Changchai Company, Limited
Financial Report For the Year 2019
I Independent Auditor’s Report
Type of the independent auditor’s opinion Unmodified unqualified opinion
Date of signing this report 9 April 2020
Gongzheng Tianye Certified Public Accountants
Name of the independent auditor
(Special General Partnership)
No. of the auditor’s report SGW[2020]A237
Name of the certified public accountants Dai Weizhong, Xu Wenxiang
Text of the Independent Auditor’s Report
To the Shareholders of Changchai Company, Limited,
I Opinion
We have audited the accompanying financial statements of Changchai Company, Limited. (together with its
consolidated subsidiaries included in the consolidated financial statements, the “Company”), which comprise the
parent’s and consolidated balance sheets as at 31 December 2019, the parent’s and consolidated income statements,
the parent’s and consolidated cash flow statements, the parent’s and consolidated statements of changes in owners’
equity for the year then ended, as well as the notes to the financial statements.
In our opinion, the financial statements attached were prepared in line with the regulations of Accounting
Standards for Business Enterprises in all significant aspects which gave a true and fair view of the consolidated
and parent financial position of Changchai Company, Limited. as at 31 December 2019 and the consolidated and
parent business performance and cash flow for 2019.
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for Audit of Financial
Statements section of our report. We are independent of the Company in accordance with the China Code of
Ethics for Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance with
the said Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
III Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. And key audit matter identified in our audit is summarized as follows:
(I) Recognition of revenue
1. Description of the item
For details of accounting policies governing revenue recognition, please refer to the Note III-25 Revenue and
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the Note V-37 Operating Revenue and Cost of Sales. The operating revenue of the Company in 2019 is
RMB2,040,133,700.
Since the operating revenue is one of key performance indicators of the Company, and there is the inherent
risk that the management may manipulate the timing of revenue recognition for the purpose of achieving certain
goals or expectations, so we identify the revenue recognition as a key audit item.
2. Response for audit
(1) Know the key internal control related to revenue recognition, evaluate whether its design and execution
are valid or not, and test the operation effectiveness of the related internal control.
(2) Analyze and assess the time-point of transferring major risks and rewards related to recognition of sales
revenue through the sampling inspection of sales contract and interviews with management, and then evaluate the
recognition policies of sales revenue of the Company.
(3) Check the supporting documents related to revenue recognition, such as sales contracts, order form,
invoice for sales, shipping order, declaration for exportation, and etc.
(4) Check the operating revenue recognized before and after the balance sheet date to the supporting
documents, such as shipping order, declaration for exportation, and etc by sampling method to assess whether the
operating revenue is recognized within appropriate period.
(5) Implement the confirmation by drawing sample to recognize the balance of accounts receivable and the
amount of sales revenue according to the features and natures of customer transaction.
(II) Bad debt provision for accounts receivable
1. Description of the item
Please refer to the accounting policies stipulated in the Note III-10 Impairment of Financial Assets and the
Note V-4 Accounts Receivable. On 31 December 2019, as for accounts receivable of the Company, the carrying
amount was RMB668.5874 million, the bad debt provision was RMB249.2917 million, and the carrying value
was RMB419.2957 million, accounting for 12.03% of total assets at the period-end. The bad debt of accounts
receivable due to failure of recovery at maturity or failure of recovery will generate significant impacts on
financial statements, thus, we identify the impairment of accounts receivable as a key audit item.
2. Response for audit
(1) Access Changchai’s internal control systems of sales and accounts receivable management to understand
and evaluate the design of internal control, and carry out walk-through test to confirm the implementation of
internal control systems.
(2) Analyze and confirm the reasonableness of Changchai’s accounting estimates of bad debt provision for
accounts receivable, including the basis for determining the combination of accounts receivable, the expected
credit loss rate and the judgment of impairment test of accounts receivable evaluated individually.
(3) Access and check the account receivable details, aging schedule, statement of provisions for bad debts,
and confirm the reasonableness of bad debt provision for accounts receivable by combining with the request of
confirmation of balance and subsequent collection inspection;
(4) Understand the reasons for accounts receivable, check Changchai’s reconciliation and collection during
the reporting period and any other data related to payment recovery, verify and confirm its accounts receivable
without transaction dispute at the end of the reporting period, as well as the adequacy of bad debt provision for
accounts receivable.
(5) Send request for confirmation of balance, and confirm the authenticity and accuracy of the amount of
accounts receivable on the balance sheet date by combining with subsequent inspection and other procedures.
IV Other Information
The Company’s management (hereinafter referred to as “management”) is responsible for the other
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information. The other information comprises all of the information included in the Company’s 2019 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.
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(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the
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 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.
Gongzheng Tianye Certified Public Accountants Chinese CPA Dai Weizhong
(Special General Partnership) (Engagement Partner)
Chinese CPA Xu Wenxiang
Wuxi China 9 April 2020
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Changchai Company, Limited
Unit: RMB
Item 31 December 2019 31 December 2018
Current assets:
Monetary assets 637,214,006.06 800,960,036.69
Settlement reserve
Interbank loans granted
Held-for-trading financial
10,000,000.00
assets
Financial assets at fair value
through profit or loss
Derivative financial assets
4
Notes receivable 606,283,023.05 495,370,782.47
Accounts receivable 419,295,665.51 378,859,159.11
Accounts receivable
financing
Prepayments 12,930,546.16 11,352,297.10
Premiums receivable
Reinsurance receivables
Receivable reinsurance
contract reserve
Other receivables 10,597,073.18 9,244,584.42
Including: Interest
receivable
Dividends
receivable
Financial assets purchased
under resale agreements
Inventories 473,352,010.58 557,953,891.70
Contractual assets
Assets classified as held for
sale
Current portion of
non-current assets
Other current assets 6,353,920.33 34,357,608.97
Total current assets 2,176,026,244.87 2,288,098,360.46
Non-current assets:
Loans and advances to
customers
Investments in debt
obligations
Available-for-sale financial
498,851,369.49
assets
Investments in other debt
obligations
Held-to-maturity investments
Long-term receivables
Long-term equity investments
Investments in other equity
532,886,000.00
instruments
5
Other non-current financial
77,952,101.63
assets
Investment property 48,447,666.83 50,656,007.63
Fixed assets 457,582,514.13 511,250,371.37
Construction in progress 91,358,156.24 89,090,384.71
Productive living assets
Oil and gas assets
Use rights assets
Intangible assets 99,699,450.26 103,092,879.38
R&D expense
Goodwill
Long-term prepaid expense
Deferred income tax assets 1,023,856.52 979,822.71
Other non-current assets
Total non-current assets 1,308,949,745.61 1,253,920,835.29
Total assets 3,484,975,990.48 3,542,019,195.75
Current liabilities:
Short-term borrowings 22,000,000.00 27,000,000.00
Borrowings from the central
bank
Interbank loans obtained
Held-for-trading financial
liabilities
Financial liabilities at fair
value through profit or loss
Derivative financial liabilities
Notes payable 403,035,000.00 438,375,400.00
Accounts payable 525,610,256.89 591,754,875.77
Advances from customers 30,836,615.21 34,500,232.97
Contractual liabilities
Financial assets sold under
repurchase agreements
Customer deposits and
interbank deposits
Payables for acting trading of
securities
6
Payables for underwriting of
securities
Payroll payable 44,559,015.79 50,500,592.99
Taxes payable 9,094,382.58 7,066,085.89
Other payables 203,840,127.19 199,412,250.90
Including: Interest payable 0.00
Dividends
3,891,433.83 3,891,433.83
payable
Handling charges and
commissions payable
Reinsurance payables
Liabilities directly associated
with assets classified as held for
sale
Current portion of
18,500,000.00
non-current liabilities
Other current liabilities 1,177,712.38 2,082,985.18
Total current liabilities 1,240,153,110.04 1,369,192,423.70
Non-current liabilities:
Insurance contract reserve
Long-term borrowings 0.00 2,000,000.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term payroll payable
Provisions
Deferred income 58,864,111.22 59,928,484.84
Deferred income tax
57,082,890.27 47,971,780.36
liabilities
Other non-current liabilities
Total non-current liabilities 115,947,001.49 109,900,265.20
Total liabilities 1,356,100,111.53 1,479,092,688.90
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
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Including: Preferred shares
Perpetual bonds
Capital reserves 164,328,665.43 164,328,665.43
Less: Treasury stock
Other comprehensive income 317,059,775.00 264,405,675.00
Specific reserve 17,560,202.07 15,182,958.83
Surplus reserves 322,226,700.34 320,133,050.15
General reserve
Retained earnings 726,689,929.10 717,883,351.33
Total equity attributable to
owners of the Company as the 2,109,239,597.94 2,043,308,026.74
parent
Non-controlling interests 19,636,281.01 19,618,480.11
Total owners’ equity 2,128,875,878.95 2,062,926,506.85
Total liabilities and owners’
3,484,975,990.48 3,542,019,195.75
equity
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2019 31 December 2018
Current assets:
Monetary assets 584,957,678.96 759,404,219.72
Held-for-trading financial
assets
Financial assets at fair value
through profit or loss
Derivative financial assets
Notes receivable 576,948,023.05 490,519,795.91
Accounts receivable 337,447,538.04 300,357,283.81
Accounts receivable
financing
Prepayments 6,386,284.14 4,768,038.11
Other receivables 23,639,899.46 21,681,331.85
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Including: Interest
receivable
Dividends
receivable
Inventories 368,653,472.39 437,423,195.46
Contractual assets
Assets classified as held for
sale
Current portion of
non-current assets
Other current assets 3,898,333.51 23,099,858.67
Total current assets 1,901,931,229.55 2,037,253,723.53
Non-current assets:
Investments in debt
obligations
Available-for-sale financial
470,940,000.00
assets
Investments in other debt
obligations
Held-to-maturity investments
Long-term receivables
Long-term equity investments 251,752,730.03 241,752,730.03
Investments in other equity
532,886,000.00
instruments
Other non-current financial
50,000,000.00
assets
Investment property 48,447,666.83 50,656,007.63
Fixed assets 364,071,199.07 413,186,680.19
Construction in progress 89,330,161.60 87,007,215.91
Productive living assets
Oil and gas assets
Use rights assets
Intangible assets 70,169,770.91 72,184,608.63
R&D expense
Goodwill
Long-term prepaid expense
Deferred income tax assets 970,026.67 930,641.19
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Other non-current assets
Total non-current assets 1,407,627,555.11 1,336,657,883.58
Total assets 3,309,558,784.66 3,373,911,607.11
Current liabilities:
Short-term borrowings 5,000,000.00 10,000,000.00
Held-for-trading financial
liabilities
Financial liabilities at fair
value through profit or loss
Derivative financial liabilities
Notes payable 392,105,000.00 425,995,400.00
Accounts payable 481,854,210.18 561,555,397.44
Advances from customers 28,673,664.87 32,072,387.55
Contractual liabilities
Payroll payable 39,125,477.30 43,597,759.22
Taxes payable 5,952,664.10 2,443,767.89
Other payables 191,962,821.35 185,022,961.56
Including: Interest payable 0.00 0.00
Dividends
3,243,179.97 3,243,179.97
payable
Liabilities directly associated
with assets classified as held for
sale
Current portion of
18,500,000.00
non-current liabilities
Other current liabilities
Total current liabilities 1,144,673,837.80 1,279,187,673.66
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term payroll payable
Provisions
10
Deferred income 58,864,111.22 59,928,484.84
Deferred income tax
55,951,725.00 46,659,825.00
liabilities
Other non-current liabilities
Total non-current liabilities 114,815,836.22 106,588,309.84
Total liabilities 1,259,489,674.02 1,385,775,983.50
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 183,071,147.70 183,071,147.70
Less: Treasury stock
Other comprehensive income 317,059,775.00 264,405,675.00
Specific reserve 17,560,202.07 15,182,958.83
Surplus reserves 322,226,700.34 320,133,050.15
Retained earnings 648,776,959.53 643,968,465.93
Total owners’ equity 2,050,069,110.64 1,988,135,623.61
Total liabilities and owners’
3,309,558,784.66 3,373,911,607.11
equity
3. Consolidated Income Statement
Unit: RMB
Item 2019 2018
1. Revenue 2,040,133,717.30 2,132,902,718.60
Including: Operating revenue 2,040,133,717.30 2,132,902,718.60
Interest income
Premium income
Handling charge and commission
income
2. Costs and expenses 1,985,673,605.20 2,140,281,299.65
Including: Cost of sales 1,709,649,777.75 1,813,444,585.66
Interest expense
Handling charge and commission
expense
Surrenders
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Net claims paid
Net amount provided as
insurance contract reserve
Expenditure on policy dividends
Reinsurance premium expense
Taxes and surcharges 10,959,071.89 12,532,729.68
Selling expense 97,085,117.05 126,997,066.87
Administrative expense 106,183,133.40 116,027,838.96
R&D expense 66,221,376.27 72,182,840.78
Finance costs -4,424,871.16 -903,762.30
Including: Interest expense 5,722,554.43 4,553,608.46
Interest income 6,719,990.78 4,665,445.23
Add: Other income 5,312,295.51 6,291,685.65
Return on investment (“-” for loss) 7,951,711.61 113,270,824.83
Including: Share of profit or loss of
joint ventures and associates
Income from the derecognition of
financial assets at amortized cost (“-” for loss)
Foreign exchange gain (“-” for loss)
Net gain on exposure hedges (“-” for
loss)
Gain on changes in fair value (“-” for
-49,255.00
loss)
Credit impairment loss (“-” for loss) -933,128.89
Asset impairment loss (“-” for loss) -42,371,202.17 -37,598,498.08
Asset disposal income (“-” for loss) 2,059,668.56 662,151.89
3. Operating profit (“-” for loss) 26,430,201.72 75,247,583.24
Add: Non-operating income 446,345.38 1,938,995.76
Less: Non-operating expense 219,341.54 1,474,218.49
4. Profit before tax (“-” for loss) 26,657,205.56 75,712,360.51
Less: Income tax expense 1,704,818.55 13,545,662.67
5. Net profit (“-” for net loss) 24,952,387.01 62,166,697.84
5.1 By operating continuity
5.1.1 Net profit from continuing
24,952,387.01 62,166,697.84
operations (“-” for net loss)
5.1.2 Net profit from discontinued
operations (“-” for net loss)
12
5.2 By ownership
5.2.1 Net profit attributable to owners of
24,934,586.11 62,021,374.04
the Company as the parent
5.2.1 Net profit attributable to
17,800.90 145,323.80
non-controlling interests
6. Other comprehensive income, net of tax 52,654,100.00 -250,662,875.00
Attributable to owners of the Company as
52,654,100.00 -250,662,875.00
the parent
6.1 Items that will not be reclassified to
52,654,100.00
profit or loss
6.1.1 Changes caused by
remeasurements on defined benefit pension
schemes
6.1.2 Other comprehensive income that
will not be reclassified to profit or loss under
the equity method
6.1.3 Changes in the fair value of
52,654,100.00
investments in other equity instruments
6.1.4 Changes in the fair value of the
company’s credit risks
6.1.5 Other
6.2 Items that will be reclassified to profit
-250,662,875.00
or loss
6.2.1 Other comprehensive income that
will be reclassified to profit or loss under the
equity method
6.2.2 Changes in the fair value of
investments in other debt obligations
6.2.3 Gain/Loss on changes in the fair
-250,662,875.00
value of available-for-sale financial assets
6.2.4 Other comprehensive income
arising from the reclassification of financial
assets
6.2.5 Gain/Loss arising from the
reclassification of held-to-maturity
investments to available-for-sale financial
assets
6.2.6 Allowance for credit impairments
in investments in other debt obligations
6.2.7 Reserve for cash flow hedges
6.2.8 Differences arising from the
translation of foreign currency-denominated
financial statements
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6.2.9 Other
Attributable to non-controlling interests
7. Total comprehensive income 77,606,487.01 -188,496,177.16
Attributable to owners of the Company as
77,588,686.11 -188,641,500.96
the parent
Attributable to non-controlling interests 17,800.90 145,323.80
8. Earnings per share
8.1 Basic earnings per share 0.04 0.11
8.2 Diluted earnings per share 0.04 0.11
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
4. Income Statement of the Company as the Parent
Unit: RMB
Item 2019 2018
1. Operating revenue 1,866,291,739.39 1,968,727,065.36
Less: Cost of sales 1,575,626,989.46 1,689,706,860.63
Taxes and surcharges 8,407,285.53 9,550,011.21
Selling expense 89,281,567.68 113,219,756.42
Administrative expense 89,269,943.25 99,399,032.15
R&D expense 60,705,823.99 70,981,785.06
Finance costs -7,320,351.23 -2,269,683.27
Including: Interest expense 1,974,711.69 1,150,062.50
Interest income 6,955,017.26
4,320,565.70
Add: Other income 3,864,303.74 6,156,851.75
Return on investment (“-” for loss) 6,206,814.50 112,464,720.49
Including: Share of profit or loss of
joint ventures and associates
Income from the derecognition of
financial assets at amortized cost (“-” for loss)
Net gain on exposure hedges (“-” for
loss)
Gain on changes in fair value (“-” for
loss)
Credit impairment loss (“-” for loss) 750,844.30
14
Asset impairment loss (“-” for loss) -41,914,242.93 -33,088,706.77
Asset disposal income (“-” for loss) 2,072,367.71 577,265.23
2. Operating profit (“-” for loss) 21,300,568.03 74,249,433.86
Add: Non-operating income 13,825.00 1,231,701.78
Less: Non-operating expense 141,118.07 1,442,817.89
3. Profit before tax (“-” for loss) 21,173,274.96 74,038,317.75
Less: Income tax expense 236,773.02 9,759,917.90
4. Net profit (“-” for net loss) 20,936,501.94 64,278,399.85
4.1 Net profit from continuing operations
20,936,501.94 64,278,399.85
(“-” for net loss)
4.2 Net profit from discontinued operations
(“-” for net loss)
5. Other comprehensive income, net of tax 52,654,100.00 -250,662,875.00
5.1 Items that will not be reclassified to
52,654,100.00
profit or loss
5.1.1 Changes caused by remeasurements
on defined benefit pension schemes
5.1.2 Other comprehensive income that
will not be reclassified to profit or loss under
the equity method
5.1.3 Changes in the fair value of
52,654,100.00
investments in other equity instruments
5.1.4 Changes in the fair value of the
company’s credit risks
5.1.5 Other
5.2 Items that will be reclassified to profit or
-250,662,875.00
loss
5.2.1 Other comprehensive income that
will be reclassified to profit or loss under the
equity method
5.2.2 Changes in the fair value of
investments in other debt obligations
5.2.3 Gain/Loss on changes in the fair
-250,662,875.00
value of available-for-sale financial assets
5.2.4 Other comprehensive income arising
from the reclassification of financial assets
5.2.5 Gain/Loss arising from the
reclassification of held-to-maturity investments
to available-for-sale financial assets
15
5.2.6 Allowance for credit impairments in
investments in other debt obligations
5.2.7 Reserve for cash flow hedges
5.2.8 Differences arising from the
translation of foreign currency-denominated
financial statements
5.2.9 Other
6. Total comprehensive income 73,590,601.94 -186,384,475.15
7. Earnings per share
7.1 Basic earnings per share
7.2 Diluted earnings per share
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2019 2018
1. Cash flows from operating
activities:
Proceeds from sale of commodities
2,172,685,126.88 2,425,197,716.22
and rendering of services
Net increase in customer deposits
and interbank deposits
Net increase in borrowings from
the 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
Interest, handling charges and
commissions received
Net increase in interbank loans
obtained
Net increase in proceeds from
repurchase transactions
Net proceeds from acting trading of
securities
Tax rebates 42,607,617.45 57,089,558.17
16
Cash generated from other
11,679,968.90 12,322,331.45
operating activities
Subtotal of cash generated from
2,226,972,713.23 2,494,609,605.84
operating activities
Payments for commodities and
1,820,127,110.80 1,748,699,087.54
services
Net increase in loans and advances
to customers
Net increase in deposits in the
central bank and in interbank loans
granted
Payments for claims on original
insurance contracts
Net increase in interbank loans
granted
Interest, handling charges and
commissions paid
Policy dividends paid
Cash paid to and for employees 286,479,391.58 321,746,157.63
Taxes paid 19,775,735.08 33,740,896.03
Cash used in other operating
121,133,333.29 116,603,937.75
activities
Subtotal of cash used in operating
2,247,515,570.75 2,220,790,078.95
activities
Net cash generated from/used in
-20,542,857.52 273,819,526.89
operating activities
2. Cash flows from investing
activities:
Proceeds from disinvestment 11,201,882.58 43,589,736.75
Return on investment 8,488,216.45 113,425,932.70
Net proceeds from the disposal of
fixed assets, intangible assets and 326,835.85 979,093.38
other long-lived assets
Net proceeds from the disposal of
subsidiaries and other business units
Cash generated from other
investing activities
Subtotal of cash generated from
20,016,934.88 157,994,762.83
investing activities
Payments for the acquisition of
fixed assets, intangible assets and 39,198,814.48 18,482,660.75
other long-lived assets
17
Payments for investments 58,980,496.31 33,293,147.06
Net increase in pledged loans
granted
Net payments for the acquisition of
subsidiaries and other business units
Cash used in other investing
activities
Subtotal of cash used in investing
98,179,310.79 51,775,807.81
activities
Net cash generated from/used in
-78,162,375.91 106,218,955.02
investing activities
3. Cash flows from financing
activities:
Capital contributions received
Including: Capital contributions
by non-controlling interests to
subsidiaries
Borrowings obtained 34,000,000.00 40,700,000.00
Cash generated from other
financing activities
Subtotal of cash generated from
34,000,000.00 40,700,000.00
financing activities
Repayments of borrowings 59,500,000.00 39,600,000.00
Payments for interest and dividends 19,005,058.96 19,322,496.75
Including: Dividends paid by
subsidiaries to non-controlling
interests
Cash used in other financing
activities
Subtotal of cash used in financing
78,505,058.96 58,922,496.75
activities
Net cash generated from/used in
-44,505,058.96 -18,222,496.75
financing activities
4. Effect of foreign exchange rate
715,396.97
changes on cash and cash equivalents
5. Net increase in cash and cash
-142,494,895.42 361,815,985.16
equivalents
Add: Cash and cash equivalents,
687,079,639.59 325,263,654.43
beginning of the period
6. Cash and cash equivalents, end of
544,584,744.17 687,079,639.59
the period
18
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item 2019 2018
1. Cash flows from operating activities:
Proceeds from sale of commodities
1,911,679,765.84 2,373,022,957.25
and rendering of services
Tax rebates 34,035,423.13 40,981,398.83
Cash generated from other operating
9,754,947.38 10,293,262.16
activities
Subtotal of cash generated from
1,955,470,136.35 2,424,297,618.24
operating activities
Payments for commodities and
1,637,576,894.25 1,748,150,322.59
services
Cash paid to and for employees 237,310,147.26 268,331,025.24
Taxes paid 8,675,558.38 21,464,799.34
Cash used in other operating
107,932,998.05 114,428,231.52
activities
Subtotal of cash used in operating
1,991,495,597.94 2,152,374,378.69
activities
Net cash generated from/used in
-36,025,461.59 271,923,239.55
operating activities
2. Cash flows from investing activities:
Proceeds from disinvestment 4,000,000.00 30,000,000.00
Return on investment 6,206,814.50 112,621,521.91
Net proceeds from the disposal of
fixed assets, intangible assets and other 297,935.85 867,615.38
long-lived assets
Net proceeds from the disposal of
subsidiaries and other business units
Cash generated from other investing
9,500,000.00
activities
Subtotal of cash generated from
20,004,750.35 143,489,137.29
investing activities
Payments for the acquisition of fixed
assets, intangible assets and other 30,078,441.85 16,631,342.48
long-lived assets
Payments for investments 60,000,000.00 10,000,000.00
Net payments for the acquisition of
subsidiaries and other business units
19
Cash used in other investing
9,500,000.00
activities
Subtotal of cash used in investing
99,578,441.85 26,631,342.48
activities
Net cash generated from/used in
-79,573,691.50 116,857,794.81
investing activities
3. Cash flows from financing activities:
Capital contributions received
Borrowings obtained 5,000,000.00 10,000,000.00
Cash generated from other financing
activities
Subtotal of cash generated from
5,000,000.00 10,000,000.00
financing activities
Repayments of borrowings 28,500,000.00 1,000,000.00
Payments for interest and dividends 16,009,069.84 17,991,292.28
Cash used in other financing
activities
Subtotal of cash used in financing
44,509,069.84 18,991,292.28
activities
Net cash generated from/used in
-39,509,069.84 -8,991,292.28
financing activities
4. Effect of foreign exchange rate
1,031,120.95
changes on cash and cash equivalents
5. Net increase in cash and cash
-154,077,101.98 379,789,742.08
equivalents
Add: Cash and cash equivalents,
651,854,206.79 272,064,464.71
beginning of the period
6. Cash and cash equivalents, end of the
497,777,104.81 651,854,206.79
period
20
7. Consolidated Statements of Changes in Owners’ Equity
2019
Unit: RMB
2019
Equity attributable to owners of the Company as the parent
Other equity
instruments Less: Other Gen Non-cont Total
Item
Share Prefe Perpe Capital Trea compreh Specific Surplus eral Retained Ot rolling owners’
Subtotal
capital rred tual Ot reserves sury ensive reserve reserves reser earnings her interests equity
share bond her stock income ve
s s
1.
Balances
as at the 561,374, 164,328, 264,405, 15,182,9 320,133, 717,883, 2,043,308, 19,618,48 2,062,926,
end of 326.00 665.43 675.00 58.83 050.15 351.33 026.74 0.11 506.85
the prior
year
Add:
Adjustm
ents for
changed
accounti
ng
policies
21
Adjustm
ents for
correctio
ns of
previous
errors
Adjustm
ents for
business
combinat
ions
under
common
control
Other
adjustme
nts
2.
Balances
as at the 561,374, 164,328, 264,405, 15,182,9 320,133, 717,883, 2,043,308, 19,618,48 2,062,926,
beginnin 326.00 665.43 675.00 58.83 050.15 351.33 026.74 0.11 506.85
g of the
year
22
3.
Increase/
decrease
in the 52,654,1 2,377,24 2,093,65 8,806,57 65,931,57 65,949,37
17,800.90
period 00.00 3.24 0.19 7.77 1.20 2.10
(“-” for
decrease
)
3.1
Total
52,654,1 24,934,5 77,588,68 77,606,48
compreh 17,800.90
00.00 86.11 6.11 7.01
ensive
income
3.2
Capital
increase
d and
reduced
by
owners
3.2.
1
Ordinary
shares
increase
d by
owners
23
3.2.
2 Capital
increase
d by
holders
of other
equity
instrume
nts
3.2.
3
Share-ba
sed
payment
s
included
in
owners’
equity
3.2.
4 Other
3.3
Profit 2,093,65 -16,128,0 -14,034,35 -14,034,35
distributi 0.19 08.34 8.15 8.15
on
24
3.3.1
Appropri 2,093,65 -2,093,65
ation to 0.19 0.19
surplus
reserves
3.3.2
Appropri
ation to
general
reserve
3.3.3
Appropri
ation to -14,034,3 -14,034,35 -14,034,35
owners 58.15 8.15 8.15
(or
sharehol
ders)
3.3.4
Other
3.4
Transfers
within
owners’
equity
25
3.4.1
Increase
in capital
(or share
capital)
from
capital
reserves
3.4.2
Increase
in capital
(or share
capital)
from
surplus
reserves
3.4.3
Loss
offset by
surplus
reserves
26
3.4.4
Changes
in
defined
benefit
pension
schemes
transferr
ed to
retained
earnings
3.4.5
Other
compreh
ensive
income
transferr
ed to
retained
earnings
3.4.6
Other
3.5
2,377,24 2,377,243. 2,377,243.
Specific
3.24 24 24
reserve
27
3.5.1
3,868,72 3,868,727. 3,868,727.
Increase
7.07 07 07
in the
period
3.5.2
1,491,48 1,491,483. 1,491,483.
Used in
3.83 83 83
the
period
3.6
Other
4.
Balances
as at the 561,374, 164,328, 317,059, 17,560,2 322,226, 726,689, 2,109,239, 19,636,28 2,128,875,
end of 326.00 665.43 775.00 02.07 700.34 929.10 597.94 1.01 878.95
the
period
2018
Unit: RMB
2018
Equity attributable to owners of the Company as the parent
Other equity
instruments Less: Other Gen Non-cont Total
Item
Share Prefe Perpe Capital Trea comprehe Specific Surplus eral Retained Ot rolling owners’
Subtotal
capital rred tual Ot reserves sury nsive reserve reserves reser earnings her interests equity
share bond her stock income ve
s s
28
1.
Balances
as at the 561,374, 164,328, 515,068,5 13,289,0 313,705, 679,131, 2,246,896, 19,473,1 2,266,370,
end of 326.00 665.43 50.00 59.21 210.16 047.06 857.86 56.31 014.17
the prior
year
Add:
Adjustm
ents for
changed
accounti
ng
policies
Adjustm
ents for
correctio
ns of
previous
errors
Adjustm
ents for
business
combinat
ions
under
common
control
29
Other
adjustme
nts
2.
Balances
as at the 561,374, 164,328, 515,068,5 13,289,0 313,705, 679,131, 2,246,896, 19,473,1 2,266,370,
beginnin 326.00 665.43 50.00 59.21 210.16 047.06 857.86 56.31 014.17
g of the
year
3.
Increase/
decrease
in the -250,662, 1,893,89 6,427,83 38,752,3 -203,588, 145,323. -203,443,
period 875.00 9.62 9.99 04.27 831.12 80 507.32
(“-” for
decrease
)
3.1
Total
-250,662, 62,021,3 -188,641, 145,323. -188,496,
compreh
875.00 74.04 500.96 80 177.16
ensive
income
3.2
Capital
increase
d and
reduced
by
owners
30
3.2.
1
Ordinary
shares
increase
d by
owners
3.2.
2 Capital
increase
d by
holders
of other
equity
instrume
nts
3.2.
3
Share-ba
sed
payment
s
included
in
owners’
equity
3.2.
4 Other
31
3.3
Profit 6,427,83 -23,269,0 -16,841,2 -16,841,2
distributi 9.99 69.77 29.78 29.78
on
3.3.1
Appropri 6,427,83 -6,427,83
ation to 9.99 9.99
surplus
reserves
3.3.2
Appropri
ation to
general
reserve
3.3.3
Appropri
ation to -16,841,2 -16,841,2 -16,841,2
owners 29.78 29.78 29.78
(or
sharehol
ders)
3.3.4
Other
32
3.4
Transfers
within
owners’
equity
3.4.1
Increase
in capital
(or share
capital)
from
capital
reserves
3.4.2
Increase
in capital
(or share
capital)
from
surplus
reserves
3.4.3
Loss
offset by
surplus
reserves
33
3.4.4
Changes
in
defined
benefit
pension
schemes
transferr
ed to
retained
earnings
3.4.5
Other
compreh
ensive
income
transferr
ed to
retained
earnings
3.4.6
Other
3.5
1,893,89 1,893,899. 1,893,899.
Specific
9.62 62 62
reserve
34
3.5.1
4,135,80 4,135,805. 4,135,805.
Increase
5.99 99 99
in the
period
3.5.2
2,241,90 2,241,906. 2,241,906.
Used in
6.37 37 37
the
period
3.6
Other
4.
Balances
as at the 561,374, 164,328, 264,405,6 15,182,9 320,133, 717,883, 2,043,308, 19,618,4 2,062,926,
end of 326.00 665.43 75.00 58.83 050.15 351.33 026.74 80.11 506.85
the
period
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2019
Unit: RMB
2019
Other equity instruments Less:
Other
Item Share Preferr Perpetu Capital Treasu Specific Surplus Retained Oth Total owners’
Oth comprehensi
capital ed al reserves ry reserve reserves earnings er equity
er ve income
shares bonds stock
35
1. Balances
as at the end 561,374,326 183,071,147 264,405,675 15,182,958 320,133,050 643,968,465 1,988,135,623
of the prior .00 .70 .00 .83 .15 .93 .61
year
Add:
Adjustment
s for
changed
accounting
policies
Adjustment
s for
corrections
of previous
errors
Other
adjustments
2. Balances
as at the 561,374,326 183,071,147 264,405,675 15,182,958 320,133,050 643,968,465 1,988,135,623
beginning .00 .70 .00 .83 .15 .93 .61
of the year
3. Increase/
decrease in
52,654,100. 2,377,243. 2,093,650.1 4,808,493.6
the period 61,933,487.03
00 24 9 0
(“-” for
decrease)
3.1 Total
52,654,100. 20,936,501.
comprehens 73,590,601.94
00 94
ive income
36
3.2
Capital
increased
and reduced
by owners
3.2.1
Ordinary
shares
increased
by owners
3.2.2
Capital
increased
by holders
of other
equity
instruments
3.2.3
Share-based
payments
included in
owners’
equity
3.2.4
Other
3.3 Profit 2,093,650.1 -16,128,008. -14,034,358.1
distribution 9 34 5
37
3.3.1
Appropriati
2,093,650.1 -2,093,650.1
on to
9 9
surplus
reserves
3.3.2
Appropriati
on to -14,034,358. -14,034,358.1
owners (or 15 5
shareholder
s)
3.3.3
Other
3.4
Transfers
within
owners’
equity
3.4.1
Increase in
capital (or
share
capital)
from capital
reserves
38
3.4.2
Increase in
capital (or
share
capital)
from
surplus
reserves
3.4.3
Loss offset
by surplus
reserves
3.4.4
Changes in
defined
benefit
pension
schemes
transferred
to retained
earnings
3.4.5
Other
comprehens
ive income
transferred
to retained
earnings
3.4.6
Other
39
3.5
2,377,243.
Specific 2,377,243.24
24
reserve
3.5.1
3,868,727.
Increase in 3,868,727.07
07
the period
3.5.2
1,491,483.
Used in the 1,491,483.83
83
period
3.6 Other
4. Balances
as at the end 561,374,326 183,071,147 317,059,775 17,560,202 322,226,700 648,776,959 2,050,069,110
of the .00 .70 .00 .07 .34 .53 .64
period
2018
Unit: RMB
2018
Other equity instruments Less:
Other
Item Share Preferr Perpetu Capital Treasu Specific Surplus Retained Oth Total owners’
Oth comprehensi
capital ed al reserves ry reserve reserves earnings er equity
er ve income
shares bonds stock
1. Balances
as at the 561,374,326 183,071,147 515,068,550. 13,289,059 313,705,210 602,959,135 2,189,467,42
end of the .00 .70 00 .21 .16 .85 8.92
prior year
40
Add:
Adjustment
s for
changed
accounting
policies
Adjustment
s for
corrections
of previous
errors
Other
adjustments
2. Balances
as at the 561,374,326 183,071,147 515,068,550. 13,289,059 313,705,210 602,959,135 2,189,467,42
beginning .00 .70 00 .21 .16 .85 8.92
of the year
3. Increase/
decrease in
-250,662,875 1,893,899. 6,427,839.9 41,009,330. -201,331,805.
the period
.00 62 9 08 31
(“-” for
decrease)
3.1 Total
-250,662,875 64,278,399. -186,384,475.
comprehens
.00 85 15
ive income
41
3.2
Capital
increased
and reduced
by owners
3.2.1
Ordinary
shares
increased
by owners
3.2.2
Capital
increased
by holders
of other
equity
instruments
3.2.3
Share-based
payments
included in
owners’
equity
3.2.4
Other
3.3 Profit 6,427,839.9 -23,269,069. -16,841,229.7
distribution 9 77 8
42
3.3.1
Appropriati
6,427,839.9 -6,427,839.9
on to
9 9
surplus
reserves
3.3.2
Appropriati
on to -16,841,229. -16,841,229.7
owners (or 78 8
shareholder
s)
3.3.3
Other
3.4
Transfers
within
owners’
equity
3.4.1
Increase in
capital (or
share
capital)
from capital
reserves
43
3.4.2
Increase in
capital (or
share
capital)
from
surplus
reserves
3.4.3
Loss offset
by surplus
reserves
3.4.4
Changes in
defined
benefit
pension
schemes
transferred
to retained
earnings
3.4.5
Other
comprehens
ive income
transferred
to retained
earnings
3.4.6
Other
44
3.5
1,893,899.
Specific 1,893,899.62
62
reserve
3.5.1
4,135,805.
Increase in 4,135,805.99
99
the period
3.5.2
2,241,906.
Used in the 2,241,906.37
37
period
3.6 Other
4. Balances
as at the 561,374,326 183,071,147 264,405,675. 15,182,958 320,133,050 643,968,465 1,988,135,62
end of the .00 .70 00 .83 .15 .93 3.61
period
45
III. Company Profile
Changchai Company, Limited (hereinafter referred to as “the Company”) was founded on 5 May 1994, which
is a company limited by shares promoted solely by Changzhou Diesel Engine Plant through the approval by the
State Commission for Restructuring the Economic Systems with document TGS [1993] No. 9 on 15 January 1993
by way of public offering of shares. With the approved of the People’s Government of Jiangsu Province SZF
[1993] No. 67, as well as reexamined and approved by China Securities Regulatory Commission (“CSRC”)
through document ZJFSZ (1994) No. 9, the Company initially issued A shares to the public from 15 March 1994
to 30 March 1994. As approved by the Shenzhen Stock Exchange through document SZSFZ (1994) No. 15, such
tradable shares of the public got listing on 1 July 1994 at Shenzhen Stock Exchange with “Su Changchai A” for
short of stock, as well as “0570” as stock code (present stock code is “000570”).
In 1996, with the recommendation of the Office of the People’s Government of Jiangsu Province SZBH
[1996] No. 13, as well as first review by Shenzhen Municipal Securities Administration Office through SZBZ
[1996] No. 24, and approval of the State Council Securities Commission ZWF [1996] No. 27, the Company issued
100 million B shares to qualified investors on 27 August 1996 to 30 August 1996, getting listed on 13 September
1996.
On 9 June 2006, the Company held a shareholders’ general meeting related to A shares market to examine
and approve share merger reform plan, and performed the share merger reform on 19 June 2006.
As examined and approved at the 2nd Extraordinary General Meeting of 2009 in September 2009, based on
the total share capital of 374,249,551 shares as at 30 June 2009, the Company implemented the profit distribution
plan, i.e. to distribute 5 bonus shares and cash of RMB0.80 for every 10 shares, with registered capital increased
by RMB187,124,775.00, as well as registered capital of RMB561,374,326.00 after change. As at 31 December
2015, the total share capital of the Company is 561,374,326.00 shares, as well as registered capital of
RMB561,374,326.00, which verified by Gongzheng Tianye Certified Public Accountants (Special General
Partnership) with issuing Capital Verification Report SGC [2010] No. B002. And the unified social credit code of
the enterprise business license of the Company is 91320400134792410W.
The Company’s registered address is situated at No. 123 Huaide Middle Road, Changzhou, Jiangsu, as well
as its head office located at No. 123 Huaide Middle Road, Changzhou, Jiangsu.
The Company belongs to manufacturing with business scope including manufacturing and sale of diesel
engine, diesel engines part and casting, grain harvesting machine, rotary cultivators, walking tractor, mould and
fixtures, assembling and sale of diesel generating set and pumping unit. The Company mainly engaged in the
production and sales of small and medium-sized single cylinders and multi-cylinder diesel engine with the label of
Changchai Brand. The diesel engine produced and sold by the Company were mainly used in tractors, combine
harvest models, light commercial vehicle, farm equipment, small-sized construction machinery, generating sets
and shipborne machinery and equipment, etc. The Company’s main business remained unchanged in the
Reporting Period.
The Company established the Shareholders’ General Meeting, the Board of Directors and the Supervisory
Committee, Corporate office, Financial Department, Political Department, Investment and Development
Department, Audit Department, Human Recourses Department, Production Department, Procurement Department,
Sales Company, Chief Engineer Office, Technology Center, QA Department, Foundry Branch, Machine
Processing Branch, Single-cylinder Engine branch, Multi-cylinder Engine Branch and Overseas Business
Department in the Company.
The financial report has been approved to be issued by the Board of Directors on 9 April 2020.
The consolidated scope of the Company of the Reporting Period includes the Company as the parent and 6
subsidiaries. For the details of the consolidated scope of the Reporting Period and the changes situation, please
refer to the changes of the consolidated scope of the notes to the financial report and the notes to the equities
among other entities.
IV. Basis for Preparation of the Financial Report
1. Basis for Preparation
With the going-concern assumption as the basis and based on transactions and other events that actually
occurred, the Company prepared financial statements in accordance with The Accounting Standards for Business
46
Enterprises—Basic Standard issued by the Ministry of Finance with Decree No. 33 and revised with Decree No.
76, the various specific accounting standards, the Application Guidance of Accounting Standards for Business
Enterprises, the Interpretation of Accounting Standards for Business Enterprises and other regulations issued and
revised from 15 February 2006 onwards (hereinafter jointly referred to as “the Accounting Standards for Business
Enterprises”, “China Accounting Standards” or “CAS”), as well as the Rules for Preparation Convention of
Disclosure of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014)
by China Securities Regulatory Commission.
In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the Company
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
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 financial instruments，withdrawal method of the bad debt provision of
the accounts receivable, the measurement of the inventory and the depreciation of the fixed assets etc.
1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Company are in compliance with in compliance with the
Accounting Standards for Business Enterprises, which factually and completely present the Company’s and the
Company’s financial positions, business results and cash flows and other relevant information.
2. Fiscal Period
The fiscal periods are divided into fiscal year and metaphase, the fiscal year is from January 1 to December
31 and as the metaphase included monthly, quarterly and semi-yearly periods.
3. Operating Cycle
A normal operating cycle refers to a period from the Company purchasing assets for processing to realizing
cash or cash equivalents. An operating cycle for the Company is 12 months, which is also the classification
criterion for the liquidity of its assets and liabilities.
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4. Currency Used in Bookkeeping
Renminbi is functional currency of the Company.
5. Accounting Methods for Business Combinations under the Same Control and Business Combinations not
under the Same Control
(1) Business combinations under the same control:
A business combination under the same control is a business combination in which all of the combining
enterprises are ultimately controlled by the same party or the same parties both before and after the business
combination and on which the control is not temporary.
For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it
makes payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share
of the book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity
investment. The difference between the initial cost of the long-term equity investment and the payment in cash,
non-cash assets transferred as well as the book value of the debts borne by the merging party shall offset against
the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.
If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger,
regard the share of the book value of the owner's equity of the merged enterprise as the initial cost of the
long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while
the difference between the initial cost of the long-term equity investment and total face value of the shares issued
shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be
adjusted.
All direct costs for the business combination, including expenses for audit, evaluating and legal services
shall be recorded into the profits and losses at the current period. The expenses such as the handling charges and
commission etc, premium income of deducting the equity securities, and as for the premium income was
insufficient to dilute, the retained earnings shall be written down.
Owning to the reasons such as the additional investment, for the equity investment held before acquiring the
control right of the combined parties, the confirmed relevant gains and losses, other comprehensive income and
the changes of other net assets since the date of the earlier one between the date when acquiring the original equity
right and the date when the combine parties and combined ones were under the same control to the combination
date, should be respectively written down and compared with the beginning balance of retained earnings or the
current gains and losses during the statement period.
(2) Business combinations not under the same control
A business combination not under the same control is a business combination in which the combining
enterprises are not ultimately controlled by the same party or the same parties both before and after the business
combination.
The combination costs of the acquirer and the identifiable net assets obtained by the acquirer in a business
combination shall be measured at the fair values. The acquirer shall recognize the positive balance between the
combination costs and the fair value of the identifiable net assets it obtains forms the acquiree as business
reputation. The direct relevant expenses occurred from the enterprise combination should be included in the
current gains and losses when occurred. The combination costs of the acquirer and the identifiable net assets
obtained by it in the combination shall be measured according to their fair values at the acquiring date. The
difference between the fair value of the assets paid out by the Company and its book value should be included in
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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 Company 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 Company
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 Company are recognized as minority interests and
minority shareholder profits and losses respectively and presented separately under shareholders’ equity and net
profits in the consolidation financial statements. The portion of a subsidiary’s net profits and losses for the period
that belong to minority interests is presented as the item of “minority shareholder profits and losses” under the
bigger item of net profits in the consolidated financial statements. Where the loss of a subsidiary shared by
minority shareholders exceeds the portion enjoyed by minority shareholders in the subsidiary’s opening owners’
equity, minority interests are offset.
The accounting policy or accounting period of each subsidiary is different from which of the Company,
which shall be adjusted as the Company; or subsidiaries shall prepare financial statement again required by the
Company when preparing the consolidated financial statements.
As for the added subsidiary company not controlled by the same enterprise preparing the consolidated
financial statement, shall adjust individual financial statement based on the fair value of the identifiable net assets
on the acquisition date; as for the added subsidiary companies controlled by the same enterprise preparing the
financial statement, shall not adjust the financial statement of the subsidiaries, namely survived by integration as
participating in the consolidation when the final control party starts implementing control and should adjust the
period-begin amount of the consolidated balance sheet and at the same time adjust the relevant items of the
compared statement.
As for the disposed subsidiaries, the operation result and the cash flow should be included in the consolidated
income statement and the consolidated cash flow before the disposing date; the disposed subsidiaries of the
current period, should not be adjusted the period-begin amount of the consolidated balance sheet.
Where the Company 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
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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 Company according to the original
shareholding percentage in the subsidiary, is recorded in investment gains for the period when the Company’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
Company 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 Company classifies joint arrangements into joint operations and joint ventures.
A joint operation refers to a joint arrangement where the Company 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 Company’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 Company’s stake in the joint operation;
(3) Recognizes the income from sale of the Company’s share in the output of the joint operation
(4) Recognizes the income from sale of the joint operation’s outputs according to the Company’s stake in it
(5) Recognizes the expense solely incurred to the Company and the expense incurred to the joint operation
according to the Company’s stake in it.
8. Recognition Standard for Cash and Cash Equivalents
In the Company’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.
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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) Classification of Financial Instruments
The Company classifies the financial assets when initially recognized into the following three categories
based on the business model for financial assets management and characteristics of contractual cash flow of
financial assets: financial assets measured at amortized cost, financial assets at fair value through other
comprehensive income (debt instruments) and financial assets at fair value through profit or loss
Financial liabilities were classifies when initially recognized into financial liabilities at fair value through
profit or loss and financial liabilities measured at amortized cost.
(2) Recognition Basis and Measurement Method for Financial Instruments
① Financial assets measured at amortized cost
Financial assets at amortized cost include notes receivable, accounts receivable, other receivables, long-term
receivables, and investment in debt obligations which are initially measured at fair value and related transaction
cost shall be recorded into the initial recognized amount. For accounts receivable excluding significant financing
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and accounts receivable that the Company decides not to consider financing components less than one year, the
initial measurement shall be made at the contract transaction price. The interest calculated with actual rates for the
holding period shall be recorded into the current profit or loss. When recovered or disposed, the difference
between the price obtained and the carrying value of the financial assets shall be recorded into the current profit or
loss.
② Financial assets at fair value through other comprehensive income (debt instruments)
Financial assets at fair value through other comprehensive income (debt instruments) include accounts
receivable financing and investment in other debt obligations which are initially measured at fair value and related
transaction cost shall be recorded into the initial recognized amount. The subsequent measurement of the financial
assets shall be at fair value and changes of fair value except for interest calculated with actual rates, impairment
losses or gains and exchange gains or losses shall be recorded into other comprehensive income. When
derecognized, the accumulated gains or losses originally recorded into other comprehensive income shall be
transferred into the current profit or loss.
③ Financial assets at fair value through other comprehensive income (equity instruments)
Financial assets at fair value through other comprehensive income (equity instruments) include investment in
other equity instruments, etc. which are initially measured at fair value and related transaction cost shall be
recorded into the initial recognized amount. The subsequent measurement of the financial assets shall be at fair
value and changes of fair value shall be recorded into other comprehensive income. The dividends obtained shall
be recorded into the current profit or loss. When derecognized, the accumulated gains or losses originally recorded
into other comprehensive income shall be transferred into retained earnings.
④ Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include held-for-trading financial assets, derivative
financial assets and other non-current financial assets which are initially measured at fair value and the related
transaction cost shall be recorded into the current profit or loss. The subsequent measurement of the financial
assets shall be at fair value and the changes of fair value shall be recorded into the current profit or loss.
⑤ Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include held-for-trading financial liabilities and
derivative financial liabilities which are initially measured at fair value and the related transaction cost shall be
recorded into the current profit or loss. The subsequent measurement of the financial liabilities shall be at fair
value and the changes of fair value shall be recorded into the current profit or loss. When derecognized, the
difference between the carrying value and the paid consideration shall be recorded into the current profit or loss.
⑥ Financial liabilities at amortized cost
Financial liabilities at amortized cost include short-term borrowings, notes payable, accounts payable, other
payables, long-term borrowings, bonds payable and long-term payables which are initially measured at fair value
and the related transaction cost shall be recorded into the initial recognized amount. The interest calculated with
actual rates for the holding period shall be recorded into the current profit or loss. When derecognized, the
difference between the paid consideration and the carrying value of the financial liabilities shall be recorded into
the current profit or loss.
(3) Recognition Basis and Measurement of Transfer of Financial Assets
Where the Company has transferred 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 separately recognize the rights and
obligations generated retained from the transfer as assets or liabilities. If it retained nearly all of the risks and
rewards related to the ownership of the financial asset, it shall continue to recognize the transferred financial asset.
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Where the Company does not transfer or retain nearly all of the risks and rewards related to the ownership of a
financial asset, it shall deal with it according to the circumstances as follows, respectively: (1) If it gives up its
control over the financial asset, it shall stop recognizing the financial asset and separately recognize the rights and
obligations generated retained from the transfer as assets or liabilities; (2) If it does not give up its control over the
financial asset, it shall, according to the extent of its continuous involvement in the transferred financial asset,
recognize the related financial asset and recognize the relevant liability accordingly.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference
between the amounts of the following 2 items shall be recorded in the profits and losses of the current period: (1)
The carrying value of the transferred financial asset on the derecognition date; (2) The sum of consideration
received from the transfer of financial assets, and derecognition amount among the accumulative amount of the
changes of the fair value originally recorded in the other comprehensive income (the financial assets involve
transfer are investments in debt instruments at fair value through other comprehensive income. If the transfer of
partial financial asset satisfies the conditions to stop the recognition, the entire carrying value of the transferred
financial asset shall, between the portion whose recognition has been stopped and the portion whose recognition
has not been stopped, be apportioned according to their respective relative fair value on the transfer date, and the
difference between the amounts of the following two items shall be included into the profits and losses of the
current period: (1)The carrying value of the portion whose recognition has been stopped; (2)The sum of
consideration of the portion whose recognition has been stopped, and derecognition amount among the
accumulative amount of the changes of the fair value originally recorded in the other comprehensive income (the
financial assets involve transfer are investments in debt instruments at fair value through other comprehensive
income.
(4) Derecognition Basis of Financial Liabilities
A financial liability or part of it can be derecognized after its current obligation has been relieved in full or in
part.
(5) Recognition of Fair Value of Financial Assets and Financial Liabilities
The fair value of financial instruments with an active market is determined by the quoted price in the active
market. For financial instruments without active market, the fair value is determined by valuation techniques. The
Company adopts the valuation techniques applicable to the current conditions which are supported by sufficient
data and other information for valuation, and selects the input values consistent with the characteristics of assets
or liabilities considered by market participants in asset or liability transactions, with priority to observable input
values. Unobservable input values are used only when relevant observable input values are not available or
practical.
(6) Impairment of financial instrument
① Impairment measurement and accounting handling of financial instrument
Based on expected credit loss, the Company conducts impairment handling and confirms credit impairment
loss for financial assets which is measured by amortized cost, debt instrument investment which is measured by
fair value and whose change is calculated into other comprehensive profits, financial guarantee contract
Expected credit loss refers to weighted average of credit loss of financial instrument which takes the risk of
contract breach occurrence as the weight. Credit loss refers to the difference between all contract cash flow which
is converted into cash according to actual interest rate and receivable according to contract and all cash flow
which to be charged as expected, i.e. current value of all cash shortage. Among it, as for financial asset purchased
or original which has had credit impairment, it should be converted into cash according actual interest rate of this
financial asset after credit adjustment.
As for financial asset purchased or original which has had credit impairment, the Company only confirms
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cumulative change of expected credit loss within the whole duration after initial confirmation on the balance sheet
date as loss reserve.
As for accounts receivable which don’t include major financing contents or the Company does not consider
financing contents in contract which is less than one year, the Company applies simplified measurement method,
and measures loss reserve according to amount of expected credit loss within the whole duration.
As for account receivable of rental and accounts receivable including major financing contents, the Company
applies simplified measurement method, and measure loss reserve according to amount of expected credit loss
within the whole duration.
As for financial asset beyond above mentioned measurement methods, the Company evaluates whether its
credit risk has increased obviously since the initial confirmation on each balance sheet date. In case credit risk has
increased obviously, the Company measures the loss reserve according to amount of expected credit loss within
the whole duration; in case the credit risk does not increase obviously, the Company measures loss reserve
according to the amount of expected credit loss in next 12 months.
By utilizing obtainable rational and well grounded information, including forward-looking information,
comparing the risk of contract breach on balance sheet date and risk of contract breach on initial confirmation date,
the Company confirms whether the credit risk of financial instrument has increased obviously from initial
confirmation.
On balance sheet date, in case the Company judges that the financial instrument just has relatively low credit
risk, then it will be assumed that credit risk of the financial instrument has not increased obviously.
Based on single financial instrument or financial portfolio, the Company evaluates expected credit risk and
measures expected credit loss. When based on financial instrument portfolio, the Company takes common risk
characteristics as the basis, and divides financial instruments into different portfolios.
The Company measures expected credit loss again on each balance sheet date, the increase of loss reserve or
amount which is transfer back generated by it is calculated into current profits and losses as impairment profits or
losses. As for financial asset which is measured by amortized cost, loss reserve offsets the carrying value of the
financial asset listed in the balance sheet; as for debt investment which is measured by fair value and whose
change is calculated into other comprehensive profits, the Company confirms its loss reserve in other
comprehensive profits and does not offset the carrying value of the financial asset.
② For notes receivable, accounts receivable, other receivables and long-term receivables with objective
evidence indicating impairment and those suitable for individual evaluation, the Company carries out impairment
test separately to confirm expected credit loss and prepare provision for impairment of single items. For notes
receivable, accounts receivable and other receivables without objective evidence of impairment, or a single
financial asset with expected credit loss impossible to be assessed at a reasonable cost, the Company divides the
receivables into groups according to the characteristics of credit risk, and calculate the expected credit loss based
on receivable groups.
Accounts receivable with expected credit losses measured by groups
Specific groups and method of measuring expected credit loss
Item Recognition basis Method of measuring expected credit losses
Bank’s acceptance bills Consulting historical experience in credit losses,
receivable combining current situation and prediction for future
Bill type economic situation, the expected credit loss shall be
Trade acceptance bills accounted through exposure at default and the expected
receivable credit loss rate over the entire life
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Accounts Aging group Prepare the comparative list between aging of accounts
receivable-credit risk receivable and expected credit loss rate over the entire life
characteristics group and calculate the expected credit loss by consulting
historical experience in credit losses, combining current
situation and prediction for future economic situation
Accounts Consulting historical experience in credit losses,
receivable-intercourse combining current situation and prediction for future
Related party within the
funds among related party economic situation, the expected credit loss shall be
consolidation scope
group within the accounted through exposure at default and the expected
consolidation scope credit loss rate over the entire life
Accounts receivable-the comparative list between aging of credit risk characteristic group and expected credit loss
rate over the entire life
Aging Withdrawal
proportion
Within 1 year 2.00%
1 to 2 years 5.00%
2 to 3 years 15.00%
3 to 4 years 30.00%
4 to 5 years 60.00%
Over 5 years 100.00%
Other receivables with expected credit losses measured by groups
Specific groups and method of measuring expected credit loss
Item Recognition basis Method of measuring expected credit losses
Consulting historical experience in credit losses,
combining current situation and prediction for future
Other receivables-aging economic situation, the expected credit loss shall be
Aging group
analysis group accounted through exposure at default and the expected
credit loss rate within the next 12 months or over the
entire life
Other Consulting historical experience in credit losses,
receivables-intercourse Related party within combining current situation and prediction for future
funds among related party the consolidation economic situation, the expected credit loss shall be
group within the scope accounted through exposure at default and the expected
consolidation scope credit loss rate over the entire life
For the measurement of impairment loss of other receivables, refer to the aforesaid measurement of impairment
loss of accounts receivable.
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11. Notes Receivable
See “10. Financial Instruments”.
12. Accounts Receivable
See “10. Financial Instruments”.
13. Inventory
(1) Category of Inventory
Inventory refers to the held-for-sale finished products or commodities, goods in process, materials consumed
in the production process or the process providing the labor service etc. Inventory is mainly including the raw
materials, low priced and easily worn articles, unfinished products, inventories and work in process–outsourced
etc.
(2) Pricing method
Purchasing and storage of the various inventories should be valued according to the planed cost and the
dispatch be calculated according to the weighted average method; carried forward the cost of the finished products
according to the actual cost of the current period and the sales cost according to the weighted average method.
(3) Determination basis of the net realizable value of inventory and withdrawal method of the provision for
falling price of inventory
At the balance sheet date, inventories are measured at the lower of the 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.
14. Classified as Assets Held for Sale
The Company recognizes the components (or the non-current assets) which meet with the following
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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.
15. 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 Company which could
anticipate in the finance and the operation polices of the investees, but could not control or jointly control the
formulation of the policies with the other parties.
(2) Recognition for initial investment cost
The initial investment cost of the long-term equity investment shall be recognized by adopting the following
ways in accordance with different methods of acquisition:
1) As for those forms under the same control of the enterprise combine, if the combine party takes the cash
payment, non-cash assets transformation, liabilities assumption or equity securities issuance as the combination
consideration, should take the shares of the book value by the ultimate control party in the consolidate financial
statement of the owners’ equities of the combiners acquired on the merger date as the initial investment cost. The
difference between the initial investment cost and the book value of the paid combination consideration or the
total amount of the issued shares of the long-term equity investment should be adjusted the capital reserve; If the
capital reserve is insufficient to dilute, the retained earnings shall be adjusted. To include each direct relevant
expense occurred when executing the enterprise merger into the current gains and losses; while the handling
charges and commission occurs from the issuing the equity securities or the bonds for the enterprise merger
should be included in the initial measurement amount of the shareholders’ equities or the liabilities.
2) As for long-term equity investment acquired through the merger of enterprises not under the same control,
its initial investment cost shall regard as the combination cost calculated by the fair value of the assets, equity
instrument issued and liabilities incurred or undertaken on the purchase date adding the direct cost related with the
acquisition. The identifiable assets of the combined party and the liabilities (including contingent liability)
undertaken on the combining date shall be measured at the fair value without considering the amount of minority
interest. The acquirer shall recognize the positive balance between the combination costs and the fair value of the
identifiable net assets it obtains from the acquiree as business reputation. The acquirer shall record the negative
balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree
into the consolidated income statement directly. The agent expense and other relevant management expenses such
as the audit, legal service and evaluation consultation occurs from the enterprise merger, should be included in the
current gains and losses when occur; while the handling charges and commission occurs from the issuing the
equity securities or the bonds for the enterprise merger should be included in the initial measurement amount of
the shareholders’ equities or the liabilities.
3) Long-term equity investment obtained by other means
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The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase
cost which is actually paid.
The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the
fair value of the equity securities issued.
The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment
contract or agreement, the unfair value stipulated in the contract or agreement shall be measured at fair value.
As for long-term investment obtained by the exchange of non-monetary assets, where it is commercial in
nature, the fair value of the assets surrendered shall be recognized as the initial cost of the long-term equity
investment received; where it is not commercial in nature, the book value of the assets surrendered shall be
recognized as the initial cost of the long-term equity investment received.
The initial cost of a long-term equity investment obtained by recombination of liabilities shall be recognized
at fair value of long-term equity investment.
(3) Subsequent measurement and recognition of profits and losses
1) An investment in the subsidiary company shall be measured by employing the cost method
Where the Company hold, and is able to do equity investment with control over an invested entity, the
invested entity shall be its subsidiary company. Where the Company holds the shares of an entity over 50%, or,
while the Company holds the shares of an entity below 50%, but has a real control to the said entity, then the said
entity shall be its subsidiary company.
2) An investment in the joint enterprise or associated enterprise shall be measured by employing the equity
method
Where the Company hold, and is able to do equity investment with joint control with other parties over an
invested entity, the invested entity shall be its joint enterprise. Where the Company hold, and is able to have
equity investment with significant influences on an invested entity, the invested entity shall be its associated
entity.
After the Company acquired the long-term equity investment, should respectively recognize investment
income and other comprehensive income according to the net gains and losses as well as the portion of other
comprehensive income which should be enjoyed or be shared, and at the same time adjust the book value of the
long-term equity investment; corresponding reduce the book value of the long-term equity investment according
to profits which be declared to distribute by the investees or the portion of the calculation of cash dividends which
should be enjoyed; for the other changes except for the net gains and losses, other comprehensive income and the
owners’ equity except for the profits distribution of the investees, should adjust the book value of the long-term
equity investment as well as include in the owners’ equity .
The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity
when it obtains the investment, recognize the attributable share of the net profits and losses of the invested entity
after it adjusts the net profits of the invested entity.
If the accounting policy adopted by the investees is not accord with that of the Company, should be adjusted
according to the accounting policies of the Company 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 Company 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,
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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 Company shall, after the
amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume
recognizing its attributable share of profits.
In the preparation for the financial statements, the balance existed between the long-term equity investment
increased by acquiring shares of minority interest and the attributable net assets on the subsidiary calculated by
the increased shares held since the purchase date (or combination date), the capital reserves shall be adjusted, if
the capital reserves are not sufficient to offset, the retained profits shall be adjusted; the Company disposed part of
the long-term equity investment on subsidiaries without losing its controlling right on them, the balance between
the disposed price and attributable net assets of subsidiaries by disposing the long-term equity investment shall be
recorded into owners’ equity.
For other ways on disposal of long-term equity investment, the balance between the book value of the
disposed equity and its actual payment gained shall be recorded into current profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained equity after
disposal still adopts the equity method for measurement, the other comprehensive income originally recorded into
owners’ equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly
disposed by the investees according to the corresponding proportion. The owners’ equity recognized owning to the
changes of the other owners’ equity except for the net gains and losses, other comprehensive income and the
profits distribution of the investees, should be transferred into the current gains and losses according to the
proportion.
For the long-term equity investment which adopts the cost method of measurement, if the remained equity
still adopt the cost method, the other comprehensive income recognized owning to adopting the equity method for
measurement or the recognition and measurement standards of financial instrument before acquiring the control of
the investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly
disposed by the investees and should be carried forward into the current gains and losses according to the
proportion; the changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by adopting the equity
method for measurement, should be carried forward into the current gains and losses according to the proportion.
For those the Company lost the control of the investees by disposing part of the equity investment as well as
the remained equity after disposal could execute joint control or significant influences on the investees, should
change to measure by equity method when compiling the individual financial statement and should adjust the
measurement of the remained equity to equity method as adopted since the time acquired; if the remained equity
after disposal could not execute joint control or significant influences on the investees, should change the
accounting disposal according to the relevant regulations of the recognition and measurement standards of
financial instrument, and its difference between the fair value and book value on the date lose the control right
should be included in the current gains and losses. For the other comprehensive income recognized by adopting
equity method for measurement or the recognition and measurement standards of financial instrument before the
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Company acquired the control of the investees, should execute the accounting disposal by adopting the same basis
of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when lose the
control of them, while the changes of the other owners’ equity except for the net gains and losses, other
comprehensive income and the profits distribution among the net assets of the investees which recognized by
adopting the equity method for measurement, should be carried forward into the current gains and losses
according to the proportion. Of which, for the disposed remained equity which adopted the equity method for
measurement, the other comprehensive income and the other owners’ equity should be carried forward according
to the proportion; for the disposed remained equity which changed to execute the accounting disposal according to
the recognition and measurement standards of financial instrument, the other comprehensive income and the other
owners’ equity should be carried forward in full amount.
For those the Company lost the control of the investees by disposing part of the equity investment, the
disposed remained equity should change to calculate according to the recognition and measurement standards of
financial instrument, and difference between the fair value and book value on the date lose the control right should
be included in the current gains and losses. For the other comprehensive income recognized from the original
equity investment by adopting the equity method, should execute the accounting disposal by adopting the same
basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when
terminate the equity method for measurement, while for the owners’ equity recognized owning to the changes of
the other owner’s equity except for the net gains and losses, other comprehensive income and the profits
distribution of the investees, should be transferred into the current investment income with full amount when
terminate adopting the equity method.
16. 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.
17. 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.
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(2) Depreciation Method
Category of fixed assets Method Useful life Annual deprecation
Housing and building Average method of useful
20-40 2.50%-5%
life
Machinery equipment Average method of useful
6-15 6.67%-16.67%
life
Transportation equipment Average method of useful
5-10 10%-20%
life
Average method of useful
Other equipment 5-10 10%-20%
life
(3) Recognition Basis, Pricing and Depreciation Method of Fixed Assets by Finance Lease
The Company recognizes those meet with the following one or certain standards as the fixed assets by
finance lease:
1) The leasing contract had agreed that (or made the reasonable judgment according to the relevant
conditions on the lease starting date) when the lease term expires, the ownership of leasing the fixed assets could
be transferred to the Company;
2) The Company owns the choosing right for purchasing and leasing the fixed assets, with the set purchase
price which is estimated far lower than the fair value of the fixed assets by finance lease when executing the
choosing right, so the Company could execute the choosing right reasonably on the lease starting date;
3) Even if the ownership of the fixed assets not be transferred, the lease period is of 75% or above of the
useful life of the lease fixed assets;
4) The current value of the minimum lease payment on the lease starting date of the Company is equal to
90% or above of the fair value of the lease fixed assets on the lease starting date; the current value of the
minimum lease receipts on the lease starting date of the leaser is equal to 90% or above of the fair value of the
lease fixed assets on the lease starting date;
5) The nature of the lease assets is special that only the Company could use it if not execute large
transformation.
The fixed assets by finance lease should take the lower one between the fair value of the leasing assets and
the current value of the minimum lease payment on the lease starting date as the entry value. As for the minimum
lease payment which be regarded as the entry value of the long-term accounts payable, its difference should be
regarded as the unrecognized financing expense. For the initial direct expenses occur in the lease negotiations and
the signing process of the lease contracts that attribute to the handling expenses, counsel fees, travel expenses and
stamp taxes of the lease items, should be included in the charter-in assets value. The unrecognized financing
expenses should be amortized by adopting the actual interest rate during the period of the lease term.
The fixed assets by finance lease shall adopt the same depreciation policy for self-owned fixed assets. If it is
reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease term expires,
the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will
obtain the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully depreciated
over the shorter one of the lease term or its useful life
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18. Construction in Progress
(1) Valuation of the progress in construction
Construction in progress shall be measured at actual cost. Self-operating projects shall be measured at direct
materials, direct wages and direct construction fees; construction contract shall be measured at project price
payable; project cost for plant engineering shall be recognized at value of equipments installed, cost of installation,
trail run of projects. Costs of construction in process also include borrowing costs and exchange gains and losses,
which should be capitalized.
(2) Standardization on construction in process transferred into fixed assets and time point
The construction in process, of which the fixed assets reach to the predicted condition for use, shall carry
forward fixed assets on schedule. The one that has not audited the final accounting shall recognize the cost and
make depreciation in line with valuation value. The construction in process shall adjust the original valuation
value at its historical cost but not adjust the depreciation that has been made after auditing the final accounting.
19. 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
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capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general
borrowing.
20. Intangible Assets
(1) Pricing Method, Service Life, and Impairment Test
(1) Pricing method of intangible assets
Intangible assets purchased should take the actual payment and the relevant other expenses as the actual cost.
For the intangible assets invested by the investors should be recognized the actual cost according to the value
of the investment contracts or agreements, however, for the value of the contracts or agreements is not fair, the
actual cost should be recognized according to the fair value.
For the intangible assets acquires from the exchange of the non-currency assets, if own the commercial
nature, should be recorded according to the fair value of the swap-out assets; for those not own the commercial
nature, should be recorded according to the book value of the swap-out assets.
For the intangible assets acquires from the debts reorganization should be recognized by the fair value.
(2) Amortization method and term of intangible assets
As for the intangible assets with limited service life, which are amortized by straight-line method when it is
available for use within the service period, shall be recorded into the current profits and losses. The Company
shall, at least at the end of each year, check the service life and the amortization method of intangible assets with
limited service life. When the service life and the amortization method of intangible assets are different from those
before, the years and method of the amortization shall be changed.
Intangible assets with uncertain service life may not be amortized. However, the Company shall check the
service life of intangible assets with uncertain service life during each accounting period. Where there are
evidences to prove the intangible assets have limited service life, it shall be estimated of its service life, and be
amortized according to the above method mentioned.
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.
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21. 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 Company should judge whether decrease in value exists on the date of balance
sheet. Recoverable amounts should be tested for decrease in value if it exists. Other intangible Assets of reputation
and uncertain service life and other non-accessible intangible assets should be tested for decrease in value no
matter whether it exists.
If the recoverable amount is less than book value in impairment test results, the provision for impairment of
differences should include in impairment loss. Recoverable amounts would be the higher of net value of asset fair
value deducting disposal charges or present value of predicted cash flow. Asset fair value should be determined
according to negotiated sales price of fair trade. If no sales agreement exists but with asset active market, fair
value should be determined according to the Buyer’s price of the asset. If no sales agreement or asset active
market exists, asset fair value could be acquired on the basis of best information available. Disposal expenses
include legal fees, taxes, cartage or other direct expenses of merchantable Assets related to asset disposal. Present
value of predicted asset cash flow should be determined by the proper discount rate according to Assets in service
and predicted cash flow of final disposal. Asset depreciation reserves should be calculated on the basis of single
Assets. If it is difficult to predict the recoverable amounts for single Assets, recoverable amounts should be
determined according to the belonging asset group. Asset group is the minimum asset combination producing cash
flow independently.
In impairment test, book value of the business reputation in financial report should be shared to beneficial
asset group and asset group combination in collaboration of business merger. It is shown in the test that if
recoverable amounts of shared business reputation asset group or asset group combination are lower than book
value, it should determine the impairment loss. Impairment loss amount should firstly be deducted and shared to
the book value of business reputation of asset group or asset group combination, then deduct book value of all
assets according to proportions of other book value of above assets in asset group or asset group combination
except business reputation.
After the asset impairment loss is determined, recoverable value amounts would not be returned in future.
22. 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.
23. 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
Company 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.
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(2) Accounting Treatment of the Welfare after Demission
The Company classifies the welfare plans after demission into defined contribution plans and defined benefit
plans. Welfare plans after demission refers to the agreement on the welfare after demission reaches between the
Company and the employees, or the regulations or methods formulated by the Company for providing the welfare
after demission for the employees. Of which, defined contribution plans refers to the welfare plans after demission
that the Company no more undertake the further payment obligations after the payment of the fixed expenses for
the independent funds; defined benefit plans, refers to the welfare plans after demission except for the defined
contribution plans.
Defined contribution plans
During the accounting period that the Company providing the service for the employees, the Company
should recognize the liabilities according to the deposited amount calculated by defined contribution plans, and
should be included in the current gains and losses or the relevant assets cost.
(3) Accounting Treatment of the Demission Welfare
The Company should recognize the payroll payment liabilities occur from the demission welfare according to
the earlier date between the following two conditions and include which in the current gains and losses when
providing the demission welfare for the employees: the Company could not unilaterally withdraw the demission
welfare owning to the relieve plans of the labor relationship or reduction; when the Company recognizing the
costs or expenses related to the reorganization involves with the demission welfare payments.
24. 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.
25. Revenue
Has the Company implemented the new standards governing revenues
□Yes √ 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
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way; the relevant revenue and costs of selling goods can be measured in a reliable way. The amount of the revenue
from selling shall ascertain the revenue incurred by selling goods in accordance with the received or receivable
price stipulated in the contract or agreement signed between the enterprise and the buyer, unless the received or
receivable amount as stipulated in the contract or agreement is unfair.
(2) Recognition of revenue from providing labor services: When the total revenue and costs from providing
labor can be measured in a reliable way; the relevant economic benefits are likely to flow into the enterprise; the
schedule of completion under the transaction can be measured in a reliable way, the revenue from providing labor
shall be recognized. If the Company can reliably estimate the outcome of a transaction concerning the labor
services it provides, it shall recognize the revenue from providing services employing the
percentage-of-completion method on the date of the balance sheet, otherwise the revenue from the providing of
labor services shall be recognized in accordance with the amount of the cost of labor services incurred and
expected to be compensated. The Company recognized the completion process of the transaction concerning the
labor services according to the proportion of the occurred cost of the estimated total cost. The total amount of the
revenue from providing services should be recognized according to the contract price received or receivable from
the accepting of the labor services or the agreement price except for those unfair prices.
(3) Recognition of the revenue from transferring use rights of assets: When the relevant economic benefits
are likely to flow into the enterprises and the amount of revenues can be measured in a reliable way, the revenue
from abalienating the right to use assets shall be recognized. The amount of interest revenue should be measured
and confirmed in accordance with the length of time for which the enterprise's cash is used by others and the
actual interest rate；the amount of royalty revenue should be measured and confirmed in accordance with the
period and method of charging as stipulated in the relevant contract or agreement；as for the rental revenue: the
amount of the rental revenue from the operation lease should be recognized according to the straight-line method
during each period of the lease term or accrued into the current gains and losses if rental actual occurred.
26. Government Subsidies
(1) Type
A government subsidy means the monetary or non-monetary assets obtained free by an enterprise from the
government. Government subsidies consist of the government subsidies pertinent to assets and government
subsidies pertinent to income according to the relevant government documents.
For those the government documents not definite stipulate the assistance object, the judgment basis of the
Company classifies the government subsidies pertinent to assets and government subsidies pertinent to income is:
whether are used for purchasing or constructing or for forming the long-term assets by other methods.
(2) Recognition of Government Subsidies
The government subsidies should be recognized only when meet with the attached conditions of the
government subsidies as well as could be acquired.
If the government subsidies are the monetary assets, should be measured according to the received or
receivable amount; and for the government subsidies are the non-monetary assets, should be measured by fair
value.
(3) Accounting Treatment
The government subsidies pertinent to assets shall be recognized as deferred income, and included in the
current gains and losses or offset the book value of related assets within the useful lives of the relevant assets with
a reasonable and systematic method. Government subsidies pertinent to income used to compensate the relevant
costs, expenses or losses of the Company in the subsequent period shall be recognized as deferred income, and
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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.
27. 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.
28. Lease
(1) Accounting Treatment of Operating Lease
Lessee in an operating lease shall treat the lease payment under an operating lease as a relevant asset cost or
the current profit or loss on a straight-line basis over the lease term. The initial direct costs incurred shall be
recognized as the current profit or loss; Contingent rents shall be charged as expenses in the periods in which they
are incurred.
Lessors in an operating lease shall be recognized as the current profit or loss on a straight-line basis over the
lease term; Initial direct costs incurred by lessors shall be recognized as the current profit or loss; the initial direct
expenses occur should be directly included in the current gains and losses except for those with larger amount and
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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.
29. 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 Company or be classified to held-to-sold as well as could be individually distinguished in
operating and compiling the financial statement:
1) The compose part represents an individual main business or a main operation area;
2) The compose part is a part intends to dispose and plan an individual main business or a main operation
area;
3) The compose part is a subsidiary which be acquired only for resold.
(2) Hedging accounting
The term “hedging” refers to one or more hedging instruments which are designated by an enterprise for
avoiding the risks of foreign exchange, interest rate, commodity price, stock price, credit and etc., and which is
expected to make the changes in fair value or cash flow of hedging instrument(s) to offset all or part of the
changes in the fair value or cash flow of the hedged item.
The term “hedging instrument” shall refer to a derivative instrument which is designated by an enterprise for
hedging and by which it is expected that changes in its fair value or cash flow can offset the changes in fair value
or cash flow of the hedged item. For a hedging of foreign exchange risk, a non-derivative financial asset or
non-derivative financial liability may be used as a hedging instrument.
The “hedged item” shall refer to the following items which make an enterprise faced to changes in fair value
or cash flow and are designated as the hedged objectives.
The hedging should be executed by the hedging accounting methods when satisfying the following
conditions at the same time:
1) At the commencement of the hedging, the enterprise shall specify the hedging relationship formally
(namely the relationship between the hedging instrument and the hedged item) and prepare a formal written
document on the hedging relationship, risk management objectives and the strategies of hedging.
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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.
30. Changes in Main Accounting Policies and Estimates
(1) Change of Accounting Policies
√ Applicable □ Not applicable
Changes to the accounting policies and why Approval process Remark
The Notice on Revising and Issuing the Formats of 2019
Financial Statements for General Enterprises On 27 August 2019, the
(CK[2019]No. 6) issued by the Ministry of Finance on 30 Company held the 20th
April 2019 requires the companies which have Meeting of the 8th Board
implemented the new standards governing financial of Directors and the 16th Refer to (1) of
instruments but not the new standards governing revenue Meeting of the 8th other notes for
and lease or companies which have implemented the new Supervisory Committee details
standards governing financial instruments and revenue but and approved the Proposal
not the new standards governing lease to adjust items of on Changes of Some
financial statements in line with requirements in Appendix Accounting Policies
1 and Appendix 2 of this Notice.
The Company starts to implement the Accounting
Standards for Business Enterprises No.22-Recognition and
Measurement of Financial Instruments, Accounting
Standards for Business Enterprises No.23-Transfer of
On 9 April 2019, the
Financial Assets, Accounting Standards for Business
Company held the 17th
Enterprises No.24-Hedge Accounting and Accounting
Meeting of the 8th Board
Standards for Business Enterprises No.37-Presentation of
of Directors and 13th Refer to (2) of
Financial Instruments, which revised and issued by the
Meeting of the 8th other notes for
Ministry of Finance in March 2017 and hereinafter
Supervisory Committee details
collectively referred to as new standards governing
and approved the Proposal
financial instruments since 1 January 2019 which stipulate
on Changes in Some
that the company shall classify and measure financial
Accounting Policies
instruments in accordance with regulations on the
execution date, when the data of comparative financial
statements of prior years do not comply with the new
standards, no adjustment is made by the Company.
Other notes:
(1) Influence of Changes in Formats of Financial statements
Affected items in the consolidated balance sheet and amount thereof:
69
31 December 2018 1 January 2019
Notes receivable and 874,229,941.58 Notes receivable 495,370,782.47
accounts receivable Accounts receivable 378,859,159.11
Notes payable and accounts 1,030,130,275.77 Notes payable 438,375,400.00
payable Accounts payable 591,754,875.77
Affected items in the balance sheet of the Company as the parent and amount thereof:
31 December 2018 1 January 2019
Notes receivable and 790,877,079.72 Notes receivable 490,519,795.91
accounts receivable Accounts receivable 300,357,283.81
Notes payable and 987,550,797.44 Notes payable 425,995,400.00
accounts payable Accounts payable 561,555,397.44
(2) Influence of Execution of New Standards Governing Financial Instruments
Affected items in the consolidated balance sheet and amount thereof:
Affected amount
Affected by Affected by
Item 31 December 2018 1 January 2019
classification and impairment of
measurement financial assets
Other current assets 34,357,608.97 -8,253,873.41 26,103,735.56
Held-for-trading financial
8,253,873.41 8,253,873.41
assets
Available-for-sale financial
498,851,369.49 -498,851,369.49
assets
Investment in other equity
472,150,000.00 1,210,000.00 470,940,000.00
instruments
Other non-current financial
27,911,369.49 27,911,369.49
assets
Other non-current assets -4,000,000.00 4,000,000.00
Investment in debt
4,000,000.00 -4,000,000.00
obligations
Affected items in the balance sheet of the Company as the parent and amount thereof:
Affected amount
Affected by Affected by
Item 31 December 2018 1 January 2019
classification and impairment of
measurement financial assets
Available-for-sale financial
470,940,000.00 -470,940,000.00
assets
Investment in other equity
471,350,000.00 410,000.00 470,940,000.00
instruments
Other non-current assets -4,000,000.00 4,000,000.00
Investment in debt
4,000,000.00 -4,000,000.00
obligations
70
(2) Changes in Accounting Estimates
□ Applicable √ Not applicable
(3) Adjustments to the Financial Statements at the Beginning of the First Execution Year of any New
Standards Governing Financial Instruments, Revenue or Leases
√ Applicable □ Not applicable
Consolidated Balance Sheet
Unit: RMB
Item 31 December 2018 1 January 2019 Adjustment
Current assets:
Monetary assets 800,960,036.69 800,960,036.69
Settlement reserve
Interbank loans granted
Held-for-trading financial assets 8,253,873.41 8,253,873.41
Financial assets at fair value
through profit or loss
Derivative financial assets
Notes receivable 495,370,782.47 495,370,782.47
Accounts receivable 378,859,159.11 378,859,159.11
Accounts receivable financing
Prepayments 11,352,297.10 11,352,297.10
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract
reserve
Other receivables 9,244,584.42 9,244,584.42
Including: Interest receivable
Dividends
receivable
Financial assets purchased under
resale agreements
Inventories 557,953,891.70 557,953,891.70
Contractual assets
Assets classified as held for sale
Current portion of non-current
71
assets
Other current assets 34,357,608.97 26,103,735.56 -8,253,873.41
Total current assets 2,288,098,360.46 2,288,098,360.46
Non-current assets:
Loans and advances to customers
Investments in debt obligations
Available-for-sale financial assets 498,851,369.49 -498,851,369.49
Investments in other debt
obligations
Held-to-maturity investments
Long-term receivables
Long-term equity investments
Investments in other equity 470,940,000.00 470,940,000.00
instruments
Other non-current financial assets 27,911,369.49 27,911,369.49
Investment property 50,656,007.63 50,656,007.63
Fixed assets 511,250,371.37 511,250,371.37
Construction in progress 89,090,384.71 89,090,384.71
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 103,092,879.38 103,092,879.38
R&D expense
Goodwill
Long-term prepaid expense
Deferred income tax assets 979,822.71 979,822.71
Other non-current assets
Total non-current assets 1,253,920,835.29 1,253,920,835.29
Total assets 3,542,019,195.75 3,542,019,195.75
Current liabilities:
Short-term borrowings 27,000,000.00 27,000,000.00
Borrowings from central bank
Interbank loans obtained
Held-for-trading financial
liabilities
72
Financial liabilities at fair value
through profit or loss
Derivative financial liabilities
Notes payable 438,375,400.00 438,375,400.00
Accounts payable 591,754,875.77 591,754,875.77
Advances from customers 34,500,232.97 34,500,232.97
Financial assets sold under
repurchase agreements
Customer deposits and interbank
deposits
Payables for acting trading of
securities
Payables for underwriting of
securities
Payroll payable 50,500,592.99 50,500,592.99
Taxes payable 7,066,085.89 7,066,085.89
Other payables 199,412,250.90 199,412,250.90
Including: Interest payable
Dividends payable 3,891,433.83 3,891,433.83
Handling charges and
commissions payable
Reinsurance payables
Contractual liabilities
Liabilities directly associated with
assets classified as held for sale
Current portion of non-current
18,500,000.00 18,500,000.00
liabilities
Other current liabilities 2,082,985.18 2,082,985.18
Total current liabilities 1,369,192,423.70 1,369,192,423.70
Non-current liabilities:
Insurance contract reserve
Long-term borrowings 2,000,000.00 2,000,000.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities
73
Long-term payables
Long-term payroll payable
Provisions
Deferred income 59,928,484.84 59,928,484.84
Deferred income tax liabilities 47,971,780.36 47,971,780.36
Other non-current liabilities
Total non-current liabilities 109,900,265.20 109,900,265.20
Total liabilities 1,479,092,688.90 1,479,092,688.90
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 164,328,665.43 164,328,665.43
Less: Treasury stock
Other comprehensive income 264,405,675.00 264,405,675.00
Specific reserve 15,182,958.83 15,182,958.83
Surplus reserves 320,133,050.15 320,133,050.15
General reserve
Retained earnings 717,883,351.33 717,883,351.33
Total equity attributable to owners of
2,043,308,026.74 2,043,308,026.74
the Company as the parent
Non-controlling interests 19,618,480.11 19,618,480.11
Total owners’ equity 2,062,926,506.85 2,062,926,506.85
Total liabilities and owners’ equity 3,542,019,195.75 3,542,019,195.75
Note for adjustment
In 2017, the Ministry of Finance revised the Accounting Standards for Business Enterprises
No.22-Recognition and Measurement of Financial Instruments, Accounting Standards for Business Enterprises
No.23-Transfer of Financial Assets, Accounting Standards for Business Enterprises No.24-Hedge Accounting and
Accounting Standards for Business Enterprises No.37-Presentation of Financial Instruments, and required
companies listed domestically to implement since 1 January 2019. In accordance with the standards, for financial
instruments not derecognized yet on the execution date, when there is inconsistence between the original
recognition & measurement and the requirements of the revised standards, retroactive adjustment is needed. For
the inconsistence between the prior comparative financial statement data and the requirements of the revised
standards, no adjustment is needed.
The Company starts to implement the new standards governing financial instruments since 1 January 2019.
Financial assets originally recorded into available-for-sale financial assets shall be classified into financial assets
74
at fair value through other comprehensive income and presented as investment in other equity instruments in
financial statements.
Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2018 1 January 2019 Adjustment
Current assets:
Monetary assets 759,404,219.72 759,404,219.72
Held-for-trading financial assets
Financial assets at fair value
through profit or loss
Derivative financial assets
Notes receivable 490,519,795.91 490,519,795.91
Accounts receivable 300,357,283.81 300,357,283.81
Accounts receivable financing
Prepayments 4,768,038.11 4,768,038.11
Other receivables 21,681,331.85 21,681,331.85
Including: Interest receivable
Dividends
receivable
Inventories 437,423,195.46 437,423,195.46
Contractual assets
Assets classified as held for sale
Current portion of non-current
assets
Other current assets 23,099,858.67 23,099,858.67
Total current assets 2,037,253,723.53 2,037,253,723.53
Non-current assets:
Investments in debt obligations
Available-for-sale financial assets 470,940,000.00 -470,940,000.00
Investments in other debt
obligations
Held-to-maturity investments
Long-term receivables
Long-term equity investments 241,752,730.03 241,752,730.03
Investments in other equity
470,940,000.00 470,940,000.00
instruments
75
Other non-current financial assets
Investment property 50,656,007.63 50,656,007.63
Fixed assets 413,186,680.19 413,186,680.19
Construction in progress 87,007,215.91 87,007,215.91
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 72,184,608.63 72,184,608.63
R&D expense
Goodwill
Long-term prepaid expense
Deferred income tax assets 930,641.19 930,641.19
Other non-current assets
Total non-current assets 1,336,657,883.58 1,336,657,883.58
Total assets 3,373,911,607.11 3,373,911,607.11
Current liabilities:
Short-term borrowings 10,000,000.00 10,000,000.00
Held-for-trading financial
liabilities
Financial liabilities at fair value
through profit or loss
Derivative financial liabilities
Notes payable 425,995,400.00 425,995,400.00
Accounts payable 561,555,397.44 561,555,397.44
Advances from customers 32,072,387.55 32,072,387.55
Contractual liabilities
Payroll payable 43,597,759.22 43,597,759.22
Taxes payable 2,443,767.89 2,443,767.89
Other payables 185,022,961.56 185,022,961.56
Including: Interest payable
Dividends payable 3,243,179.97 3,243,179.97
Liabilities directly associated with
assets classified as held for sale
Current portion of non-current
18,500,000.00 18,500,000.00
liabilities
76
Other current liabilities
Total current liabilities 1,279,187,673.66 1,279,187,673.66
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual
bonds
Lease liabilities
Long-term payables
Long-term payroll payable
Provisions
Deferred income 59,928,484.84 59,928,484.84
Deferred income tax liabilities 46,659,825.00 46,659,825.00
Other non-current liabilities
Total non-current liabilities 106,588,309.84 106,588,309.84
Total liabilities 1,385,775,983.50 1,385,775,983.50
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Including: Preferred shares
Perpetual
bonds
Capital reserves 183,071,147.70 183,071,147.70
Less: Treasury stock
Other comprehensive income 264,405,675.00 264,405,675.00
Specific reserve 15,182,958.83 15,182,958.83
Surplus reserves 320,133,050.15 320,133,050.15
Retained earnings 643,968,465.93 643,968,465.93
Total owners’ equity 1,988,135,623.61 1,988,135,623.61
Total liabilities and owners’ equity 3,373,911,607.11 3,373,911,607.11
Note for adjustment
In 2017, the Ministry of Finance revised the Accounting Standards for Business Enterprises
No.22-Recognition and Measurement of Financial Instruments, Accounting Standards for Business Enterprises
No.23-Transfer of Financial Assets, Accounting Standards for Business Enterprises No.24-Hedge Accounting and
Accounting Standards for Business Enterprises No.37-Presentation of Financial Instruments, and required
77
companies listed domestically to implement since 1 January 2019. In accordance with the standards, for financial
instruments not derecognized yet on the execution date, when there is inconsistence between the original
recognition & measurement and the requirements of the revised standards, retroactive adjustment is needed. For
the inconsistence between the prior comparative financial statement data and the requirements of the revised
standards, no adjustment is needed.
The Company starts to implement the new standards governing financial instruments since 1 January 2019.
Financial assets originally recorded into available-for-sale financial assets shall be classified into financial assets
at fair value through other comprehensive income and presented as investment in other equity instruments in
financial statements.
(4) Retroactive Adjustments to Comparative Data of Prior Years when First Execution of any New
Standards Governing Financial Instruments or Leases
□ Applicable √ Not applicable
VI. Taxation
1. Main Taxes and Tax Rate
Category of taxes Tax basis Tax rate
VAT Payable to sales revenue 16%, 13%, 11%, 10%, 6%
Urban maintenance and Tax paid in accordance with the tax
Taxable turnover amount
construction tax regulations of tax units location
Enterprise income tax Taxable income 25% or 15%
Education surcharge Taxable turnover amount 5%
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
Name Income tax rate
Changchai Co., Ltd. 15%
Changchai Wanzhou Diesel Engine Co., Ltd. 15%
Changzhou Changchai Benniu Diesel Engine Fittings
25%
Co., Ltd.
Changzhou Housheng Investment Co., Ltd. 5%
Changzhou Changchai Housheng Agricultural
25%
Equipment Co., Ltd.
Changzhou Fuji Changchai Robin Gasoline Engine
25%
Co., Ltd.
Jiangsu Changchai Machinery Co., Ltd. 25%
78
2. Tax Preference
In 2018, the Company has been identified as High-tech Enterprises, therefore, it enjoys 15-percent
preferential rate for corporate income tax; the Company’s controlling subsidiary-Changchai Wanzhou Diesel
Engine Co., Ltd., the controlling subsidiary company, shall pay the corporate income tax at tax rate 15% from 1
January 2011 to 31 December 2020 in accordance with the Notice of the Ministry of Finance, the General
Administration of Customs of PRC and the National Administration of Taxation about the Preferential Tax
Policies for the Western Development. The controlling subsidiary-Changzhou Housheng Investment Co., Ltd.
shall pay the corporate income tax at tax rate 5% from 1 January 2019 to 31 December 2021 in accordance with
the Notice of the Implementation of Inclusive Tax Reduction Policy to Small and Micro Enterprises by Ministry
of Finance and the National Administration of the Taxation.
VII. Notes to Major Items in the Consolidated Financial Statements of the Company
1. Monetary Assets
Unit: RMB
Item Ending balance Beginning balance
Cash on hand 153,975.35 441,363.70
Bank deposits 543,923,045.33 684,620,907.41
Other monetary assets 93,136,985.38 115,897,765.58
Total 637,214,006.06 800,960,036.69
Of which: Total amount deposited
overseas
Total amount of
restriction in use by guaranteed, 92,629,261.89 113,880,397.10
pledged or frozen
At the period-end, the restricted monetary assets of the Company was RMB92,629,261.89, of which
RMB90,770,574.15 was the cash deposit for bank acceptance bills, RMB986,662.74 was cash deposit for L/C,
and RMB872,025.00 was cash deposit for environment.
2. Trading Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Financial assets assigned
measured by fair value and the
10,000,000.00 8,253,873.41
changes be included in the current
gains and losses
Of which: Financial products 10,000,000.00 8,253,873.41
79
Total 10,000,000.00 8,253,873.41
Refer to “XII. Financial Statements (V) 30. Changes in Main Accounting Policies and Estimates” for the
difference between beginning balance and ending balance in the prior period (31 December 2018) for details.
3. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
Item Ending balance Beginning balance
Bank acceptance bill 606,283,023.05 495,370,782.47
Total 606,283,023.05 495,370,782.47
(2) There Was No Notes Receivable Pledged by the Company at the Period-end
(3) Notes Receivable which Had Endorsed by the Company or had Discounted and had not Due on the
Balance Sheet Date at the Period-end
Unit: RMB
Amount of recognition termination Amount of not terminated
Item
at the period-end recognition at the period-end
Bank acceptance bill 366,776,726.29
Total 366,776,726.29
(4) Notes Transferred to Accounts Receivable because Drawer of the Notes Failed to Execute the Contract
or Agreement
4. Accounts Receivable
(1) Accounts Receivable Classified by Category
Unit: RMB
Ending balance Beginning balance
Carrying Bad debt Carrying Bad debt
amount provision amount provision
Carryi
Category Withd Withd Carryin
ng
Amou Propo Amou rawal Amou Propor Amou rawal g value
value
nt rtion nt propo nt tion nt propor
rtion tion
80
Accounts
receivable for
35,53 33,44 32,020 31,133
which bad debt 94.13 2,084, 97.23 887,436.
4,574. 5.31% 9,794. ,727.5 5.135 ,291.1
provision % 780.14 % 42
55 41 3 1
separately
accrued
Of which:
Accounts
receivable with
significant
30,64 28,55 2,084, 28,20 27,317
amount for 93.20 96.85 887,436
2,717. 4.58% 7,937. 780.1 5,070. 4.52% ,634.1
which bad debt % % .42
62 48 4 58 6
provision
separately
accrued
Accounts
receivable with
insignificant
4,891, 4,891, 3,815,
amount for 100.0 3,815, 100.0
856.9 0.73% 856.9 656.9 0.61%
which bad debt 0% 656.95 0%
3 3 5
provision
separately
accrued
Accounts
receivable for
633,0 215,8 417,2 591,4 213,51
which bad debt 94.69 34.10 94.87 36.10 377,971
52,84 41,95 10,88 89,45 7,727.
provision % % % % ,722.69
3.24 7.87 5.37 0.66 97
accrued by
group
Of which:
Accounts
receivable for
which bad debt 633,0 215,8 417,2 591,4 213,51
94.69 34.10 94.87 36.10 377,971
provision 52,84 41,95 10,88 89,45 7,727.
% % % % ,722.69
accrued by 3.24 7.87 5.37 0.66 97
credit risk
features group
668,5 249,2 419,2 623,5 244,65
100.0 37.29 100.00 39.24 378,859
Total 87,41 91,75 95,66 10,17 1,019.
0% % % % ,159.11
7.79 2.28 5.51 8.19 08
Account receivables withdrawn bad debt provision separately with significant amount in the period end:
Unit: RMB
81
Ending balance
Name Withdrawal Reason of
Carrying amount Bad debt provision
proportion withdrawal
Expected to
Customer 1 1,470,110.64 1,470,110.64 100.00
difficultly recover
Customer 2 1,902,326.58 1,902,326.58 100.00 Difficult to recover
Customer 3 6,215,662.64 6,215,662.64 100.00 Difficult to recover
Expected to
Customer 4 2,445,367.85 2,177,128.33 89.03
difficultly recover
Expected to
Customer 5 3,633,081.23 1,816,540.61 50.00
difficultly recover
Expected to
Customer 6 3,279,100.00 3,279,100.00 100.00
difficultly recover
Expected to
Customer 7 2,068,377.01 2,068,377.01 100.00
difficultly recover
Customer 8 5,359,381.00 5,359,381.00 100.00 Difficult to recover
Customer 9 2,584,805.83 2,584,805.83 100.00 Difficult to recover
Customer 10 1,684,504.84 1,684,504.84 100.00 Difficult to recover
Total 30,642,717.62 28,557,937.48 -- --
Accounts receivable for which bad debt provision accrued by credit risk features group:
Unit: RMB
Ending balance
Aging
Accounts receivable Bad debt provision Withdrawal proportion
Within 1 year 399,534,844.49 7,990,697.36 2.00 %
1 to 2 years 17,871,570.68 893,578.54 5.00 %
2 to 3 years 7,948,315.22 1,192,247.28 15.00 %
3 to 4 years 2,241,585.32 672,475.60 30.00 %
4 to 5 years 908,921.11 545,352.67 60.00 %
Over 5 years 204,547,606.42 204,547,606.42 100.00 %
Total 633,052,843.24 215,841,957.87 --
Notes of the basis of determining the group:
The accounts receivable was adopted the aging analysis based on the months when the accounts incurred
actually, among which the accounts incurred earlier will be priority to be settled in terms of the capital turnover.
Explanation of the input value and assumption adopted to determine the withdrawal amount of bad debt
provision on the Current Period: With reference to the experience of the historical credit loss, combining with the
prediction of the present status and future financial situation, the comparison table was prepared between the
aging of the accounts receivable and estimated credit loss rate in the duration and to calculate the estimated credit
82
loss.
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if
adopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivable.
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Carrying amount
Within 1 year (including 1 year) 400,301,753.19
1 to 2 years 19,983,341.14
2 to 3 years 11,370,168.43
Over 3 years 236,932,155.03
3 to 4 years 4,987,170.10
4 to 5 years 1,346,662.43
Over 5 years 230,598,322.50
Total 668,587,417.79
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Information of bad debt provision withdrawn:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversal or Ending balance
balance Withdrawal Write-off
recovery
Bad debt
provision
31,133,291.11 3,347,105.92 1,030,602.62 33,449,794.41
withdrawn
separately
Bad debt
provision
213,517,727.97 3,598,115.60 1,273,885.70 215,841,957.87
withdrawn by
group
Total 244,651,019.08 6,945,221.52 2,304,488.32 249,291,752.28
Of which bad debt provision reversed or recovered with significant amount in the Reporting Period: No.
83
(3) There Were No Particulars of the Actual Verification of Accounts Receivable during the Reporting
Period.
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to the Arrears Party
Unit: RMB
Proportion to total ending
Ending balance of Ending balance of bad debt
Name of the entity balance of accounts
accounts receivable provision
receivable
Customer 1 170,103,568.50 25.44% 3,402,071.37
Customer 2 23,896,557.76 3.57% 477,931.16
Customer 3 21,182,519.25 3.17% 423,650.39
Customer 4 21,885,020.77 3.27% 437,700.42
Customer 5 18,470,927.36 2.76% 369,418.55
Total 255,538,593.64 38.21% 5,110,771.87
5. Prepayments
(1) List by Aging Analysis
Unit: RMB
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 10,819,576.65 83.67 9,535,876.40 84.01%
1 to 2 years 993,030.99 7.68 437,529.70 3.85%
2 to 3 years 115,335.90 0.89 57,536.24 0.51%
Over 3 years 1,002,602.62 7.76 1,321,354.76 11.63%
Total 12,930,546.16 -- 11,352,297.10 --
(2) Top 5 of the Ending Balance of the Prepayments Collected according to the Prepayment Target
At the period-end, the total top 5 of the ending balance of the prepayments collected according to the
prepayment target was RMB5,494,349.33 accounting for 42.49% of the total ending balance of prepayments.
6. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Interest receivable 0.00 0.00
84
Dividends receivable 0.00 0.00
Other receivables 10,597,073.18 9,244,584.42
Total 10,597,073.18 9,244,584.42
(1) Other Receivables
1) Other Receivables Classified by Account Nature
Unit: RMB
Item Ending carrying amount Beginning carrying amount
Margin and cash pledge 7,758.60 4,200.00
Intercourse funds 25,293,372.77 25,451,250.34
Petty cash and borrowings by employees 3,203,041.67 1,232,153.09
Other 15,374,916.41 15,546,601.57
Total 43,879,089.45 42,234,205.00
2) Withdrawal of Bad Debt Provision
□ Applicable □ Not applicable
Unit: RMB
First stage Second stage Third stage
Expected loss in the
Expected credit Expected loss in the
Bad debt provision duration (credit Total
loss of the next duration (credit
impairment not
12 months impairment occurred)
occurred)
Balance of 1
32,989,620.58 32,989,620.58
January 2019
Balance of 1
January 2019 in the —— —— —— ——
Current Period
--Transfer to
Second stage
-- Transfer to Third
stage
-- Reverse to
Second stage
-- Reverse to First
stage
85
Withdrawal of the
296,359.94 296,359.94
Current Period
Reversal of the
3,964.25 3,964.25
Current Period
Write-offs of the
Current Period
Verification of the
Current Period
Other changes
Balance of 31
33,282,016.27 33,282,016.27
December 2019
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Carrying amount
Within 1 year (including 1 year) 7,635,227.47
1 to 2 years 1,651,595.88
2 to 3 years 1,531,378.71
Over 3 years 33,060,887.39
3 to 4 years 231,294.13
4 to 5 years 96,930.77
Over 5 years 32,732,662.49
Total 43,879,089.45
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Information of bad debt provision withdrawn:
Unit: RMB
Changes in the Reporting Period
Beginning Reversal
Category Write- Ending balance
balance Withdrawal or Other
off
recovery
86
Bad debt
provision
5,011,963.16 30,485.42 5,042,448.58
withdrawn
separately
Bad debt
provision
27,977,657.42 265,874.52 3,964.25 28,239,567.69
withdrawn by
group
Total 32,989,620.58 296,359.94 3,964.25 33,282,016.27
4) There Was No Particulars of the Actual Verification of Other Receivables during the Reporting Period
5) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to
Ending balance
Name of the total ending
Nature Ending balance Aging of bad debt
entity balance of other
provision
receivables
Changzhou
Changjiang
Intercourse
Casting 5,000,000.00 Within 1 year 11.39% 100,000.00
funds
Materials Co.,
Ltd.
Changzhou
Intercourse
Compressors 2,940,000.00 Over 5 years 6.70% 2,940,000.00
funds
Factory
Changchai
Intercourse
Group Imp. & 2,853,188.02 Over 5 years 6.50% 2,853,188.02
funds
Exp. Co., Ltd.
Changzhou
New District Intercourse
1,626,483.25 Over 5 years 3.71% 1,626,483.25
Accounting funds
Centre
Changzhou
Group Intercourse
1,140,722.16 Over 5 years 2.60% 1,140,722.16
Settlement funds
Centre
Total -- 13,560,393.43 -- 30.90% 8,660,393.43
87
7. Inventories
Whether the Company has executed the new revenue standards
□ Yes √ No
(1) Category of Inventory
Unit: RMB
Ending balance Beginning balance
Item Carrying Falling price Carrying Carrying Falling price Carrying
amount reserves value amount reserves value
Raw 125,757,856. 119,218,025. 134,454,498. 5,845,504.24 128,608,994.
6,539,831.39
materials 89 50 93 69
Materials 993,300.18 12,336,933.1
12,444,566.4 12,261,455.1
processed on 183,111.28 13,330,233.2 1
1 3
commission 9
Goods in 142,399,981. 26,985,350.1 115,414,631. 166,798,553. 24,187,100.5 142,611,452.
process 66 4 52 34 4 80
Finished 239,694,354. 15,404,153.2 224,290,201. 288,979,920. 16,035,855.0 272,944,065.
goods 77 9 48 46 3 43
Low priced 2,180,265.53 1,452,445.67
and easily 3,373,235.80 1,205,538.85 2,167,696.95
worn articles 3,632,711.20
523,669,995. 50,317,984.9 473,352,010. 607,195,917. 49,242,025.5 557,953,891.
Total
53 5 58 22 2 70
(2) Falling Price Reserves of Inventories
Unit: RMB
Increase Decrease
Beginning Ending
Item Reversal or
balance Withdrawal Other Other balance
write-off
Raw
5,845,504.24 707,004.81 12,677.66 6,539,831.39
materials
Materials
processed on 993,300.18 810,188.90 183,111.28
commission
Goods in
24,187,100.54 26,985,350.14 24,187,100.54 26,985,350.14
process
88
Finished
16,035,855.03 15,194,526.31 15,826,228.05 15,404,153.29
goods
Low priced
and easily 2,180,265.53 974,726.68 1,205,538.85
worn articles
Total 49,242,025.52 42,886,881.26 41,810,921.83 50,317,984.95
(3) There Was No Capitalized Borrowing Expense in the Ending Balance of Inventories
(4) There Was No Completed but Unsettled Assets Generated from Construction Contracts at the
Period-end
8. Other Current Assets
Whether the Company has executed the new revenue standards
□ Yes √ No
Unit: RMB
Item Ending balance Beginning balance
The VAT tax credits 6,014,692.92 25,962,369.29
Prepaid expense 98,856.26 86,761.81
Other 240,371.15 54,604.46
Total 6,353,920.33 26,103,735.56
9. Creditor’s Rights Investment
Unit: RMB
Ending balance Beginning balance
Item Impairment Impairment
Carrying amount Carrying value Carrying amount Carrying value
provision provision
Entrusted loan 4,000,000.00 4,000,000.00
Total 4,000,000.00 4,000,000.00
Withdrawal of impairment provision
Unit: RMB
First stage Second stage Third stage
Expected loss in
Expected loss in the
Expected credit the duration
Bad debt provision duration (credit Total
loss of the next (credit
impairment not
12 months impairment
occurred)
occurred)
89
Balance of 1 January 2019 4,000,000.00 4,000,000.00
Balance of 1 January 2019 in
—— —— —— ——
the Current Period
--Transfer to Second stage
-- Transfer to Third stage
-- Reverse to Second stage
-- Reverse to First stage
Withdrawal of the Current
Period
Reversal of the Current
4,000,000.00 4,000,000.00
Period
Write-offs of the Current
Period
Verification of the Current
Period
Other changes
Balance of 31 December
2019
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
10. Long-term Equity Investment
Unit: RMB
Changes in the Reporting Period
Gains
Adjust Endin
Begin and Cash Endin
ment Withd g
ning losses bonus g
of rawal balanc
balanc Additi Reduc recogn Chang or balanc
Invest other of e of
e onal ed ized es of profits e
ees compr deprec Other deprec
(carryi invest invest under other annou (carryi
ehensi iation iation
ng ment ment the equity nced ng
ve reserv reserv
value) equity to value)
incom es es
metho issue
e
d
II. Associated enterprises
90
Beijin
g
Tsingh
ua
Indust
rial 44,182
0 0
Invest .50
ment
Mana
gemen
t Co.,
Ltd.
Subtot 44,182
0 0
al .50
44,182
Total 0 0
.50
11. Other Equity Instrument Investment
Unit: RMB
Item Ending balance Beginning balance
Changzhou Synergetic Innovation
Private Equity Fund (Limited 100,000,000.00 100,000,000.00
Partnership)
Other equity instrument
432,886,000.00 370,940,000.00
investment measured by fair value
Total 532,886,000.00 470,940,000.00
Disclosure of non-trading equity instrument investment in the reporting period by item:
Unit: RMB
Amount of other Reason of other
Reason for assigning to
Accu compressive comprehensive
measure at fair value and
Recognized mulati income income
Item Accumulative gains changes recorded into
dividends income ve transferred to transferred to
other comprehensive
losses retained retained
income
earnings earnings
Foton Motor Co., Non-trading equity
39,015,000.00
Ltd. investment
Non-trading equity
Bank of Jiangsu 6,069,000.00 22,860,000.00
investment
91
Jiangsu Expressway Non-trading equity
71,000.00
Co., Ltd. investment
Changzhou
Synergetic
Innovation Private Non-trading equity
Equity Fund investment
(Limited
Partnership)
Total 6,069,000.00 61,946,000.00
Refer to “XII. Financial Statements (V) 30. Changes in Main Accounting Policies and Estimates” for the
difference between beginning balance and ending balance in the prior period (31 December 2018) for details.
The stocks of listed companies such as Foton Motor Co., Ltd. held by the Company belong to non-trading equity
investment. Therefore, the investment was divided into the financial assets assigned measured by fair value and the changes be
included in the other comprehensive income.
12. Other Non-current Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Jiangsu Liance Electromechanical Technology Co., Ltd. 7,200,000.00 7,200,000.00
Kailong High Technology Co., Ltd. 20,001,268.00 20,001,268.00
Guizhou Warmen Pharmaceutical Co, Ltd. 200,104.80 200,104.80
Guizhou Anda Energy Technology Co., Ltd. 195,297.49 195,297.49
Henan Lantian Gas Co., Ltd. 160,744.76 160,744.76
Hebei Songhe Recycling Resources Co., Ltd. 104,699.44 104,699.44
Anhui Hofo Electromechanical Co., Ltd. 89,987.14 89,987.14
Jiangsu Housheng New Energy Technology Co., Ltd. 50,000,000.00
Total 77,952,101.63 27,952,101.63
Other notes:
Refer to “XII. Financial Statements (V) 30. Changes in Main Accounting Policies and Estimates” for the
difference between beginning balance and ending balance in the prior period (31 December 2018) for details.
13. Investment Property
(1) Investment Property Adopting the Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMB
Item Houses and buildings Total
92
I. Original carrying value
1.Beginning balance 87,632,571.14 87,632,571.14
2.Increased amount of the period
(1) Outsourcing
(2) Transfer from inventories/fixed
assets/construction in progress
(3)Enterprise combination increase
3.Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance 87,632,571.14 87,632,571.14
II. Accumulative depreciation and
accumulative amortization
1.Beginning balance 36,976,563.51 36,976,563.51
2.Increased amount of the period 2,208,340.80 2,208,340.80
(1) Withdrawal or amortization 2,208,340.80 2,208,340.80
3.Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance 39,184,904.31 39,184,904.31
III. Depreciation reserves
1.Beginning balance
2.Increased amount of the period
(1) Withdrawal
3.Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance
IV. Carrying value
1. Ending carrying value 48,447,666.83 48,447,666.83
2.Beginning carrying value 50,656,007.63 50,656,007.63
14. Fixed Assets
Unit: RMB
93
Item Ending balance Beginning balance
Fixed assets 457,582,514.13 511,250,371.37
Disposal of fixed assets 0.00 0.00
Total 457,582,514.13 511,250,371.37
(1) List of Fixed Assets
Unit: RMB
Houses and Machinery Transportation Other
Item Total
buildings equipment equipment equipment
I. Original
carrying value
1. Beginning
447,076,373.55 936,110,914.94 18,083,828.53 44,422,389.46 1,445,693,506.48
balance
2. Increased
amount of the 2,093,189.79 27,049,532.05 1,361,109.97 30,503,831.81
period
(1) Purchase 1,401,958.84 2,546,176.53 948,074.27 4,896,209.64
(2) Transfer
from
691,230.95 24,503,355.52 413,035.70 25,607,622.17
construction in
progress
(3) Enterprise
combination
increase
3. Decreased
amount of the 480,902.12 7,022,206.81 800,658.99 3,574,856.25 11,878,624.17
period
(1) Disposal or
480,902.12 7,022,206.81 800,658.99 3,574,856.25 11,878,624.17
scrap
4. Ending
448,688,661.22 956,138,240.18 17,283,169.54 42,208,643.18 1,464,318,714.12
balance
II.
Accumulative
depreciation
1. Beginning
265,778,832.18 619,622,564.64 13,341,638.03 34,205,985.26 932,949,020.11
balance
94
2. Increased
amount of the 16,273,258.83 61,230,582.50 1,287,627.97 4,506,366.79 83,297,836.09
period
(1) Withdrawal 16,273,258.83 61,230,582.50 1,287,627.97 4,506,366.79 83,297,836.09
3. Decreased
amount of the 385,508.75 6,307,964.63 736,947.20 3,574,350.63 11,004,771.21
period
(1) Disposal or
385,508.75 6,307,964.63 736,947.20 3,574,350.63 11,004,771.21
scrap
4. Ending
281,666,582.26 674,545,182.51 13,892,318.80 35,138,001.42 1,005,242,084.99
balance
III.
Depreciation
reserves
1. Beginning
1,494,115.00 1,494,115.00
balance
2. Increased
amount of the
period
(1) Withdrawal
3. Decreased
amount of the
period
(1) Disposal or
scrap
4. Ending
1,494,115.00 1,494,115.00
balance
IV. Carrying
value
1. Ending
167,022,078.96 280,098,942.67 3,390,850.74 7,070,641.76 457,582,514.13
carrying value
2. Beginning
181,297,541.37 314,994,235.30 4,742,190.50 10,216,404.20 511,250,371.37
carrying value
15. Construction in Progress
Unit: RMB
Item Ending balance Beginning balance
Construction in progress 63,216,445.03 59,851,682.79
95
Engineering materials 28,141,711.21 29,238,701.92
Total 91,358,156.24 89,090,384.71
(1) List of Construction in Progress
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciati Carrying Depreciati
Carrying value Carrying value
amount on reserves amount on reserves
Trial
production
workshop
14,349,461.80 14,349,461.80
project
technology
center
Casting
renovation 396,000.00
396,000.00
project
Expansion
capacity of
multi-cylinde 11,371,098.24
11,375,531.74 11,375,531.74 11,371,098.24
r (The 2nd
Period)
Diesel
Engine
Cylinder
Body 19,061,813.95
38,266,788.31 38,266,788.31 19,061,813.95
Flexible
Manufacturin
g Line
35KV
1,321,959.41 1,321,959.41 1,321,959.41 1,321,959.41
Substation
Oily water
separating 340,800.00 340,800.00
equipment
96
Relocation
project of
1,687,194.64 1,687,194.64
light engine
and casting
Equipment to
be installed
10,224,170.93 13,351,349.39 13,351,349.39
and payment 10,224,170.93
for projects
Total 63,216,445.03 63,216,445.03 59,851,682.79 59,851,682.79
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
Propo Of
rtion which Capit
of Accu : alizati
accu mulat Amo on
mulat ive unt of rate
Trans Other
Begin Incre Endin ive amou capita of Capit
ferred decre Job
Budg ning ased g invest nt of lized intere al
Item in ased sched
et balan amou balan ment intere intere sts in resou
fixed amou ule
ce nt ce in st sts in the rces
assets nt
constr capita the Repor
uctio lizati Repor ting
ns to on ting Perio
budge Perio d
t d
Trial
produ
ction
works
22,89 14,34 14,34 Unco
hop
6,300 9,461 9,461 mplet Other
proje .00 .80 .80 ed
ct
techn
ology
center
97
Expa
nsion
capac
ity of
multi- 79,00 11,37 11,37 Unco
cylin 0,000 1,098 4,433 5,531 mplet Other
.00 .24 .50 .74 ed
der
(The
2nd
Perio
d)
Diese
l
Engin
e
Cylin
der 116,0 19,06 38,26 Unco
19,20
Body 40,00 1,813 6,788 mplet Other
4,974
Flexi 0.00 .95 .31 ed
.36
ble
Manu
factur
ing
Line
35KV 1,321 Unco
1,321
Subst ,959. mplet Other
,959.
ation 41 ed
41
217,9 46,10 19,20 14,34 50,96
Total 36,30 4,333 9,407 9,461 4,279 -- -- --
0.00 .40 .86 .80 .46
(3) Engineering Materials
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciatio Carrying Depreciati
Carrying value Carrying value
amount n reserves amount on reserves
98
Engineering
28,141,711.21 28,141,711.21 29,238,701.92 29,238,701.92
materials
Total 28,141,711.21 28,141,711.21 29,238,701.92 29,238,701.92
16. Intangible Assets
(1) List of Intangible Assets
Unit: RMB
Item Land use right Patent right License fee Total
I. Original carrying value
1. Beginning balance 144,770,507.85 11,517,579.94 5,488,000.00 161,776,087.79
2. Increased amount of the period 1,433,300.90 1,433,300.90
(1) Purchase 1,433,300.90 1,433,300.90
(2) Internal R&D
(3) Business combination increase
3. Decreased amount of the period 83,888.26 83,888.26
(1) Disposal 83,888.26 83,888.26
4. Ending balance 144,770,507.85 12,866,992.58 5,488,000.00 163,125,500.43
II. Accumulated amortization
1. Beginning balance 48,128,022.51 9,549,052.64 1,006,133.26 58,683,208.41
2. Increased amount of the period 2,971,978.31 1,305,951.75 548,799.96 4,826,730.02
(1) Withdrawal 2,971,978.31 1,305,951.75 548,799.96 4,826,730.02
3. Decreased amount of the period 83,888.26 83,888.26
(1) Disposal 83,888.26 83,888.26
4. Ending balance 51,100,000.82 10,771,116.13 1,554,933.22 63,426,050.17
III. Depreciation reserves
1. Beginning balance
2. Increased amount of the period
(1) Withdrawal
3. Decreased amount of the period
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying value 93,670,507.03 2,095,876.45 3,933,066.78 99,699,450.26
2. Beginning carrying value 96,642,485.34 1,968,527.30 4,481,866.74 103,092,879.38
99
17. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets that Had not Been Set-off
Unit: RMB
Ending balance Beginning balance
Deductible Deductible
Item Deferred income Deferred income
temporary temporary
tax assets tax assets
difference difference
Provision for
impairment of 6,682,163.90 1,023,856.52 6,401,000.68 979,822.71
assets
Total 6,682,163.90 1,023,856.52 6,401,000.68 979,822.71
(2) Deferred Income Tax Liabilities Had Not Been Off-set
Unit: RMB
Ending balance Beginning balance
Deductible Deductible
Item Deferred income Deferred income
temporary temporary
tax liabilities tax liabilities
difference difference
Changes in fair
value of other
373,011,500.00 55,951,725.00
equity instrument
investment
Changes in fair
value of
311,065,500.00 46,659,825.00
available-for-sale
financial assets
Assets evaluation
appreciation for
business
4,524,661.07 1,131,165.27 5,247,821.44 1,311,955.36
combination not
under the same
control
Total 377,536,161.07 57,082,890.27 316,313,321.44 47,971,780.36
(3) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
Item Ending balance Beginning balance
100
bad debt 375,416,184.97 271,239,638.98
falling price reserves of inventories 50,317,984.95 49,242,025.52
Total 425,734,169.92 320,481,664.50
18. Other Non-current Assets
Whether the Company has executed the new revenue standards
□ Yes √ No
Unit: RMB
Item Ending balance Beginning balance
Total 0.00 0.00
There was no balance at the period-begin. Refer to “XII. Financial Statements (V) 30. Changes in Main
Accounting Policies and Estimates-(2) Influence of Execution of New Standards Governing Financial
Instruments” for the difference between beginning balance and ending balance in the prior period (31 December
2018) for details.
19. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Mortgage loans 7,000,000.00 7,000,000.00
Guaranteed loans 10,000,000.00 10,000,000.00
Credit loans 5,000,000.00 10,000,000.00
Total 22,000,000.00 27,000,000.00
(2) There Was No Short-term Borrowings Overdue but Unpaid.
20. Notes Payable
Unit: RMB
Item Ending balance Beginning balance
Bank acceptance bill 403,035,000.00 438,375,400.00
Total 403,035,000.00 438,375,400.00
The amount of notes payable due but unpaid at the period-end was RMB0.
101
21 Accounts Payable
(1) List of Accounts Payable
Unit: RMB
Item Ending balance Beginning balance
Loans 525,610,256.89 591,754,875.77
Total 525,610,256.89 591,754,875.77
(2) There Was No Significant Accounts Payable Aging over One Year
22. Advances from Customers
Whether the Comp
any has executed the new revenue standards
□ Yes √ No
(1) List of Advances from Customers
Unit: RMB
Item Ending balance Beginning balance
Loan 30,836,615.21 34,500,232.97
Total 30,836,615.21 34,500,232.97
(2) There Were No Significant Advances from Customers Aging over One Year
23. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
I. Short-term salary 50,500,592.99 245,933,884.31 251,875,461.51 44,559,015.79
II. 34,554,489.90 34,554,489.90
Post-employment
benefit-defined
contribution plans
III. Termination 284,193.00 284,193.00
benefits
Total 50,500,592.99 280,772,567.21 286,714,144.41 44,559,015.79
102
(2) List of Short-term Salary
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Salary, bonus, 41,939,857.83 201,033,055.30 206,077,959.42 36,894,953.71
allowance, subsidy
2.Employee welfare 89,592.74 3,658,998.62 3,746,998.62 1,592.74
3. Social insurance 18,016,605.44 18,016,605.44
Of which: Medical 14,983,569.28 14,983,569.28
insurance
premiums
Work-related injury 1,491,692.35 1,491,692.35
insurance
Maternity insurance 1,541,343.81 1,541,343.81
4. Housing fund 19,198,174.00 19,198,174.00
5. Labor union 8,471,142.42 4,027,050.95 4,835,724.03 7,662,469.34
budget and
employee education
budget
6. Short-term
absence with salary
7. Short-term profit
sharing scheme
50,500,5 245,933,884.31 251,875,461.51 44,559,015.79
Total
2.99
(3) List of Defined Contribution Plans
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Basic pension 33,571,411.49 33,571,411.49
benefits
2. Unemployment 983,078.41 983,078.41
insurance
Total 34,554,489.90 34,554,489.90
103
24. Taxes Payable
Unit: RMB
Item Ending balance Beginning balance
VAT 1,290,060.47 876,055.81
Corporate income tax 5,090,781.18 3,665,483.92
Personal income tax 367,624.40 140,662.05
Urban maintenance and
970,067.92 993,210.56
construction tax
Property tax 94,257.20 94,256.40
Land use tax 100,135.19 100,135.19
Stamp duty 6,282.95 4,594.61
Education surcharge 99,824.96 116,355.46
Comprehensive fees 1,075,134.76 1,075,134.76
Environmental protection tax 213.55 197.13
Total 9,094,382.58 7,066,085.89
Other notes:
25. Other Payables
Unit: RMB
Item Ending balance Beginning balance
Interest payable
Dividends payable 3,891,433.83 3,891,433.83
Other payables 199,948,693.36 195,520,817.07
Total 203,840,127.19 199,412,250.90
(1) Dividends Payable
Unit: RMB
Item Ending balance Beginning balance
Ordinary stock dividends 3,243,179.97 3,243,179.97
Interest of preferred shares/
perpetual bond classified as equity
instrument
Dividends for non-controlling
648,253.86 648,253.86
shareholders
104
Other
Total 3,891,433.83 3,891,433.83
The reason for non-payment for over one year: Not gotten by shareholders yet.
(2) Other Payables
1) Other Payables Listed by Nature of Account
Unit: RMB
Item Ending balance Beginning balance
Margin and cash pledged 2,674,213.08 3,369,213.08
Intercourse funds among units 10,791,973.79 10,977,924.77
Intercourse funds among individuals 333,412.05 375,201.04
Sales discount and three guarantees 143,497,522.22 144,278,468.99
Other 42,651,572.22 36,520,009.19
Total 199,948,693.36 195,520,817.07
2) Significant Other Payables Aging over One Year
The significant other payables aging over one year at the period-end mainly referred to the unsettled
temporary credits and charges owned.
26. Current Portion of Non-current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Current portion of long-term
0.00 18,500,000.00
borrowings
Total 0.00 18,500,000.00
The current portion of long-term borrowings was RMB18,500,000.00 which was the borrowing for technical
transformation project of the Company as the parent provided by China Merchants Bank Changzhou Branch with
the term from 20 September 2017 to 19 September 2019 and the interest rate of 4.75%.
27. Other Current Liabilities
Whether the Company has executed the new revenue standards
□ Yes √ No
Unit: RMB
Item Ending balance Beginning balance
105
Sale service fee 229,387.96
Transportation storage fee 132,551.86
Electric charge 815,772.56 2,082,985.18
Total 1,177,712.38 2,082,985.18
28. Long-term Borrowings
(1) Category of Long-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Mortgage loans 0.00 2,000,000.00
Total 0.00 2,000,000.00
The mortgage loan at the period-end was RMB2,000,000.00, which was the loan by the
subsidiary-Changchai Wanzhou from Gaosuntang Branch of Chongqing Three Gorges Bank with the duration
from 14 December 2017 to 6 November 2020 and the interest rate of 6.15%. The loan has been paid off in
advance on 24 May 2019.
29. Deferred Income
Unit: RMB
Beginning Reason for
Item Increase Decrease Ending balance
balance formation
Government Government
59,928,484.84 1,064,373.62 58,864,111.22
subsidies appropriation
Total 59,928,484.84 1,064,373.62 58,864,111.22 --
Item involving government subsidies:
Unit: RMB
Amount
Amount
recorded
recorded Amount
into Related
into offset
Amount non-oper to
Beginning other cost in Other Ending
Item of new ating assets/rel
balance income the changes balance
subsidy income ated
in the Reportin
in the income
Reportin g Period
Reportin
g Period
g Period
106
Electric
control
of diesel
engine
research
and 398,400. Related
646,800.00 248,400.00
develop 00 to assets
ment and
industrial
ization
allocatio
ns
National
major
project 28,770,000. 28,770,000. Related
special 00 00 to assets
allocatio
ns
Remove
20,511,684. 665,973. 19,845,711. Related
compens
84 62 22 to assets
ation
107
Research
and
develop
ment and
industrial
ization
allocatio
ns of
national
10,000,000. 10,000,000. Related
III/IV
00 00 to assets
standard
high-po
wered
efficient
diesel
engine
for
agricultu
ral use
59,928,484. 1,064,37 58,864,111.
Total
84 3.62 22
30. Share Capital
Unit: RMB
Increase/decrease (+/-)
Beginning Bonus Ending
New shares Bonus
balance issue from Other Subtotal balance
issued shares
profit
The sum of 561,374,32 561,374,32
shares 6.00 6.00
31. Capital Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
108
Capital premium
143,990,690.24 143,990,690.24
(premium on stock)
Other capital
20,337,975.19 20,337,975.19
reserves
Total 164,328,665.43 164,328,665.43
32. Other Comprehensive Income
Unit: RMB
Reporting Period
Less:
Record
Less: ed into
Recorded other
in other compre
comprehe hensiv Attribu
nsive e table to Attribu
Income
income in income owners table to
before Less: Endin
Beginni prior in prior of the non-co
taxatio Income g
Item ng period period Compa ntrollin
n in the tax balan
balance and and ny as g
Curren expens ce
transferre transfe the interest
t e
d to rred to parent s after
Period
profit or retaine after tax
loss in d tax
the earning
Current s in the
Period Curren
t
Period
I. Other comprehensive 317,0
264,405, 61,946, 9,291,9 52,654,
income that will not be 59,77
675.00 000.00 00.00 100.00
reclassified to profit or loss 5.00
Of which: Changes caused
by re-measurements on
defined benefit pension
schemes
Share of other
comprehensive income of
investees that will not be
reclassified to profit or loss
under equity method
109
Changes in fair value of 317,0
264,405, 61,946, 9,291,9 52,654,
other equity instrument 59,77
675.00 000.00 00.00 100.00
investment 5.00
Changes in fair value of
corporate credit risk
II. Other comprehensive
income that may
subsequently be
reclassified to profit or loss
Of which: Share of other
comprehensive income of
investees that will be
reclassified to profit or loss
under equity method
Changes in fair value of
other creditor’s rights
investment
Amount of financial assets
reclassified to other
comprehensive income
Credit depreciation
reserves of other creditor’s
rights investment
Reserves for cash flow
hedges
Differences arising from
translation of foreign
currency-denominated
financial statements
317,0
Total of other 264,405, 61,946, 9,291,9 52,654,
59,77
comprehensive income 675.00 000.00 00.00 100.00
5.00
33. Specific Reserve
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Safety production
15,182,958.83 3,868,727.07 1,491,483.83 17,560,202.07
cost
Total 15,182,958.83 3,868,727.07 1,491,483.83 17,560,202.07
110
34. Surplus Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Statutory surplus
306,976,192.25 2,093,650.19 309,069,842.44
reserves
Discretional surplus
13,156,857.90 13,156,857.90
reserves
Total 320,133,050.15 2,093,650.19 322,226,700.34
35. Retained Earnings
Unit: RMB
Item Reporting Period Same period of last year
Beginning balance of retained earnings
717,883,351.33 679,131,047.06
before adjustments
Total retained earnings at the beginning
of the adjustment period (“+” means up,
“-” means down)
Beginning balance of retained earnings
717,883,351.33 679,131,047.06
after adjustments
Add: Net profit attributable to owners of
24,934,586.11 62,021,374.04
the Company as the parent
Less: Withdrawal of statutory surplus
2,093,650.19 6,427,839.99
reserves
Withdrawal of discretional surplus
reserves
Withdrawal of general reserve
Dividend of ordinary shares
14,034,358.15 16,841,229.78
payable
Dividends of ordinary shares
transferred as share capital
Ending retained earnings 726,689,929.10 717,883,351.33
36. Operating Revenue and Cost of Sales
Unit: RMB
Reporting Period Same period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
111
Main operations 2,001,911,782.04 1,679,856,891.00 2,093,039,249.58 1,782,146,126.35
Other operations 38,221,935.26 29,792,886.75 39,863,469.02 31,298,459.31
Total 2,040,133,717.30 1,709,649,777.75 2,132,902,718.60 1,813,444,585.66
Whether the Company has executed the new revenue standards
□ Yes √ No
37. Taxes and Surtaxes
Unit: RMB
Item Reporting Period Same period of last year
Urban maintenance and 955,480.56 1,538,140.51
construction tax
Education surcharge 682,129.42 1,098,335.32
Property tax 4,692,583.81 4,720,363.62
Land use tax 3,813,015.72 3,813,015.72
Vehicle and vessel use tax 1,320.00 1,920.00
Stamp duty 541,541.14 1,046,929.90
Environment tax 238,068.00 194,011.91
Other 34,933.24 120,012.70
Total 10,959,071.89 12,532,729.68
38. Selling Expense
Unit: RMB
Item Reporting Period Same period of last year
Office expenses 15,164,256.65 15,226,739.67
Employee’s remuneration 29,850,039.44 30,898,847.11
Sales promotional expense 5,260,765.63 11,065,465.84
Three guarantees 38,321,773.50 59,459,243.39
Transport charge 7,296,670.11 7,875,890.07
Other 1,191,611.72 2,470,880.79
Total 97,085,117.05 126,997,066.87
39. Administrative Expense
Unit: RMB
112
Item Reporting Period Same period of last year
Office expenses 11,008,664.40 13,620,335.64
Employee’s remuneration 55,260,415.45 63,552,532.88
Depreciation and amortization 11,164,412.83 12,141,787.46
Transport fees 2,035,060.15 2,203,781.08
Repair charge 391,744.51 918,265.20
Safety expenses 3,868,727.07 4,135,805.99
Other 22,454,108.99 19,455,330.71
Total 106,183,133.40 116,027,838.96
40. R&D Expense
Unit: RMB
Item Reporting Period Same period of last year
Direct input expense 39,929,867.41 44,893,971.91
Employee’s remuneration 19,795,993.59 22,101,113.31
Depreciation and amortization 3,926,467.26 2,812,179.10
Entrusted R&D charges 26,000.00 700,000.00
Other 2,543,048.01 1,675,576.46
Total 66,221,376.27 72,182,840.78
41. Finance Costs
Unit: RMB
Item Reporting Period Same period of last year
Interest expense 5,722,554.43 4,553,608.46
Less: Interest income 6,719,990.78 4,665,445.23
Net foreign exchange gains or
-1,709,183.70 -6,194,688.23
losses
Other -1,718,251.11 5,402,762.70
Total -4,424,871.16 -903,762.30
42. Other Income
Unit: RMB
Sources Reporting Period Same period of last year
Government subsidies 5,312,295.51 6,291,685.65
113
43. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Long-term equity investment income accounted
by equity method
Investment income from disposal of long-term
equity investment
Investment income from holding of trading
financial assets
Investment income from disposal of trading
financial assets
Dividend income from holding of other equity
6,069,000.00
instrument investment
Investment income from holding of held-to
–maturity investment
Investment income from holding of
7,607,870.00
available-for-sale financial assets
Investment income from disposal of
104,824,084.63
available-for-sale financial assets
Investment income from disposal of held-to
–maturity investment
Income from re-measurement of residual stock
rights at fair value after losing control power
Interest income from holding of creditor’s rights
investment
Interest income from holding of other creditor’s
rights investment
Investment income from disposal of other
creditor’s rights investment
Investment income from disposal of other
-18,685.03
non-current financial assets
Investment income from holding of other
1,408,752.61
non-current financial assets
Investment income from disposal of financial
354,829.53 838,870.20
products of securities company
Other income from holding of equity instrument
137,814.50
investment
Total 7,951,711.61 113,270,824.83
114
44. Gain on Changes in Fair Value
Unit: RMB
Sources Reporting Period Same period of last year
Trading financial assets -49,255.00
Of which: gain on changes in fair
value of derivative financial -49,255.00
instrument
Total -49,255.00
45. Credit Impairment Loss
Unit: RMB
Item Reporting Period Same period of last year
Bad debt loss of other receivables -292,395.68
Bad debt loss of accounts receivable -4,640,733.21
Impairment loss of entrusted loan 4,000,000.00
Total -933,128.89
46. Asset Impairment Loss
Whether the Company has executed the new revenue standards
□ Yes √ No
Unit: RMB
Item Reporting Period Same period of last year
I. Bad debt loss -5,459,103.29
II. Loss on inventory valuation and
-42,371,202.17 -42,139,394.79
contract performance cost
III. Impairment loss on
available-for-sale financial assets
IV. Impairment loss on
held-to-maturity investment
V. Impairment loss on long-term
equity investment
VI. Impairment loss on investment
property
VII. Impairment loss on fixed
assets
115
VIII. Impairment loss on
engineering materials
IX. Impairment loss on
construction in progress
X. Impairment loss on productive
living assets
XI. Impairment loss on oil and gas
assets
XII. Impairment loss on intangible
assets
XIII. Impairment loss on goodwill
XIV. Other -10,000,000.00
Total -42,371,202.17 -37,598,498.08
47. Asset Disposal Income
Unit: RMB
Sources Reporting Period Same period of last year
Fixed asset disposal income 2,059,668.56 662,151.89
48. Non-operating Income
Unit: RMB
Amount recorded in the
Item Reporting Period Same Period of last year current non-recurring
profit or loss
Insurance indemnity 1,179,518.37
Income from penalty 373,200.44 112,645.60 373,200.44
Income generated from
502,640.00
disposal of current assets
Other 59,319.94 144,191.79 59,319.94
Not need to pay 13,825.00 13,825.00
Total 446,345.38 1,938,995.76 446,345.38
49. Non-operating Expense
Unit: RMB
116
Amount recorded in the
Item Reporting Period Same period of last year current non-recurring
profit or loss
Loss on disposal of
145,531.09 928,118.57 145,531.09
non-current assets
Loss on disposal of
539,665.92
current assets
Other 73,810.45 6,434.00 73,810.45
Total 219,341.54 1,474,218.49 219,341.54
50. Income Tax Expense
(1) List of Income Tax Expense
Unit: RMB
Item Reporting Period Same Period of last year
Current income tax expense 1,929,642.45 13,721,905.60
Deferred income tax expense -224,823.90 -176,242.93
Total 1,704,818.55 13,545,662.67
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
Item Reporting Period
Profit before taxation 26,657,205.56
Current income tax expense accounted at
3,998,580.82
statutory/applicable tax rate
Influence of applying different tax rates by subsidiaries 300,367.06
Influence of income tax before adjustment -6,783,397.42
Influence of non-taxable income -974,350.00
Influence of non-deductable costs, expenses and losses 228,027.17
Influence of deductable temporary difference or
deductable losses of unrecognized deferred income tax 8,530,167.41
assets in the Reporting Period
Tax preference generated from eligible expense -3,594,576.49
Income tax expense 1,704,818.55
117
51. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Subsidy and appropriation 4,247,921.89 5,227,312.03
Other intercourses in cash 79,063.29 2,429,574.19
Interest income 6,974,058.50 4,665,445.23
Other 378,925.22
Total 11,679,968.90 12,322,331.45
Notes:
(2) Cash Used in Other Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Selling expense paid in cash 62,490,016.60 70,472,280.14
Administrative expense paid in
57,388,527.86 44,119,952.70
cash
Handling charge 937,381.75 517,221.04
Other 317,407.08 1,494,483.87
Total 121,133,333.29 116,603,937.75
52. 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 24,952,387.01 62,166,697.84
Add: Provision for impairment of assets 43,304,331.06 37,598,498.08
Depreciation of fixed assets, of oil and gas assets, of
85,506,176.89 86,806,660.70
productive living assets
Depreciation of right-to-use assets
Amortization of intangible assets 4,826,730.02 5,248,080.61
118
Amortization of long-term deferred expenses
Losses on disposal of fixed assets, intangible assets and
-2,059,668.56 -662,151.89
other long-term assets (gains by “-”)
Losses on the scrapping of fixed assets (gains by “-”) 145,531.09 928,118.57
Losses on the changes in fair value (gains by “-”) 49,255.00
Financial expenses (gains by “-”) 5,007,157.46 4,553,608.46
Investment losses (gains by “-”) -7,951,711.61 -113,270,824.83
Decrease in deferred income tax assets (increase by “-”) -44,033.81 27,131.10
Increase in deferred income tax liabilities (decrease by
-180,790.09 -203,374.03
“-”)
Decrease in inventory (increase by “-”) 42,230,678.95 -91,846,479.01
Decrease in accounts receivable from operating activities
-139,462,798.46 232,739,906.78
(increase by “-”)
Increase in payables from operating activities (decrease
-99,430,107.30 63,742,812.33
by “-”)
Other 22,564,004.83 -14,009,157.82
Net cash flows generated from operating activities -20,542,857.52 273,819,526.89
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 -- --
Ending balance of cash 544,584,744.17 687,079,639.59
Less: Beginning balance of cash 687,079,639.59 325,263,654.43
Add: Ending balance of cash equivalents
Less: Beginning balance of cash equivalents
Net increase in cash and cash equivalents -142,494,895.42 361,815,985.16
(2) Cash and Cash Equivalents
Unit: RMB
Item Ending balance Beginning balance
I. Cash 544,584,744.17 687,079,639.59
Including: Cash on hand 153,975.35 441,363.70
Bank deposit on demand 543,923,045.33 684,620,907.41
119
Other monetary assets on demand 507,723.49 2,017,368.48
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. Ending balance of cash and cash
544,584,744.17 687,079,639.59
equivalents
Of which: Cash and cash equivalents
with restriction in use for the
Company as the parent or
subsidiaries of the Group
53. Assets with Restricted Ownership or Right to Use
Unit: RMB
Item Ending carrying value Reason for restriction
As cash deposit for bank
Monetary assets 92,629,261.89
acceptance bill
Mortgaged for borrowings from
Houses and buildings 2,936,446.13
banks
Mortgaged for borrowings from
Land use right 995,328.00
banks
Mortgaged for borrowings from
Machinery equipment 48,181,935.62
banks
Total 144,742,971.64 --
54. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Unit: RMB
Ending foreign currency Ending balance
Item Exchange rate
balance converted to RMB
Monetary assets -- --
Of which: USD 12,870,806.64 6.9762 89,789,321.28
EUR
120
HKD 280,787.13 0.8958 251,529.11
SGD 54,427.95 5.1739 281,604.77
JPY 19,477,137.00 0.0641 1,248,484.48
Accounts receivable -- --
Of which: USD 9,340,696.90 6.9762 65,162,569.71
Accounts payable -
Of which: USD 302.60 6.9762 2,111.00
(2) Notes to Overseas Entities Including: for Significant Oversea Entities, Main Operating Place,
Recording Currency and Selection Basis Shall Be Disclosed; if there Are Changes in Recording Currency,
Relevant Reasons Shall Be Disclosed.
□ Applicable √ Not applicable
55. Government Subsidy
(1) Basic Information on Government Subsidy
Unit: RMB
Amount recorded in the
Category Amount Listed items
current profit or loss
Trinity subsidy 674,000.00 Other income 674,000.00
Subsidy for stabilizing posts 2,162,251.03 Other income 2,162,251.03
Research fund for agricultural
machinery pollutant discharge control
156,000.00 Other income 156,000.00
technology and system of Luoyang
tractors research laboratory
Research fund for agricultural diesel
engine clean combustion key
59,400.00 Other income 59,400.00
technology of Wuhan University of
Technology
ECI subsidy 474,400.00 Other income 474,400.00
Relocation compensation 665,973.62 Other income 665,973.62
Patent rewards 200,000.00 Other income 200,000.00
Fund for hillside tractor key technology
research and complete machine 96,959.20 Other income 96,959.20
development of Jiangsu University
R & D and industrialization of off-road
398,400.00 Other income 398,400.00
diesel engine controlled by electricity
121
Tax contributions reward 80,000.00 Other income 80,000.00
Industry development fund 60,000.00 Other income 60,000.00
Other rewards and subsidies 59,611.66 Other income 59,611.66
Appropriation of other technological
225,300.00 Other income 225,300.00
projects
Appropriation for R & D and
industrialization of off-road diesel 248,400.00 Deferred income
engine controlled by electricity
National major special appropriation 28,770,000.00 Deferred income
Relocation compensation 19,845,711.22 Deferred income
Appropriation or research and
development and industrialization
allocations of national III/IV standard 10,000,000.00 Deferred income
high-powered efficient diesel engine for
agricultural use
Return of Government Subsidy
□ Applicable √ Not applicable
VIII. Changes of Consolidation Scope
1. Changes in Combination Scope for Other Reasons
Note to changes in combination scope for other reasons (such as newly establishment or liquidation of subsidiaries,
etc.) and relevant information:
On 25 February 2019, the interim board meeting held by the Company, examined and approved the Proposal
on Establishing Wholly-owned Subsidiary to Implement the Production Project of Light Duty Engine and Casting,
and agreed the Company to set up a wholly-owned subsidiary in RMB300 million to implement the production
project. Refer to Announcement of Foreign Investment and Establishing the Wholly-owned Subsidiary
(Announcement No. 2019-004) in Security Times, Ta Kung Pao and the cninfo website on 26 February 2019 for
details.
On 6 March 2019, the wholly-owned subsidiary completed the registration procedures and gained the
business license issued by Administrative Approval Bureau of Changzhou National High-tech Industry
Development Zone (Xinbei District). Refer to Announcement of Procedures of Foreign Investment and
Establishing the Wholly-owned Subsidiary (Announcement No. 2019-005) in Security Times, Ta Kung Pao and
the cninfo website on 7 March 2019 for details.
122
IX. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
Main Holding percentage (%)
Registration Nature of Way of
Name operating
place business Directly Indirectly gaining
place
Changchai
Wanzhou
Diesel Chongqing Chongqing Industry 60.00% Set-up
Engine Co.,
Ltd.
Changzhou
Changchai
Benniu
Diesel Changzhou Changzhou Industry 99.00% 1.00% Set-up
Engine
Fittings Co.,
Ltd.
Changzhou
Housheng
Changzhou Changzhou Service 100.00% Set-up
Investment
Co., Ltd.
Changzhou
Changchai
Housheng
Changzhou Changzhou Industry 70.00% 25.00% Set-up
Agricultural
Equipment
Co., Ltd.
Changzhou
Fuji
Changchai Combination
Robin Changzhou Changzhou Industry 100.00% not under the
Gasoline same control
Engine Co.,
Ltd.
Jiangsu
Changchai
Changzhou Changzhou Industry 100.00% Set-up
Machinery
Co., Ltd.
123
(2) Significant Non-wholly-owned Subsidiary
Unit: RMB
Declaring
Shareholding The profit or loss Balance of
dividends
proportion of attributable to the non-controlling
Name distributed to
non-controlling non-controlling interests at the
non-controlling
interests interests period-end
interests
Changchai
Wanzhou Diesel 40.00% 64,142.17 19,613,948.72
Engine Co., Ltd.
Changzhou
Changchai
Housheng
5.00% -46,341.27 22,332.29
Agricultural
Equipment Co.,
Ltd.
Holding proportion of non-controlling interests in subsidiary different from voting proportion: Not applicable
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
Unit: RMB
Ending balance Beginning balance
Non- Non-
Non- Curre Non- Curre
Curre curre Total Curre curre Total
Name curre Total nt curre Total nt
nt nt liabili nt nt liabili
nt assets liabili nt assets liabili
assets liabili ties assets liabili ties
assets ties assets ties
ty ty
Chan
gchai
Wanz
hou 43,80 25,82 69,62 20,59 20,59 44,94 26,69 71,64 20,76 2,000 22,76
Diese 7,991 1,314 9,305 4,433 4,433 6,886 3,776 0,662 6,145 ,000. 6,145
l .71 .00 .71 .90 .90 .20 .10 .30 .92 00 .92
Engin
e Co.,
Ltd.
124
Chan
gzhou
Chan
gchai
Hous
heng 28,57 29,08 28,64 28,64 35,77 36,40 35,02 35,02
514,6 625,6
Agric 3,892 8,562 1,916 1,916 6,302 1,983 8,512 8,512
69.94 80.72
ultura .12 .06 .23 .23 .79 .51 .30 .30
l
Equip
ment
Co.,
Ltd.
Unit: RMB
Reporting Period Same period of last year
Cash Cash
Total Total
flows flows
Name Operating comprehe Operating comprehe
Net profit from Net profit from
revenue nsive revenue nsive
operating operating
income income
activities activities
Changcha
i
Wanzhou 40,959,22 160,355.4 160,355.4 1,526,529 46,653,66 1,117,933 1,117,933 1,632,974
Diesel 2.43 3 3 .99 0.46 .80 .80 .66
Engine
Co., Ltd.
Changzh
ou
Changcha
i
Houshen
13,888,57 -926,825. -926,825. -419,750. 17,505,78 -6,036,99 -6,036,99 -1,896,20
g
9.77 38 38 02 4.08 4.34 4.34 3.08
Agricultu
ral
Equipme
nt Co.,
Ltd.
2. Equity in the Structured Entity Excluded in the Scope of Consolidated Financial Statements
Notes to the structured entity excluded in the scope of consolidated financial statements:
In 2017, the Company set up Changzhou Xietong Private Equity Fund (Limited Partnership) together with
Synergetic Innovation Fund Management Co., Ltd. through joint investment. On 18 October 2018, new partners
125
were added. In line with the revised Partnership Agreement, the general partner is Synergetic Innovation Fund
Management Co., Ltd., and the limited partners are Changchai Company, Limited, Changzhou Zhongyou
Petroleum Sales Co., Ltd., Changzhou Fuel Co., Ltd., Tong Yinzhu and Tong Yinxin. In accordance with the
Partnership Agreement, the limited partner does not execute the partnership affairs. Thus, the Company does not
control Changzhou Xietong Private Equity Fund (Limited Partnership) and did not include it into the scope of
consolidated financial statements.
X. The Risk Related to Financial Instruments
The goal of the Company’s risk management was gaining the balance between the risk and income, and
reduced the negative impact to the operation performance of the Company in the lowest level and maximized the
interests of shareholders and other equity investors. Base on the risk management goal, the basis strategy of the
Company’s risk management was to recognized and 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 conducts the following methods.
The Company only conducts related transaction with approved and reputable third party, in line with the
policy of the Company, the Company need to conduct credit-check for the clients adopting way of credit to
conduct transaction. In addition, the Company continuously monitors the balance of account receivable to ensure
the Company would not face the significant bad debt risk.
(II) Liquidity Risk
Liquidity risk is referred to the risk of incurring capital shortage when performing settlement obligation in
the way of cash payment or other financial assets. The policies of the Company are to ensure that there was
sufficient cash to pay the due liabilities.
The liquidity risk was centralized controlled by the financial department of the Company. The financial
departments through supervising the balance of the cash and securities can be convert to cash at any time and the
rolling prediction of cash flow in future 12 months to ensure the Company has sufficient cash to pay the liabilities
under the case of all reasonable prediction.
(III) Market Risk
Market risk is referred to risk of the fair value or future cash flow of financial instrument changed due to the
change of market price, including: foreign exchange rate risk, interest rate risk.
1. Interest Rate Risk
Interest rate risk is refers to fluctuation risk of the fair value or future cash flow of financial instrument
change due to the change of market price.
2. Foreign Exchange Risk
Foreign exchange rate risk is referred to the risk incurred form the change of exchange rate. As for the
Company’s export business, customers will be given a certain credit term, if the RMB appreciates against the
dollar, the Company’s accounts receivable will incur foreign currency exchange loss.
XI. The Disclosure of Fair Value
1. The Disclosure of Fair Value
Unit: RMB
Item Ending fair value
126
Fair value
Fair value Fair value
measurement
measurement measurement Total
items at level
items at level 1 items at level 3
2
I. Consistent fair value
-- -- -- --
measurement
(I) Financial assets at fair value
432,886,000.00 187,952,101.63 620,838,101.63
through profit or loss
1. Trading financial assets 87,952,101.63 87,952,101.63
(1) Debt instrument investment 10,000,000.00 10,000,000.00
(2) Equity instrument investment 77,952,101.63 77,952,101.63.
(3) Derivative financial assets
2. Financial assets designated to be
measured at fair value and the
changes included into the current
profit or loss
(1) Debt instrument investment
(2) Equity instrument investment
(II) Other bond investment
(III)Other equity instrument
432,886,000.00 100,000,000.00 532,886,000.00
investment
(2) Equity instrument investment
(IV) Investment property
1. Land use right for lease
2. Buildings leased out
3. Land use right held and plan to be
transferred once appreciating
(V) Living assets
1. Consumptive living assets
2. Productive living assets
Total assets consistently measured
432,886,000.00 187,952,101.63 620,838,101.63
by fair value
(VI) Trading financial liabilities
Of which: Issued trading bonds
Derivative financial
liabilities
127
Other
(VII) Financial liabilities designated
to be measured at fair value and the
changes recorded into the current
profit or loss
Total liabilities consistently
measured by fair value
II. Inconsistent fair value
-- -- -- --
measurement
(1) Held-to-sale assets
Total assets inconsistently measured
by fair value
Total liabilities inconsistently
measured by fair value
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level
1
The available-for-sale financial assets measured at fair value of the Company were shares with the closing
price as the basis of fair value calculation at period-end.
3. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for
Consistent and Inconsistent Fair Value Measurement Items at Level 3
(1) In terms of trading financial assets held by the Company, as the underlying assets through financial
products investment include cash, bond repurchase, bank deposit, interbank loan, national bank and central bank
bill, etc., the assets portfolio invested were executed dynamic management, while the fair value of financial
products is difficult to measure, so the fair value shall be recognized by adopting cost amount.
(2) In terms of non-trading financial assets, with regard to the equity instrument investment without active
market transactions, including the capital investment to Jiangsu Housheng New Energy Technology Co., Ltd.,
Jiangsu Liance Electromechanical Technology Co., Ltd. and Kailong High Technology Co., Ltd., and no
significant impact due to the low equity of the invested companies held by the Company, so the appraisement to
the invested companies by income or market approach was unfeasible. Therefore, the investment cost shall be
regarded as reasonable estimation of fair value to measure at the period-end.
In terms of shares of NEEQ unlisted public companies held by the Company, as for the equity instrument
investment with inactive market transactions, due to the market value of shares cannot be reflected by the market
transaction price with the low volume of holding, so the appraisement to the invested companies by income or
market approach was unfeasible. Therefore, the investment cost shall be regarded as reasonable estimation of fair
value to measure at the period-end.
(3)In terms of other equity instrument investment, there was no significant changes in business environment
and circumstance and financial condition of Changzhou Synergetic Innovation Private Equity Fund (Limited
Partnership), and thus the investment cost shall be regarded as reasonable estimation of fair value to measure at
128
the period-end.
XII. Related Party and Related-party Transactions
1. Information Related to the Company as the Parent of the Company
Proportion of Proportion of
share held by voting rights
Registration Nature of Registered the Company as owned by the
Name
place business capital the parent Company as the
against the parent against
Company the Company
Investment and
operations of
state-owned
assets, assets
management
(excluding
Changzhou financial
Investment Changzhou business), RMB1.2 billion 30.43% 30.43%
Group Co., Ltd. investment
consulting
(excluding
consulting on
investment in
securities and
options), etc.
Notes: Information on the Company as the parent
On 22 November 2018, Changzhou Government State-owned Assets Supervision and Administration
Commission transferred all 170,845,236 shares of the Company (accounting for 30.43% of the total share capital
of the Company) to Changzhou Investment Group Co., Ltd. for free. In accordance with Changzhou People’s
Government Document (CZF [2006] No. 62), both the Company and Changzhou Investment Group Co., Ltd. are
enterprises which Changzhou People’s Government authorizes Changzhou Government State-owned Assets
Supervision and Administration Commission to perform duties of investors. Thus, after the sharer transfer,
Changzhou Investment Group Co., Ltd. is the controlling shareholder of the Company and Changzhou
Government State-owned Assets Supervision and Administration Commission is still the actual controller of the
Company. The final controller of the Company is Changzhou Government State-owned Assets Supervision and
Administration Commission.
2. Subsidiaries of the Company
Refer to Note IX for details.
129
3. Information on Other Related Parties
Name Relationship with the Company
The director of the Company serves as the senior
Synergetic Innovation Fund Management Co., Ltd.
management of the company
Changzhou Synergetic Innovation Private Equity Participated in establishing the industrial investment
Fund (Limited Partnership) fund
Jiangsu Housheng New Energy Technology Co., Ltd. Shareholding enterprise of the Company
4. Related-party Transactions
(1) Asset Transfer and Debt Restructuring of Related Party
Same period of
Related party Content Reporting Period
last year
Changzhou Synergetic Innovation Equity transfer (Jiangsu
Private Equity Fund (Limited Housheng New Energy 50,000,000.00
Partnership) Technology Co., Ltd.)
XIII. Commitments and Contingency
1. Significant Commitments
Significant commitment on the balance sheet date
As of 31 December 2019, there was no significant commitment for the Company to disclose.
2. Contingency
(1) Significant Contingency on Balance Sheet Date
Previous litigations continuing to the Reporting Period the Company involved:
Date of Name of the litigation or Amount involved
Name of defendant Remark
accepted arbitration institutions (RMB’0,000)
Shandong Hongli Group Co., Changzhou Intermediate 1,436.00 Under the
Ltd. 27 June 2001 People’s Court bankruptcy and
liquidation
Notes:
About the lawsuit case of Shandong Hongli Group Co., Ltd., the accused company owed accumulatively
RMB 14.36 million to the Company. The Company sued to Changzhou Intermediate People’s Court in 2001 and
sued for compulsory execution in April 2002. Currently, the defendant has started the bankruptcy procedure. The
aforesaid payment has arranged for the full provision for bad debts.
130
XIV. Events after Balance Sheet Date
1. Profit Distribution
Unit: RMB
Profits or dividends to be distributed 0
2. Notes to Other Events after Balance Sheet Date
After the outbreak of the epidemic of COVID-19, the Company responded promptly and set up
epidemic prevention group headed by the general manager to direct the prevention in all respects.
The materials for epidemic prevention were adequate, and the Company has organized the
emergency exercise with the staff of all levels to ensure safe production and to control and prevent.
The parent of the Company returned to work on 11 February 2020, and other subsidiaries
successively after 7 to 15 days as well. Due to the different time in work resumption of each
production process, the production efficiency was influenced to some extent.Due to the uneven
return time of each production process, the production efficiency is greatly affected, and the
delivery pressure of the company is large. To sum up, there was negative influence of the epidemic
to the operation performance in the first quarter of Company to some extent, but insignificant
influence to the yearly performance.
XV. Other Significant Events
1. Segment Information
(1) Determination Basis and Accounting Policies of Reportable Segment
Due to the operation scope of the Company and subsidiaries were similar, the Company conducts common
management, and did not divide business unit, so the Company only made single branch report.
2. Other Significant Transactions and Events with Influence on Investors’ Decision-making
As of the approval issue date of financial statements, the Company did not complete the liquidation
procedures of 2019 annual enterprise income tax.
XVI. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts Receivable
(1) Accounts Receivable Classified by Category
Unit: RMB
Category Ending balance Beginning balance
131
Carrying Bad debt Carrying Bad debt
amount provision amount provision
Carryi
Withd Withd Carryin
ng
Amou Propo Amou rawal Amou Propor Amou rawal g value
value
nt rtion nt propo nt tion nt propor
rtion tion
Accounts
receivable for
37,51 33,78 3,721, 35,82 32,806
which bad debt 90.08 91.58 3,017,6
0,056. 6.66% 8,291. 765.0 3,767. 6.85% ,077.1
provision % % 89.87
90 86 4 01 4
separately
accrued
Of which:
Accounts
receivable with
significant
32,61 28,89 3,721, 32,00 28,990
single amount 88.59 90.57 3,017,6
8,199. 5.79% 6,434. 765.0 8,110. 6.12% ,420.1
for which bad % % 89.87
97 93 4 06 9
debt provision
separately
accrued
Accounts
receivable with
insignificant
4,891, 4,891, 3,815,
single amount 100.0 3,815, 100.0
856.9 0.87% 856.9 656.9 0.73%
for which bad 0% 656.95 0%
3 3 5
debt provision
separately
accrued
Accounts
receivable for
525,8 192,1 333,7 487,5 190,22
which bad debt 93.34 36.54 93.15 39.02 297,339
74,42 48,65 25,77 66,50 6,913.
provision % % % % ,593.94
3.56 0.56 3.00 7.88 94
accrued by
group
Of which:
132
Accounts
receivable for
which bad debt 525,8 192,1 333,7 487,5 190,22
93.34 36.54 93.15 39.02 297,339
provision 74,42 48,65 25,77 66,50 6,913.
% % % % ,593.94
accrued by 3.56 0.56 3.00 7.88 94
credit risk
features group
563,3 225,9 337,4 523,3 223,03
100.0 40.10 100.00 42.61 300,357
Total 84,48 36,94 47,53 90,27 2,991.
0% % % % ,283.81
0.46 2.42 8.04 4.89 08
Accounts receivable with significant single amount for which bad debt provision separately accrued at the end of
the period:
Unit: RMB
Ending balance
Name Withdrawal
Carrying amount Bad debt provision Withdrawal reason
proportion
Expected to
Customer 1 1,975,482.35 338,497.45 17.13%
difficultly recover
Expected to
Customer 2 1,470,110.64 1,470,110.64 100.00%
difficultly recover
Customer 3 1,902,326.58 1,902,326.58 100.00% Difficult to recover
Customer 4 6,215,662.64 6,215,662.64 100.00% Difficult to recover
Expected to
Customer 5 2,445,367.85 2,177,128.33 89.03%
difficultly recover
Expected to
Customer 6 3,633,081.23 1,816,540.62 50.00%
difficultly recover
Expected to
Customer 7 3,279,100.00 3,279,100.00 100.00%
difficultly recover
Expected to
Customer 8 2,068,377.01 2,068,377.01 100.00%
difficultly recover
Customer 9 5,359,381.00 5,359,381.00 100.00% Difficult to recover
Customer 10 2,584,805.83 2,584,805.83 100.00% Difficult to recover
Customer 11 1,684,504.84 1,684,504.84 100.00% Difficult to recover
Total 32,618,199.97 28,896,434.94 -- --
Accounts receivable for which bad debt provision accrued by credit risk features group:
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion
133
Within 1 year 323,342,224.45 6,466,844.49 2.00%
1 to 2 years 12,433,193.78 621,659.69 5.00%
2 to 3 years 4,709,436.22 706,415.43 15.00%
3 to 4 years 960,385.32 288,115.60 30.00%
4 to 5 years 908,921.11 545,352.67 60.00%
Over 5 years 183,520,262.68 183,520,262.68 100.00%
Total 525,874,423.56 192,148,650.56 --
Notes to the basis for the determination of the groups:
The accounts receivable was adopted the aging analysis based on the months when the accounts occurred
actually, among which the accounts occurred earlier will be priority to be settled in terms of the capital turnover.
Explanation of the input value and assumption adopted to determine the withdrawal amount of bad debt
provision on the Current Period: With reference to the experience of the historical credit loss, combining with the
prediction of the present status and future financial situation, the comparison table was prepared between the
aging of the accounts receivable and estimated credit loss rate in the duration and to calculate the estimated credit
loss.
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if
adopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivable.
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Carrying amount
Within 1 year (including 1 year) 324,694,509.71
1 to 2 years 14,957,898.01
2 to 3 years 8,536,920.63
Over 3 years 215,195,152.11
3 to 4 years 4,031,389.90
4 to 5 years 1,346,662.43
Over 5 years 209,817,099.78
Total 563,384,480.46
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Unit: RMB
Changes in the Reporting Period
Beginning Ending
Category Reversal or
balance Withdrawal Write-off Other balance
recovery
134
Bad debt
provision 32,806,077.1 33,788,291.8
3,347,105.91 2,364,891.19
withdrawn 4 6
separately
Bad debt
provision 190,226,913. 192,148,650.
2,808,078.37 886,341.75
withdrawn 94 56
by group
223,032,991. 225,936,942.
Total 6,155,184.28 3,251,232.94
08 42
Of which bad debt provision reversed or recovered with significant amount in the Reporting Period: No
(3) There Was No Particulars of the Actual Verification of Accounts Receivable during the Reporting
Period
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
Unit: RMB
Proportion to total ending
Ending balance of Ending balance of bad
Name of the entity balance of accounts
accounts receivable debt provision
receivable
Customer 1 170,103,568.50 30.19% 3,402,071.37
Customer 2 23,896,557.76 4.24% 477,931.16
Customer 3 21,182,519.25 3.76% 423,650.39
Customer 4 21,885,020.77 3.88% 437,700.42
Customer 5 18,470,927.36 3.28% 369,418.55
Total 255,538,593.64 45.35%
2. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Other receivables 23,639,899.46 21,681,331.85
Total 23,639,899.46 21,681,331.85
(1)Other Receivable
1) Other Receivables Classified by Account Nature
Unit: RMB
135
Nature Ending carrying amount Beginning carrying amount
Cash deposit and Margin 4,200.00 4,200.00
Intercourse funds among units 38,535,333.35 36,267,607.16
Petty cash and borrowings by
624,083.07 596,876.87
employees
Other 15,373,206.41 15,364,366.83
Total 54,536,822.83 52,233,050.86
2) Withdrawal of Bad Debt Provision
Unit: RMB
First stage Second stage Third stage
Expected loss in the
Expected credit Expected loss in the
Bad debt provision duration (credit Total
loss of the next duration (credit
impairment not
12 months impairment occurred)
occurred)
Balance of 1
30,551,719.01 30,551,719.01
January 2019
Balance of 1
January 2019 in the —— —— —— ——
Current Period
--Transfer to
Second stage
-- Transfer to Third
stage
-- Reverse to
Second stage
-- Reverse to First
stage
Withdrawal of the
345,204.36 345,204.36
Current Period
Reversal of the
Current Period
Write-offs of the
Current Period
Verification of the
Current Period
136
Other changes
Balance of 31
30,896,923.37 30,896,923.37
December 2019
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Carrying amount
Within 1 year (including 1 year) 21,069,950.51
1 to 2 years 1,594,927.07
2 to 3 years 1,513,504.75
Over 3 years 30,358,440.50
3 to 4 years 215,594.13
4 to 5 years 96,930.77
Over 5 years 30,045,915.60
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Information of bad debt provision withdrawn:
Unit: RMB
Changes in the Reporting Period
Beginnin
Category Reversal or Ending balance
g balance Withdrawal Write-off Other
recovery
Bad debt
provision 5,011,963
30,485.42 5,042,448.58
withdrawn .16
separately
Bad debt
provision 25,539,75
314,718.94 25,854,474.79
withdrawn by 5.85
group
30,551,71
Total 345,204.36 30,896,923.37
9.01
Other receivables with significant amount withdrawn bad debt provision separately at the period-end:
Unit: RMB
Other receivables Carrying amount Bad debt Withdrawal Withdrawal
provision proportion (%) reason
Changchai Group Imp. & Exp. Co., 2,853,188.02 2,853,188.02 100 Difficult to
137
Ltd. recover
Total 2,853,188.02 2,853,188.02
4) Particulars of the Actual Verification of Other Receivables during the Reporting Period: No.
5) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to
Ending balance
Name of the total ending
Nature Ending balance Aging of bad debt
entity balance of other
provision
receivables
Changzhou
Changchai
Intercourse
Benniu Diesel 10,000,000.00 Within 1 year 18.34% 200,000.00
funds
Engine Fittings
Co., Ltd.
Within 1 year
Changzhou
with
Changchai
RMB8,088,841
Housheng Intercourse
9,215,263.56 .90, 1 to 2 16.90% 218,097.92
Agricultural funds
years with
Equipment Co.,
RMB1,126,421
Ltd.
.66
Changzhou
Intercourse
Compressors 2,940,000.00 Over 5 years 5.39% 2,940,000.00
funds
Factory
Changchai
Intercourse
Group Imp. & 2,853,188.02 Over 5 years 5.23% 2,853,188.02
funds
Exp. Co., Ltd.
Changzhou New
District Intercourse
1,626,483.25 Over 5 years 2.98% 1,626,483.25
Accounting funds
Centre
Total -- 26,634,934.83 -- 48.84% 7,837,769.19
3. Long-term Equity Investment
Unit: RMB
Item Ending balance Beginning balance
138
Carrying Depreciation Carrying Carrying Depreciation Carrying
amount reserves value amount reserves value
Investment to 251,752,730. 251,752,730. 241,752,730. 241,752,730.
0.00 0.00
subsidiaries 03 03 03 03
Investment to
joint ventures
and 44,182.50 44,182.50 0.00 44,182.50 44,182.50 0.00
associated
enterprises
251,796,912. 251,752,730. 241,796,912. 241,752,730.
Total 44,182.50 44,182.50
53 03 53 03
(1) Investment to Subsidiaries
Unit: RMB
Increase/decrease
Beginning Ending Ending
Withdrawa
balance balance balance of
Investees Additional Reduced l of
(carrying Other (carrying depreciatio
investment investment depreciatio
value) value) n reserves
n reserves
Changchai
Wanzhou
51,000,000 51,000,000
Diesel
.00 .00
Engine Co.,
Ltd.
Changzhou
Changchai
Benniu
96,466,500 96,466,500
Diesel
.00 .00
Engine
Fittings Co.,
Ltd.
Changzhou
Housheng 40,000,000 40,000,000
Investment .00 .00
Co., Ltd.
139
Changzhou
Changchai
Housheng 7,000,000. 7,000,000.
Agricultural 00 00
Equipment
Co., Ltd.
Changzhou
Fuji
Changchai
47,286,230 47,286,230
Robin
.03 .03
Gasoline
Engine Co.,
Ltd.
Jiangsu
Changchai 10,000,000 10,000,000
Machinery .00 .00
Co., Ltd.
241,752,73 10,000,000 251,752,73
Total 0.00
0.03 .00 0.03
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
Increase/decrease
Gains
Adjust Endin
Begin and Cash Endin
ment Withd g
ning losses bonus g
of rawal balanc
balanc Additi Reduc recogn Chang or balanc
Invest other of e of
e onal ed ized es of profits e
ee compr impair Other deprec
(carryi invest invest under other annou (carryi
ehensi ment iation
ng ment ment the equity nced ng
ve provis reserv
value) equity to value)
incom ion es
metho issue
e
d
II. Associated enterprises
140
Beijin
g
Tsingh
ua
Xingy
e
Indust 44,182
0.00 0.00
rial .50
Invest
ment
Mana
gemen
t Co.,
Ltd.
Subtot 44,182
0.00 0.00
al .50
44,182
Total 0.00 0.00
.50
4. Operating Revenue and Cost of Sales
Unit: RMB
Reporting Period Same period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main operations 1,829,511,302.64 1,547,250,831.33 1,929,864,957.32 1,659,272,787.45
Other operations 36,780,436.75 28,376,158.13 38,862,108.04 30,434,073.18
Total 1,866,291,739.39 1,575,626,989.46 1,968,727,065.36 1,689,706,860.63
Whether the Company has executed the new revenue standards
□ Yes √ No
5. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Dividend income from holding of
6,069,000.00
other equity instrument investment
Investment income from holding of
7,597,950.00
available-for-sale financial assets
Investment income from disposal of
104,866,770.49
available-for-sale financial assets
141
Income from transferring to
137,814.50
accommodation business
Total 6,206,814.50 112,464,720.49
XVII. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
√ Applicable □ Not applicable
Unit: RMB
Item Amount Note
Gains/losses on the disposal of
1,914,137.47
non-current assets
Government grants recognized in
the current period, except for those
acquired in the ordinary course of
5,312,295.51
business or granted at certain quotas
or amounts according to the
government’s unified standards
Capital occupation charges on
non-financial enterprises that are
536,504.84
recorded into current gains and
losses
Gain/loss from change of fair value
of trading financial assets and
liabilities, and derivative financial
assets and liabilities, and investment
gains from disposal of trading
financial assets and liabilities, and -49,255.00
derivative financial assets and
liabilities, and other creditor’s rights
investment, other than valid hedging
related to the Company’s common
businesses
Other non-operating income and
372,534.93
expenses other than the above
142
Reversed portions of impairment
allowances for entrustment loans
4,000,000.00
which are tested individually for
impairment
Less: Income tax effects 1,520,857.98
Non-controlling interests effects 7,556.87
Total 10,557,802.90 --
Explain the reasons if the Company classifies an item as an non-recurring gain/loss according to the definition in
the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Non-recurring Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said
explanatory announcement as a recurrent gain/loss item.
□ Applicable √ Not applicable
2. Return on Equity and Earnings Per Share
EPS (Yuan/share)
Profit as of Reporting Period Weighted average ROE (%)
EPS-basic EPS-diluted
Net profit attributable to
ordinary shareholders of the 1.20% 0.04 0.04
Company
Net profit attributable to
ordinary shareholders of the
0.69% 0.03 0.03
Company after deduction of
non-recurring profit or loss
The Board of Directors
Changchai Company, Limited
11 April 2020
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