Changchai Company, Limited Annual Report 2019
CHANGCHAI COMPANY, LIMITED
ANNUAL REPORT 2019
April 2020
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Changchai Company, Limited Annual Report 2019
Table of Contents
Part I Important Notes, Table of Contents and Definitions........................................................... 3
Part II Corporate Information and Key Financial Information................................................... 5
Part III Business Summary............................................................................................................. 10
Part IV Operating Performance Discussion and Analysis............................................................13
Part V Significant Events.................................................................................................................34
Part VI Share Changes and Shareholder Information................................................................. 48
Part VII Preferred Shares................................................................................................................54
Part VIII Convertible Corporate Bonds........................................................................................ 55
Part IX Directors, Supervisors, Senior Management and Staff...................................................56
Part X Corporate Governance........................................................................................................ 63
Part XI Corporate Bonds.................................................................................................................71
Part XII Financial Statements.........................................................................................................72
Part XIII Documents Available for Reference............................................................................. 215
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Changchai Company, Limited Annual Report 2019
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as the
directors, supervisors and senior management of Changchai Company, Limited (hereinafter
referred to as the “Company”) hereby guarantee the factuality, accuracy and completeness of
the contents of this Report and its summary, and shall be jointly and severally liable for any
misrepresentations, misleading statements or material omissions therein.
Shi Xinkun, the Company’s legal representative, Zhang Xin, the Company’s General
Manager, and Jiang He, head of the Company’s financial department (equivalent to financial
manager) hereby guarantee that the Financial Statements carried in this Report are factual,
accurate and complete.
All the Company’s directors have attended the Board meeting for the review of this
Report and its summary.
Any plans for the future and other forward-looking statements mentioned in this Report
shall NOT be considered as absolute promises of the Company to investors. Therefore,
investors are kindly reminded to pay attention to possible investment risks.
The Company has described in detail the risks it might face in “Part IV Operating
Performance Discussion and Analysis”, IX, “4. Possible Risks in Future” herein.
The Board has approved a final dividend plan as follows: based on the 561,374,326 shares,
the Company has no final dividend plan, either in the form of cash or stock.
This Report and its summary have been prepared in both Chinese and English. Should
there be any discrepancies or misunderstandings between the two versions, the Chinese
versions shall prevail.
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Changchai Company, Limited Annual Report 2019
Definitions
Term Definition
Changchai Company, Limited and its consolidated
The “Company”, “Changchai” or “we” subsidiaries, except where the context otherwise
requires
Changzhou Changchai Benniu Diesel Engine Fittings
Changchai Benniu
Co., Ltd.
Changchai Wanzhou Changchai Wanzhou Diesel Engine Co., Ltd.
Housheng Investment Changzhou Housheng Investment Co., Ltd.
Changzhou Changchai Housheng Agricultural
Housheng Agricultural Equipment
Equipment Co., Ltd.
Changzhou Fuji Changchai Robin Gasoline Engine
Changchai Robin
Co., Ltd.
Changchai Machinery Jiangsu Changchai Machinery Co., Ltd.
Expressed in the Chinese currency of Renminbi,
RMB, RMB’0,000
expressed in tens of thousands of Renminbi
The period from 1 January 2019 to 31 December
The “Reporting Period” or “Current Period”
2019
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Changchai Company, Limited Annual Report 2019
Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name Changchai, Changchai-B Stock code 000570, 200570
Stock exchange for stock listing Shenzhen Stock Exchange
Company name in Chinese 常柴股份有限公司
Abbr. 苏常柴
Company name in English CHANGCHAI COMPANY,LIMITED
Abbr.
CHANGCAHI CO.,LTD.
Legal representative Shi Xinkun
Registered address 123 Huaide Middle Road, Changzhou, Jiangsu, China
Zip code 213002
Office address 123 Huaide Middle Road, Changzhou, Jiangsu, China
Zip code 213002
Company website http://www.changchai.com.cn
Email address cctqm@public.cz.js.cn
II Contact Information
Board Secretary Securities Representative
Name He Jianjiang
123 Huaide Middle Road,
Address
Changzhou, Jiangsu, China
Tel. （86）519-68683155
Fax （86）519-86630954
Email address cchjj@changchai.com
III Media for Information Disclosure and Place where this Report Is Lodged
Newspapers designated by the Company for
Securities Times, Ta Kung Pao (HK)
information disclosure
Website designated by CSRC for publication of
http://www.cninfo.com.cn
this Report
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Changchai Company, Limited Annual Report 2019
Board Secretariat of the Company and the Shenzhen Stock
Place where this Report is lodged
Exchange
IV Change to Company Registered Information
Unified social credit code 91320400134792410W
Change to principal activity of the
No change
Company since going public
On 22 November 2018, the State-owned Assets Supervision and
Administration Commission of Changzhou Municipal People’s
Every change of controlling
Government transferred its entire holdings of 170,845,236 shares in the
shareholder since incorporation
Company (a stake of 30.43%) to Changzhou Investment Group Co., Ltd.
for no compensation. These shares are non-restricted public shares.
V Other Information
The independent audit firm hired by the Company:
Name Gongzheng Tianye Certified Public Accountants LLP
Office address Yingtong Commerce Building, Changzhou, Jiangsu, China
Accountants writing signatures Dai Weizhong, Xu Wenxiang
The independent sponsor hired by the Company to exercise constant supervision over the Company in the
Reporting Period:
□ Applicable √ Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over the Company in
the Reporting Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
2019-over-2018
2019 2018 2017
change (%)
Operating revenue (RMB) 2,040,133,717.30 2,132,902,718.60 -4.35% 2,423,058,958.29
Net profit attributable to the
listed company’s 24,934,586.11 62,021,374.04 -59.80% 46,431,302.73
shareholders (RMB)
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Changchai Company, Limited Annual Report 2019
Net profit attributable to the
listed company’s
shareholders before 14,376,783.21 -43,333,196.13 - 18,818,435.16
exceptional gains and losses
(RMB)
Net cash generated
from/used in operating -20,542,857.52 273,819,526.89 - -121,669,279.39
activities (RMB)
Basic earnings per share
0.04 0.11 -63.64% 0.08
(RMB/share)
Diluted earnings per share
0.04 0.11 -63.64% 0.08
(RMB/share)
Weighted average return on
1.20% 2.84% -1.64% 2.00%
equity (%)
Change of 31
December 2019
31 December 31 December 31 December
over 31
2019 2018 2017
December 2018
(%)
Total assets (RMB) 3,484,975,990.48 3,542,019,195.75 -1.61% 3,722,905,285.05
Equity attributable to the
listed company’s 2,109,239,597.94 2,043,308,026.74 3.23% 2,246,896,857.86
shareholders (RMB)
VII Accounting Data Differences under China’s Accounting Standards for Business
Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign
Accounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No difference for the Reporting Period.
3. Reasons for Accounting Data Differences Above
□ Applicable √ Not applicable
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Changchai Company, Limited Annual Report 2019
VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 557,670,611.48 558,159,234.11 460,579,449.28 463,724,422.4
Net profit attributable to the
2,518,025.10 16,539,999.97 950,668.62 4,925,892.42
listed company’s shareholders
Net profit attributable to the
listed company’s shareholders
1,083,678.62 13,143,476.97 197,704.53 -48,076.91
before exceptional gains and
losses
Net cash generated from/used in
-63,832,631.41 -90,395,073.36 -23,645,425.75 157,330,273.00
operating activities
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs
materially from what have been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item 2019 2018 2017 Note
Gain or loss on disposal of
non-current assets (inclusive of 1,914,137.47 -265,966.68 1,005,800.62
impairment allowance write-offs)
Government subsidies charged to
current profit or loss (exclusive of
government subsidies given in the
Company’s ordinary course of 5,312,295.51 6,291,685.65 8,456,560.85
business at fixed quotas or amounts as
per the government’s uniform
standards)
Capital occupation charges on
non-financial enterprises that are 536,504.84 938,737.87 1,200,592.21
charged to current profit or loss
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Changchai Company, Limited Annual Report 2019
Gain equal to the amount by which
investment costs for the Company to
obtain subsidiaries, associates and
joint ventures are lower than the 19,924,486.12
Company’s enjoyable fair value of
identifiable net assets of investees
when making investments
Gain or loss on fair-value changes in
held-for-trading and derivative
financial assets and liabilities &
income from disposal of
held-for-trading and derivative
-49,255.00 105,672,874.83 654,862.68
financial assets and liabilities and
other investments in debt obligations
(exclusive of the effective portion of
hedges that arise in the Company’s
ordinary course of business)
Non-operating income and expense
372,534.93 1,392,895.84 -4,441,830.05
other than the above
Gain or loss on re-measurement by the
fair value of equity interests in joint
ventures before acquisition dates in 1,751,203.43
business combinations not under
common control
Reversed portions of impairment
allowances for entrustment loans
4,000,000.00 10,000,000.00
which are tested individually for
impairment
Less: Income tax effects 1,520,857.98 18,670,371.98 951,629.77
Non-controlling interests effects
7,556.87 5,285.36 -12,821.48
(net of tax)
Total 10,557,802.90 105,354,570.17 27,612,867.57 --
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the
Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Exceptional Gain/Loss Items:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
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Changchai Company, Limited Annual Report 2019
Part III Business Summary
I Principal Activity of the Company in the Reporting Period
As a manufacturer, we specialize in the manufacture and sale of diesel engines, diesel engine fittings and
castings, gasoline engines, gasoline engine fittings, rotovators, walking tractors, molds and jigs as well as the
assembly and sale of diesel engine and gasoline engine supporting sets.
We mainly manufacture and sell small and medium-sized single-cylinder and multi-cylinder diesel engines
under the brand of “Changchai” which are often used in tractors, combine-harvesters, light commercial vehicles,
agriculture equipment, small-sized engineering machinery, generator sets, ship machines, etc.
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
Major assets Main reason for significant changes
During the reporting period, the company set up a wholly-owned
Equity assets subsidiary, Jiangsu Changchai Machinery Co., Ltd. , and invested in
Jiangsu Housheng New Energy Technology Co., Ltd.
The ending amount stood at RMB6,353,920.33, down 81.51% from the
Other current assets
beginning amount, primarily driven by a decrease in VAT withheld.
2. Major Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness Analysis
1. Advantages in Brand
Changchai is a national industrial enterprise with a history of over one hundred years. It is one of the earliest
professional manufacturers of internal combustion engines in China. The brand "Changchai" is the earliest
domestic trademark of production goods known as China's well-known trademarks. The diesel engine of
"Changchai" brand is China's brand-name product. The enterprise has been certified by ISO9001 and IATF16949
quality systems, ISO14001 environmental management system, ISO/TS16949 automotive product quality
management system, and accessed to the national export-free enterprise qualification. Changchai was honorably
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Changchai Company, Limited Annual Report 2019
ranked among “ the Top One Hundred Chinese Enterprises in Engineering Industry ” and “ China Pacesetter
Enterprise of Industrial Industry” for several times, and was awarded the honorary title of “State-level Enterprise
of Observing Contracts and Keeping Promise”, “China's Agricultural Machinery Parts and Components Leading
Enterprises”, “China's Agricultural Machinery AAA Credit Enterprise”, “Quality Management Excellence Award
of Jiangsu Province ” and “ Mayor Quality Award of Changzhou City ” . The Company has been among the
“Jiangsu Independent Industries Brand Top 50”for four years in a row. Also, it has been among the 10 users’ most
satisfied leading brands in “Jing Geng” competition for many years. In 2019, the Company once again was given
the title of “ Top 50 Industrial Brands of Jiangsu Province ” , “ China's Agricultural Machinery Parts and
Components Leading Enterprises”, “National Model Enterprise for Trustworthy Product and Service Quality” and
“China’s Top 500 Most Valuable Brands”, among others. For many years, in the process of achieving steady
economic development of the enterprise, we developed in a sound manner and cultivated the “Changchai” brand,
a famous small diesel engine brand of China with independent intellectual property rights.
2. Advantages in Technology
The Company has a state-level technology center and post-doctoral research station, and a research center of
small and medium-power internal combustion engine engineering and technology in Jiangsu Province. Currently,
it is mainly engaged in production of small and medium-power single-cylinder and multi-cylinder diesel engine. It
has a complete product range, a wide power level coverage, a high reputation and intellectual property rights for
its main products. Its 4G33TC diesel engine has been included in the provincial catalog of key new technologies
and products to be promoted. Its 4G33TC and 3M78 diesel engines have been recognized as “high-tech products”
at the provincial level. The 4G33V16 Multi-Cylinder Diesel Engine won the China Agricultural Machinery
Industry Annual Product Innovation Award, The Speed Regulator for Single-Cylinder Diesel Engines—one of the
Company’s patented technologies, won the China Patent Excellence Award, and three other products including the
H16 Diesel Engine were recognized as “High-Tech Product” at the municipal level. During the Reporting Period,
the Company filed for 9 patents and was granted 10 patents. Currently, the Company has a total of 138 patents
granted by authorities at home and abroad, including 12 invention patents.
3. Advantages in Marketing
Changchai has built up a sales service network covering the whole country, with 5 sales business units, 27
sales service centers and over 800 service stations. In addition, in order to meet the National Emission Standard
IV for Non-Road Vehicles and provide better after-sales service for customers, a service monitoring platform with
Changchai characteristics has been put in place. With a perfect diesel sales service network system, the Company
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Changchai Company, Limited Annual Report 2019
is able to provide high quality, efficient and timely services for customers.
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Changchai Company, Limited Annual Report 2019
Part IV Operating Performance Discussion and Analysis
I Overview
In 2019, China’s economic situation was extremely severe, with much greater risks and challenges at home
and abroad. The agricultural machinery market remained under depression due to multiple factors such as changes
to the agricultural subsidy policy, stricter emission regulations for diesel engines, more stringent inspection of
safety and environmental protection, fluctuating prices of raw materials, weaker purchasing power of farmers and
the China-U.S. trade war. Amid the deep change in the agricultural machinery industry and the harsh market
environment, the Company formulated effective operating strategies, refined the product mix, worked on segment
markets, strengthened quality control and enhanced internal management. As a result, despite a decreasing output
and sales volume in the industry as a whole, the Company managed to maintain stable and orderly development.
Certain business indicators such as the sales volume decreased, but slower than the industry average. During the
Reporting Period, the Company sold 675,000 units of diesel engines, gasoline engines and related generator sets,
including 138,100 units of gasoline engines, generating total sales revenue of RMB2,040,133,717.30, a drop of
4.35% year-on-year.
In terms of product development and supporting areas, the Company has completed the development of
several models of single-cylinder common rail diesel engines to fully meet the State III emission standards of
three-wheels and State IV emission standards of non-road mobile machinery. The Company has established
all-round connection with industrial mainstream brands for products of State IV standards. For the key product
4G36V16 diesel, it has completed the calibration of emission source machines for multiple after-treatment modes
and multiple power ranges, with a diversity of plant protection tractors as supporting products. The Company
developed supporting resources on all fronts, completed supporting promotion for a number of product models
and achieved marked growth in market alignment.
In terms of market service, the Company further optimized and expanded the franchised dealer team,
strengthened the franchised dealer network, enhanced franchise loyalty, improved the aftermarket sales and
service network, developed new dealers and beefed up the sales and management of accessories. The Company
continued to enhance service quality, fully promoted the experience of modular management of busy farming
seasons, intensified training for market service personnel, main engine plants and dealers, explored the service
application of Internet+, drove the analysis, integration and application management of quality information and
service data and improved the overall service capacity of service resources.
In terms of quality management, the Company further implemented quality projects, refined system
management and successfully passed the external review for IATF16949 and the ISO9001 quality system and the
on-site monitoring and review of CNAS. It enhanced the quality of whole machines and parts on all fronts, made
continuous efforts to improve product quality, optimized work flows in a number of aspects, including testing
equipment, product parts traceability systems and quality improvement projects, and refined processes, leading to
enhancement in product image.
In terms of internal management, the Company strengthened production organization and management
according to the actual situation, continuously improved the supply system, intensified delicacy management of
cost and inventory, and promoted cost reduction and expenditure minimization as a response to the continuous
market downturn, leading to substantial achievements in cost reduction and efficiency enhancement and
improvements in production and operation efficiency.
During the Reporting Period, the Company established Jiangsu Changchai Machinery Co., Ltd. to implement
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Changchai Company, Limited Annual Report 2019
light engine and casting relocation projects. The new subsidiary has a registered capital of RMB300 million with
RMB10 million already paid up. Early-stage work of the project, including feasibility demonstration, planning,
design and registration, has been completed. So far, construction has commenced. The project is planned to be
completed and put into operation in 2021.
II Core Business Analysis
1. Overview
See “I Overview” above.
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
2019 2018
As % of total As % of total
Operating Change (%)
Operating revenue operating operating
revenue
revenue (%) revenue (%)
Total 2,040,133,717.30 100% 2,132,902,718.60 100% -4.35%
By operating division
Internal
combustion 2,001,911,782.04 98.13% 2,093,039,249.58 98.13% -4.35%
engines
Other 38,221,935.26 1.87% 39,863,469.02 1.87% -4.29%
By product category
Diesel engines 1,856,130,365.33 90.98% 1,945,336,290.52 91.21% -4.59%
Gasoline
133,936,656.91 6.57% 130,329,100.71 6.11% 2.77%
engines
Other 50,066,695.06 2.45% 57,237,327.37 2.68% -12.53%
By operating segment
Domestic 84.61% 1,785,012,986.06 83.69% -3.30%
1,726,174,312.79
Overseas 313,959,404.51 15.39% 347,889,732.54 16.31% -9.75%
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of Operating
Revenue or Operating Profit
√ Applicable □ Not applicable
Unit: RMB
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Changchai Company, Limited Annual Report 2019
YoY change
YoY change YoY change
Operating Gross profit in gross
Cost of sales in operating in cost of
revenue margin profit margin
revenue (%) sales (%)
(%)
By operating division
Internal
2,001,911,78 1,679,856,89
combustion 16.09% -4.35% -5.74% 1.24%
2.04 1.00
engines
By product category
Diesel 1,856,130,36 1,560,642,19
15.92% -4.59% -5.65% 0.95%
engines 5.33 5.38
Gasoline 133,936,656. 108,678,942.
18.86% 2.77% -4.68% 6.34%
engines 91 40
50,066,695.0 40,328,639.9
Other 19.45% -12.53% -11.05% -1.34%
6 7
By operating segment
1,726,174,31 1,404,826,59
Domestic 18.62% -3.30% -4.74% 1.24%
2.79 1.91
313,959,404. 304,823,185.
Overseas 2.91% -9.75% -10.01% 0.28%
51 84
Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
Operating
Item Unit 2019 2018 Change (%)
division
Unit sales Unit 536,932 556,443 -3.51%
Diesel engines Output Unit 519,339 562,223 -7.63%
Inventory Unit 48,003 65,596 -26.82%
□ Applicable √ Not applicable
(4) Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
Unit: RMB
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Changchai Company, Limited Annual Report 2019
2019 2018
As % of As % of
Product Change
Item total cost total cost
category Cost of sales Cost of sales (%)
of sales of sales
(%) (%)
Diesel Raw
1,317,459,424.33 78.43% 1,422,647,277.45 78.45% -7.39%
engines materials
Diesel
Labor cost 214,361,508.91 12.76% 238,105,274.10 13.13% -9.97%
engines
Diesel Depreciati
74,355,935.23 4.43% 75,456,887.66 4.16% -1.46%
engines on
Diesel
Energy 27,773,748.68 1.65% 28,471,079.99 1.57% -2.45%
engines
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√Yes □ No
Changchai Company, Limited (hereinafter referred to as “the Company”) reviewed and approved the
Proposal on Establishing the Wholly-owned Subsidiary to Implement the Project of Producing Light Engines and
Casting on the extraordinary board meeting held on 25 February 2019. The Board agreed the Company to invest
RMB0.3 billion for establishing the wholly-owned subsidiary to implement the project of producing light engines
and casting. For details, please refer to the Announcement on the External Investment and Intention of
Establishing the Wholly-owned Subsidiary (No.：2019-004) disclosed on Securities Times, Hong Kong Ta Kung
Pao and Cninfo on 26 February 2019. On 6 March 2019, the wholly-owned subsidiary completed the registration
procedures and obtained the Business License issued by the Administrative Examination and Approval Authority
of Changzhou State Hi-Tech Industry Development Zone (Xinbei District). For more details, please refer to the
Announcement on the Progress of External investment and Intention of Establishing the Wholly-owned
Subsidiary (No.: 2019-005) disclosed on Securities Times, Hong Kong Ta Kung Pao and Cninfo on 7 March 2019.
Thus, the consolidation scope of the Reporting Period increased a subsidiary- Jiangsu Changchai Machinery Co.,
Ltd.
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √ Not applicable
(8) Major Customers and Suppliers
Major customers:
Total sales to top five customers (RMB) 864,536,279.47
Total sales to top five customers as % of total sales of the
42.38%
Reporting Period (%)
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Changchai Company, Limited Annual Report 2019
Total sales to related parties among top five customers as % of
total sales of the Reporting Period (%) 0.00
Information about top five customers:
Sales revenue contributed for
No. Customer As % of total sales revenue (%)
the Reporting Period (RMB)
1 Customer 1 360,622,078.51 17.68%
2 Customer 2 192,587,952.49 9.44%
3 Customer 3 139,976,253.71 6.86%
4 Customer 4 90,595,836.18 4.44%
5 Customer 5 80,754,158.58 3.96%
Total -- 864,536,279.47 42.38%
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
Total purchases from top five suppliers (RMB) 239,017,892.01
Total purchases from top five suppliers as % of total purchases
16.11%
of the Reporting Period (%)
Total purchases from related parties among top five suppliers
0.00
as % of total purchases of the Reporting Period (%)
Information about top five suppliers:
Purchase in the Reporting
No. Supplier As % of total purchases (%)
Period (RMB)
1 Supplier 1 98,793,697.74 6.66%
2 Supplier 2 51,409,844.73 3.47%
3 Supplier 3 37,965,669.05 2.56%
4 Supplier 4 28,270,929.54 1.91%
5 Supplier 5 22,577,750.95 1.52%
Total -- 239,017,892.01 16.11%
Other information about major suppliers:
□ Applicable √ Not applicable
3. Expense
Unit: RMB
Reason for any significant
2019 2018 Change (%)
change
Selling expense 97,085,117.05 126,997,066.87 -23.55%
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Changchai Company, Limited Annual Report 2019
Administrative
106,183,133.40 116,027,838.96 -8.48%
expense
Finance costs -4,424,871.16 -903,762.30 ---
R&D expenses 66,221,376.27 72,182,840.78 -8.26%
4. R&D Expense
√ Applicable □ Not applicable
The Company has been valuing the R&D of new products and application of new technologies. Based on the
market-oriented policy, the Company continuously promotes technological upgrading, makes great efforts to
improve the technological development capacity and self-innovation capacity and increases the added value of
products so as to continuously enhance the Company’s market competitiveness.
Details about R&D expense:
2019 2018 Change (%)
Number of R&D personnel 360 368 -2.17%
R&D personnel as % of total employees 11.96% 11.55% 0.41%
R&D expense (RMB) 66,221,376.27 72,182,840.78 -8.26%
R&D expense as % of operating revenue 3.25% 3.38% -0.13%
Capitalized R&D expense (RMB) 0.00 0.00 ---
Capitalized R&D expense as % of total
0.00% 0.00% ---
R&D expense
Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D expense and rationale:
□ Applicable √ Not applicable
5. Cash Flows
Unit: RMB
Item 2019 2018 Change (%)
Subtotal of cash generated from
2,226,972,713.23 2,494,609,605.84 -10.73%
operating activities
Subtotal of cash used in
2,247,515,570.75 2,220,790,078.95 1.20%
operating activities
Net cash generated from/used in
-20,542,857.52 273,819,526.89 ——
operating activities
Subtotal of cash generated from
20,016,934.88 157,994,762.83 -87.33%
investing activities
Subtotal of cash used in
98,179,310.79 51,775,807.81 89.62%
investing activities
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Changchai Company, Limited Annual Report 2019
Net cash generated from/used in
-78,162,375.91 106,218,955.02 ——
investing activities
Subtotal of cash generated from
34,000,000.00 40,700,000.00 -16.46%
financing activities
Subtotal of cash used in
78,505,058.96 58,922,496.75 33.23%
financing activities
Net cash generated from/used in
-44,505,058.96 -18,222,496.75 ——
financing activities
Net increase in cash and cash
-142,494,895.42 361,815,985.16 ——
equivalents
Explanation of why any of the data above varies significantly:
√Applicable Not applicable
Significant changes in net cash generated from/used in operating activities compared to that of last year were
mainly due to the increase of accounts receivable within the credit period, realization of less bank’s acceptance
bills in the Reporting Period;
Significant changes in net cash generated from/used in investing activities compared to that of last year were
due to the Company’s investment in Jiangsu Changchai Machinery Co., Ltd. and Jiangsu Housheng New Energy
Technology Co., Ltd. in the Reporting Period and increase in cash inflow through sales of stocks in Bank of
Jiangsu last year;
Significant changes in net cash generated from/used in financing activities compared to that of last year were
mainly due to decrease of bank loans in the Reporting Period.
Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period
√Applicable Not applicable
The big difference between the net operating cash flow and the net profit for this Reporting Period mainly
due to increase of accounts receivable within the credit period which decreased the net operating cash flow. The
external investments of the Company in the Reporting Period decreased the net investing cash flow.
III Analysis of Non-Core Businesses
□ Applicable √ Not applicable
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Adjustments to the Financial Statements at the Beginning of the First Execution Year of any New Standards
Governing Financial Instruments, Revenue or Leases since 2019
√ Applicable □ Not applicable
Unit: RMB
31 December 2019 31 December 2018 Change Reason for
19
Changchai Company, Limited Annual Report 2019
As % of As % of in any
Amount total Amount total percenta significant
assets assets ge (%) change
Monetary
637,214,006.06 18.28% 800,960,036.69 22.61% -4.33%
assets
Accounts
419,295,665.51 12.03% 378,859,159.11 10.70% 1.33%
receivable
Inventories 473,352,010.58 13.58% 557,953,891.70 15.75% -2.17%
Investment
48,447,666.83 1.39% 50,656,007.63 1.43% -0.04%
property
Long-term
equity 0 0.00% 0.00 0.00% 0.00%
investments
Fixed assets 457,582,514.13 13.13% 511,250,371.37 14.43% -1.30%
Construction
91,358,156.24 2.62% 89,090,384.71 2.52% 0.10%
in progress
Short-term
22,000,000.00 0.63% 27,000,000.00 0.76% -0.13%
borrowings
Long-term
0.00 0.00% 2,000,000.00 0.06% -0.06%
borrowings
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Gain/loss
Cumulati Impairme
on
ve nt Purchased Sold in
fair-value
Beginning fair-value allowance in the the Other Ending
Item changes
amount changes for the Reporting Reporting change amount
in the
charged Reporting Period Period
Reporting
to equity Period
Period
Financial
assets
1.
Held-for-t
rading
financial
assets 36,205,97 78,500,00 26,753,87 87,952,1
(derivativ 5.04 0.00 3.41 01.63
20
Changchai Company, Limited Annual Report 2019
e financial
assets
exclusive)
4.
Investmen
t in other
equity
instrumen 470,940,0 61,946,00 317,059,7 532,886,
ts 00.00 0.00 75.00 000.00
Subtotal
of
financial 507,145,9 61,946,00 317,059,7 78,500,00 26,753,87 620,838,
assets 75.04 0.00 75.00 - 0.00 3.41 - 101.63
Total of
507,145,9 61,946,00 317,059,7 78,500,00 26,753,87 620,838,
above
75.04 0.00 75.00 - 0.00 3.41 - 101.63
Financial
0.00 0.00
liabilities
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as at the Period-End
Item Ending carrying value Reasons
92,629,261.89 Cash deposits of bank acceptance’s bill
Monetary assets
and letter of credit
House constructions 2,936,446.13 Mortgage of bank loan
Land use right 995,328.00 Mortgage of bank loan
Machinery equipment 48,181,935.62 Mortgage of bank loan
Total 144,742,971.64
V Investments Made
1. Total Investment Amount
√ Applicable □ Not applicable
Investments made in Reporting Investments made in same period
+/-%
Period (RMB) of last year (RMB)
60,000,000.00 20,315,967.20 195.33%
21
Changchai Company, Limited Annual Report 2019
2. Major Equity Investments Made in the Reporting Period
√ Applicable □ Not applicable
Unit: RMB
Profi
ts or
Prog losse
ress s of Invo
Shar Disc Disc
Inve Inve Capi as of Esti inve lvin
Mai ehol Inve Type losur losur
stme stme tal the mate stme g in
Inve n ding Part stme of e e
nt nt reso bala d nt in laws
stee busi perc ner nt prod date inde
meth amo urce nce inco the uit
ness enta term ucts (if x (if
od unt s shee me Rep or
ge any) any)
t ortin not
date g
Peri
od
Cha
ngzh
ou
Inve
stme
nt
Gro
Jian up
gsu Co.,
Hou Ltd.
shen and
Lithi Lithi The
g Cha
um Capi 50,0 um inpu
New Self- ngzh Lon 9
batte tal 00,0 8.33 batte t has 2019
Ener own ou g-ter 0.00 0.00 No July
ry incre 00.0 % ry been -022
gy ed Syne m 2019
baffl ase 0 baffl mad
Tech rgeti
e e e
nolo c
gy Inno
Co., vatio
Ltd. n
Priv
ate
Equi
ty
Fun
d
(Lim
22
Changchai Company, Limited Annual Report 2019
ited
Part
ners
hip)
Inter Inter
nal nal
Jian com com
gsu busti busti
Cha on on The
ngch engi 10,0 engi inpu 26
Esta Self- Lon -396
ai ne, 00,0 100. Nau ne, t has Febr 2019
blish own g-ter 0.00 ,390. No
Mac relat 00.0 00% ght relat been uary -004
ment ed m 46
hine ed 0 ed mad 2019
ry gene gene e
Co., rator rator
Ltd. sets sets
and and
parts parts
60,0
-396
Tota 00,0
-- -- -- -- -- -- -- -- 0.00 ,390. -- -- --
l 00.0
46
0
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Gain
Accu
/Loss
mula
Initia Acco on Sour
ted Purc Gain
untin Begi fair Sold
Varie Code Nam l fair hase /loss Endi Acco ce of
g nnin value in
ty of of e of value d in in ng untin inves
inves meas g chan Repo
chan Repo Repo carry
secur secur secur urem carry ges rting g tmen
tmen ges rting rting ing
ent ing in Perio
ity ity ity charg Perio Perio value title t
meth value Repo d
t cost ed to d d funds
od rting
equit
Perio
y
d
Dom 6001 Foto 41,7 Fair Inves Self-
0.00 0.00 0.00
estic/ 66 n 84,0 value 262, 39,0 221, 302, tmen owne
23
Changchai Company, Limited Annual Report 2019
Forei Moto 00.0 meth 990, 15,0 187, 005, t in d
gn r 0 od 000. 00.0 850. 000. other fund
stock 00 0 00 00 equit
y
instr
ume
nts
Inves
107, 22,8 95,4 130, tmen
Dom 460, 60,0 72,0 320, t in
Bank 18,0 Fair Self-
estic/ 000. 00.0 00.0 000. other
6009 of 00,0 value owne
Forei 00 0 0 0.00 0.00 0.00 00 equit
19 Jiang 00.0 meth d
gn y
su 0 od fund
stock instr
ume
nts
Inves
490, 71,0 399, 561, tmen
Dom Jiang 000. 00.0 925. 000. t in
Fair Self-
estic/ su 90,5 00 0 00 00 other
6003 value owne
Forei Expr 00.0 0.00 0.00 0.00 equit
77 meth d
gn essw 0 y
od fund
stock ay instr
ume
nts
Other securities
investments held at -- -- --
the period-end
59,8
370, 61,9 317, 432,
74,5
Total -- 940, 46,0 059, 886, -- --
00.0
000. 00.0 775. 000.
0
00 0 00 00
(2) Investments in Derivative Financial Instruments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Use of Funds Raised
□ Applicable √ Not applicable
No such cases in the Reporting Period.
24
Changchai Company, Limited Annual Report 2019
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII Major Subsidiaries
√ Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the
Company’s net profit:
Unit: RMB
Relat
ionsh
ip Principal Register
Total Operating Operating
Name with activity ed Net assets Net profit
assets revenue profit
the capital
Com
pany
Production
of diesel
Changchai Subsi 55,063, 157,983,69 183,792,93 -4,215,018 -3,863,13
engine
Benniu diary 000.00 8.84 3.88 .99 3.37
accessorie 85,916,91
s 7.70
Diesel
Changchai Subsi 85,000, 69,629,305 40,959,222 248,139.3 160,355.
engine 49,034,87
Wanzhou diary 000.00 .71 .43 2 43
assembly 1.81
External
Housheng Subsi investment 40,000, 48,830,828 1,758,606. 1,727,30
536,504.84
Investment diary and 000.00 .93 48,029,71 98 7.33
consulting 2.93
agricultura
Housheng l
Agricultur Subsi machinery 10,000, 29,088,562 13,888,579 -926,825.3 -926,825.
al diary product of 000.00 .06 .77 8 38
Equipment rice 446,645.8
transplante 3
25
Changchai Company, Limited Annual Report 2019
r etc.
Gasoline
Changchai Subsi 37,250, 101,729,65 133,936,65 9,931,517. 8,591,28
engines 90,091,43
Robin diary 000.00 1.75 6.91 74 7.04
assembly 5.72
Internal
combustio
Changch
n engine
ai Subsi 100,000 9,606,403. -387,276.3 -393,596.
and 0.00
Machiner diary ,000.00 66 4 34
related
y
accessorie 9,606,403
s .66
Subsidiaries obtained or disposed in the Reporting Period:
√Applicable □ Not applicable
How subsidiary was obtained or Effects on overall operations and
Subsidiary
disposed in the Reporting Period operating performance
Jiangsu Changchai Newly established Conform to the long-term development
Machinery Co., Ltd. plan of the Company and interests of all
shareholders and the Company. It is
estimated that no significant impacts will
be generated on the Company’s financial
status and operating performance.
Notes:
(1) Changchai Company, Limited held the 15th Meeting of the 8th Board of Directors on 27 November 2018,
on which the Proposal on Capital Increase in the Wholly-owned Subsidiary was reviewed and approved, and
intended to make the capital increase in the wholly-owned subsidiary Housheng Investment with its self-owned
funds of RMB10 million. After this capital increase, the registered capital of Housheng Investment increased to
RMB40 million from RMB30 million. On 14 February 2019, Housheng Investment completed the registration
procedures and obtained the Business License issued by Changzhou Bureau of Industry and Commerce. For
details, please refer to the Announcement on Capital Increase in the Wholly-owned Subsidiary (No.: 2018-034)
and the Announcement on Progress of Capital Increase in the Wholly-owned Subsidiary (No.: 2019-002)
disclosed on Securities Times, Hong Kong Ta Kung Pao and Cninfo respectively on 29 November 2018 and 15
February 2019.
(2) On 26 December 2018, Changchai Company, Limited formally signed the Investment Agreement with
Changzhou High-tech Zone. According to the agreement, the Company will invest RMB0.3 billion to establish a
wholly-owned subsidiary to implement the project of producing light engine and casting. The Company held the
extraordinary board meeting on 25 February 2019 and approved the Proposal on Establishing A Wholly-owned
Subsidiary to Implement the Project of Producing Light Engine and Casting. The said wholly-owned subsidiary
completed the registration procedures on 6 March 2019 and obtained the Business License issued by the
Administrative Examination and Approval Authority of Changzhou National Hi-Tech Industrial Development
Zone (Xinbei District). For more details, please refer to the Announcement on the External Investment and
Intention of Establishing the Wholly-owned Subsidiary (No.: 2019-004) and the Announcement on Progress of the
External Investment and Establishing the Wholly-owned Subsidiary (No.: 2019-005) on Securities Times, Hong
26
Changchai Company, Limited Annual Report 2019
Kong Ta Kung Pao and Cninfo respectively on 26 February 2019 and 7 March 2019. The preliminary work of the
project such as feasibility demonstration, planning design and filing has been completed. The construction has
officially started at the end of December 2019 and is scheduled to be completed and put into operation in 2021.
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Prospects
1. Industrial Competition Pattern and Development Trend
In 2019, agricultural machinery market remained in the stage of deep adjustment, with faster product
upgrading and more intensive industrial reshuffle. In 2020, China’s agricultural machinery market will sustain the
low-speed normalized development of the transformation stage. Despite the decline of the traditional categories
market, opportunities can still be found in market segments, with intelligent agricultural machinery favored by the
market. The national macro-economy will be positive in the long run and agricultural machinery industry is
supported by policies. The agricultural machinery market is prospective from the perspective of long-term
development. As total market demand is large, it is not only an opportunity but also a challenge for agricultural
machinery manufacturers, who need to accelerate the upgrading of agricultural machinery products and
technology.
In addition, the huge pressure brought by the new energy industry to traditional internal-combustion engine
companies has forced traditional engine manufacturers to actively or passively become involved in the
development of new energy automotive industries.
At present, the development trend and market situation of the industry are mainly as follows: firstly, the
demand for agricultural machinery and commercial vehicles slows down, bringing further competition of the
industry; secondly, the cost of product emission upgrade is increasing and it takes a certain time for the market to
accept; thirdly, users are very concerned about reliability, vibration, noise and appearance quality of diesel
engines, and extension of "Three Guarantees of Products" increased the enterprise expense on service. Overall, the
diesel market competition is fierce. There will be better market prospects for diesel engines with
high-performance in energy saving and environmental protection and meeting the rigid demand of specific fields.
2. Company development strategies:
To base on the farm machinery, do stronger in the power, develop the fields and develop scientifically.
The current products market structure of the Company mainly distributed in the farm equipment such as the
walking tractor, big small and medium-sized wheeled tractors, caterpillar tractors, gardening tractors, plant
protection tractors, tractors for peanut harvest, and combine harvesters; agricultural small construction machinery,
three rounds and low-speed vehicles; light trucks, pickups automobile industry; generator and water pump, small
ship auxiliary machinery. The Company would take the market and users’ demands as the orientation to seize the
main line of the products and to improve the quality and increase the efficiency as well as to do better in the
power and to constantly enhance the market competitiveness.
In the field of agricultural machinery, the Company maintained a leading position in the horsepower segment
and continues to expand the market share, and actively explored and entered the market in large-horse-powered
vehicles and non-road-specific power supporting areas for engineering use and achieved stable breakthroughs in
the niche. In the terminal area, the Company actively expanded the market share of transplanter products. In
addition, the Company extended its product structure to the gasoline engine field by acquiring a joint venture with
27
Changchai Company, Limited Annual Report 2019
Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd., continuously expanded product application, firmly
grasped product quality and actively developed overseas and domestic customers. The Company will further
innovate the management mechanism, accelerate the progress of product development and vigorously expand the
market to promote the sustained and steady development of the Company.
In addition, the Company is using the cloud platform technology to promote information building and
develop a highly efficient and practical information platform. Meanwhile, as a response to the plans of Changzhou,
the Company is implementing light engine and casting relocation projects to integrate existing resources, improve
quality and increase efficiency, which is beneficial to the Company’s sustainable development.
3. Operation Plan for the Year 2020:
The Company is improving the quality of single cylinder machinery to create fine quality products and
enhancing the competitiveness of multi-cylinder machinery products to expand the market; speeding up the
development of end market, increasing its size and making achievements in the park building; creating new
management models for higher returns and utilizing capital to drive development. In 2020, the Company is
expected to achieve a sales revenue of RMB2 billion with more than 80,000 units of new products.
The above operation plan does not represent the profit forecast of Y2020 by the listed company, and whether can
be realized depends on various factors on the changes of market conditions and the effort level of the management
team. There is a lot of uncertainty, and investors should pay special attention on it.
4. Possible risks and countermeasures:
(1) Market risk:
With fierce competition, over-capacity of some traditional products and the total available market of the
single cylinder engine were in a decline tendency as well as the demand from the industry was insufficient. And
the profitability of the enterprises faced with rather great pressure. In the future, emission standards of internal
combustion engines will be further updated and air pollution control will be further stringent. Safety production
and environmental protection will be normalized, and the industry will still be in a period of deep adjustment.
However, long-term improvement of the national macro-economy remains unchanged, and the agricultural
machinery market is still promising with a large total market demand.
Countermeasures:
1. Continue to optimize product and market structures and strengthen the market foundation to domestic and
foreign markets.
2. Dedicate to product development and upgrading and proactively expanding new supporting areas.
3. Fully focus on market quality matters and improve market reputation with sound measures.
4.Continue to drive the progress of key technological improvement projects and build Changchai Industry
Park with high standards.
5.Make tangible efforts to reinforce lean management to promote quality improvement, cost reduction and
efficiency enhancement.
6. Make full use of the capital market to perform capital operation and assist corporate development.
7. To improve the quality of employees and provide human resources support for company development.
(2) Industrial risk:
The rapid development of new energy vehicles is bound to affect the traditional fuel automobile industry and
its industrial chain, specifically; it will directly affect the engine and gearbox manufacturing industry, and
generate a greater impact on the traditional gasoline and diesel engine industry. Although the maturity of related
industries in the field of new energy may take years, more than a decade or even longer for transition, the trend is
inevitable. In response to the upgrading of emission standards and the rapid development of new energy industries,
28
Changchai Company, Limited Annual Report 2019
enterprises in the traditional internal-combustion engine industry need to seek new development opportunities to
shift industrial risks.
Countermeasures:
The first measure is to prepare layout in new energy industries in advance to seize the opportunity for
industry development.
The second one is to increase the R&D intensity of new products that meets the standards of non-road
national Grade IV and other new products, increase product emission standards, and take advanced diesel engine
products as the basis of the Company to explore the development direction of new industries and meet the
industrial upgrading and transformation.
(3) Policy risk:
The macro-economic environment is complex and changeable, economic growth is slowing down and the
policy on the diesel engine emissions is becoming stricter and stricter, which increased the operating difficulties
and the pressure. As such, the market demands for some products of the Company will be affected to some extent.
Countermeasures:
The Company will pay close attention to the government’s economic macro-control policies and market
developments. To promote the work such as “promote the products upgrade and quality enhancing”, to embrace
the upgrading of the engine emission standards, to accelerate the forging of the new “Standard V” platform, and to
execute the necessary products resources reserves in advance.
(4) Talent risk:
As the Company keeps, in recent years, improving operational efficiency and technological innovation to
cope with the increasingly fierce market competition and industry development trend, the demand for professional
and senior management personnel is greatly increased.
Countermeasures:
Firstly, introduce all kinds of high-ranking talents through varieties of channels and strengthen personnel
training.
Secondly, the Company also makes optimization in the performance appraisal system and incentive pay
system and strengthens the training of employees to reduce the loss of professionals and strengthens personnel for
the construction of talented personnel teams.
X Communications with the Investment Community such as Researches, Inquiries and
Interviews
1. During the Reporting Period
√ Applicable □ Not applicable
Type of
Way of
Date communication Index to main information communicated
communication
party
Inquired the capital operation of the capital
31 December 2019 Other Individual
market
Inquired the Housheng lithium battery baffle
27 December 2019 Other Individual
project
29
Changchai Company, Limited Annual Report 2019
Inquired the reform and restructuring toward
24 December 2019 Other Individual
state-owned enterprises
24 December 2019 Other Individual Inquired the general election of the Board
24 December 2019 Other Individual Inquired the general election of the Board
Inquired the visiting activity of Housheng
16 December 2019 Other Individual
lithium battery baffle project
16 December 2019 Other Individual Inquired the general election of the Board
Inquired the starting time of production of
5 December 2019 Other Individual
Housheng lithium battery baffle
26 November 2019 Other Individual Inquired the business name
25 November 2019 Other Individual Inquired the business name
25 November 2019 Other Individual Inquired the business name
Inquired the continuous supervision opinions
25 November 2019 Other Individual
from securities companies
20 November 2019 Other Individual Inquired the stock price of the Company
Inquired the transformation and upgrading of
7 November 2019 Other Individual
the Company
Inquired the construction progress of the
7 November 2019 Other Individual
industrial park
6 November 2019 Other Individual Inquired the stock price of the Company
23 October 2019 Other Individual Inquired the repurchase of B shares
Inquired the consultation of the Company’s
17 September 2019 Other Individual
financial affairs
11 September 2019 Other Individual Inquired shareholders
5 September 2019 Other Individual Inquired industry policies
Inquired the condition of the agricultural
5 September 2019 Other Individual
machinery industry
Inquired the transformation and upgrading of
5 September 2019 Other Individual
the Company
Inquired the development strategy of the
5 September 2019 Other Individual
Company
30 August 2019 Other Individual Inquired the progress of new energy project
Inquired the progress of the lithium battery
6 August 2019 Other Individual
baffle
29 July 2019 Other Individual Inquired the land of the industrial park
28 July 2019 Other Individual Inquired the removal project
28 July 2019 Other Individual Inquired the removal project
30
Changchai Company, Limited Annual Report 2019
Inquired the transformation and upgrading of
10 July 2019 Other Individual
the Company
Inquired the progress of the lithium battery
4 July 2019 Other Individual
baffle
Inquired the consultation of the Company’s
1 July 2019 Other Individual
business
Inquired the investment in the new energy
31 May 2019 Other Individual
industry
Inquired the progress of the lithium battery
31 May 2019 Other Individual
baffle
Inquired the ownership of premises of the
21 May 2019 Other Individual
Company’s after-sale service sites
Inquired the transformation and upgrading of
21 May 2019 Other Individual
the Company
21 May 2019 Other Individual Inquired the main business of the Company
Inquired the reform of state-owned enterprises
9 May 2019 Other Individual
toward mixed system and innovation
8 May 2019 Other Individual Inquired the proposals on general meetings
Inquired the business development of the
25 April 2019 Other Individual
Company
25 April 2019 Other Individual Inquired the industrial investment fund
Inquired the transformation and upgrading of
17 April 2019 Other Individual
the Company
12 April 2019 Other Individual Inquired the investment of the Company
Inquired the reform and upgrading of the
11 April 2019 Other Individual
Company
Inquired the Company’s layout in the new
11 April 2019 Other Individual
energy industry
Inquired the development suggestions of the
10 April 2019 Other Individual
Company
Inquired the Company’s layout in the new
10 April 2019 Other Individual
energy industry
Inquired the development suggestions of the
10 April 2019 Other Individual
Company
Inquired the development suggestions of the
2 April 2019 Other Individual
Company
Inquired the engagement of directors of the
31 March 2019 Other Individual
Company
31
Changchai Company, Limited Annual Report 2019
Inquired the investments made by the industrial
31 March 2019 Other Individual
investment fund
Inquired the development suggestions of the
28 March 2019 Other Individual
Company
Inquired the progress of M&A and restructuring
28 March 2019 Other Individual
of the Company
28 March 2019 Other Individual Inquired the main business of the Company
Inquired the progress of lithium battery baffle
27 March 2019 Other Individual and progress of invested projects by
subsidiaries
21 March 2019 Other Individual Inquired the investment of the Company
21 March 2019 Other Individual Inquired the brand value of the Company
Inquired the progress of invested projects by
19 March 2019 Other Individual
subsidiaries
18 March 2019 Other Individual Inquired the investment of the Company
18 March 2019 Other Individual Inquired the investment of the Company
14 March 2019 Other Individual Inquired the investment of the Company
Inquired the reform and development of the
10 March 2019 Other Individual
Company
10 March 2019 Other Individual Inquired the stock price of the Company
8 March 2019 Other Individual Inquired the stock price of the Company
Inquired the transformation and upgrading of
5 March 2019 Other Individual
the Company
Inquired the progress of the lithium battery
25 February 2019 Other Individual
baffle
25 February 2019 Other Individual Inquired the investment of the Company
Inquired the development suggestions of the
25 February 2019 Other Individual
Company
2 February 2019 Other Individual Inquired the investment of the Company
1 February 2019 Other Individual Inquired the festival greetings to investors
Inquired the investment intention progress of
1 February 2019 Other Individual
the Company
Inquired the development suggestions of the
31 January 2019 Other Individual
Company
25 January 2019 Other Individual Inquired the industrial layout of the Company
Inquired the impacts of equity transfer on the
25 January 2019 Other Individual
Company
32
Changchai Company, Limited Annual Report 2019
Inquired the sales of financial assets by the
25 January 2019 Other Individual
Company
24 January 2019 Other Individual Inquired the industry condition
Inquired the development planning of the
24 January 2019 Other Individual
Company
24 January 2019 Other Individual Inquired the products of the Company
Inquired the development suggestions of the
23 January 2019 Other Individual
Company
Inquired the progress of the lithium battery
23 January 2019 Other Individual
baffle
13 January 2019 Other Individual Inquired the government subsidies
Inquired the performance forecast of the
11 January 2019 Other Individual
Company
Times of communications 81
Number of institutions communicated
0
with
Number of individuals communicated
81
with
Number of other communication parties 0
Tip-offs or leakages of substantial
supposedly-confidential information None
during communications
33
Changchai Company, Limited Annual Report 2019
Part V Significant Events
I Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)
How the profit distribution policy, especially the cash dividend policy, for ordinary shareholders was formulated,
executed or revised in the Reporting Period:
√ Applicable □ Not applicable
In Articles of Association, which had confirmed the specific profits distribution and cleared out the
conditions, standards and proportion of the cash bonus, stipulated the decision-making progress of the formulation
and alternation of the profits distribution policies and the chapters as well as the regulations fully ensure the
opportunities for the medium and small shareholders to exert the functions and to provide advices as well as
appeals. The cash bonus of recent 3 years of the Company met with the regulations of the Articles of Association
and during the decision-making process of the profits distribution proposal, the Independent Directors stated the
independent advices and fully respected the advices from the medium and small shareholders. The profits
distribution preplan and the turning capital reserve into share capital preplan of the Company were both met with
the relevant regulations of the Articles of Association and so on.
Special statement about the cash dividend policy
In compliance with the Company’s Articles of
Yes
Association and resolution of general meeting
Specific and clear dividend standard and ratio Yes
Complete decision-making procedure and mechanism Yes
Independent directors faithfully performed their
Yes
duties and played their due role
Non-controlling interests are able to fully express
their opinion and desire and their legal rights and Yes
interests are fully protected
In case of adjusting or changing the cash dividend
policy, the conditions and procedures involved are in
N/A
compliance with applicable regulations and
transparent
The profit distributions to ordinary shareholders, either in the form of cash or stock, in the past three years
(including the Reporting Period) are summarized as follows:
Year Profits distribution proposal Turning capital reserve into Execution
share capital proposal
2019 No No Still needed to submit
to the Annual General
Meeting
2018 Distributed RMB0.25 of every 10 No Finished the execution
shares (taxes including)
34
Changchai Company, Limited Annual Report 2019
2017 Distributed RMB0.30 of every 10 No Finished the execution
shares (taxes including)
Cash dividend for ordinary shareholders in the past three years (including the Reporting Period):
Unit: RMB
Net profit
attributable to
Total cash
Cash ordinary
Cash C dividends
dividends shareholders
A as % dividends as % (including D as % of
Year (tax of the listed
of B (%) in other of B those in B (%)
inclusive) company in
forms (C) (%) other
(A) consolidated
forms) (D)
statements for
the year (B)
2019 0.00 24,934,586.11 0.00% 0.00 0.00% 0.00 0.00%
14,034,358 14,034,358
2018 62,021,374.04 22.63% 0.00 0.00% 22.63%
.15 .15
16,841,229 16,841,229
2017 46,431,302.73 36.27% 0.00 0.00% 36.27%
.78 .78
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for the ordinary
shareholders despite the facts that the Company has made profits in the Reporting Period and the profits of the
Company as the parent distributable to the ordinary shareholders are positive.
√ Applicable □ Not applicable
Reason why the Company fails to put forward a cash
dividend proposal for the ordinary shareholders despite
the facts that the Company has made profits in the Use and use plan for retained earnings of the
Reporting Period and the profits of the Company as the Company
parent distributable to the ordinary shareholders are
positive
The implementation of the removal project of light
engine and casting by the Company needs subsequent
capital input with large amount. Based on the
comprehensive consideration of the Company’s
operation and development, the Company intends to
Enhance the Company’s capital strength and prepare
fail to conduct cash distribution in 2019. In addition,
for the corporate development
the Company will actively promote the cash
distribution way under the premise of making profits
and cash meeting the sustainable operation and
development of the Company so as to protect and
increase the long-term interests of investors.
35
Changchai Company, Limited Annual Report 2019
II Final Dividend Plan for the Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
III Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as well
as the Company Itself and other Entities Fulfilled in the Reporting Period or Ongoing at the Period-end
√Applicable □ Not applicable
Date
of Term
Type of Fulfil
commi of
Commitment Promisor commitme Details of commitment lmen
tment commi
nt t
makin tment
g
Rewards Plan for
Shareholders in Next
Three
Years(2017-2019)
Under the premise of
positive distributive
profit (remaining
after-tax profits after
making up for the loss
and extracting for the
common reserves) in
this year or half year
Changchai and abundant money 11 Year
Other commitments made to Ongo
Company, bonus flow and no influence May 2017-
minority shareholders ing
Limited on the following-up 2017 2019
going concern after
cash bonus, the profits
allocated by cash
every year shouldn’t
be lower than 10% of
the allocable profits
from parent company.
Meanwhile, the
accumulated allocable
profits by cash in the
arbitrary continuous
three accounting years
36
Changchai Company, Limited Annual Report 2019
should not be lower
than 30% of the annual
average allocable
profits in those three
years.
Fulfilled on time Yes
Specific reasons for failing to
fulfill commitments on time
N/A
and plans for next step (if
any)
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still
within the forecast period, explain why the forecast has been reached for the Reporting Period.
□ Applicable √ Not applicable
IV Occupation of the Company’s Capital by the Controlling Shareholder or Its Related
Parties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
V Explanations Given by the Board of Directors, the Supervisory Board and the Independent
Directors (if any) Regarding the Independent Auditor's “Modified Opinion” on the Financial
Statements of the Reporting Period
□ Applicable √ Not applicable
VI YoY Changes to Accounting Policies, Estimates and Methods
√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 issued by the On 27 August 2019, the
Ministry of Finance on 30 April 2019 requires the Company held the 20th
companies which have implemented the new standards Meeting of the 8th Board
governing financial instruments but not the new standards of Directors and the 16th Refer to (1) of
governing revenue and lease or companies which have Meeting of the 8th other notes for
implemented the new standards governing financial Supervisory Committee details
instruments and revenue but not the new standards and approved the Proposal
governing lease to adjust items of financial statements in on Changes of Some
line with requirements of the Appendix 1 and Appendix 2 Accounting Policies
of the Notice.
37
Changchai Company, Limited Annual Report 2019
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:
31 December 2018 1 January 2019
Notes receivable and 874,229,941.58Notes receivable 495,370,782.47
accounts receivable Accounts receivable 378,859,159.11
Notes payable and accounts 1,030,130,275.77Notes 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 790,877,079.72Notes 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
8,253,873.41 8,253,873.41
financial assets
Available-for-sale
498,851,369.49 -498,851,369.49
financial assets
Investment in other 472,150,000.00 1,210,000.00 470,940,000.00
38
Changchai Company, Limited Annual Report 2019
equity instruments
Other non-current
27,911,369.49 27,911,369.49
financial 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
470,940,000.00 -470,940,000.00
financial assets
Investment in other
471,350,000.00 410,000.00 470,940,000.00
equity 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
VII Retrospective Restatements due to Correction of Material Accounting Errors in the
Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII YoY Changes to the Scope of the Consolidated Financial Statements
√Applicable □ Not applicable
Changchai Company, Limited (hereinafter referred to as “the Company”) reviewed and approved the
Proposal on Establishing the Wholly-owned Subsidiary to Implement the Project of Producing Light Engines and
Casting on the extraordinary board meeting held on 25 February 2019. The Board agreed the Company to invest
RMB0.3 billion for establishing the wholly-owned subsidiary to implement the project of producing light engines
and casting. For details, please refer to the Announcement on the External Investment and Intention of
Establishing the Wholly-owned Subsidiary (No.：2019-004) disclosed on Securities Times, Hong Kong Ta Kung
Pao and Cninfo on 26 February 2019. On 6 March 2019, the wholly-owned subsidiary completed the registration
procedures and obtained the Business License issued by the Administrative Examination and Approval Authority
of Changzhou State Hi-Tech Industry Development Zone (Xinbei District). For more details, please refer to the
Announcement on the Progress of External investment and Intention of Establishing the Wholly-owned
Subsidiary (No.: 2019-005) disclosed on Securities Times, Hong Kong Ta Kung Pao and Cninfo on 7 March 2019.
Therefore, the subsidiary Jiangsu Changchai Machinery Co., Ltd. has been newly added to the consolidated
financial statements of the Reporting Period.
39
Changchai Company, Limited Annual Report 2019
IX Engagement and Disengagement of Independent Auditor
Current independent auditor:
Gongzheng Tianye Certified Public Accountants
Name of the domestic independent auditor
(Special General Partnership)
The Company’s payment to the domestic independent
60
auditor (RMB’0,000)
How many consecutive years the domestic
independent auditor has provided audit service for the 18
Company
Names of the certified public accountants from the
domestic independent auditor writing signatures on Dai Weizhong, Xu Wenxiang
the auditor’s report
How many consecutive years the certified public
accountants have provided audit service for the Dai Weizhong four years, Xu Wenxiang two years
Company
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
□ Yes √ No
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
□ Applicable √ Not applicable
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable √ Not applicable
XI Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XII Major Legal Matters
√Applicable □ Not applicable
Index
Involved to
amount Decisions and Execution of Disclosur disclos
General information Provision Progress
(RMB’0,0 effects decisions e date ed
00) inform
ation
As for the lawsuit against The Compulsory
Shandong Hongli Group Co., 1,436 None judgment Not applicable execution and
Ltd., the defendant was made under the
40
Changchai Company, Limited Annual Report 2019
accumulatively owed the at the bankruptcy
Company’s payment for goods second liquidation
of RMB14.36 million. The instance
Company filed an appeal to
Changzhou Intermediate
People’s Court in 2001 and
applied to the court for
compulsory execution in April
2002. At present, the said
company is going into
bankruptcy proceedings.
XIII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIV Credit Quality of the Company as well as Its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
XV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures
for Employees
□ Applicable √ Not applicable
XVI Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.。
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
41
Changchai Company, Limited Annual Report 2019
4. Credits and Liabilities with Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Other Major Related-Party Transactions
√ Applicable □ Not applicable
The Company and its controlling shareholder Changzhou Investment Group Co., Ltd. signed the Agreement
of Transferring the Capital Contribution Right in Jiangsu Housheng New Energy Technology Co., Ltd. with
Changzhou Synergetic Innovation Private Equity Fund (Limited Partnership), each transferee accepted the capital
contribution right of RMB50 million in Jiangsu Housheng New Energy Technology Co., Ltd.
Index to the current announcements about the said related-party transactions disclosed:
Title of announcement Disclosure date Disclosure website
Announcement on Joint Accepting the
Transfer of the Capital Contribution Right in
Jiangsu Housheng New Energy Technology
9 July 2019 Cninfo
Co., Ltd. Held by Changzhou Synergetic
Innovation Private Equity Fund (Limited
Partnership) with Controlling Shareholders
XVII Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Major guarantees
√ Applicable □ Not applicable
42
Changchai Company, Limited Annual Report 2019
(1) Guarantees
Unit: RMB'0,000
Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those
for subsidiaries)
Disclos Guara
ure date Actual Havin ntee
Actual
of the Line of occurrence g for a
guarante Type of Term of
Obligor guarant guarant date (date of expire relate
e guarantee guarantee
ee line ee agreement d or d
amount
announc signing) not party
ement or not
Guarantees between the Company as the parent and its subsidiaries
Disclos Guara
ure date Actual Havin ntee
Actual
of the Line of occurrence g for a
guarante Type of Term of
Obligor guarant guarant date (date of expire relate
e guarantee guarantee
ee line ee agreement d or d
amount
announ signing) not party
cement or not
Changzhou
Changchai
25
Housheng 25 December Joint
Decemb 2,000 2,000 1 year No No
Agricultural 2018 liability
er 2018
Equipment Co.,
Ltd.
Total actual amount
Total approved line for such
of such guarantees in
guarantees in the Reporting 2,000 2,000
the Reporting Period
Period (B1)
(B2)
Total actual balance
Total approved line for such of such guarantees at
guarantees at the end of the 2,000 the end of the 2,000
Reporting Period (B3) Reporting Period
(B4)
Guarantees provided between subsidiaries
Disclos Guara
Actual Havin
ure date Actual ntee
Line of occurrence g
of the guarante Type of Term of for a
Obligor guarant date (date of expire
guarant e guarantee guarantee related
ee agreement d or
ee line amount party
signing) not
announ or not
43
Changchai Company, Limited Annual Report 2019
cement
Total guarantee amount (total of the three kinds of guarantees above)
Total actual
Total guarantee line
guarantee amount in
approved in the Reporting 2,000 2,000
the Reporting Period
Period (A1+B1+C1)
(A2+B2+C2)
Total actual
Total approved guarantee
guarantee balance at
line at the end of the
2,000 the end of the 2,000
Reporting Period
Reporting Period
(A3+B3+C3)
(A4+B4+C4)
Total actual guarantee amount (A4+B4+C4) as % of the
0.95%
Company’s net assets
Of which:
Balance of guarantees provided for shareholders, actual
0
controller and their related parties (D)
Balance of debt guarantees provided directly or
indirectly for obligors with an over 70% debt/asset ratio 2,000
(E)
Amount by which the total guarantee amount exceeds
0
50% of the Company’s net assets (F)
Total of the three amounts above (D+E+F) 2,000
Explanation on possibility to bear joint liability due to
N/A
undue guarantees (if any)
Explanation on the external guarantees in violation of
N/A
stipulated procedures (if any)
(2) Irregularities in Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Cash Entrusted to Other Entities for Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overviews of cash entrusted for wealth management during the Reporting Period
Unit: RMB’0,000
Specific type Capital resources Amount incurred Undue Balance Overdue amount
44
Changchai Company, Limited Annual Report 2019
Broker financial
Self-owned funds 2,850.00 1,000.00 0.00
products
Particulars of cash entrusted for wealth management with single significant amount or low security, bad liquidity,
and no capital preservation
□ Applicable √ Not applicable
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause
impairment for entrusted asset management
□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Other Major Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVIII Corporate Social Responsibility (CSR)
1. Measures Taken to Fulfill CSR Commitment
By taking "Provide Green Power for A Better Life" as its corporate mission and "Customer First, Staff First,
Rewarding Shareholders and Benefiting the Society" as its core value, the Company pays attention to the interests
of all parties, earnestly fulfill the responsibilities and obligations due to shareholders, employees, consumers,
suppliers and other parties, actively shoulder the social responsibilities and achieve common development while
maintaining scientific development and steady operation. After years of practice and continuous refinement and
summary, the company has formed an enterprise culture system of "Love Country as well as Love Factory, Work
Down to Earth as well as Good at Innovation, Strict in Discipline, and Noble in Ethics", it has become a qualified
enterprise citizen, and strives to achieve the coordination and unity between enterprise development and
ecological and environmental protection as well as social harmony.
I. Adhere to standard operation and guaranty of interests of shareholders. In strict accordance with laws,
regulations, rules and articles of association, the Company has established a perfect corporate governance
structure and a sound internal control system, and it continuously strengthens the risk management and internal
supervision, and improves the scientific character of decision. During the reporting period, the Company has
standardized the disclosure of information, ensured the sincerity, accuracy and completeness of content,
safeguarded the shareholders' right to know, and provided sufficient investment basis to investors. Through doing
a good job in the careful organization and good management of investors, smooth and effective communication
with shareholders as well as the accurate, complete, fair treatment of all shareholders, all shareholders enjoy
fairness and guaranteed legitimate rights and interests entitled.
II. Staff first, and protect the rights and interests of workers. The Company signs the labor contracts in
accordance with the requirements of the Labor Law, Labor Contract Law and other laws and regulations, and it
45
Changchai Company, Limited Annual Report 2019
strictly implements the terms as required in contract, pays the social security for the employees and carries out the
employee welfare physical examination as required by regulations, and guarantees the employee's annual leave,
marriage leave, maternity leave and other leave rights and interests; it also takes care of employees' family affairs,
balances their work and life, and provides spiritual comfort and practical help at critical moments. The Company
attaches great importance to the protection of employees' rights and interests, pays attention to talent training,
devotes itself to the common development of enterprises and employees, and strives to build a stable and
harmonious labor-capital relationship.
III. Prudence and integrity, and safeguard the rights and interests of consumers, customers and suppliers. By
adhering to the principle of integrity management, benefit-sharing and mutual benefit, and upholding the
enterprise ethics of "Advocating Science, Integrity and Trustworthiness ", the Company has organized the
production and operation activities and product sales works, established long-term strategic partnership with
suppliers and customers, taken the improvement of product quality and consumer satisfaction as an important
work of the Company, and realized its own value in the process of creating values for consumers. The company
attaches importance to the communication with the suppliers, and gives priority to the selection of advanced
technology and environmental protection products to help the Company's energy conservation and environment
protection during the production process. In the process of cooperating with suppliers, it carries out experience
exchange, assists suppliers to improve product quality, and helps suppliers to grow. It improves services according
to market demand and response and guarantees the rights and interests of customers, and continuously provides
complete service for the market.
IV. Steady operation and sustainable development. Based on the national policies and actual situation, the
Company takes the opportunity of emission standard updating of non-road machinery and rural construction to
promote the research and development of agricultural machinery products and speeds up product updating, and
promotes the supporting application of products. The Company has continuously implemented the measures of
energy conservation and emission reduction, improved the efficiency of energy utilization, and achieved
remarkable results in cost and expenditure reduction, and it has promoted the Company to continuously improve
its governance system and enhance its management level. Under the support of relevant government departments,
the Company proceeds the construction of industrial parks in accordance with urban planning in an orderly
manner to form industrial agglomeration for the implement of urban planning and a green and harmonious living
environment.
V. Support social welfare activities and give back to the society. In recent years, the Company has taken an
active part in the local public welfare action week and donated money to help needy residents every year. Over the
past years, the Company has organically combined economic development with social contribution, actively
carried out various public welfare activities such as assisting "Agriculture, Rural Areas, and Rural Residents",
caring students, voluntary blood donation, voluntary service, energy conservation and environmental protection,
earnestly fulfilled enterprise social responsibility, and made due contributions to the harmonious and stable
development of society with its practical actions.
2. Measures Taken for Targeted Poverty Alleviation
The Company didn’t take any targeted measures to help people lift themselves out of poverty during the Reporting
Period, no subsequent plan temporarily too.
46
Changchai Company, Limited Annual Report 2019
3. Issues Related to Environmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by the
environmental protection authorities.
No
The Company and its subsidiaries are not the major polluter identified by the environmental protection
authorities of China during the Reporting Period. The Company attaches great importance to the work of
environmental protection, and requires the subsidiaries to build corresponding environmental protection facilities
according to the actual situation of production and operation, strictly controlling the pollutants, like “waste gas,
waste water, and waste residue” generated from the production process.
XIX Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XX Significant Events of Subsidiaries
□ Applicable √ Not applicable
47
Changchai Company, Limited Annual Report 2019
Part VI Share Changes and Shareholder Information
I. Share Changes
1. Share Changes
Unit: share
Increase/decrease in the
Before After
Reporting Period (+/-)
Sh Sha
are res
s as
as div
div ide
ide nd
Ne nd con Su
Percenta w co ver Oth bt Percenta
Shares Shares
ge (%) iss nv ted er ot ge (%)
ues ert fro al
ed m
fro cap
m ital
pr res
ofi erv
t es
I. Restricted shares 0 0.00% 0 0.00%
1.Shares held by the state 0 0.00% 0 0.00%
2. Shares held by
0 0.00% 0 0.00%
state-own Legal-person
3. Shares held by other
0 0.00% 0 0.00%
domestic investors
Among which: shares
held by domestic legal 0 0.00% 0 0.00%
person
Shares held by domestic
0 0.00% 0 0.00%
natural person
4.Oversea shareholdings 0 0.00% 0 0.00%
Among which: shares
held by oversea legal 0 0.00% 0 0.00%
person
48
Changchai Company, Limited Annual Report 2019
Shares held by oversea
0 0.00% 0 0.00%
natural person
II. Unrestricted shares 561,374,326 100.00% 561,374,326 100.00%
1. RMB ordinary shares 411,374,326 73.28% 411,374,326 73.28%
2. Domestically listed
150,000,000 26.72% 150,000,000 26.72%
foreign shares
3. Overseas listed foreign
0 0.00% 0 0.00%
shares
4. Other 0 0.00% 0 0.00%
III. Total shares 561,374,326 100.00% 561,374,326 100.00%
Reasons for share changes:
□ Applicable √ Not applicable
Approval of share changes:
□ Applicable √ Not applicable
Transfer of share ownership:
□ Applicable √ Not applicable
Progress on any share repurchases:
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable √ Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the
Company’s ordinary shareholders and other financial indicators of the prior year and the prior accounting period,
respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
□ Applicable √ Not applicable
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
□ Applicable √ Not applicable
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
□ Applicable √ Not applicable
49
Changchai Company, Limited Annual Report 2019
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
Number of
Number of
preferred
ordinary Number of
shareholders with
Number of shareholders at preferred
resumed voting
ordinary 50,382 the month-end 48,072 shareholders 0 0
rights at the
shareholders prior to the with resumed
month-end prior
disclosure of this voting rights
to the disclosure
Report
of this Report
5% or greater shareholders or top 10 shareholders
Increase/ Shares in pledge
Shareho
Total shares decrease or frozen
Name of Nature of lding Restricted Unrestricted
held at the in the
shareholder shareholder percenta shares held shares held
period-end Reporting Status Shares
ge
Period
Changzhou
State-owned
Investment 30.43% 170,845,236 170,845,236
legal person
Group Co., Ltd
KGI Asia Foreign legal
0.57% 3,189,845 3,189,845
Limited person
Domestic
Lei Yanqin 0.39% 2,181,447 2,181,447
natural person
Domestic
Gao Fenhuai natural 0.35% 1,950,000 1,950,000
person
Domestic
Hu Wenyong 0.28% 1,561,866 1,561,866
natural person
Domestic
Huang Guoliang natural 0.27% 1,528,891 1,528,891
person
Domestic
Li Suinan 0.27% 1,507,800 1,507,800
natural person
Zhou Yong Domestic 0.27% 1,500,000 1,500,000
50
Changchai Company, Limited Annual Report 2019
natural
person
Domestic
Xue Hong natural 0.23% 1,310,900 1,310,900
person
Domestic
Tao Xiaofang natural 0.22% 1,230,000 1,230,000
person
Strategic investor or general
legal person becoming a top-10
N/A
ordinary shareholder due to
rights issue
It is unknown whether there is among the top 10 public shareholders and the
Related or acting-in-concert
top 10 unrestricted public shareholders any related parties or acting-in-concert
parties among the shareholders
parties as defined in the Administrative Measures for Information Regarding
above
Shareholding Alteration.
Top 10 unrestricted shareholders
Unrestricted shares held at the Shares by type
Name of shareholder
period-end Type Shares
Changzhou Investment Group
170,845,236 RMB ordinary shares 170,845,236
Co., Ltd
Domestically listed
KGI Asia Limited 3,189,845 3,189,845
foreign shares
Lei Yanqin 2,181,447 RMB ordinary shares 2,181,447
Gao Fenhuai 1,950,000 RMB ordinary shares 1,950,000
Domestically listed
Hu Wenyong 1,561,866 1,561,866
foreign shares
Domestically listed
Huang Guoliang 1,528,891 1,528,891
foreign shares
Domestically listed
Li Suinan 1,507,800 1,507,800
foreign shares
Zhou Yong 1,500,000 RMB ordinary shares 1,500,000
Domestically listed
Xue Hong 1,310,900 1,310,900
foreign shares
Tao Xiaofang 1,230,000 RMB ordinary shares 1,230,000
Related or acting-in-concert It is unknown whether there is among the top 10 public shareholders and the
parties among top 10 unrestricted top 10 unrestricted public shareholders any related parties or acting-in-concert
public shareholders, as well as parties as defined in the Administrative Measures for Information Regarding
between top 10 unrestricted Shareholding Alteration.
51
Changchai Company, Limited Annual Report 2019
public shareholders and top 10
shareholders
Top 10 ordinary shareholders
The shareholders Lei Yanqin and Gao Fenhuai respectively held 2,017,347
involved in securities margin
shares and 1,950,000 shares of the Company through their credit accounts.
trading
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary
shareholders of the Company conducted any promissory repo during the Reporting Period.
□ Yes √ No
2. Controlling Shareholder
Nature of the controlling shareholder: Controlled by a local state-owned legal person
Type of the controlling shareholder: legal person
Legal
Name of controlling representativ Date of Unified social credit
Principal activity
shareholder e/person in establishment code
charge
Property
Changzhou Investment
Chen Limin 20 June 2002 91320400467283980X investment and
Group Co., Ltd
management
Controlling shareholder’s
holdings in other listed
companies at home or None
abroad in the Reporting
Period
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Its Acting-in-Concert Parties
Nature of the actual controller: Local institution for state-owned assets management
Type of the actual controller: legal person
Legal
representativ Date of Unified social
Name of actual controller Principal activity
e/person in establishment credit code
charge
State-owned Assets
Supervision and
Liu Yuedong 01411025-1 Not applicable
Administration
Commission of
52
Changchai Company, Limited Annual Report 2019
Changzhou Municipal
People’s Government
Other listed companies at
home or abroad
controlled by the actual None
controller in the
Reporting Period
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Ownership and control relations between the actual controller and the Company:
According to the document of Changzhou Municipal People's Government (CZF[2006] No. 62]),the
controlling shareholder Changzhou Investment Group Co., Ltd. is the enterprise to perform the investor role for
the State-owned Assets Supervision and Administration Commission of Changzhou Municipal People’s
Government as authorized by Changzhou Municipal People’s Government. Thus, the State-owned Assets
Supervision and Administration Commission of Changzhou Municipal People’s Government is the actual
controller of the Company.
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset
management.
□ Applicable √ Not applicable
4. Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
53
Changchai Company, Limited Annual Report 2019
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
54
Changchai Company, Limited Annual Report 2019
Part VIII Convertible Corporate Bonds
□ Applicable √ Not applicable
No convertible corporate bonds in the Reporting Period.
55
Changchai Company, Limited Annual Report 2019
Part IX Directors, Supervisors, Senior Management and Staff
I Change in Shareholdings of Directors, Supervisors and Senior Management
Ending
Incumbent/ Gende
Name Office title Age Start of tenure End of tenure shareholding
Former r
(share)
Shi Chairman of the
Incumbent Male 56 18 October 2016 Up to now 0
Board
Xinkun
He
Vice Chairman
Jianguan Former Male 56 18 October 2016 29 January 2019 0
of the Board
g
Zhang Director,
Incumbent Male 54 18 October 2016 Up to now 0
Xin General Manager
Director,
Shi
Vice-general Incumbent Male 58 18 October 2016 Up to now 0
Jianchun
Manager
Lin Tian Director Incumbent Male 57 17 December 2018 Up to now 0
Zhang Femal
Director Incumbent 62 18 October 2016 Up to now 0
Qiong e
Li Independent
Incumbent Male 46 18 October 2016 Up to now 0
Minghui director
Independent
Jia Bin Incumbent Male 42 18 October 2016 Up to now 0
director
Feng Independent
Incumbent Male 63 18 October 2016 Up to now 0
Genfu director
Yin Vice-general
Incumbent Male 56 18 October 2016 Up to now 0
Lihou Manager
Vice-general
Xu Yi Incumbent Male 56 18 October 2016 Up to now 0
Manager
Liu Vice-general
Incumbent Male 58 18 October 2016 Up to now 0
Xiaoyun Manager
56
Changchai Company, Limited Annual Report 2019
Wei Vice-general
Incumbent Male 57 18 October 2016 Up to now 0
Jinxiang Manager
Ni Chairman of the
Minglian Supervisory Incumbent Male 53 18 October 2016 Up to now 0
g Committee
Zhu Min Supervisor Incumbent Male 56 18 October 2016 Up to now 0
Xie
Guozhon Supervisor Incumbent Male 51 18 October 2016 Up to now 0
g
Lu
Zhonggu Supervisor Incumbent Male 53 18 October 2016 Up to now 0
i
Liu Yi Supervisor Incumbent Male 51 18 October 2016 Up to now 0
He Secretary of the
Incumbent Male 41 18 October 2016 Up to now 0
Jianjiang Board
Total -- -- -- -- -- -- 0
II Change of Directors, Supervisors and Senior Management
√Applicable □ Not applicable
Name Office title Type of change Date of change Reason for change
Vice Chairman of
He Jianguang Left 29 January 2019 Job transfer
the Board
III Biographical Information
Professional backgrounds, major work experience and current duties in the Company of the incumbent directors,
supervisors and senior management:
Shi Xinkun: Now he acts as vice-president of Changzhou Investment Group Co., Ltd., the Chairman of the Board
and Party Secretary in the Company and the director in Jiangsu Housheng New Energy Technology Co., Ltd.
Zhang Xin: He successively took the posts of Sales Manager, General Manager Assistant, and vice-general
manager in our company. Now, he acts as Director, General Manager, deputy Party Secretary of the Company and
executive director of Jiangsu Changchai Machinery Co., Ltd.
Shi Jianchun: He successively acted as Party Secretary, Director, Vice-general Manager and Secretary of the
Board of the Company. Now he is the Director, Vice-general Manager and Chairman of the Board of Housheng
Investment Co., Ltd.
57
Changchai Company, Limited Annual Report 2019
Lin Tian: He successively worked as deputy director of enterprise development Dept., GM of investment
management Dept. II and I, assistant president in Changzhou Investment Group Co., Ltd. Now he is the vice
president, director of Changzhou Investment Group Co., Ltd., and the director of the Company.
Zhang Qiong: She successively acted as Lecturer and Associate Professor in Department of Law of Anhui
University, Deputy Director of Intellectual Property Office and Director of Legal Affairs Office in Shenzhen
Huawei Technologies Co., Ltd, Senior Manager, Assistant Secretary General of Shenzhen Innovation Investment
Group Ltd, Director, General Manager, and consultant of Anhui Hongtu Venture Capital Co., Ltd. Now, she
works as the supervisor of Synergetic Funds Management Limited, and the director of the Company.
Feng Genfu: he held the post of Dean of Institute of Economics and Finance in Xi’an Jiaotong University. Now,
he is Professor and Doctoral Advisor of Institute of Economics and Finance in Xi’an Jiaotong University, and
independent Director of Datang International Power Generation Co., Ltd., China Securities Co., Ltd, Huaren
Pharmaceutical Co., Ltd., Xi’An Shaangu Power Co.,Ltd. and the Company.
Li Minghui: He acted as Lecturer and Associate Professor of School of Accounting in Xiamen University,
Associate Professor and Professor of School of Accounting in Nanjing University Business School. Now he is the
Doctoral Supervisor of School of Accounting in Nanjing University Business School, independent director of
Baosheng Science & Technology Innovation Co., Ltd, Nanjing Securities Co., Ltd, and GCL Power (Group) Co.,
Ltd., and independent director of the Company.
Jia Bin: He successively acted as the Deputy Director of No.1 Research office in Tianjin Research Institute of
Internal Combustion Engine, now he acts as the Director of No.1 Research office in Tianjin Research Institute of
Internal Combustion Engine and Secretary-general of CICEIA Small Gasoline Engine Branch, and independent
director of the Company.
Yin Lihou: He worked as Minister of Human Resources Department and General Manager Assistant. Now he acts
as Deputy General Manager of the Company, and the Chairman of the Board of Changchai Robin.
Xu Yi: He successively took the posts of Director of Technical Center and General Manager Assistant. Now he is
Vice-general Manager of the Company.
Liu Xiaoyun: He successively acted as Multi-cylinder Engine Factory Director, Minister of Purchase Department,
and General Manager Assistant in the Company. Now he acts as Deputy General Manager of the Company.
Wei Jinxiang: He successively held the posts of Department Director of Quality Assurance Department, General
Manager Assistant of the Company. Now he acts as Deputy General Manager of the Company, and the chairman
of Changchai Wanzhou, Changchai Benniu, and Housheng Agricultural Equipment.
Ni Mingliang: Now he acts as Deputy Party Secretary, Secretary of Commission, Chairman of Labor Union and
Chairman of the Supervisory.
Zhu Min: Now he acts as the Principal Staff Member of Organization and Personnel Division of Chanzhou
Audit Bureau and supervisor of the Company.
Xie Guozhong: Now he acts as General Manager Assistant of the Company, General Manager and Secretary of
Party General Branch of the Sales Company, and Supervisor of the Company and Director of Housheng
Agriculture Equipment.
Lu Zhonggui: Now he acts as Minister of political Department of the Company, Office Director, Secretary of
Organ Party General Branch as well as employee supervisor of the Company.
Liu Yi: He successively took the posts of Assistant Minister of Enterprise Management Department. Now he acts
as Deputy Director of Audit Department and Supervisor of the Company and Supervisor of Changchai Wanzhou
and Changchai Machinery.
He Jianjiang: He successively acted as the Section Member, Assistant Minister, Vice Minister of Investment and
Development Department, Representative of Securities in the Company. Now he is Secretary of the Board and
58
Changchai Company, Limited Annual Report 2019
Minister of Investment and Development Department in our Company, and Director of Housheng Investment,
Changchai Robin, Housheng Agricultural Equipment, and Changchai Wanzhou.
Offices held concurrently in shareholding entities:
√ Applicable □ Not applicable
Office Remuneration
held in or allowance
Start of End of
Name Shareholding entity the from the
tenure tenure
sharehold shareholding
ing entity entity
Vice
Changzhou Investment Group Co., December
Lin Tian president, Yes
Ltd. 2017
director
Notes Now, he is the vice president and director of Changzhou Investment Group Co., Ltd.
Offices held concurrently in other entities:
√ Applicable □ Not applicable
Remuneration or
Office held in the End of
Name Other entity Start of tenure allowance from
entity tenure
the entity
Zhang Synergetic Funds Management
Supervisor Yes
Qiong Limited
Nanjing University Doctoral Supervisor 1 April 2012
Baosheng Science & May 2019
Independent Director 3 December 2014
Technology Innovation Co., Ltd
Li
Nanjing Securities Co., Ltd Independent Director 12 May 2016 Yes
Minghui
Independent Director November
Jiangsu Fasten Co., Ltd 20 April 2015
2019
GCL Power (Group) Co., Ltd. Independent Director 18 June 2019
Tianjin Research Institute of the Director of No.1
1 March 2009
Internal Combustion Engine Research office
Secretary-general of
Jia Bin Yes
China Internal Combustion CICEIA Small
1 November 2011
Engine Industry Association Gasoline Engine
Branch.
Institute of Economics and
Feng Professor and
Finance in Xi’an Jiaotong 1 March 2016 Yes
Genfu Doctoral Advisor
University
59
Changchai Company, Limited Annual Report 2019
Datang International Power January
Independent Director 30 June 2016
Generation Co., Ltd. 2020
China Securities Co., Ltd. Independent Director 15 May 2015
Huaren Pharmaceutical Co.,Ltd. Independent Director 28 August 2019
Xi’An Shaangu Power Co.,Ltd. Independent Director 19 December 2019
Notes None
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors
and senior management as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors
and senior management:
In 2019, the monthly salaries of directors, supervisors and senior executives in the Company were in line
with the stipulations of relevant salary management and grade standards, and the benefits of the Company and
assessment results. The Director Lin Tian obtained salaries in shareholders' entities.
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB’0,000
Total
Any
before-tax
Incumbent/For remuneration
Name Office title Gender Age remuneration
mer from related
from the
party
Company
Chairman of the
Shi Xinkun Male 56 Incumbent 79.18 No
Board
Director, 79.18
Zhang Xin Male 54 Incumbent No
General Manager
Director, 79.18
Shi Jianchun Vice-general Male 58 Incumbent No
Manager
Lin Tian Director Male 57 Incumbent 0 Yes
Zhang Qiong Director Female 62 Incumbent 0 No
Independent
Li Minghui Male 46 Incumbent 5 No
director
Jia Bin Independent Male 42 Incumbent 5 No
60
Changchai Company, Limited Annual Report 2019
director
Independent
Feng Genfu Male 63 Former 5 No
director
Vice-general
Yin Lihou Male 56 Incumbent 68.67 No
Manager
Vice-general
Xu Yi Male 56 Incumbent 69.14 No
Manager
Vice-general
Liu Xiaoyun Male 58 Incumbent 69.14 No
Manager
Vice-general
Wei Jinxiang Male 57 Incumbent 67.73 No
Manager
Chairman of the
Ni Mingliang Supervisory Male 53 Incumbent 69.14 No
Committee
Zhu Min Supervisor Male 56 Incumbent 0 No
Xie Guozhong Supervisor Male 51 Incumbent 54.17 No
Lu Zhonggui Supervisor Male 53 Incumbent 17.01 No
Liu Yi Supervisor Male 51 Incumbent 18.14 No
Secretary of the
He Jianjiang Male 41 Incumbent 40.45 No
Board
Total -- -- -- -- 726.13 --
Equity incentives for directors, supervisors and senior management in the Reporting Period:
√ Applicable □ Not applicable
V Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company as
2,440
the parent
Number of in-service employees of major subsidiaries 570
Total number of in-service employees 3,010
Total number of paid employees in the Reporting
3,010
Period
61
Changchai Company, Limited Annual Report 2019
Number of retirees to whom the Company as the
parent or its major subsidiaries need to pay retirement 0
pensions
Functions
Function Employees
Production 1,992
Sales 226
Technical 360
Financial 39
Administrative 308
Other 85
Total 3,010
Educational backgrounds
Educational background Employees
Junior high school graduates and below 1,356
High school graduates 852
College graduates and technical secondary school
525
graduates
Bachelors 259
Masters and above 18
Total 3,010
62
Changchai Company, Limited Annual Report 2019
Part X Corporate Governance
I General Information of Corporate Governance
In the Reporting Period, the Company was strictly in line with laws, statutes such as Company Law,
Securities Laws, Code of Corporate Governance of Listed Companies, Guide Opinion on Establishment of
Independent Director System by Listed Companies and Guidelines on Internal Controls of Listed Companies and
so on, continuously perfected corporate governance, established and accomplished internal management and
control system, consistently and deeply put forward corporate governance activities, so as to further normalized
operation of the Company, raising corporate governance level, laying a guard for steady and healthy development
of the Company, protect legal rights and interests of the Company and all shareholders.
The Company promulgated or revised a series of internal control system through all aspects of normal
operation and management activities in accordance with each national laws and regulations, characteristics of the
industry, operation and self-managing business, and improved it continuously, and finally formed a normative
management system. And formulated a series of management system, process and standard covered each
operation link and level of the financial assets control, human resources management, quality environment
management and internal audit supervisor etc., which ensured all the work had rules to follow.
Indicate by tick market whether there is any material incompliance with the regulatory documents issued by the
CSRC governing the governance of listed companies.
□ Yes √ No
No such cases in the Reporting Period.
II The Company’s Independence from Its Controlling Shareholder in Business, Personnel,
Asset, Organization and Financial Affairs
The Company was totally independent from the controlling shareholder Changzhou Investment Group Co.,
Ltd in terms of assets, business, personnel, organization and financing, with independent & complete business and
capability to operate independently.
III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
Investor Index to
Date of the
Meeting Type participation Disclosure date disclosed
meeting
ratio information
63
Changchai Company, Limited Annual Report 2019
The 2018
Annual General
Annual General 0.01% 16 May 2019 17 May 2019 2019-019
Meeting
Meeting
2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed Voting
Rights
□ Applicable √ Not applicable
V Performance of Duty by Independent Directors in the Reporting Period
1. Attendance of Independent Directors at Board Meetings and General Meetings
Attendance of independent directors at board meetings and general meetings
Total
The
number of
Board independe
board Board
Board meetings nt director
meetings Board meetings
meetings the failed to General
Independent the meetings attended
attended independe attend two meetings
director independe attended by way of
through a nt director consecutiv attended
nt director on site telecommu
proxy failed to e board
was nication
attend meetings
eligible to
(yes/no)
attend
Li Minghui 9 2 7 0 0 No 1
Feng Genfu 9 2 7 0 0 No 1
Jia Bin 9 2 7 0 0 No 1
2. Objections Raised by Independent Directors on Matters of the Company
Indicate by tick mark whether any independent directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
3. Other Information about the Performance of Duty by Independent Directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
Suggestions from independent directors adopted or not adopted by the Company:
The independent directors of the Company in line with the law, rules, normative documents and obligations
given by the Company of the Company law, Article of Associations and Independent Directors Work Rules,
comprehensively focused on the development and operation of the Company, actively attended the general
meeting of shareholder and meeting of board of directors, and given independent opinions for the significant
64
Changchai Company, Limited Annual Report 2019
events of the Company, and effectively maintained the profits of the Company and all the shareholders. The
Company actively listened to the suggestions from the independent directors upon the significant events and
adopted them.
VI Performance of Duty by Specialized Committees under the Board in the Reporting Period
1. Summary Report on Responsibility Performance of the Audit Committee under the Board of Directors:
During the Reporting Period, the Audit Committee under the Board of Directors performed its duty
according to the diligent and responsible principle, based on relevant regulations such as the Company Law, the
Guidelines for Corporate Governance of Listed Companies, the Articles of Association as well as provisions in
the Enforcement Regulation of the Audit Committee under the Board of Director of the Company.
(1) Major work of Audit Committee in Reporting Period:
1) Periodically examined the working plan and execution of inner control of the Company;
2) Communicated fully with the CPAs firm on plan and content of audit;
3) Urged the CPAs firm to summit report as scheduled;
4) The Audit Committee reviewed the financial statements of the Company before the audit and after the
issuance of preliminary opinion by the CPAs firm. After it communicated with the CPAs firm on some important
items as well as major accounting estimation items, audit adjustment items and important accounting policies
which were likely to have potential influence on the financial statements, it considered that the financial
statements reflected the overall situation of the Company authentically, accurately and completely.
5) Submitted the summary report on annual audit of the Company conducted by the CPAs firm to the Board
of Directors;
6) Advised to continue the appointment of Gongzheng Tianye Certified Public Accountants (Special General
Partnership) as the audit institution of the Company in 2020.
(2) Written opinions on financial statements of the Company issued by the Audit Committee
1) On 20 March 2020, the Audit Committee the Audit Committee examined the financial statements of the
Company after the certified public accountants had issued the preliminary opinion on the statements, and issued a
written opinion as follows: The financial statements of the Company were prepared in accordance with the New
Accounting Standards for Enterprises and relevant financial rules of the Company, and faithfully reflected the
financial position of the Company, as well as the business results and cash flows in 2019 in all material aspects.
2) With regard to the audited financial statements 2019, on 9 April 2020, the Audit Committee made the
following resolution: the Audit Committee reviewed the financial statements 2019 audited by auditors, and
believed that the said financial statements faithfully reflected the financial position of the Company as at 31
December 2019, as well as the business results and cash flows in 2019 in all material aspects. It agreed to submit
the statements to the Board of Directors for examination and approval.
(3) Summary report on the audit work conducted by the CPAs firm in 2019:
According to the annual audit plan jointly formulated by the Audit Committee and Gongzheng Tianye
Certified Public Accountants (Special General Partnership), auditors communicated fully with the management
personnel of the Company and members of the Audit Committee on the consolidation of financial statements,
accounting adjustment, accounting policy and other accounting work needed to be improved, which helped both
parties acquire a deeper understanding about the operation, financial process and implementation of the New
Accounting Standards for Business Enterprises in the Company. With such understanding, the annual audit
accountants would make more mature judgment to issue a fair audit conclusion.
The Audit Committee held that the CPAs firm conducted the audit strictly in accordance with provisions
stipulated in the Independent Auditing Standards for CPAs of the PRC. The time of audit was sufficient, and the
auditors with excellent ability to practice were deployed reasonably. The issued auditor’s report fully reflected the
financial position of the Company as at 31 December 2019, as well as the business results and cash flows in 2019,
and the audit conclusion was in line with the actual situation of the Company.
(4) Resolution letter on renewing the employment of the CPAs firm:
The Audit Committee convened a meeting on 9 April 2020 to review the matter concerning the employment
of a CPAs firm for the audit in 2020, and the review opinion was as follows:
Gongzheng Tianye Certified Public Accountants (Special General Partnership) had accomplished the audit of
the Company 2018, and the auditor’s report reflected the actual financial status of the Company in 2019
objectively and fairly.
65
Changchai Company, Limited Annual Report 2019
The Audit Committee was satisfied with the audit conducted by Gongzheng Tianye Certified Public
Accountants (Special General Partnership) and decided to continue to engage it as the audit institution of the
Company in 2020.
The said proposal was agreed to be submitted to the 24th Meeting of the 8th Board of Directors for review.
2. Summary Report on Responsibility Performance of Remuneration & Appraisal Committee under the Board of
Directors:
The Remuneration & Appraisal Committee under the Board of Directors was composed of 3 Directors,
including 2 Independent Directors and 1 Inner Director. And one of the Independent Directors assumed the
position of Chairman of the Committee.
In the Reporting Period, the Remuneration & Appraisal Committee raised the proposal on implementing the
appraisal of senior executives in 2019, based on the fulfillment of the main financial indicators and operation
targets in 2019, which were determined in the Contract for Appraisal of Senior Executives in 2019.
In the Reporting Period, based on relevant regulations and rules, the Remuneration & Appraisal Committee
examined the remuneration of the Company’s senior executives in 2019 and issued opinions as follows:
The Remuneration & Appraisal Committee held that, the remuneration of the Company’s senior executives
in 2019 was in accordance with provisions in the Contract for Appraisal of Senior Executives in 2019, as well as
the laws, regulations and rules of the Company.
VII Performance of Duty by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in
the Reporting Period.
□ Yes √ No
The Supervisory Committee raised no objections in the Reporting Period.
VIII Appraisal of and Incentive for Senior Management
The Company has established a fair and objective performance appraisal and incentive restraint mechanism
for senior management staffs. The annual remuneration of senior management staffs consisted of the basic annual
salary and performance appraisal bonus, and the basic annual salary was distributed monthly with a certain
proportion, while the performance appraisal bonus was distributed after being appraised according to the appraisal
scheme for senior management staffs signed between the Board of Directors and the managers for each year.
IX Internal Control
1. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
2. Internal Control Self-Evaluation Report
Disclosure date of the internal
11 April 2020
control self-evaluation report
Index to the disclosed internal
2020-013
control self-evaluation report
66
Changchai Company, Limited Annual Report 2019
Evaluated entities’ combined assets
100.00%
as % of consolidated total assets
Evaluated entities’ combined
operating revenue as % of 100.00%
consolidated operating revenue
Identification standards for internal control weaknesses
Weaknesses in internal control over Weaknesses in internal control
Type
financial reporting not related to financial reporting
The Company classified the defects
as serious defect, important defect
and general defect according to the
influence degree from the internal
control:
(1) Serious defect: refers to one or
multiple groups with control defect
Defects with the following
which may lead the enterprise
random characteristics should be
seriously deviates the control target;
recognized as serious defect:
(2) Important defect: refers to one or
1) Seriously violated the national
multiple groups with control defect
laws and administrative
with the severity and the economic
regulations and the normative
results lower than the great defect
documents;
but may still lead the enterprise
2) “three significant one great”
seriously deviates the control target;
event had not been through the
(3) General defect: refers to other
collective decision-making
defect except for the great defect
process;
and significant defect.
3) the significant events involved
Nature standard Nature standards:
with the production and
defects with the following random
operation of the Company lacked
characteristics should be recognized
of systematic control or the
as serious defect:
institutional system was invalid;
1) the defect involves with the
4) the internal control of the
malpractice of the Directors,
information disclosure was
Supervisors and Senior Executives;
invalid, which led the Company
2) revised the disclosed financial
be open condemned by the
report;
supervision department;
3) CPAs discovered the great
5) the serious defect from the
misstatement among the current
assessment results of the internal
financial statement while which
control had not been revised.
could not be found during the
operating process of the internal
control;
4) the supervision from the Audit
Committee and the internal audit
institution of the enterprise was
invalid.
Quantitative standards: Refer to the quantitative criteria
The quantitative standards of of the internal control defect of
recognizing the significant degree of the financial report, to recognize
Quantitative standard
the misstatement (including the false the quantitative criteria of the
negatives) of the consolidated significant degree of the internal
financial report of the Company control defect of the
67
Changchai Company, Limited Annual Report 2019
based on the data from the 2019 non-financial report of the
consolidated statements was as: Company as:
Serious defect: misstatement≥5% of Serious defect: possibly caused
the annual profits directly losses≥0.1% of the net
Important defect: 2.5% of the annual assets
profits≤ misstatement ＜ 5% of the Important defect: 0.05% of the
annual profits net assets≤ possibly caused
General defect＜2.5% of the annual directly losses ＜ 0.1% of the net
profits assets
General defect: possibly caused
directly losses＜0.05% of the net
assets
Number of material weaknesses in
internal control over financial 0
reporting
Number of material weaknesses in
internal control not related to 0
financial reporting
Number of serious weaknesses in
internal control over financial 0
reporting
Number of serious weaknesses in
internal control not related to 0
financial reporting
X Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
Opinion paragraph in the independent auditor’s report on internal control
We believed that Changchai Company, Limited maintained effective internal control of the financial report in
significant aspects according to the Basic Norms of Internal Control and relevant regulations on 31 December
2019.
Independent auditor’s report
on internal control disclosed Disclosed
or not
Disclosure date 11 April 2020
Index to such report
2020-013
disclosed
Type of the auditor’s opinion Unmodified unqualified opinion
Material weaknesses in
internal control not related None
to financial reporting
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the
Company’s internal control.
□ Yes √ No
68
Changchai Company, Limited Annual Report 2019
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent
with the internal control self-evaluation report issued by the Company’s Board.
√ Yes □ No
69
Changchai Company, Limited Annual Report 2019
2. Employee Remuneration Policy
The Company always adhered to the principle of tilting the remuneration incentive mechanism towards
excellent talents, so as to display the roles of various professional technicians, management staffs and skilled
backbones. Besides, it adhered to the principle of increasing the employee’s income integrated with increasing
labor production efficiency and production & operation efficiency, so as to perfect the salary structure and further
increase employees’ income steadily.
3. Employee Training Plans
The Company established the Management Rules on the Education & Training for Employees, aiming to
enhance employees’ quality and try its best to cultivate a team of faithful and highly professional talents. Besides,
it innovated the training mechanism, optimized the training environment, and reinforced to encourage employees
to attend various training, so as to inspire the employees’ potential to the maximum extent and further promote the
sustainable development of the Company.
4. Labor Outsourcing
□ Applicable √ Not applicable
70
Changchai Company, Limited Annual Report 2019
Part XI Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding
before the date of this Report’s approval or were due but could not be redeemed in full?
No.
71
Changchai Company, Limited Annual Report 2019
Part XII Financial Statements
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
the Note V-37 Operating Revenue and Cost of Sales. The operating revenue of the Company in 2019 is
RMB2,040,133,700.
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Changchai Company, Limited Annual Report 2019
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
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.
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Changchai Company, Limited Annual Report 2019
Our opinion on the financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information; we are required to
report that fact. We have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance for Financial Statements
The management is responsible for the preparation of the financial statements that give a fair view in
accordance with CAS, and for designing, implementing and maintaining such internal control as the management
determines is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the management either intends to liquidate the Company or to cease operations,
or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with CAS will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required by CAS to draw users’ attention in our auditor’s report to the related
disclosures in the financial statements. If such disclosures are inadequate, we need to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events
or conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
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Changchai Company, Limited Annual Report 2019
(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
Notes receivable 606,283,023.05 495,370,782.47
Accounts receivable 419,295,665.51 378,859,159.11
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Changchai Company, Limited Annual Report 2019
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
Other non-current financial
77,952,101.63
assets
Investment property 48,447,666.83 50,656,007.63
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Changchai Company, Limited Annual Report 2019
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
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
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Changchai Company, Limited Annual Report 2019
Other payables 203,840,127.19 199,412,250.90
Including: Interest payable 0.00 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
Including: Preferred shares
Perpetual bonds
Capital reserves 164,328,665.43 164,328,665.43
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Changchai Company, Limited Annual Report 2019
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
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Changchai Company, Limited Annual Report 2019
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
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
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Changchai Company, Limited Annual Report 2019
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
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
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Changchai Company, Limited Annual Report 2019
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
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
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Changchai Company, Limited Annual Report 2019
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
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)
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Changchai Company, Limited Annual Report 2019
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)
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
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Changchai Company, Limited Annual Report 2019
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
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
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Changchai Company, Limited Annual Report 2019
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
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)
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Changchai Company, Limited Annual Report 2019
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
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
87
Changchai Company, Limited Annual Report 2019
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
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
88
Changchai Company, Limited Annual Report 2019
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
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:
89
Changchai Company, Limited Annual Report 2019
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
90
Changchai Company, Limited Annual Report 2019
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
91
Changchai Company, Limited Annual Report 2019
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
92
Changchai Company, Limited Annual Report 2019
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
93
Changchai Company, Limited Annual Report 2019
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
94
Changchai Company, Limited Annual Report 2019
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
95
Changchai Company, Limited Annual Report 2019
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
96
Changchai Company, Limited Annual Report 2019
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
97
Changchai Company, Limited Annual Report 2019
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
98
Changchai Company, Limited Annual Report 2019
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
99
Changchai Company, Limited Annual Report 2019
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
100
Changchai Company, Limited Annual Report 2019
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
101
Changchai Company, Limited Annual Report 2019
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
102
Changchai Company, Limited Annual Report 2019
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
103
Changchai Company, Limited Annual Report 2019
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
104
Changchai Company, Limited Annual Report 2019
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
105
Changchai Company, Limited Annual Report 2019
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
106
Changchai Company, Limited Annual Report 2019
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
107
Changchai Company, Limited Annual Report 2019
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
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
108
Changchai Company, Limited Annual Report 2019
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
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
109
Changchai Company, Limited Annual Report 2019
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
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
110
Changchai Company, Limited Annual Report 2019
3.4.1
Increase in
capital (or
share
capital)
from capital
reserves
3.4.2
Increase in
capital (or
share
capital)
from
surplus
reserves
3.4.3
Loss offset
by surplus
reserves
3.4.4
Changes in
defined
benefit
pension
schemes
transferred
to retained
earnings
111
Changchai Company, Limited Annual Report 2019
3.4.5
Other
comprehens
ive income
transferred
to retained
earnings
3.4.6
Other
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
Item
Share Other equity instruments Capital Less: Other Specific Surplus Retained Oth Total owners’
112
Changchai Company, Limited Annual Report 2019
capital Preferr Perpetu reserves Treasu comprehensi reserve reserves earnings er equity
Oth
ed al ry ve income
er
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
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)
113
Changchai Company, Limited Annual Report 2019
3.1 Total
-250,662,875 64,278,399. -186,384,475.
comprehens
.00 85 15
ive income
3.2
Capital
increased
and reduced
by owners
3.2.1
Ordinary
shares
increased
by owners
3.2.2
Capital
increased
by holders
of other
equity
instruments
3.2.3
Share-based
payments
included in
owners’
equity
3.2.4
Other
114
Changchai Company, Limited Annual Report 2019
3.3 Profit 6,427,839.9 -23,269,069. -16,841,229.7
distribution 9 77 8
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
115
Changchai Company, Limited Annual Report 2019
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
116
Changchai Company, Limited Annual Report 2019
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
117
Changchai Company, Limited Annual Report 2019
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
118
Changchai Company, Limited Annual Report 2019
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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Changchai Company, Limited Annual Report 2019
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:
141
Changchai Company, Limited Annual Report 2019
31 December 2018 1 January 2019
Notes receivable and 874,229,941.58Notes receivable 495,370,782.47
accounts receivable Accounts receivable 378,859,159.11
Notes payable and accounts 1,030,130,275.77Notes 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 790,877,079.72Notes 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
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Changchai Company, Limited Annual Report 2019
(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
143
Changchai Company, Limited Annual Report 2019
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
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Changchai Company, Limited Annual Report 2019
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
145
Changchai Company, Limited Annual Report 2019
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
146
Changchai Company, Limited Annual Report 2019
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
147
Changchai Company, Limited Annual Report 2019
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
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Changchai Company, Limited Annual Report 2019
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
149
Changchai Company, Limited Annual Report 2019
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%
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Changchai Company, Limited Annual Report 2019
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
151
Changchai Company, Limited Annual Report 2019
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
152
Changchai Company, Limited Annual Report 2019
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
153
Changchai Company, Limited Annual Report 2019
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
154
Changchai Company, Limited Annual Report 2019
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.
155
Changchai Company, Limited Annual Report 2019
(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
156
Changchai Company, Limited Annual Report 2019
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
157
Changchai Company, Limited Annual Report 2019
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
158
Changchai Company, Limited Annual Report 2019
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
159
Changchai Company, Limited Annual Report 2019
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
160
Changchai Company, Limited Annual Report 2019
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)
161
Changchai Company, Limited Annual Report 2019
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
162
Changchai Company, Limited Annual Report 2019
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
163
Changchai Company, Limited Annual Report 2019
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
164
Changchai Company, Limited Annual Report 2019
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
165
Changchai Company, Limited Annual Report 2019
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
166
Changchai Company, Limited Annual Report 2019
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
167
Changchai Company, Limited Annual Report 2019
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
168
Changchai Company, Limited Annual Report 2019
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
169
Changchai Company, Limited Annual Report 2019
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
170
Changchai Company, Limited Annual Report 2019
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
171
Changchai Company, Limited Annual Report 2019
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
172
Changchai Company, Limited Annual Report 2019
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.
173
Changchai Company, Limited Annual Report 2019
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
174
Changchai Company, Limited Annual Report 2019
(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
175
Changchai Company, Limited Annual Report 2019
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
176
Changchai Company, Limited Annual Report 2019
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
177
Changchai Company, Limited Annual Report 2019
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
178
Changchai Company, Limited Annual Report 2019
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
179
Changchai Company, Limited Annual Report 2019
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
180
Changchai Company, Limited Annual Report 2019
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
181
Changchai Company, Limited Annual Report 2019
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
182
Changchai Company, Limited Annual Report 2019
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
183
Changchai Company, Limited Annual Report 2019
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
184
Changchai Company, Limited Annual Report 2019
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
185
Changchai Company, Limited Annual Report 2019
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
186
Changchai Company, Limited Annual Report 2019
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
187
Changchai Company, Limited Annual Report 2019
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
188
Changchai Company, Limited Annual Report 2019
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
189
Changchai Company, Limited Annual Report 2019
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
190
Changchai Company, Limited Annual Report 2019
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
191
Changchai Company, Limited Annual Report 2019
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
192
Changchai Company, Limited Annual Report 2019
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
193
Changchai Company, Limited Annual Report 2019
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.
194
Changchai Company, Limited Annual Report 2019
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.
195
Changchai Company, Limited Annual Report 2019
(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.
196
Changchai Company, Limited Annual Report 2019
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
197
Changchai Company, Limited Annual Report 2019
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
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Changchai Company, Limited Annual Report 2019
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
199
Changchai Company, Limited Annual Report 2019
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
200
Changchai Company, Limited Annual Report 2019
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.
201
Changchai Company, Limited Annual Report 2019
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.
202
Changchai Company, Limited Annual Report 2019
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
203
Changchai Company, Limited Annual Report 2019
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:
204
Changchai Company, Limited Annual Report 2019
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
205
Changchai Company, Limited Annual Report 2019
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
206
Changchai Company, Limited Annual Report 2019
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
207
Changchai Company, Limited Annual Report 2019
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
208
Changchai Company, Limited Annual Report 2019
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
209
Changchai Company, Limited Annual Report 2019
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
210
Changchai Company, Limited Annual Report 2019
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.
211
Changchai Company, Limited Annual Report 2019
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
212
Changchai Company, Limited Annual Report 2019
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
213
Changchai Company, Limited Annual Report 2019
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
214
Changchai Company, Limited Annual Report 2019
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
215
Changchai Company, Limited Annual Report 2019
Part XIII Documents Available for Reference
1. The financial statements signed and sealed by the Company’s legal representative,
General Manager and head of the financial department;
2. The original copy of the Independent Auditor’s Report signed and sealed by the
CPAs, as well as sealed by the CPA firm;
3. The originals of all the Company’s documents and announcements which were
disclosed on Securities Time and Ta Kung Pao (HK) (newspapers designated by the
CSRC for information disclosure) during the Reporting Period; and
4. The Annual Report disclosed on other stock markets.
The above-mentioned documents available for reference are all kept in the Secretariat
of the Board of Directors of the Company and the Shenzhen Stock Exchange.
This Annual Report and its abstract have been prepared in both Chinese and English.
Should there be any discrepancies or misunderstandings between the two versions,
the Chinese version shall prevail.
The Board of Directors
Changchai Company, Limited
11 April 2020
216
