Changchai Company, Limited
Financial Report For the Year 2017
I Independent Auditor’s Report
Type of auditor’s opinion Standard unqualified opinion
Date of signing the auditor’s report 04/11/2018
Jiangsu Gongzheng Tianye Certified Public
Name of the auditor
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.
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
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
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 communication.
Jiangsu Gongzheng Tianye Certified Public Accountants Chinese CPA Dai weizhong, He Taifeng
(LLP) (Engagement Partner)
Chinese CPA
Wuxi China April 11, 2018
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
Appropriation to -16,841, -16,841,
owners (or 229.78 229.78
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
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,
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
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 He
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
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
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
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
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
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
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
refer to the changes of the consolidated scope of the notes to the financial report and the notes to the equities
33
Changchai Company, Limited Annual Report 2017
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
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.
34
Changchai Company, Limited Annual Report 2017
2. Fiscal Period
The fiscal periods are divided into fiscal year and metaphase, the fiscal year is from January 1 to December
31 and as the metaphase included monthly, quarterly and semi-yearly periods.
3. Operating Cycle
A normal operating cycle refers to a period from the Group purchasing assets for processing to realizing cash
or cash equivalents. An operating cycle for the Group is 12 months, which is also the classification criterion for
the liquidity of its assets and liabilities.
4. Currency Used in Bookkeeping
Renminbi is functional currency of the Company.
5. Accounting Methods for Business Combinations under the Same Control and Business Combinations not
under the Same Control
(1) Business combinations under the same control:
A business combination under the same control is a business combination in which all of the combining
enterprises are ultimately controlled by the same party or the same parties both before and after the business
combination and on which the control is not temporary.
For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it
makes payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share
of the book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity
investment. The difference between the initial cost of the long-term equity investment and the payment in cash,
non-cash assets transferred as well as the book value of the debts borne by the merging party shall offset against
the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.
If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger,
regard the share of the book value of the owner's equity of the merged enterprise as the initial cost of the
long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while
the difference between the initial cost of the long-term equity investment and total face value of the shares issued
shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be
adjusted.
All direct costs for the business combination, including expenses for audit, evaluating and legal services shall
be recorded into the profits and losses at the current period. The expenses such as the handling charges and
commission etc, premium income of deducting the equity securities, and as for the premium income was
insufficient to dilute, the retained earnings shall be written down.
Owning to the reasons such as the additional investment, for the equity investment held before acquiring the
control right of the combined parties, the confirmed relevant gains and losses, other comprehensive income and
the changes of other net assets since the date of the earlier one between the date when acquiring the original equity
right and the date when the combine parties and combined ones were under the same control to the combination
date, should be respectively written down and compared with the beginning balance of retained earnings or the
35
Changchai Company, Limited Annual Report 2017
current gains and losses during the statement period.
(2) Business combinations not under the same control
A business combination not under the same control is a business combination in which the combining
enterprises are not ultimately controlled by the same party or the same parties both before and after the business
combination.
The combination costs of the acquirer and the identifiable net assets obtained by the acquirer in a business
combination shall be measured at the fair values. The acquirer shall recognize the positive balance between the
combination costs and the fair value of the identifiable net assets it obtains forms the acquiree as business
reputation. The direct relevant expenses occurred from the enterprise combination should be included in the
current gains and losses when occurred. The combination costs of the acquirer and the identifiable net assets
obtained by it in the combination shall be measured according to their fair values at the acquiring date. The
difference between the fair value of the assets paid out by the Company and its book value should be included in
the current gains and losses. The purchase date refers to the date that the purchaser acquires the control right of the
acquiree.
For the business combinations not under the same control realized through step by step multiple transaction,
as for the equity interests that the Group holds in the acquiree before the acquiring date, they shall be re-measured
according to their fair values at the acquiring date; the positive difference between their fair values and carrying
amounts shall be recorded into the investment gains for the period including the acquiring date. The equity holed
by the acquiree which involved with the other comprehensive income and the other owners’ equities changes
except for the net gains and losses, other comprehensive income and the profits distribution and other related
comprehensive gains and other owners’ equities which in relation to the equity interests that the Group holds in
the acquiree before the acquiring date should be transferred into the current investment income on the acquiring
date, except for the other comprehensive income occurred from the re-measurement of the net profits of the
defined benefit plans or the changes of the net assets of the investees.
6. Methods for Preparing Consolidated Financial Statements
The Company confirms the consolidated scope based on the control and includes the subsidiaries with actual
control right into the consolidated financial statement.
The consolidated financial statement of the Company is compiled according to the regulations of No. 33 of
ASBE-Consolidated Financial Statement and the relevant regulations and as for the whole significant
come-and-go balance, investment, transaction and the unrealized profits should be written off when compiling the
consolidated financial statement. The portion of a subsidiary’s shareholders’ equity and the portion of a
subsidiary’s net profits and losses for the period not held by the Group are recognized as minority interests and
minority shareholder profits and losses respectively and presented separately under shareholders’ equity and net
profits in the consolidation financial statements. The portion of a subsidiary’s net profits and losses for the period
that belong to minority interests is presented as the item of “minority shareholder profits and losses” under the
bigger item of net profits in the consolidated financial statements. Where the loss of a subsidiary shared by
minority shareholders exceeds the portion enjoyed by minority shareholders in the subsidiary’s opening owners’
equity, minority interests are offset.
The accounting policy or accounting period of each subsidiary is different from which of the Company,
which shall be adjusted as the Company; or subsidiaries shall prepare financial statement again required by the
Company when preparing the consolidated financial statements.
As for the added subsidiary company not controlled by the same enterprise preparing the consolidated
36
Changchai Company, Limited Annual Report 2017
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:
(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;
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Changchai Company, Limited Annual Report 2017
(3) Recognizes the income from sale of the Group’s share in the output of the joint operation
(4) Recognizes the income from sale of the joint operation’s outputs according to the Group’s stake in it
(5) Recognizes the expense solely incurred to the Group and the expense incurred to the joint operation
according to the Group’s stake in it.
8. Recognition Standard for Cash and Cash Equivalents
In the Group’s understanding, cash and cash equivalents include cash on hand, any deposit that can be used
for cover, and short-term (usually due within 3 months since the day of purchase) and high circulating investments,
which are easily convertible into known amount of cash and whose risks in change of value are minimal.
9. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
(1) Foreign currency business
Concerning the foreign-currency transactions that occurred, the foreign currency shall be converted into the
recording currency according to the middle price of the market exchange rate disclosed by the People’s Bank of
China on the date of the transaction. Among the said transactions that occurred, those involving foreign exchanges
shall be converted according to the exchange rates adopted in the actual transactions.
On the balance sheet date, the foreign-currency monetary assets and the balance of the liability account shall
be converted into the recoding currency according to the middle price of the market exchange rates disclosed by
the People’s Bank of China on the Balance Sheet Date. The difference between the recording-currency amount
converted according to the exchange rate on the Balance Sheet Date and the original book recording-currency
amount shall be recognized as gains/losses from foreign exchange. And the exchange gain/loss caused by the
foreign-currency borrowings related to purchasing fixed assets shall be handled according to the principle of
capitalizing borrowing expenses; the exchange gain/loss incurred in the establishment period shall be recorded
into the establishment expense; others shall be recorded into the financial expenses for the current period.
On the balance sheet date, the foreign-currency non-monetary items measured by historical cost shall be
converted according to the middle price of the market exchange disclosed by the People’s Bank of China on the
date of the transaction, with no changes in the original recording-currency amount; while the foreign-currency
non-monetary items measured by fair value shall be converted according to the middle price of the market
exchange disclosed by the People’s Bank of China on the date when the fair value is recognized, and the exchange
gain/loss caused thereof shall be recognized as the gain/loss from fair value changes and recorded into the
gain/loss of the current period.
(2) Translation of foreign currency
The assets and liabilities items among the balance sheet of the foreign operation shall be translated at a spot
exchange rate on the balance sheet date. Among the owner’s equity items, except for the items as “undistributed
profits”, other items shall be translated at the spot exchange rate at the time when they are incurred. And the
revenues and expenses items among the balance sheet of the foreign operation shall be translated at the
approximate exchange rate of the transaction date. The difference caused from the above transaction of the foreign
currency statement should be listed in the other comprehensive income among the owners’ equities.
10. Financial Instruments
(1) Category of financial instruments
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Changchai Company, Limited Annual Report 2017
The Company classifies the financial assets into four kinds such as trading financial assets, available-for-sale
financial assets, accounts receivable and held-to-maturity investment according to the investment purpose and the
economy nature.
The Company classifies the financial liabilities into two kinds such as the financial liabilities measured by
fair value with the changes included in the current gains and losses and the other financial liabilities measured by
amortized cost according to the economy nature.
(2) Recognition basis and measurement methods of financial instruments
The trading financial assets should be measured by fair value with the changes of fair value included in the
current gains and losses; the available-for-sale financial assets should be measured by fair value with the changes
of fair value included in the owners’ equities; and the accounts receivable and the held-to-maturity investment
should be measured by amortized cost.
(3) Recognition basis and measurement methods of financial instruments transformation
The Company transfers or delivers a financial asset to a party other than the issuer of the financial asset and
the transformation of the financial assets could be whole of the financial assets or a part of it, which including two
methods:
The enterprise transfers the right to another party for receiving the cash flow of the financial asset;
The enterprise transfers the financial asset to another party, but maintains the right to receive the cash flow of
the financial asset and undertakes the obligation to pay the cash flow it receives to the final recipient.
Where the Company has transferred a part or nearly all of the risks and rewards related to the ownership of
the financial asset to the transferee, it shall stop recognizing the financial asset and the difference between the
consideration received and the book value of the transferred financial assets should be recognized as gains and
losses and at the same time transfers the accumulative gains or losses from the recognized financial assets among
the original owners’ equities in the gains and losses; if it retained nearly all of the risks and rewards related to the
ownership of the financial asset, it shall continue to recognize the whole or part of the financial assets and the
consideration received be recognized as financial liabilities.
Where the Company neither transfers nor retains nearly all of the risks and rewards related to the ownership
of a financial asset, and it does not cease its control on the said financial asset, it recognizes the relevant financial
asset and liability accordingly according to the extent of its continuous involvement in the transferred financial
asset.
(4) De-recognition conditions of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition
of the financial liability be terminated in all or partly.
(5) Recognition methods of the fair value of main financial assets and financial liabilities
As for the financial assets held by the Company or the financial liabilities plans to undertake, if there exists
active market, should adopt the current offering price in the active market, and as for the financial assets plans to
be purchased by the Company or the financial liabilities undertook, should adopt the current offering in the active
market, and if there is no current offering price or asking price, should adopt the market quotation of the recent
transactions or the adjusted market quotation of the recent transactions, except for there is definite evidence
indicate the market quotation is not the fair value.
Where there is no active market for a financial instrument, the enterprise concerned shall adopt value
appraisal techniques, including the prices adopted by the parties, who are familiar with the condition, in the latest
market transaction upon their own free will, the current fair value obtained by referring to other financial
instruments of the same essential nature etc.
(6) Impairment test method and withdrawal methods of impairment provision of financial assets (excluding
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Changchai Company, Limited Annual Report 2017
accounts receivable)
The Company shall carry out an inspection, on the balance sheet day, on the carrying amount of the financial
assets other than those measured at their fair values and of which the variation is recorded into the profits and
losses of the current period. Where there is any objective evidence proving that such financial asset has been
impaired, an impairment provision shall be made. For the financial assets with significant single amount, if there
is objective evidence indicates the occurred impairment, should recognize the impairment losses and should
include which in the current gains and losses. As for the financial assets with insignificant single amount but not
occur impairment, the Company should execute the impairment test by credit groups according to the credit
degree of the customers and the actual situation of the happen of the bad debts over the years for recognizing the
impairment losses.
The expression “objective evidence proving that the financial asset has been impaired” refers to the actually
incurred events which, after the financial asset is initially recognized, have an impact on the predicted future cash
flow of the said financial asset that can be reliably measured by the enterprise.
The objective evidences that can prove the impairment of a financial asset shall include:
A serious financial difficulty occurs to the issuer or debtor;
The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of
interests or the principal, etc.;
The creditor makes any concession to the debtor who is in financial difficulties due to economic or legal
factors, etc.;
The debtor will probably become bankrupt or carry out other financial reorganizations;
The financial asset can no longer continue to be traded in the active market due to serious financial
difficulties of the issuer;
It is impossible to identify whether the cash flow of a certain asset within a certain combination of financial
assets has decreased or not. But after making an overall appraisal according to the public data available, it is found
that the predicted future cash flow of the said combination of financial assets has indeed decreased since it was
initially recognized and such decrease can be measured, for example, the ability of the debtor of the said
combination of financial assets worsens gradually, the unemployment rate of the country or region where the
debtor is situated increases, the prices of the region where the guaranty is situated are obviously dropping, or the
industrial sector concerned is in slump, etc.;
Any seriously disadvantageous change has occurred to technical, market, economic or legal environment, etc.
wherein the debtor operates its business, which makes the investor of an equity instrument unable to take back its
investment;
Where the fair value of the equity instrument investment drops significantly or not contemporarily;
Other objective evidences showing the impairment of the financial asset.
Where a financial asset measured on the basis of post-amortization costs is impaired, the carrying amount of
the said financial asset shall be calculated by the difference between the book value and the current value of the
predicted future cash flow of the impairment losses.
Where any financial asset measured on the basis of post-amortization costs is recognized as having suffered
from any impairment loss, if there is any objective evidence proving that the value of the said financial asset has
been restored, and it is objectively related to the events that occur after such loss is recognized, the
impairment-related losses as originally recognized shall be reversed and be recorded into the profits and losses of
the current period.
Where a sellable financial asset is impaired, even if the recognition of the financial asset has not been
terminated, the accumulative losses arising from the decrease of the fair value of the owner’s equity which is
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Changchai Company, Limited Annual Report 2017
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
Withdrawal method of the bad debt provision of the basis of the balance between the current values of the
the accounts receivable with significant single predicted future cash flow lower than book value. Upon
amounts independent impairment test, the accounts receivable
with significant single amounts has not been impaired, it
shall be withdrawn bad debt provision based on ending
balance by adopting aging analysis method.
(2) Accounts Receivable which the Bad Debt Provision is withdrawn by Credit Risk Characteristics
Group name Withdrawal method of bad debt provision
the age of the accounts receivable is divided by the
aging analysis method
groups of credit risk
In the groups, those adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Withdrawal proportion of account Withdrawal proportion of other
Aging
receivables account receivables
Within 1 year (including 1 year) 2.00% 2.00%
1 to 2 years 5.00% 5.00%
2 to 3 years 15.00% 15.00%
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Changchai Company, Limited Annual Report 2017
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
provision million (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 value of the future cash flows
Withdrawal method for bad debt provision
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.
(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
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Changchai Company, Limited Annual Report 2017
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
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
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Changchai Company, Limited Annual Report 2017
formulation of the policies with the other parties.
(2) Recognition for initial investment cost
The initial investment cost of the long-term equity investment shall be recognized by adopting the following
ways in accordance with different methods of acquisition:
① As for those forms under the same control of the enterprise combine, if the combine party takes the cash
payment, non-cash assets transformation, liabilities assumption or equity securities issuance as the combination
consideration, should take the shares of the book value by the ultimate control party in the consolidate financial
statement of the owners’ equities of the combiners acquired on the merger date as the initial investment cost. The
difference between the initial investment cost and the book value of the paid combination consideration or the
total amount of the issued shares of the long-term equity investment should be adjusted the capital reserve; If the
capital reserve is insufficient to dilute, the retained earnings shall be adjusted. To include each direct relevant
expense occurred when executing the enterprise merger into the current gains and losses; while the handling
charges and commission occurs from the issuing the equity securities or the bonds for the enterprise merger
should be included in the initial measurement amount of the shareholders’ equities or the liabilities.
② As for long-term equity investment acquired through the merger of enterprises not under the same control,
its initial investment cost shall regard as the combination cost calculated by the fair value of the assets, equity
instrument issued and liabilities incurred or undertaken on the purchase date adding the direct cost related with the
acquisition. The identifiable assets of the combined party and the liabilities (including contingent liability)
undertaken on the combining date shall be measured at the fair value without considering the amount of minority
interest. The acquirer shall recognize the positive balance between the combination costs and the fair value of the
identifiable net assets it obtains from the acquiree as business reputation. The acquirer shall record the negative
balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree
into the consolidated income statement directly. The agent expense and other relevant management expenses such
as the audit, legal service and evaluation consultation occurs from the enterprise merger, should be included in the
current gains and losses when occur; while the handling charges and commission occurs from the issuing the
equity securities or the bonds for the enterprise merger should be included in the initial measurement amount of
the shareholders’ equities or the liabilities.
③ Long-term equity investment obtained by other means
The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase
cost which is actually paid.
The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the
fair value of the equity securities issued.
The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment
contract or agreement, the unfair value stipulated in the contract or agreement shall be measured at fair value.
As for long-term investment obtained by the exchange of non-monetary assets, where it is commercial in
nature, the fair value of the assets surrendered shall be recognized as the initial cost of the long-term equity
investment received; where it is not commercial in nature, the book value of the assets surrendered shall be
recognized as the initial cost of the long-term equity investment received.
The initial cost of a long-term equity investment obtained by recombination of liabilities shall be recognized
at fair value of long-term equity investment.
(3) Subsequent measurement and recognition of profits and losses
① An investment in the subsidiary company shall be measured by employing the cost method
Where the Company hold, and is able to do equity investment with control over an invested entity, the
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Changchai Company, Limited Annual Report 2017
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.
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
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Changchai Company, Limited Annual Report 2017
the capital reserves are not sufficient to offset, the retained profits shall be adjusted; the Company disposed part of
the long-term equity investment on subsidiaries without losing its controlling right on them, the balance between
the disposed price and attributable net assets of subsidiaries by disposing the long-term equity investment shall be
recorded into owners’ equity.
For other ways on disposal of long-term equity investment, the balance between the book value of the
disposed equity and its actual payment gained shall be recorded into current profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained equity after
disposal still adopts the equity method for measurement, the other comprehensive income originally recorded into
owners’ equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly
disposed by the investees according to the corresponding proportion. The owners’ equity recognized owning to the
changes of the other owners’ equity except for the net gains and losses, other comprehensive income and the
profits distribution of the investees, should be transferred into the current gains and losses according to the
proportion.
For the long-term equity investment which adopts the cost method of measurement, if the remained equity
still adopt the cost method, the other comprehensive income recognized owning to adopting the equity method for
measurement or the recognition and measurement standards of financial instrument before acquiring the control of
the investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly
disposed by the investees and should be carried forward into the current gains and losses according to the
proportion; the changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by adopting the equity
method for measurement, should be carried forward into the current gains and losses according to the proportion.
For those the Company lost the control of the investees by disposing part of the equity investment as well as
the remained equity after disposal could execute joint control or significant influences on the investees, should
change to measure by equity method when compiling the individual financial statement and should adjust the
measurement of the remained equity to equity method as adopted since the time acquired; if the remained equity
after disposal could not execute joint control or significant influences on the investees, should change the
accounting disposal according to the relevant regulations of the recognition and measurement standards of
financial instrument, and its difference between the fair value and book value on the date lose the control right
should be included in the current gains and losses. For the other comprehensive income recognized by adopting
equity method for measurement or the recognition and measurement standards of financial instrument before the
Group acquired the control of the investees, should execute the accounting disposal by adopting the same basis of
the accounting disposal of the relevant assets or liabilities directly disposed by the investees when lose the control
of them, while the changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by adopting the equity
method for measurement, should be carried forward into the current gains and losses according to the proportion.
Of which, for the disposed remained equity which adopted the equity method for measurement, the other
comprehensive income and the other owners’ equity should be carried forward according to the proportion; for the
disposed remained equity which changed to execute the accounting disposal according to the recognition and
measurement standards of financial instrument, the other comprehensive income and the other owners’ equity
should be carried forward in full amount.
For those the Company lost the control of the investees by disposing part of the equity investment, the
disposed remained equity should change to calculate according to the recognition and measurement standards of
financial instrument, and difference between the fair value and book value on the date lose the control right should
be included in the current gains and losses. For the other comprehensive income recognized from the original
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Changchai Company, Limited Annual Report 2017
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
Category of fixed Expected net
Method Useful life Annual deprecation
assets salvage value
Housing and Average method of
20-40 2.50%-5%
building useful life
Machinery Average method of
6-15 6.67%-16.67%
equipment useful life
Transportation Average method of
5-10 10%-20%
equipment useful life
Electronic Average method of
5-10 10%-20%
equipment useful life
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Changchai Company, Limited Annual Report 2017
(3) Recognition Basis, Pricing and Depreciation Method of Fixed Assets by Finance Lease
The Company recognizes those meet with the following one or certain standards as the fixed assets by
finance lease:
① The leasing contract had agreed that (or made the reasonable judgment according to the relevant
conditions on the lease starting date) when the lease term expires, the ownership of leasing the fixed assets could
be transferred to the Company;
② The Company owns the choosing right for purchasing and leasing the fixed assets, with the set purchase
price which is estimated far lower than the fair value of the fixed assets by finance lease when executing the
choosing right, so the Company could execute the choosing right reasonably on the lease starting date;
③ Even if the ownership of the fixed assets not be transferred, the lease period is of 75% or above of the
useful life of the lease fixed assets;
④ The current value of the minimum lease payment on the lease starting date of the Company is equal to
90% or above of the fair value of the lease fixed assets on the lease starting date; the current value of the
minimum lease receipts on the lease starting date of the leaser is equal to 90% or above of the fair value of the
lease fixed assets on the lease starting date;
⑤ The nature of the lease assets is special that only the Company could use it if not execute large
transformation.
The fixed assets by finance lease should take the lower one between the fair value of the leasing assets and
the current value of the minimum lease payment on the lease starting date as the entry value. As for the minimum
lease payment which be regarded as the entry value of the long-term accounts payable, its difference should be
regarded as the unrecognized financing expense. For the initial direct expenses occur in the lease negotiations and
the signing process of the lease contracts that attribute to the handling expenses, counsel fees, travel expenses and
stamp taxes of the lease items, should be included in the charter-in assets value. The unrecognized financing
expenses should be amortized by adopting the actual interest rate during the period of the lease term.
The fixed assets by finance lease shall adopt the same depreciation policy for self-owned fixed assets. If it is
reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease term expires,
the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will
obtain the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully depreciated
over the shorter one of the lease term or its useful life
17. Construction in 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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Changchai Company, Limited Annual Report 2017
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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Changchai Company, Limited Annual Report 2017
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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Changchai Company, Limited Annual Report 2017
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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Changchai Company, Limited Annual Report 2017
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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Changchai Company, Limited Annual Report 2017
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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Changchai Company, Limited Annual Report 2017
(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
54
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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Changchai Company, Limited Annual Report 2017
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
Reviewed and approved
Business Enterprises No. 42—Held-for-sale Non-current Assets,
on the 11th Meeting of the
Disposal Groups and Discontinued Operation on April 28, 2017
8th Board of Directors
which the Company began to execute on May 28, 2017. This
and on the 9th Meeting of
change of accounting policies was adjusted by prospective
the 8th Supervisory Board
application.
The Ministry of Finance released Notice on Revising and Issuing
the Format of Financial Statement for General Enterprises on Dec.
25, 2017 in which the amendment to the format of financial Reviewed and approved
statements for general enterprises was made, changing the on the 11th Meeting of the
presentation of gains and losses arising from disposal of 8th Board of Directors
non-current assets from being originally listed under Non-operating and on the 9th Meeting of
Revenues and Non-operating Expenses into listed under Gains from the 8th Supervisory Board
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 8th Board of Directors
Jan. 1, 2017 were treated by prospective applicable. While, those and on the 6th Meeting of
newly added from Jan. 1, 2017 to the executive date of the new the 8th Supervisory Board
code were adjusted in line with the new code.
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Changchai Company, Limited Annual Report 2017
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
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
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Changchai Company, Limited Annual Report 2017
the net realizable value as well as out-of-date and dull-sale inventories, the Group withdrawn the provision for
falling price of inventories on the lower one between costs and net realizable value. Evaluating the falling price of
inventories needed the management level gain the valid evidence and take full consideration of the purpose of
inventories, influence of events after balance sheet date and other factors, and then made relevant judgments and
estimates. The actual amount and the difference of previous estimates would affect the book value of inventories
and the withdrawal and reversal on provision for bad debts of inventories during the period of estimates being
changed.
(3) Held-to-maturity investment
The Company classifies the non-derivative financial assets which meet with conditions with fixed or
confirmable repayment amount and fixed maturity date as well as the Company owns definite intention and ability
to hold until mature as the held-to-maturity investment. To execute the classification needs large judgment. In the
process of executing the judgment, the Company would assess the intention and ability of the investment which
hold until the due date. Except for the particular situation (for example, selling the investment with insignificant
amount when approaching the due date), if the Company fails to hold the investment until the due date, should
re-classify the investment to the available-for-sale financial assets and would no more be classified as the
held-to-maturity investment in the current fiscal year as well as the afterward two complete fiscal years. If there
exits such situation, that would probably cause significant influences on the value of the relevant financial assets
presented on the financial statement and may influence the risks management strategies of the financial
instruments of the Company.
(4) Held-to-maturity investment impairment
The Company confirms whether the held-to-maturity investment has impairment depends on the judgment
from the management layer to a large extent. The objective evidences of the impairments including the issuers
which occur serious financial difficulties that lead the financial assets could not continue to trade in the active
market and to execute the contracts regulations (for example, to return the interests or the principal violates a
treaty) etc. In the process of executing judgment, the Company needs to evaluate the influences of the objective
evidences of the impairment on the estimated future cash flow.
(5) The impairment of financial assets available for sale
The Group judged whether the financial assets available for sale were impaired relying heavily on the
judgment and assumption of the management team, so as to decide whether recognized the impairment losses in
the income statement. During the process of making the judgment and assumption, the Group needed to appraise
the balance of the cost of the investment exceeding its fair value and the continuous period, the financial status
and business forecast in a short period, including the industrial situation, technical reform, credit level, default rate
and risk of counterparty.
(6) Provision for impairment of non-financial non-current assets
The Group made a judgment on the non-current assets other than financial assets whether they had any
indication of impairment on the balance sheet date. For the intangible assets without finite service life, other than
the annual impairment test, they should be subject to the impairment test when there was any indication of
impairment. For other non-current non-financial assets, which should be subjected to impairment test when there
was indication of impairment indicated that the book value can’t be recoverable.
When the book value of the assets or assets portfolio was more than the recoverable amount, which was the
higher one between the net amount of fair value after deducting the disposal expenses and the discounted amount
of the estimated future cash flow, it means impairment incurred.
The net amount of fair value after deducting the disposal expenses should be fixed the price in the sale
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Changchai Company, Limited Annual Report 2017
agreement for similar assets in the fair transaction minus the increased costs directly attributable to the assets
disposal.
When estimated the discounted value of future cash flow, the Group needed to make important judgment on
the output, selling price, relevant costs and the discount rate for calculating the discounted amount, etc. When
estimated the recoverable amount, the Group would adopt all the available documents, including the prediction for
relevant output, selling price and relevant operating costs arising from reasonable and supportive assumptions.
The Group made the impairment test on goodwill at least one time per year, which required to predict the
discounted amount of the future cash flow of the assets or assets portfolio with the distributed good will, for which,
the Group needed to predict the future cash flow of the assets or assets portfolio, and adopt the property
discounted rate to decide the discounted amount of future cash flow.
(7) Depreciation and amortization
For the investment real estate, fixed assets and intangible assets, the Group withdrew the depreciation and
amortization by adopting the straight-line method during the service life after full consideration of the salvage
value. The Group checked the service life periodically so as to decide the amount of depreciation and amortization
at each Reporting Period. The service life was fixed by the Group in accordance with the previous experience of
the similar assets and the expected technical update. If there was any significant change on the previous estimates,
the depreciation and amortization expenses should be adjusted.
(8) Income tax
During the routine operating activities, there were some uncertainty in the ultimate tax treatment and
calculation for parts of transactions. Some accounts of such transaction could be listed as pre-tax expenditures
only after the approval of taxation authorities. If there were any differences between the ultimate result of
recognition for these taxation maters and their initial estimates, the differences would affect the current income tax
and deferred income tax at the period of ultimate recognition.
VI 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
25%
Co., Ltd.
59
Changchai Company, Limited Annual Report 2017
Changzhou Housheng Investment Co., Ltd. 25%
Changzhou Changchai Housheng Agricultural
25%
Equipment Co., Ltd.
Changzhou Fuji Changchai Robin Gasoline Engine
25%
Co., Ltd.
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
60
Changchai Company, Limited Annual Report 2017
(3) Notes Receivable which Had Endorsed by the Company or Had Discounted and Had not Due on the
Balance Sheet Date at the Period-end
Unit: RMB
Amount of recognition termination Amount of not terminated
Item
at the period-end recognition at the period-end
Bank acceptance bill 308,740,702.48
Total 308,740,702.48
(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
Book balance Book balance Bad debt provision
provision
Category Withd Book Withdra Book
Prop
Amou Propo Amou rawal value Amou Amoun wal value
ortio
nt rtion nt propo nt t proporti
n
rtion on
Accounts
receivable with
significant
26,48 25,72 27,50
single amount 97.15 753,5 4.62 25,391, 2,117,5
2,933. 4.19% 9,422. 8,638. 92.30%
for which bad % 11.42 % 099.21 39.61
51 09 82
debt provision
separately
accrued
Accounts
receivable
withdrawn bad 604,2 212,9 391,2 567,6
95.65 35.24 95.3 210,511 357,162
debt provision 09,51 52,06 57,44 73,71 37.08%
% % 3% ,429.64 ,282.08
according to 0.47 8.34 2.13 1.72
credit risks
characteristics
61
Changchai Company, Limited Annual Report 2017
Accounts
receivable with
insignificant
single amount 974,9 974,9 100.0 276,2 0.05 276,29 100.00
0.16%
for which bad 86.14 86.14 0% 98.29 % 8.29 %
debt provision
separately
accrued
631,6 239,6 392,0 595,4 236,17
100.0 37.94 100. 359,279
Total 67,43 56,47 10,95 58,64 8,827.1 39.66%
0% % 00% ,821.69
0.12 6.57 3.55 8.83 4
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
62
Changchai Company, Limited Annual Report 2017
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:
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.
63
Changchai Company, Limited Annual Report 2017
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 --
(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
Category Withdra Withdra
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 33,367 87.08 27,572, 5,7 30,9 26,785 4,16
82.63% 84.83% 86.54%
receivable ,460.9 % 489.76 94, 50,7 ,062.6 5,67
64
Changchai Company, Limited Annual Report 2017
withdrawn bad 8 971 37.2 0 4.62
debt provision .22 2
according to
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
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%
65
Changchai Company, Limited Annual Report 2017
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
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
66
Changchai Company, Limited Annual Report 2017
Closing balance
Name of units Nature Closing balance Aging Proportion% of bad debt
provision
Changzhou
Intercourse
Compressor 2,940,000.00 Over 5 years 7.67% 2,940,000.00
accounts
Co., Ltd.
Import and
Export
Intercourse
Company of 2,853,188.02 Over 5 years 7.45% 2,853,188.02
accounts
Changchai
Group
Changzhou
New District Intercourse
1,626,483.25 Over 5 years 4.24% 1,626,483.25
Accounting accounts
Center
OEM Group
Intercourse
Settlement 1,140,722.16 Over 5 years 2.98% 1,140,722.16
accounts
Center
Jiangsu Branch
of China Export
Intercourse
& Credit 684,008.33 Within 1 year 1.78% 13,680.17
accounts
Insurance
Corporation
Total -- 9,244,401.76 -- 24.12% 8,574,073.60
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. 123,661,5 127,378,644.50 21,803,781.1 105,574,863.3
67
Changchai Company, Limited Annual Report 2017
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
Opening Closing
Item Reverse or
balance Withdrawal Other Other balance
write-off
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 18,705,451.9
21,803,781.18 18,705,451.92 21,803,781.18
process 2
Finished 15,020,818.9
20,174,913.34 15,020,818.93 20,174,913.34
goods 3
Low-value
fugitive 1,300,787.34 813,738.95 339,233.03 1,775,293.26
items
41,331,450.5
Total 48,193,225.90 35,867,310.34 29,318.33 42,758,404.02
5
(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
68
Changchai Company, Limited Annual Report 2017
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
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
69
Changchai Company, Limited Annual Report 2017
(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
Anda
Energy 195,2 195,297.4
Technol 97.49 9
ogy Co.,
Ltd.
FUNIK
Ultrahar
63,09
d 63,096.08
6.08
Material
Co., Ltd.
Epitop 26,64
26,640.67
Optoelec 0.67
70
Changchai Company, Limited Annual Report 2017
tronic
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
Category of the available-for-sale financial Available-for-sale equity
Total
assets instruments
Withdrawn impairment balance at the
1,210,000.00 1,210,000.00
period-begin
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
1,210,000.00 1,210,000.00
period-end
9. Long-term Equity Investment
Unit: RMB
Increase/decrease Closing
Openin Ad Gains Adjust Cash Withd Closi balance
Reduc Chang
g diti and ment bonus rawal Other ng of
Investee ed es of
balanc ona losses of or of decrea balan impair
invest other
e l recogn other profits impair se ce ment
ment equity
inv ized compr annou ment provisio
71
Changchai Company, Limited Annual Report 2017
est under ehensi nced provis n
me the ve to ion
nt equity incom issue
metho 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
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
72
Changchai Company, Limited Annual Report 2017
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
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
73
Changchai Company, Limited Annual Report 2017
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
（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 445,235,823.37 910,680,568.87 23,363,510.00 44,350,166.61 1,423,630,068.85
74
Changchai Company, Limited Annual Report 2017
balance
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
(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
75
Changchai Company, Limited Annual Report 2017
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
(2) Changes of Significant Construction in Progress
Unit: RMB
Est Amount Other Propor Proj Accu Of Capit Cap
Ope Incre Clo
ima that decrea tion ect mulati which: alizati ital
Name of ning ased sing
ted transfer sed estima pro ve the on reso
item bala amo bala
nu red to amoun ted of gres amou amount rate urce
nce unt nce
mb fixed t of the the s nt of of the of the s
76
Changchai Company, Limited Annual Report 2017
er assets period project capita capitali intere
of the accum lized zed sts of
period ulative intere interest the
input sts s of the perio
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
13. Intangible Assets
(1) Particulars about Intangible Assets
Unit: RMB
77
Changchai Company, Limited Annual Report 2017
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
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 96,479,591.31 3,435,546.31 99,915,137.62
78
Changchai Company, Limited Annual Report 2017
period-begin
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
(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
79
Changchai Company, Limited Annual Report 2017
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
Item Closing balance Opening balance
Loans 616,228,500.18 605,424,726.65
Total 616,228,500.18 605,424,726.65
80
Changchai Company, Limited Annual Report 2017
(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
3. Social insurance 20,405,748.93 20,405,748.93
81
Changchai Company, Limited Annual Report 2017
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
82
Changchai Company, Limited Annual Report 2017
construction tax
Education surcharge 14,671.54 51,563.36
The comprehensive fee 1,075,134.76 1,075,134.76
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 142,449,844.40
151,408,043.35
guarantees
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.
83
Changchai Company, Limited Annual Report 2017
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
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 of Amount Amount Amount set Other Related to
Opening Closing
Item newly accrued in accrued in off cost chang the assets/
balance balance
subsidy non-busin other expenses es income
84
Changchai Company, Limited Annual Report 2017
ess income
income
Electric
control of
diesel
engine
research
and 1,443,600. 1,045,20 Related to
398,400.00
developm 00 0.00 the assets
ent and
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
85
Changchai Company, Limited Annual Report 2017
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 (+/-)
Capitalizati
Opening Closing
Newly Bonus on of
balance Other Subtotal balance
issue share shares public
reserves
The sum of 561,374,32 561,374,32
shares 6.00 6.00
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 After-t
profit ax
Amount After-tax
and loss Less: attribut
Opening incurred attribute Closing
Item in the income e to
balance before to the balance
current tax minorit
income parent
period expense y
tax company
that shareh
recognize older
d into
other
compreh
86
Changchai Company, Limited Annual Report 2017
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
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
87
Changchai Company, Limited Annual Report 2017
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
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
88
Changchai Company, Limited Annual Report 2017
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
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
89
Changchai Company, Limited Annual Report 2017
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
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
90
Changchai Company, Limited Annual Report 2017
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
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 2,070,000.00 Related to income
91
Changchai Company, Limited Annual Report 2017
upgrading of industrial and
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 Related to income
32,000.00
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
92
Changchai Company, Limited Annual Report 2017
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
influence
Distri Distrib the Special Related to
Natur Reportin Same period
Item bution ution current subsidy assets/relate
e g Period of last year
entity reason profits or not d income
and
losses or
not
Project of industrial
revitalization and Related to
2,000,000.00
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
93
Changchai Company, Limited Annual Report 2017
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 --
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
94
Changchai Company, Limited Annual Report 2017
(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
deductible losses of deferred income tax assets -11,221.38
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 42,894,223.56 48,853,500.64
95
Changchai Company, Limited Annual Report 2017
cash
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
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 "-")
96
Changchai Company, Limited Annual Report 2017
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
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
97
Changchai Company, Limited Annual Report 2017
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
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
98
Changchai Company, Limited Annual Report 2017
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 Net
of profits of
Time and acquiree acquiree
Cost of Way to Recognition
place of Proportio during during
Name of gaining gain the Purcha basis of
gaining n of stock the the
acquiree the stock stock se date purchase
the stock rights purchase purchase
rights rights date
rights date to date to
period-en period-en
d d
The whole
accounts of
stock
acquisition
had been
paid; the
Changzh change
ou Fuji procedure of
Changcha Acquisiti industrial
01/20/20 26,280,00 01/20/ 160,850,6 5,642,002
i Robin 67.00% on in and
17 0.00 2017 13.34 .58
Gasoline cash commercial
Engine registration
Co., Ltd. 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
99
Changchai Company, Limited Annual Report 2017
--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
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
100
Changchai Company, Limited Annual Report 2017
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.
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.
101
Changchai Company, Limited Annual Report 2017
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
Wanzhou Diesel 40.00% 703,685.46 19,102,633.03
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 51,97 27,42 79,39 29,63 2,000 31,63 43,46 27,67 71,13 25,13 25,13
gchai 4,844 0,469 5,314 8,731 ,000. 8,731 2,836 1,597 4,433 7,064 7,064
Wanz .72 .36 .08 .50 00 .50 .42 .38 .80 .88 .88
102
Changchai Company, Limited Annual Report 2017
hou
Diese
l
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
Reporting Period Same period of last year
Total Total
Operatio
Name 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:
103
Changchai Company, Limited Annual Report 2017
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
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
104
Changchai Company, Limited Annual Report 2017
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
(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
share held by voting rights
Name of Parent Registration Nature of Registered
parent company owned by
Company place business capital
against the parent company
Company (%) against the
105
Changchai Company, Limited Annual Report 2017
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
Synergetic Innovation Fund Management Co., The Company serves as the senior executive of that
Ltd. company
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.
106
Changchai Company, Limited Annual Report 2017
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
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.
107
Changchai Company, Limited Annual Report 2017
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
receivable
490,
withdrawal of 505,1 190,1 315,0 188,26
93.30 37.64 383, 92.78 302,116
bad debt 42,98 29,53 13,44 7,201. 38.39%
% % 771. % ,570.08
provision of by 1.60 2.72 8.88 85
93
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
108
Changchai Company, Limited Annual Report 2017
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
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
109
Changchai Company, Limited Annual Report 2017
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
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.
110
Changchai Company, Limited Annual Report 2017
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
receivable with
insignificant
2,099, 2,099, 2,67
single amount 100.0 2,679, 100.00
382.0 5.03% 382.0 9,80 8.04%
for which bad 0% 801.13 %
2 2 1.13
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:
111
Changchai Company, Limited Annual Report 2017
√ 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:
□ 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
112
Changchai Company, Limited Annual Report 2017
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
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
113
Changchai Company, Limited Annual Report 2017
3. Long-term Equity Investment
Unit: RMB
Closing balance Opening balance
Item Book Depreciation Depreciatio
Book value Book balance Book value
balance reserves n reserves
Investment to the 231,752,730. 184,466,500
231,752,730.03 184,466,500.00
subsidiary 03 .00
Investment to joint
21,006,230.
ventures and associated 44,182.50 44,182.50 21,050,412.53 44,182.50
03
enterprises
231,796,912. 205,472,730
Total
53 44,182.50 231,752,730.03 205,516,912.53 44,182.50 .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
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
47,286,230.03 47,286,230.03
Changchai Robin
114
Changchai Company, Limited Annual Report 2017
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
Adjust
Gains Closing
ment Cash Withdr
Addi and balance
of Chan bonus awal
Openin tiona Reduc losses of
other ges of or of Closing
Investee g l ed recogniz impairm
compr other profits impair Other balance
balance inves invest ed under ent
ehensi equit announ ment
tmen ment the provisio
ve y ced to provisi
t equity n
incom issue on
method
e
I. Joint ventures
II. Associated enterprises
Changzho
u Fuji
Changcha 21,006
21,006,
i Robin ,230.0
230.03
Gasoline 3
Engine
Co., Ltd.
Beijing
Tsinghua
Xingye
Industrial
44,182. 44,182. 44,182.
Investme
50 50 50
nt
Managem
ent Co.,
Ltd.
21,006
21,050, 44,182. 44,182.
Subtotal ,230.0
412.53 50 50
3
21,006
21,050, 44,182. 44,182.
Total ,230.0
412.53 50 50
3
115
Changchai Company, Limited Annual Report 2017
(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
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
116
Changchai Company, Limited Annual Report 2017
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
Gains due to that the investment costs for the shares of Changzhou Fuji Changchai
Company to obtain subsidiaries, associates and Robin Gasoline Engine Co., Ltd. on
joint ventures are lower than the enjoyable fair 19,924,486.12 January 20, 2017. So FCR has
value of the identifiable net assets of the investees incorporated into Changchai company's
when making the investments consolidated statement 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
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
117
Changchai Company, Limited Annual Report 2017
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.
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)
Weighted average EPS (Yuan/share)
Profit as of Reporting Period
ROE (%) EPS-basic EPS-diluted
Net profit attributable to common shareholders of
2.00 0.08 0.08
the Company
Net profit attributable to common shareholders of
the Company after deduction of non-recurring 0.81 0.03 0.03
profit and loss
The Board of Directors
Changchai Company, Limited
April 13, 2018
118
