.53 2,438,815.53
Maternity insurance 1,473,816.27 1,473,816.27
4. Housing fund 19,607,673.00 19,607,673.00
5. Labor union budget
and employee education
budget 7,828,982.29 4,929,793.17 4,470,367.13 8,288,408.33
6. Short-term absence
with salary
7 Short-term profit
sharing scheme .
Total 58,549,908.90 285,465,135.70 292,767,931.94 51,247,112.66
(3) List of Drawing Scheme
Unit: RMB
Item Opening balance Increase Decrease Closing balance
1. Basic endowment insurance 38,911,738.46 38,911,738.46
2. Unemployment insurance
expense 1,339,179.11 1,339,179.11
3. Enterprise annuity
Total 40,250,917.57 40,250,917.57
21. Taxes Payable
Unit: RMB
Item Closing balance Opening balance
VAT 257,634.15 972,104.89
Corporate income tax 1,220,803.03 5,537,211.23
Personal income tax 397,114.88 940,612.41
Urban maintenance and
850,853.05 902,501.60
construction tax
Education surcharge 14,671.54 51,563.36
The comprehensive fee 1,075,134.76 1,075,134.76
139
Changchai Company, Limited Annual Report 2017
Property tax 173,200.76 143,204.51
Land use tax 21,000.00
Stamp duty 7,508.61
Total 4,017,920.78 9,622,332.76
22. Dividends Payable
Unit: RMB
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
Other notes, including the disclosure of unpaid reason as for the significant dividends payable unpaid over
one year: Shareholders have not yet taken.
23. Other Accounts Payable
(1) Other Accounts Payable Listed by Nature of the Account
Unit: RMB
Item Closing balance Opening balance
Margin and deposit 3,266,453.59 2,700,853.59
Unit current amount 10,838,311.11 11,420,825.32
Personal amount payable 457,465.63 1,067,429.96
Sales discount and three guarantees 142,449,844.40 151,408,043.35
Other 35,082,168.35 37,849,658.34
Total 192,094,243.08 204,446,810.56
(2) Other Significant Accounts Payable with Aging Over One Year
Other significant accounts payable with aging over one year mainly was temporarily closed and owe
payment unsettled.
24. Other Current Liabilities
Unit: RMB
Item Closing balance Opening balance
Sewage charge 54,000.00 200,000.00
Electric charge 1,974,937.59 2,254,381.75
Total 2,028,937.59 2,454,381.75
140
Changchai Company, Limited Annual Report 2017
25. Long-term Loan
(1) Category of Long-term Loan
Unit: RMB
Item Closing balance Opening balance
Mortgage loan 2,000,000.00
Loan on credit 19,500,000.00
Total 21,500,000.00
Notes:
The loan on credit of RMB19,500,000.00 at the period-end was borrowing from Changzhou Branch of
CMBC by the Parent Company for the technical transformation project at interest rate of 4.75% with period from
Sep. 20, 2017 to Sep. 19, 2019.
The mortgage loan at the period-end of RMB2,000,000.00 was borrowing from Gaosuntang Branch of
Chongqing Three Gorges Bank by the subsidiary Changchai Wanzhou Diesel Engine Co., Ltd. at interest rate of
6.15% with period from Dec. 14, 2017 to Nov 6, 2020.
26. Deferred Income
Unit: RMB
Opening Formation
Item Increase Decrease Closing balance
balance reasons
Government Government
61,057,232.08 1,000,000.00 1,064,373.62 60,992,858.46
subsidies allocations
Total 61,057,232.08 1,000,000.00 1,064,373.62 60,992,858.46 --
Items involved in government subsidies:
Unit: RMB
Amount
Amount
Amount of accrued in Amount set Other Related to
Opening accrued in Closing
Item newly non-busin off cost chang the assets/
balance other balance
subsidy ess expenses es income
income
income
Electric
control of
diesel
engine 1,443,600. 1,045,20 Related to
398,400.00
research 00 0.00 the assets
and
developm
ent and
141
Changchai Company, Limited Annual Report 2017
industriali
zation
allocation
s
National
major
project 28,770,00 28,770,0 Related to
special 0.00 00.00 the assets
allocation
s
Remove
21,843,63 21,177,6 Related to
compensa 665,973.62
2.08 58.46 the assets
tion
Research
and
developm
ent and
industriali
zation
allocation
s of
national 9,000,000. 1,000,000. 10,000,0 Related to
III/IV 00 00 00.00 the assets
standard
high-pow
ered
efficient
diesel
engine for
agricultur
al use
61,057,23 1,000,000. 1,064,373.6 60,992,8
Total --
2.08 00 2 58.46
27. Share Capital
Unit: RMB
Increase/decrease (+/-)
Opening Closing
Newly Bonus Capitalization of
balance Other Subtotal balance
issue share shares public reserves
The sum of 561,374,32 561,374,32
shares 6.00 6.00
142
Changchai Company, Limited Annual Report 2017
28. Capital Reserves
Unit: RMB
Item Opening balance Increase Decrease Closing balance
Capital premium 143,990,690.24 143,990,690.24
Other capital
20,337,975.19 20,337,975.19
reserves
Total 164,328,665.43 164,328,665.43
29. Other Comprehensive Income
Unit: RMB
Reporting Period
Less:
Amount
transferre
d into
profit
and loss After-t
in the ax
Amount After-tax
current Less: attribut
Opening incurred attribute Closing
Item period income e to
balance before to the balance
that tax minorit
income parent
recognize expense y
tax company
d into shareh
other older
compreh
ensive
income
in prior
period
II. Other comprehensive
income not reclassified into
profits and losses
Of which: changes in net
assets and net liabilities of
defined benefit plan due to
re-measurement
Of which: Shares in other
comprehensive income shall
be not reclassified into profits
143
Changchai Company, Limited Annual Report 2017
or losses in future in investee
entity under the equity method
II. Other comprehensive
income reclassified into
profits and losses
Of which: Shares in other
comprehensive income shall
be reclassified into profits or
losses in future in investee
entity under the equity method
Profits or losses from the
change of fair value of 623,048,3 -127,035, -19,055, -107,979, 515,068,
available-for-sale financial 00.00 000.00 250.00 750.00 550.00
assets
Profits or losses from
held-to-maturity investment
reclassified as
available-for-sale financial
assets
Effective profits or losses of
cash flow arbitrage
Balance arising from
translation of foreign currency
financial statements
Total of other comprehensive 623,048,3 -127,035, -19,055, -107,979, 515,068,
income 00.00 000.00 250.00 750.00 550.00
30. Special Reserves
Unit: RMB
Item Opening balance Increase Decrease Closing balance
Safety production
11,715,417.22 4,161,424.06 2,587,782.07 13,289,059.21
cost
Total 11,715,417.22 4,161,424.06 2,587,782.07 13,289,059.21
31. Surplus Reserves
Unit: RMB
Item Opening balance Increase Decrease Closing balance
Statutory surplus 298,723,390.98 1,824,961.28 300,548,352.26
144
Changchai Company, Limited Annual Report 2017
reserves
Discretional surplus
13,156,857.90 13,156,857.90
reserves
Total 311,880,248.88 1,824,961.28 313,705,210.16
32. Retained Profits
Unit: RMB
Item Reporting Period Same period of last year
Opening balance of retained profits
651,365,935.39 607,859,611.69
before adjustments
Total retained profits at the beginning of
the adjustments (“+” means up,
“-“ means down)
Opening balance of retained profits after
651,365,935.39 607,859,611.69
adjustments
Add: Net profit attributable to owners of
46,431,302.73 62,539,896.17
the Company
Less: Accrued statutory surplus reserve 1,824,961.28 6,121,962.97
Accrued discretionary surplus reserve
Accrued general risk preparation
Dividend of common stock payable 16,841,229.78 12,911,609.50
Dividend of common stock transferred as
share capital
Closing retained profits 679,131,047.06 651,365,935.39
33. Revenue and Cost of Sales
Unit: RMB
Reporting Period Same period of last year
Item
Revenue Operating costs Revenue Operating costs
Main operations 2,393,799,573.65 2,053,982,326.15 2,258,400,410.51 1,849,826,031.76
Other operations 29,259,384.64 18,895,650.62 24,628,445.01 16,791,304.61
Total 2,423,058,958.29 2,072,877,976.77 2,283,028,855.52 1,866,617,336.37
145
Changchai Company, Limited Annual Report 2017
34. Business Tax and Surcharges
Unit: RMB
Item Reporting Period Same period of last year
Urban maintenance and
2,565,415.20 2,649,728.73
construction tax
Education surcharge 1,832,439.41 1,892,413.41
Property tax 4,650,467.91 4,169,245.49
Land use tax 3,659,038.57 2,976,381.90
Vehicle and vessels usage tax 1,920.00 2,280.00
Stamp duty 1,151,693.01 894,177.60
Business tax 7,500.00
Other taxes 43,324.35 413,516.46
Total 13,904,298.45 13,005,243.59
35. Sales Expenses
Unit: RMB
Item Reporting Period Same period of last year
Office expenses 16,073,409.43 18,933,214.19
Employee’s remuneration 30,109,247.54 28,799,684.22
Sales promotional expense 17,037,228.20 9,370,719.41
Three guarantees 28,911,112.28 39,799,196.44
Transport fees 7,199,785.26 6,837,099.50
Other 2,966,930.66 229,664.03
Total 102,297,713.37 103,969,577.79
36. Administration Expenses
Unit: RMB
Item Reporting Period Same period of last year
Office expenses 15,631,029.11 17,890,984.51
Employee’s remuneration 77,283,923.72 97,316,215.78
Depreciation and amortization 16,124,845.01 15,942,006.73
Research and development
50,801,135.42 53,319,103.98
expense
146
Changchai Company, Limited Annual Report 2017
Transport fees 2,761,951.21 2,966,033.22
Repair charge 2,036,028.52 4,796,798.73
Safety expenses 4,161,424.06 1,645,670.24
Other 15,750,578.21 13,705,400.79
Total 184,550,915.26 207,582,213.98
37. Financial Expenses
Unit: RMB
Item Reporting Period Same period of last year
Interest expenses 2,119,903.67 1,220,678.60
Less: Interest income 7,613,535.50 5,446,142.49
Exchange net profit or loss 6,421,288.87 -6,491,112.12
Other -3,218,451.43 -825,589.07
Total -2,290,794.39 -11,542,165.08
38. Asset Impairment Loss
Unit: RMB
Item Reporting Period Same period of last year
I. Bad debt loss 5,093,473.40 -554,826.22
II. Inventory falling price loss 35,867,310.34 38,035,521.66
Total 40,960,783.74 37,480,695.44
39. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Long-term equity investment income
236,925.27
accounted by equity method
Investment income received from the
disposal of financial assets measured
294,760.70
at fair value and the changes included
into the current gains and losses
Investment income received from the
holding of available-for-sale financial 10,709,750.99 2,833,250.00
assets
Investment income received from the 364,000.00
147
Changchai Company, Limited Annual Report 2017
disposal of bank’s financial products
Investment income received from the
disposal of securities companies’ 654,862.68 399,809.11
financial products
Gains or losses arising from the equity
held before the purchase date
re-measured at fair value for the 1,751,203.43
business combination not under the
same control
Total 13,115,817.10 4,128,745.08
40. Return on Disposal of Assets
Unit: RMB
Resources Reporting Period Same period of last year
Return on disposal of fixed assets 1,373,236.33 6,433,767.68
41. Other Income
Unit: RMB
Resources Reporting Period Same period of last year
Government subsidies 8,456,560.85
List of government subsidies recorded into other income
Unit: RMB
Reporting Period Same period of last Related to
Item
year assets/income
Subsidy for the transformation and
upgrading of industrial and 2,070,000.00 Related to income
information sectors
Trinity subsidy 1,696,000.00 Related to income
Subsidy for stabilizing posts 1,355,883.23 Related to income
Subsidy for the special rectification of
60,000.00 Related to income
coal fired boilers
Subsidy for participating in the
300,000.00 Related to income
international brand campaign
Commercial development fund 21,700.00 Related to income
Development funds for small and 32,000.00 Related to income
148
Changchai Company, Limited Annual Report 2017
medium-sized enterprises
Related to
Relocation compensation 1,780,757.62
assets/income
R & D and industrialization of Related to assets
off-road diesel engine controlled by 398,400.00
electricity
Other rewards and subsidies 110,820.00 Related to income
Appropriation of other technological Related to income
631,000.00
projects
Total 8,456,560.85
42. Non-operating Gains
Unit: RMB
Recorded in the amount
Item Reporting Period Same period of last year of the non-recurring
gains and losses
Government subsidies 7,948,135.65
Insurance compensation 1,453,805.83 357,156.87 1,453,805.83
Penalty incomes 218,421.07 157,649.63 218,421.07
Gains and losses arising
from the disposal of 303,456.00 264,992.00 303,456.00
current assets
Other 1,007,709.34 428,989.26 1,007,709.34
Negative goodwill
arising from the
19,924,486.12 19,924,486.12
combination not under
the same control
Total 22,907,878.36 9,156,923.41 22,907,878.36
Government subsidies recorded into the current gains and losses:
Unit: RMB
Whether
subsidies
Distri Distrib Special Related to
Nat influence the Reportin Same period
Item bution ution subsidy assets/relate
ure current profits g Period of last year
entity reason or not d income
and losses or
not
Project of industrial
2,000,000.00 Related to
revitalization and
149
Changchai Company, Limited Annual Report 2017
technical income
transformation
Special fund for
Related to
industrial 500,000.00
income
development
Special fund to
industrial economy
Related to
for steady growth 1,250,000.00
income
and promoting
transformation
Mayor Quality
Prize
Subsidy for Related to
1,928,234.75
stabilizing posts income
Science and
Technology
Progress Award
Talent development Related to
80,000.00
fund income
Appropriation of
Related to
other technological
income
projects
Other rewards and Related to
615,527.28
subsidies income
Relocation Related to
665,973.62
compensation income
Subsidy for famous Related to
300,000.00
brands income
R & D and
industrialization of
Related to
off-road diesel 398,400.00
income
engine controlled
by electricity
Subsidy as the fund
for Related to
150,000.00
university-industry income
cooperation
Subsidy from the Related to
60,000.00
association income
Total 7,948,135.65 --
150
Changchai Company, Limited Annual Report 2017
43. Non-operating Expenses
Unit: RMB
Recorded in the amount
Item Reporting Period Same period of last year of the non-recurring
gains and losses
Losses on the disposal of
367,435.71 179,739.42 367,435.71
non-current assets
Donation 210,000.00 310,000.00 210,000.00
Losses on the disposal of
7,047,215.23 9,640,304.91 7,047,215.23
current assets
Other 168,007.06 587,436.12 168,007.06
Total 7,792,658.00 10,717,480.45 7,792,658.00
44. Income Tax Expense
(1) Lists of Income Tax Expense
Unit: RMB
Item Reporting Period Same period of last year
Current income tax expense 2,030,954.40 11,149,938.42
Deferred income tax expense -349,287.14 51,301.46
Total 1,681,667.26 11,201,239.88
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
Item Reporting Period
Total profits 48,818,899.73
Current income tax expense accounted by tax and
7,322,834.96
relevant regulations
Influence of different tax rate suitable to subsidiary 855,374.42
Influence of non-taxable income -4,583,262.68
Influence of not deductable costs, expenses and losses -1,766,118.69
Influence of deductable losses of deferred income tax
5,742,161.50
assets derecognized used in previous period
Influence of deductible temporary difference or
-11,221.38
deductible losses of deferred income tax assets
151
Changchai Company, Limited Annual Report 2017
derecognized in Reporting Period.
Tax preference incurred from qualified expense -323,318.11
Tax preference arising from eligible expenses -2,303,429.33
Other -3,251,353.43
Total profits 1,681,667.26
45. Cash Flow Statement
(1) Other Cash Received Relevant to Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Subsidies and grants 8,003,187.23 6,883,762.03
Cash received from other current
2,742,256.68
account 5,034,680.92
Interest income 7,665,735.50 5,446,142.49
Total 20,703,603.65 15,072,161.20
(2) Other Cash Paid Relevant to Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Sale expense paid into cash 42,623,103.17 50,525,203.20
Management expense paid into
48,853,500.64
cash 42,894,223.56
Commission Expenses 797,242.10 585,735.15
Other 1,786,264.01 876,066.51
Total 88,100,832.84 100,840,505.50
46. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Unit: RMB
Supplemental information Reporting Period Same period of last year
1. Reconciliation of net profit to net cash
-- --
flows generated from operating activities
Net profit 47,137,232.47 63,716,669.27
152
Changchai Company, Limited Annual Report 2017
Add: Provision for impairment of assets 40,960,783.74 37,480,695.44
Depreciation of fixed assets, of oil-gas
90,190,434.30 81,826,261.97
assets, of productive biological assets
Amortization of intangible assets 6,018,505.30 4,942,465.02
Amortization of long-term deferred
expenses
Losses on disposal of fixed assets,
intangible assets and other long-term assets -1,373,236.33 -6,254,028.26
(gains by "-")
Losses on the scrapping of fixed assets
367,435.71
(gains by “-”)
Losses on the changes in fair value (gains
by “-”)
Financial expenses (gains by "-") 2,119,903.67 1,220,678.60
Investment losses (gains by "-") -13,115,817.10 -4,128,745.08
Decrease in deferred income tax assets
-95,724.39 51,301.46
(increase by "-")
Increase in deferred income tax liabilities
-253,562.75
(decrease by “-”)
Decrease in inventory (increase by "-") -16,207,075.64 -134,791,967.74
Decrease in accounts receivable from
-255,524,512.29 -70,568,271.81
operating activities (increase by "-")
Increase in payables from operating
15,592,612.02 138,226,784.07
activities (decrease by "-")
Other -37,486,258.10 -12,247,898.90
Net cash flows generated from operating
-121,669,279.39 99,473,944.04
activities
2. Investing and financing activities that do
--
not involving cash receipts and payment:
Debt transferred as capital
Convertible corporate bond due within one
year
Fixed assets from financing lease
3. Net increase in cash and cash equivalents --
Closing balance of cash 325,263,654.43 583,278,129.09
Less: Opening balance of cash 583,278,129.09 526,716,238.21
Add: Closing balance of cash equivalents
153
Changchai Company, Limited Annual Report 2017
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -258,014,474.66 56,561,890.88
(2) Net Cash Paid of Obtaining the Subsidiary
Unit: RMB
Amount
Cash or cash equivalents paid in the Reporting Period for the business combination
26,280,000.00
occurring in the Current Period
Of which: Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. 26,280,000.00
Less: cash and cash equivalents held by subsidiaries on the purchase date 22,007,649.01
Of which: Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. 22,007,649.01
Add: cash or cash equivalents for the business combination occurring in previous
period
Of which:
Net cash paid of obtaining the subsidiary 4,272,350.99
(3) Cash and Cash Equivalents
Unit: RMB
Item Closing balance Opening balance
I. Cash 325,263,654.43 583,278,129.09
Including: Cash on hand 466,356.31 314,905.29
Bank deposit on demand 324,781,747.27 582,963,123.80
Other monetary fund on demand 15,550.85 100.00
Accounts deposited in the central bank available for
payment
Deposits in other banks
Accounts of interbank
II. Cash equivalents
Of which: bond investment expired within three months
III. Balance of cash and cash equivalents 325,263,654.43 583,278,129.09
Of which: cash and cash equivalents with restriction in
use for the Parent Company or subsidiaries of the Group
154
Changchai Company, Limited Annual Report 2017
47. The Assets with the Ownership or Use Right Restricted
Unit: RMB
Item Closing book value Reason for restriction
Monetary capital 105,041,713.28 Margin of bank acceptance bill and L/C
Houses and buildings 9,597,056.53 Pledge for bank loans
Land use right 18,940,882.28 Pledge for bank loans
48. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Unit: RMB
Closing foreign Closing balance of
Item Exchange rate
currency balance converting to RMB
Monetary capital -- --
Including: USD 6,798,219.88 6.5342 44,420,928.34
HKD 218,624.13 0.83591 182,750.10
SGD 54,427.95 4.8831 265,777.12
JPY 3,451.00 0.057883 199.75
Accounts receivable -- --
Including: USD 7,600,123.97 6.5342 49,660,730.04
VIII. Changes of Merger scope
1. Business Merger not under Same Control
(1) Business Merger not under Same Control in Reporting Period
Unit: RMB
Income of
Net profits
Time and acquiree
Cost of Propor Way to of acquiree
place of Purc Recognition during the
Name of gaining tion of gain the during the
gaining hase basis of purchase
acquiree the stock stock stock purchase
the stock date purchase date date to
rights rights rights date to
rights period-en
period-end
d
Changzh 01/20/20 26,280,00 67.00 Acquisitio 01/2 The whole 160,850,6 5,642,002.5
ou Fuji 17 0.00 % n in cash 0/20 accounts of 13.34 8
155
Changchai Company, Limited Annual Report 2017
Changcha 17 stock
i Robin acquisition
Gasoline had been paid;
Engine the change
Co., Ltd. procedure of
industrial and
commercial
registration
had been
conducted; the
controlling
rights had
been acquired.
(2) Combined Cost and Goodwill
Unit: RMB
Changzhou Fuji Changchai Robin
Combined cost
Gasoline Engine Co., Ltd.
--Cash 26,280,000.00
--Fair value of non-cash assets
--Fair value of liabilities issued or undertaken
--Fair value of equity securities issued
--Fair value of contingent consideration
--Fair value of equity held before the purchase date on the purchase
22,757,433.46
date
--Other
Total combination cost 49,037,433.46
Less: Shares of fair value of recognizable net assets obtained 68,961,919.58
Amount of shares of fair value recognizable net assets obtained minus
19,924,486.12
goodwill/combination cost
(3) The Identifiable Assets and Liabilities of Acquiree on Purchase Date
Unit: RMB
Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd.
Fair value on purchase date Book value on purchase date
Assets: 87,293,684.29 80,218,115.74
Monetary capital 22,007,649.01 22,007,649.01
156
Changchai Company, Limited Annual Report 2017
Accounts receivable 14,218,423.93 14,218,423.93
Inventory 33,860,583.74 33,860,583.74
Fixed assets 7,697,441.16 10,400,703.76
Intangible assets 2,041,797.54 6,414,103.49
Liabilities 18,331,764.71 16,562,872.57
Loans 0.00 0.00
Accounts payable 16,562,872.57 16,562,872.57
Deferred income tax liabilities 0.00 1,768,892.14
Net assets 68,961,919.58 63,655,243.17
Less: Minority shareholders equity
Net assets obtained 68,961,919.58 63,655,243.17
(4) The Profit or Loss from Equity Held before the Acquisition Date Re-measured at Fair Value
Whether there is a transaction that through multiple transaction step by step to realize enterprises merger and
gaining the control during the Reporting Period
□ Yes √ No
Unit: RMB
Determination Amount of
Gains or losses method for the investment income
Book value of Fair value of
arising from fair value of transferred from
stock rights stock rights
stock rights held stock rights held other
Name of held before the held before
before the before the comprehensive
acquiree purchase date the purchase
purchase date purchase date on income related to
on the date on the
re-measured at the purchase stock rights held
purchase date purchase date
fair value date and main before the
assumptions purchase date
Continue to
calculate the fair
value on the
Changzhou
purchase date
Fuji
based on the fair
Changchai
values of assets
Robin 21,006,230.03 22,757,433.46 1,751,203.43 -
and liabilities
Gasoline
assessed on June
Engine Co.,
30, 2017-the
Ltd.
base date of
assets
evaluation.
157
Changchai Company, Limited Annual Report 2017
IX. Equity in Other Entities
1. Equity in Subsidiary
(1) The Structure of the Enterprise Group
Main operating Registration Nature of Holding percentage (%) Way of
Name
place place business Directly Indirectly gaining
Changchai
Wanzhou Diesel Chongqing Chongqing Industry 60.00% Set-up
Engine Co., Ltd.
Changzhou
Changchai
Changzhou Changzhou
Benniu Diesel Industry 99.00% 1.00% Set-up
City City
Engine Fittings
Co., Ltd.
Changzhou
Housheng Changzhou Changzhou
Service 100.00% Set-up
Investment Co., City City
Ltd.
Changzhou
Changchai
Housheng Changzhou Changzhou
Industry 70.00% 25.00% Set-up
Agricultural City City
Equipment Co.,
Ltd.
Business
Changzhou Fuji
merger
Changchai Changzhou Changzhou
Industry 100.00% not under
Robin Gasoline City City
the same
Engine Co., Ltd.
control
(2) Significant Non-wholly-owned Subsidiary
Unit: RMB
Shareholding The profits and Declaring Balance of
proportion of losses arbitrate to the dividends distribute minority
Name
minority minority to minority shareholder at
shareholder shareholders shareholder closing period
Changchai
40.00% 703,685.46 19,102,633.03
Wanzhou Diesel
158
Changchai Company, Limited Annual Report 2017
Engine Co., Ltd.
Changzhou
Changchai
Housheng
5.00% 2,244.28 370,523.28
Agricultural
Equipment Co.,
Ltd.
(3) The Main Financial Information of Significant not Wholly Owned Subsidiary
Unit: RMB
Closing balance Opening balance
Non- Non-
Non- Curre Non- Curre
Curre curre Total Curre curre Total
Name curre Total nt curre Total nt
nt nt liabili nt nt liabili
nt assets liabili nt assets liabili
assets liabili ties assets liabili ties
assets ties assets ties
ty ty
Chan
gchai
Wanz
hou 51,97 27,42 79,39 29,63 2,000 31,63 43,46 27,67 71,13 25,13 25,13
Diese 4,844 0,469 5,314 8,731 ,000. 8,731 2,836 1,597 4,433 7,064 7,064
l .72 .36 .08 .50 00 .50 .42 .38 .80 .88 .88
Engin
e Co.,
Ltd.
Chan
gzhou
Chan
gchai
Hous
heng 38,59 38,94 31,53 31,53 29,74 30,11 22,75 22,75
346,5 372,8
Agric 7,424 3,951 3,485 3,485 3,164 6,033 0,453 0,453
26.83 68.70
ultura .23 .06 .51 .51 .98 .68 .64 .64
l
Equip
ment
Co.,
Ltd.
Unit: RMB
Name Reporting Period Same period of last year
159
Changchai Company, Limited Annual Report 2017
Total Total
Operatio
comprehe Operating Operation comprehe Operating
n Net profit Net profit
nsive cash flow revenue nsive cash flow
revenue
income income
Changchai
Wanzhou
64,348,5 1,759,213 1,759,213 6,032,875 66,035,87 2,684,535 2,684,535 5,461,701
Diesel
08.86 .66 .66 .55 2.53 .81 .81 .22
Engine
Co., Ltd.
Changzho
u
Changchai
Housheng 15,715,1 -10,230,8 20,425,66 2,059,175 2,059,175 1,114,872
44,885.51 44,885.51
Agricultur 66.92 32.08 6.48 .66 .66 .81
al
Equipmen
t Co., Ltd.
2. Equity in the Structured Entity not Included in the Scope of Consolidated Financial Statements
Related notes to structured entity not included in the scope of consolidated financial statements:
On October 18, 2017, the Company set up Changzhou Xietong Private Equity Fund (Limited Partnership)
together with Synergetic Innovation Fund Management Co., Ltd. through joint investment, of which, RMB1
million was invested by the general partner- Synergetic Innovation Fund Management Co., Ltd., and RMB100
million was invested by the limited partner-Changchai Co., Ltd. In accordance with the Partnership Agreement,
the limited partner does not execute the partnership affairs. Thus, the Company does not control Changzhou
Xietong Private Equity Fund (Limited Partnership) and did not include it into the scope of consolidated financial
statements.
X. The Risk Related Financial Instruments
The goal of the Company’s risk management was gaining the balance between the risk and income, and
reduced the negative impact to the operation performance of the Company in the lowest level and maximized the
interests of shareholders and other equity investors, base on the risk management goal, the basis strategy of the
Company’s risk management was to recognized and analyze all kinds of risk that the Company faced, set up
suitable risk bottom line and conduct risk management, and supervised the risks timely and reliably and control
the risk within the limited scope.
The main risks of the Company due to financial instruments were credit risk, liquidity risk and market risk.
The management level had reviewed and approved the policies to manage the risks, which summarized as follows.
(I) Credit risk
Credit risk was one party of the contract failed to fulfill the obligations and causes loss of financial assets of
the other party.
The credit of risk of the Company mainly was related to account receivable, in order to control the risk, the
160
Changchai Company, Limited Annual Report 2017
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 was referred to their risk of incurring capital shortage when performing settlement obligation
in the way of cash payment or other financial assets. The policies of the Company were to ensure that there was
sufficient cash to pay the due liabilities.
The liquidity risk was centralized controlled by the financial department of the Company. The financial
department through supervising the balance of the cash and securities can be convert to cash at any time and the
rolling prediction of cash flow in future 12 months to ensure the Company has sufficient cash to pay the liabilities
under the case of all reasonable prediction.
(III) Market risk
Market risk is refer to risk of the fair value or future cash flow of financial instrument changed due to the
change of market price, including: foreign exchange rate risk, interest rate risk.
1. Interest rate risk
Interest rate risk was 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 risk
Foreign exchange rate risk is referred to the risk incurred form the change of exchange rate. The export sales
of the Company 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
Closing fair value
Item Fair value Fair value Fair value
measurement items at measurement measurement Total
level 1 items at level 2 items at level 3
I. Consistent fair value
-- -- -- --
measurement
(II) Available-for-sale
685,837,500.00 685,837,500.00
financial assets
(1)Debt instrument
investment
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Changchai Company, Limited Annual Report 2017
(2) Equity tool
685,837,500.00 685,837,500.00
investment
Total of assets
consistently 685,837,500.00 685,837,500.00
measured by fair value
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level
1
The available-for-sale financial assets measured at fair value of the Company were shares with the closing
price as the basis of fair value calculation at period-end.
XII. Related Party and Related Transaction
1. Information Related to the Parent Company
Proportion of
Proportion of
voting rights
share held by
Name of Parent Registration Nature of Registered owned by
parent company
Company place business capital parent company
against the
against the
Company (%)
Company (%)
Changzhou
Government
State-owned
Changzhou 30.43% 30.43%
Assets Supervision
and Administration
Commission
Notes: Information on the parent company:
The actual controller of the Company is Changzhou Government State-owned Assets Supervision and
Administration Commission. At Dec. 31, 2017, it held 30.43% shares of the Company (state owned shares).
Final control of the Company is Changzhou Government State-owned Assets Supervision and Administration
Commission.
2. Subsidiaries of the Company
Refer to Note IX for details.
3. Information on Other Related Parties of the Company
Name Relationship
The Company serves as the senior executive of that
Synergetic Innovation Fund Management Co., Ltd.
company
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Changchai Company, Limited Annual Report 2017
4. List of Related-party Transactions
(1) Other Related-party Transactions
On October 18, 2017, the Company set up Changzhou Synergetic Innovation Private Equity Fund (Limited
Partnership) through investment together with Synergetic Innovation Fund Management Co., Ltd., of which,
RMB1 million was invested by the general partner-Synergetic Innovation Fund Management Co., Ltd., and
RMB0.1 billion was invested by the limited partner-Changchai Co., Ltd.
XIII. Commitments and Contingency
1. Significant Commitments
Significant commitments on the balance sheet date
As of 31 Dec. 2017, there were no significant commitments to be disclosed.
2. Contingency
(1) Significant Contingency on Balance Sheet Date
Previous litigations continuing to the Reporting Period the Company involved:
Name of the entity Date of Name of the litigation or Amount involved Remark
accepted arbitration institutions (RMB’0,000)
Shandong Hongli Group Co., Under the
Changzhou Intermediate
Ltd. 06/27/2001 1,436.00 bankruptcy and
People's Court
liquidation
Notes to the case:
About the lawsuit case of Shandong Hongli Group Co., Ltd., the accused company owed accumulatively
RMB14.36 million to the Company. The Company sued to Changzhou Intermediate People’s Court in 2001 and
sued for compulsory execution in April, 2002. Currently, the defendant has started the bankruptcy procedure. The
aforesaid payment has arranged for the full provision for bad debts.
XIV. Events after Balance Sheet Date
1. Profit Distribution
Unit: RMB
Profits or dividends planned to be allocated 16,841,229.78
Reviewed and approved Profits or dividends allocation
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Changchai Company, Limited Annual Report 2017
XV. Other Significant Events
1. Segment Information
(1) Reasons Should Be Given when the Company Has no Segment, or the Total Assets and Total Liabilities
of Various Segments Could Not Be Disclosed
Due to the operation scope of the Company and subsidiaries were similar, the Company conduct common
management, did not divide business unit, so the Company only made single branch report.
(2) Other Notes
2. Other Important Transactions and Events Having an Impact on Investors’ Decision-making
As of the approval issue date of financial statements, the Company did not complete the liquidation
procedures of 2017 annual enterprise income tax.
XVI. Notes of Main Items in the Financial Statements of the Parent Company
1. Accounts Receivable
(1) Accounts Receivable Classified by Category
Unit: RMB
Closing balance Opening balance
Bad debt Bad debt
Book balance Book balance
provision provision
Category Withd Book Withdra Book
Amou Propo Amou rawal value Amo Propo Amou wal value
nt rtion nt propo unt rtion nt proporti
rtion on
Accounts
receivable with
significant 37,8
35,27 30,40 4,873, 31,210
single amount 86.18 94,6 6,684,1
4,603. 6.52% 1,000. 602.8 7.17% ,576.9 82.36%
for which bad % 77.7 00.82
67 85 2 6
debt provision 8
separately
accrued
Accounts 490,
505,1 190,1 315,0 188,26
receivable 93.30 37.64 383, 92.78 302,116
42,98 29,53 13,44 7,201. 38.39%
withdrawal of % % 771. % ,570.08
1.60 2.72 8.88 85
bad debt 93
164
Changchai Company, Limited Annual Report 2017
provision of by
credit risks
characteristics:
Accounts
receivable with
insignificant
276,
single amount 974,9 974,9 100.0 276,29 100.00
0.18% 298. 0.05%
for which bad 86.14 86.14 0% 8.29 %
29
debt provision
separately
accrued
Total 528,
541,3 221,5 319,8 219,75
100.0 40.91 554, 100.0 308,800
92,57 05,51 87,05 4,077. 41.58%
%0 % 748. 0 ,670.90
1.41 9.71 1.70 10
00
Accounts receivable with significant single amount for which bad debt provision separately accrued at the
period-end:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Accounts receivable（by unit） Accounts Bad debt Withdrawal Withdrawal
receivable provision proportion reason
Customer 1 Difficult to
1,902,326.58 1,902,326.58 100.00
recover
Customer 2 Difficult to
6,215,662.64 6,215,662.64 100.00
recover
Customer 3 Estimated
2,347,839.17 2,175,177.75 92.65 difficult to
recover
Customer 4 Estimated
3,279,100.00 3,279,100.00 100.00 difficult to
recover
Customer 5 Estimated
2,068,377.01 2,068,377.01 100.00 difficult to
recover
Customer 6 Difficult to
5,359,381.00 5,359,381.00 100.00
recover
Customer 7 Difficult to
2,584,805.83 2,584,805.83 100.00
recover
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Changchai Company, Limited Annual Report 2017
Customer 8 Difficult to
1,563,741.28 1,563,741.28 100.00
recover
Customer 9 Estimated
1,161,700.00 580,850.00 50.00 difficult to
recover
Customer 10 Estimated
8,791,670.16 4,671,578.76 53.14 difficult to
recover
Total 35,274,603.67 30,401,000.85 -- --
In the groups, accounts receivable adopting aging analysis method to accrue bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Aging
Accounts receivable Bad debt provision Withdrawal proportion
Subitem within 1 year
Subtotal within 1 year 310,936,203.59 6,218,724.06 2.00%
1 to 2 years 8,955,873.22 447,793.66 5.00%
2 to 3 years 1,307,816.38 196,172.46 15.00%
3 to 4 years 872,139.62 261,641.89 30.00%
4 to 5 years 164,370.37 98,622.22 60.00%
Over 5 years 182,906,578.42 182,906,578.42 100.00%
Total 505,142,981.60 190,129,532.72
Notes of the basis for the determination of the group:
In the groups, accounts receivable adopting balance percentage method to accrue bad debt provision:
□ Applicable √ Not applicable
Unit: RMB
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB7,242,507.82; the
amount of the reversed or collected part during the Reporting Period was of RMB4,011,804.95.
(3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
Unit: RMB
Item Amount
Wuxi Combine Harvester Co., Ltd. 148,840.10
166
Changchai Company, Limited Annual Report 2017
Shanghe Xiyanghong Agricultural Machinery Trading
510,972.30
Company
Xinxiang Yituo Co., Ltd. 681,150.48
FAW Harbin K-CAR Co., Ltd. 138,297.38
Total 1,479,260.26
(4) Top Five of Account Receivable of Closing Balance Collected by Arrears Party
The total amount of top five of account receivable of closing balance collected by arrears party was RMB
218,623,071.69, 40.38% of total closing balance of account receivable, the relevant closing balance of bad debt
provision withdrawn was RMB9,673,874.34.
2. Other Accounts Receivable
(1) Other Account Receivable Classified by Category
Unit: RMB
Closing balance Opening balance
Bad debt Bad debt
Book balance Book balance
provision provision
Category Withd Book Withdra Book
Amou Propo Amou rawal value Amo Propo Amou wal value
nt rtion nt propo unt rtion nt proporti
rtion on
Other accounts
receivable with
significant
2,853, 2,853, 2,85
single amount 100.0 2,853, 100.00
188.0 6.83% 188.0 3,18 8.56%
for which bad 0% 188.02 %
2 2 8.02
debt provision
separately
accrued
Other accounts
receivable
27,7
withdrawn bad 36,81 25,01 11,798 24,104
88.14 67.95 99,3 83.40 3,694,6
debt provision 5,664. 7,453. ,211.4 ,715.3 86.71%
% % 89.2 % 73.93
according to 59 19 0 3
6
credit risks
characteristics
Other accounts 2,099, 2,099, 100.0 2,67 2,679, 100.00
5.03% 8.04%
receivable with 382.0 382.0 0% 9,80 801.13 %
167
Changchai Company, Limited Annual Report 2017
insignificant 2 2 1.13
single amount
for which bad
debt provision
separately
accrued
Total 33,3
41,76 29,97 11,798 29,637
100.0 71.75 32,3 100.0 3,694,6
8,234. 0,023. ,211.4 ,704.4 88.92%
0% % 78.4 0% 73.93
63 23 0 8
1
Other accounts receivable with significant single amount for which bad debt provision separately accrued at the
period-end:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Other accounts
Other accounts Withdrawal
receivable（by unit） Bad debt provision Withdrawal reason
receivable proportion
Changchai Group
Import & Export 2,853,188.02 2,853,188.02 100.00% Difficult to recover
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:
√ Applicable □ Not applicable
Unit: RMB
Closing balance
Aging Other accounts
Bad debt provision Withdrawal proportion
receivable
Subitem within 1 year
Subtotal within 1 year 11,257,923.82 225,158.47 2.00%
1 to 2 years 445,822.98 22,291.15 5.00%
2 to 3 years 106,930.77 16,039.62 15.00%
3 to 4 years 60,114.33 18,034.30 30.00%
4 to 5 years 522,357.60 313,414.56 60.00%
Over 5 years 24,422,515.09 24,422,515.09 100.00%
Total 36,815,664.59 25,017,453.19
Notes of the basis for the determination of the group:
In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision:
168
Changchai Company, Limited Annual Report 2017
□ Applicable √ Not applicable
Note: fill in the accurate name of the group.
Notes of the basis for the determination of the group:
In the groups, other accounts receivable adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
Notes: explain the basis for the determination of the group, the closing balance of various other accounts
receivable, the closing balance of bad debt provision and the withdrawal proportion of bad debt provision.
(2) Bad Debt Provision Withdraw, Reversed or Collected during the Reporting Period
The amount of bad debt provision was RMB332,318.75, the amount of reversed or recovered bad debt
provision in the Reporting Period RMB0.00.
(3) Particulars of the Actual Verification of Other Accounts Receivable during the Reporting Period
Naught
(4) Other Accounts Receivable Classified by the Nature
Unit: RMB
Nature Closing book balance Opening book balance
Guarantee and cash pledge 4,200.00 4,200.00
Intercourse accounts among units 25,497,534.34 16,917,626.21
Petty cash &employee borrowing 912,133.46 1,056,185.37
Other 15,354,366.83 15,354,366.83
Total 41,768,234.63 33,332,378.41
(5) Top 5 of the Closing Balance of the Other Accounts Receivable Collected according to the Arrears Party
Unit: RMB
Closing
Closing balance of
Name of units Nature Aging Proportion%
balance bad debt
provision
Changzhou Changchai
Intercourse
Housheng Agricultural 7,161,832.25 Within 1 year 17.15% 143,236.65
accounts
Equipment Co., Ltd.
Changzhou Intercourse
2,940,000.00 Over 5 years 7.04% 2,940,000.00
Compressor Co., Ltd. accounts
169
Changchai Company, Limited Annual Report 2017
Changchai Group
Intercourse
Import & Export Co., 2,853,188.02 Over 5 years 6.83% 2,853,188.02
accounts
Ltd.
Changzhou New
Intercourse
District Accounting 1,626,483.25 Over 5 years 3.89% 1,626,483.25
accounts
Center
OEM Group Settlement Intercourse
1,140,722.16 Over 5 years 2.73% 1,140,722.16
Center accounts
Total -- 15,722,225.68 -- 37.64% 8,703,630.08
3. Long-term Equity Investment
Unit: RMB
Closing balance Opening balance
Item Depreciati
Book Depreciatio Book
Book value Book balance on
balance n reserves value
reserves
Investment to the 231,752,73 231,752,730. 184,466,500. 184,466,5
subsidiary 0.03 03 00 00.00
Investment to joint
21,050,412.5 21,006,23
ventures and 44,182.50 44,182.50 44,182.50
3 0.03
associated enterprises
231,796,91 231,752,730. 205,516,912. 205,472,7
Total
2.53 44,182.50 03 53 44,182.50 30.03
(1) Investment to the Subsidiary
Unit: RMB
Withdrawn Closing
impairment balance
Opening Decre Closing provision of
Investee Increase
balance ase balance in the impairme
Reporting nt
Period provision
Changchai
Wanzhou Diesel 51,000,000.00 51,000,000.00
Engine Co., Ltd.
Changzhou
Changchai Benniu 96,466,500.00 96,466,500.00
Diesel Engine
170
Changchai Company, Limited Annual Report 2017
Fittings Co., Ltd.
Changzhou
Housheng
30,000,000.00 30,000,000.00
Investment Co.,
Ltd.
Changzhou
Changchai
Housheng 7,000,000.00 7,000,000.00
Agricultural
Equipment Co., Ltd.
Changzhou Fuji
Changchai Robin
47,286,230.03 47,286,230.03
Gasoline Engine
Co., Ltd.
Total 184,466,500.00 47,286,230.03 231,752,730.03
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
Increase/decrease
Gains Adjus
Closing
and tment Cash Withd
Addi Chan balance
Openi losses of bonus rawal Closin
tiona Reduc ges of
ng recogni other or of g
Investee l ed of Ot impairm
balanc zed compr profits impair balanc
inve invest other her ent
e under ehensi announ ment e
stme ment equit provisio
the ve ced to provis
nt y n
equity incom issue ion
method e
I. Joint ventures
II. Associated enterprises
Changzh
ou Fuji
Changch 21,006 21,006
ai Robin ,230.0 ,230.0
Gasoline 3 3
Engine
Co., Ltd.
Beijing
44,182 44,182 44,182.5
Tsinghua
.50 .50 0
Xingye
171
Changchai Company, Limited Annual Report 2017
Industrial
Investme
nt
Manage
ment
Co., Ltd.
21,050 21,006
44,182 44,182.5
Subtotal ,412.5 ,230.0
.50 0
3 3
21,050 21,006
44,182 44,182.5
Total ,412.5 ,230.0
.50 0
3 3
(3)Other Notes
4. Revenues and Operating Costs
Unit: RMB
Reporting Period Same period of last year
Item
Revenue Operating costs Revenue Operating costs
Main operations 2,208,546,755.61 1,913,570,161.64 2,238,155,721.58 1,856,049,114.70
Other operations 27,259,235.38 18,109,162.04 23,268,342.48 16,348,177.30
Total 2,235,805,990.99 1,931,679,323.68 2,261,424,064.06 1,872,397,292.00
5. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Long-term equity investment income accounted by cost
236,925.27
method
Investment income received from holding of
10,709,750.99 2,673,250.00
available-for-sale financial assets
Investment income received from the disposal of
364,000.00
financial products
Total 10,709,750.99 3,274,175.27
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Changchai Company, Limited Annual Report 2017
XVII. Supplementary Materials
1. Non-recurring Gains and Losses during this Reporting Period
√ Applicable □ Not applicable
Unit: RMB
Item Amount Note
Gains/losses on the disposal of non-current assets 1,005,800.62
Tax rebates, reductions or exemptions due to
approval beyond authority or the lack of official
approval documents
Government grants recognized in the current
period, except for those acquired in the ordinary
course of business or granted at certain quotas or 8,456,560.85
amounts according to the government’s unified
standards
Capital occupation charges on non-financial
enterprises that are recorded into current gains 1,200,592.21
and losses
In case of the negative goodwill
resulting from non-identical control
after the merger of FCR, Changchai
decided to complete the transfer of
shares of Changzhou Fuji Changchai
Gains due to that the investment costs for the
Robin Gasoline Engine Co., Ltd. on
Company to obtain subsidiaries, associates and
January 20, 2017. So FCR has
joint ventures are lower than the enjoyable fair 19,924,486.12
incorporated into Changchai
value of the identifiable net assets of the investees
company's consolidated statement
when making the investments
since January 20, 2017. Then the
difference of identifiable net assets
share less the combined cost was
included in the current profit and loss
as 19.9245 million yuan.
Gain/loss on non-monetary asset swap
Gain/loss on entrusting others with investments or
asset management
Asset impairment provisions due to acts of God
such as natural disasters
Gains and losses from debt restructuring
Expenses on business reorganization, such as
173
Changchai Company, Limited Annual Report 2017
expenses on staff arrangements, integration, etc.
Gain/loss on the part over the fair value due to
transactions with distinctly unfair prices
Current net gains and losses of subsidiaries
acquired in business combination under the same
control from period-begin to combination date
Profits or losses incurred from contingency of
non-operating business.
Gain/loss from change of fair value of
transactional assets and liabilities, and investment
gains from disposal of transactional financial
654,862.68
assets and liabilities and available-for-sale
financial assets, other than valid hedging related
to the Company’s common businesses
Reverse of bad debt provision of account
receivable individually conducting impairment
test
Gain/loss on entrustment loans
Gain/loss on change of the fair value of investing
real estate of which the subsequent measurement
is carried out adopting the fair value method
Effect on current gains/losses when a one-off
adjustment is made to current gains/losses
according to requirements of taxation, accounting
and other relevant laws and regulations
Custody fee income when entrusted with
operation
Other non-operating income and expenses other
-4,441,830.05
than the above
Project confirmed with the definition of
non-recurring gains and losses and losses
Gains or losses arising from the re-measurement
of the original stock rights held before the
1,751,203.43
purchase date by fair value for the business
combination not under the same control
Less: Income tax effects 951,629.77
Minority interests effects -12,821.48
Total 27,612,867.57 --
Notes: Items of non-recurring gains and losses were listed in line with the pretax amount.
174
Changchai Company, Limited Annual Report 2017
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in
the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Extraordinary Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said
explanatory announcement as a recurrent gain/loss item
□ Applicable √ Not applicable
2. Return on Equity (ROE) and Earnings Per Share (EPS)
EPS (Yuan/share)
Profit as of Reporting Period Weighted average ROE (%)
EPS-basic EPS-diluted
Net profit attributable to common
2.00 0.08 0.08
shareholders of the Company
Net profit attributable to common
shareholders of the Company
0.81 0.03 0.03
after deduction of non-recurring
profit and loss
175
Changchai Company, Limited Annual Report 2017
Part XII Documents Available for Reference
1. The financial statements signed and sealed by the Company’s legal representative, General
Manager and head of the financial department;
2. The original copy of the Independent Auditor’s Report signed and sealed by the CPAs, as
well as sealed by the CPA firm;
3. The originals of all the Company’s documents and announcements which were disclosed on
Securities Time and Ta Kung Pao (HK) (newspapers designated by the CSRC for information
disclosure) during the Reporting Period; and
4. The Annual Report disclosed on other stock markets.
The above-mentioned documents available for reference are all kept in the Secretariat of the
Board of Directors of the Company and the Shenzhen Stock Exchange.
This Annual Report and its abstract have been prepared in both Chinese and English. Should
there be any discrepancies or misunderstandings between the two versions, the Chinese version
shall prevail.
The Board of Directors
Changchai Company, Limited
April 13, 2018
176
