Changchai Company, Limited Interim Report 2020
CHANGCHAI COMPANY, LIMITED
SEMI-Financial Report 2020
I Independent Auditor’s Report
Are these interim financial statements audited by an independent auditor?
√ Yes □ No
Type of the audit opinion Unmodified unqualified opinion
Date of signing the independent auditor’s report 29 July 2020
Gongzheng Tianye Certified Public Accountants
Name of the audit firm
(Special General Partnership)
Reference number of the independent auditor’s report SGW[2020]A1166
Name of the certified public accountants Dai Weizhong and Xu Wenxiang
Is the independent auditor’s report modified?
□ Yes √ No
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 30 June 2020, 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 six months 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 30 June 2020 and the consolidated and parent
business performance and cash flow for the six months then ended.
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
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Changchai Company, Limited Interim Report 2020
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-28 Revenue and the
Note V-34 Operating Revenue and Cost of Sales. The operating revenue of the Company in the period from
January to June 2020 is RMB1,167.4558 million.
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 30 June 2020, as for accounts receivable of the Company, the carrying amount was
RMB918.1510 million, the bad debt provision was RMB187.7513 million, and the carrying value was
RMB730.3997 million, accounting for 20.64% 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.
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Changchai Company, Limited Interim Report 2020
(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 2020 Interim Report other than
the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information; we are required to report
that fact. We have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance for Financial Statements
The management is responsible for the preparation of the financial statements that give a fair view in accordance
with CAS, and for designing, implementing and maintaining such internal control as the management determines
is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the management either intends to liquidate the Company or to cease operations,
or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with CAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control.
(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
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Changchai Company, Limited Interim Report 2020
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.
(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 29 July 2020
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Changchai Company, Limited
30 June 2020
Unit: RMB
Item 30 June 2020 31 December 2019
Current assets:
Monetary assets 600,274,769.45 638,589,260.09
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Changchai Company, Limited Interim Report 2020
Settlement reserve
Interbank loans granted
Held-for-trading financial
14,600,000.00 13,050,000.00
assets
Derivative financial assets
Notes receivable 508,401,509.54 606,283,023.05
Accounts receivable 730,399,692.57 419,302,056.87
Accounts receivable
financing
Prepayments 10,208,446.08 12,968,746.16
Premiums receivable
Reinsurance receivables
Receivable reinsurance
contract reserve
Other receivables 10,280,692.50 9,703,390.94
Including: Interest
receivable
Dividends
receivable
Financial assets purchased
under resale agreements
Inventories 428,205,070.52 473,359,168.90
Contract assets
Assets held for sale
Current portion of
non-current assets
Other current assets 8,576,962.79 6,421,275.47
Total current assets 2,310,947,143.45 2,179,676,921.48
Non-current assets:
Loans and advances to
customers
Investments in debt
obligations
Investments in other debt
obligations
Long-term receivables
Long-term equity investments
Investments in other equity 462,160,000.00 532,886,000.00
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Changchai Company, Limited Interim Report 2020
instruments
Other non-current financial
77,952,101.63 77,952,101.63
assets
Investment property 47,343,496.43 48,447,666.83
Fixed assets 437,411,354.41 457,722,667.32
Construction in progress 103,006,376.02 91,358,156.24
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 97,374,195.14 99,699,450.26
Development costs
Goodwill
Long-term prepaid expense 33,595.50 53,497.80
Deferred income tax assets 1,979,974.43 1,023,863.04
Other non-current assets 177,400.00
Total non-current assets 1,227,438,493.56 1,309,143,403.12
Total assets 3,538,385,637.01 3,488,820,324.60
Current liabilities:
Short-term borrowings 22,000,000.00 22,000,000.00
Borrowings from the central
bank
Interbank loans obtained
Held-for-trading financial
liabilities
Derivative financial liabilities
Notes payable 479,515,000.00 403,035,000.00
Accounts payable 580,840,786.08 525,625,016.89
Advances from customers 31,789,001.78
Contract liabilities 31,527,438.40
Financial assets sold under
repurchase agreements
Customer deposits and
interbank deposits
Payables for acting trading of
securities
Payables for underwriting of
securities
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Changchai Company, Limited Interim Report 2020
Employee benefits payable 18,957,655.55 44,559,015.79
Taxes payable 8,253,042.15 9,094,382.58
Other payables 190,736,737.19 205,064,145.10
Including: Interest payable
Dividends
3,891,433.83 3,891,433.83
payable
Handling charges and
commissions payable
Reinsurance payables
Liabilities directly associated
with assets held for sale
Current portion of
non-current liabilities
Other current liabilities 2,240,843.08 1,177,712.38
Total current liabilities 1,334,071,502.45 1,242,344,274.52
Non-current liabilities:
Insurance contract reserve
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term employee benefits
payable
Provisions
Deferred income 58,331,924.41 58,864,111.22
Deferred income tax
46,398,724.72 57,082,890.27
liabilities
Other non-current liabilities
Total non-current liabilities 104,730,649.13 115,947,001.49
Total liabilities 1,438,802,151.58 1,358,291,276.01
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
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Changchai Company, Limited Interim Report 2020
Capital reserves 164,328,665.43 164,328,665.43
Less: Treasury stock
Other comprehensive income 257,019,600.00 317,059,775.00
Specific reserve 18,438,650.51 17,560,202.07
Surplus reserves 322,228,533.72 322,228,533.72
General reserve
Retained earnings 756,379,945.09 728,341,265.36
Total equity attributable to
owners of the Company as the 2,079,769,720.75 2,110,892,767.58
parent
Non-controlling interests 19,813,764.68 19,636,281.01
Total owners’ equity 2,099,583,485.43 2,130,529,048.59
Total liabilities and owners’
3,538,385,637.01 3,488,820,324.60
equity
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 30 June 2020 31 December 2019
Current assets:
Monetary assets 537,280,656.10 584,957,678.96
Held-for-trading financial
assets
Derivative financial assets
Notes receivable 472,217,227.54 576,948,023.05
Accounts receivable 644,643,117.23 337,447,538.04
Accounts receivable
financing
Prepayments 4,990,201.79 6,386,284.14
Other receivables 22,243,041.97 22,741,542.22
Including: Interest
receivable
Dividends
receivable
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Changchai Company, Limited Interim Report 2020
Inventories 311,044,719.11 368,653,472.39
Contract assets
Assets held for sale
Current portion of
non-current assets
Other current assets 3,217,463.57 3,898,333.51
Total current assets 1,995,636,427.31 1,901,032,872.31
Non-current assets:
Investments in debt
obligations
Investments in other debt
obligations
Long-term receivables
Long-term equity investments 287,752,730.03 252,752,730.03
Investments in other equity
462,160,000.00 532,886,000.00
instruments
Other non-current financial
50,000,000.00 50,000,000.00
assets
Investment property 47,343,496.43 48,447,666.83
Fixed assets 348,701,107.11 364,071,199.07
Construction in progress 73,761,874.14 89,330,161.60
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 68,543,680.83 70,169,770.91
Development costs
Goodwill
Long-term prepaid expense
Deferred income tax assets 1,926,498.14 970,026.67
Other non-current assets
Total non-current assets 1,340,189,386.68 1,408,627,555.11
Total assets 3,335,825,813.99 3,309,660,427.42
Current liabilities:
Short-term borrowings 5,000,000.00 5,000,000.00
Held-for-trading financial
liabilities
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Changchai Company, Limited Interim Report 2020
Derivative financial liabilities
Notes payable 467,515,000.00 392,105,000.00
Accounts payable 523,091,443.14 481,854,210.18
Advances from customers 28,673,664.87
Contract liabilities 27,529,799.73
Employee benefits payable 12,316,392.34 39,125,477.30
Taxes payable 4,913,254.33 5,952,664.10
Other payables 176,944,594.03 192,046,130.29
Including: Interest payable
Dividends
3,243,179.97 3,243,179.97
payable
Liabilities directly associated
with assets held for sale
Current portion of
non-current liabilities
Other current liabilities
Total current liabilities 1,217,310,483.57 1,144,757,146.74
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term employee benefits
payable
Provisions
Deferred income 58,331,924.41 58,864,111.22
Deferred income tax
45,356,400.00 55,951,725.00
liabilities
Other non-current liabilities
Total non-current liabilities 103,688,324.41 114,815,836.22
Total liabilities 1,320,998,807.98 1,259,572,982.96
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
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Changchai Company, Limited Interim Report 2020
Including: Preferred shares
Perpetual bonds
Capital reserves 183,071,147.70 183,071,147.70
Less: Treasury stock
Other comprehensive income 257,019,600.00 317,059,775.00
Specific reserve 18,438,650.51 17,560,202.07
Surplus reserves 322,228,533.72 322,228,533.72
Retained earnings 672,694,748.08 648,793,459.97
Total owners’ equity 2,014,827,006.01 2,050,087,444.46
Total liabilities and owners’
3,335,825,813.99 3,309,660,427.42
equity
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
3. Consolidated Income Statement
Unit: RMB
Item H1 2020 H1 2019
1. Revenue 1,167,455,782.30 1,118,871,125.00
Including: Operating revenue 1,167,455,782.30 1,118,871,125.00
Interest income
Insurance premium income
Handling charge and commission income
2. Costs and expenses 1,123,014,304.27 1,099,092,785.90
Including: Cost of sales 985,842,718.68 972,984,773.54
Interest expense
Handling charge and commission expense
Surrenders
Net insurance claims paid
Net amount provided as insurance contract
reserve
Expenditure on policy dividends
Reinsurance premium expense
Taxes and surcharges 6,551,605.53 5,009,692.95
Selling expense 63,392,358.52 58,258,398.98
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Changchai Company, Limited Interim Report 2020
Administrative expense 35,609,030.74 34,560,062.30
R&D expense 32,338,250.78 30,064,283.46
Finance costs -719,659.98 -1,784,425.33
Including: Interest expense 3,340,575.91 1,567,625.50
Interest income 2,792,152.75 1,647,206.24
Add: Other income 2,677,964.82 134,037.71
Return on investment (“-” for loss) 5,384,597.04 184,349.63
Including: Share of profit or loss of joint ventures
and associates
Income from the derecognition of financial assets
at amortized cost (“-” for loss)
Exchange gain (“-” for loss)
Net gain on exposure hedges (“-” for loss)
Gain on changes in fair value (“-” for loss)
Credit impairment loss (“-” for loss) -5,979,021.29 -5,252,610.74
Asset impairment loss (“-” for loss) -16,343,805.00 -26,096.43
Asset disposal income (“-” for loss) 10,977.61 988,535.95
3. Operating profit (“-” for loss) 30,192,191.21 15,806,555.22
Add: Non-operating income 468,290.78 582,937.48
Less: Non-operating expense 395,375.68 217,837.98
4. Profit before tax (“-” for loss) 30,265,106.31 16,171,654.72
Less: Income tax expense 2,397,311.58 -2,994,995.32
5. Net profit (“-” for net loss) 27,867,794.73 19,166,650.04
5.1 By operating continuity
5.1.1 Net profit from continuing operations (“-” for net
27,867,794.73 19,166,650.04
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 the Company
27,690,311.06 19,117,635.69
as the parent
5.2.1 Net profit attributable to non-controlling interests 177,483.67 49,014.35
6. Other comprehensive income, net of tax -59,691,806.33 87,330,700.00
Attributable to owners of the Company as the parent -59,691,806.33 87,330,700.00
6.1 Items that will not be reclassified to profit or loss -59,691,806.33 87,330,700.00
6.1.1 Changes caused by remeasurements on defined
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Changchai Company, Limited Interim Report 2020
benefit 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 investments in
-59,691,806.33 87,330,700.00
other equity instruments
6.1.4 Changes in the fair value arising from changes
in own credit risk
6.1.5 Other
6.2 Items that will be reclassified to profit or loss
6.2.1 Other comprehensive income that will be
reclassified to profit or loss under the equity method
6.2.2 Changes in the fair value of investments in
other debt obligations
6.2.3 Other comprehensive income arising from the
reclassification of financial assets
6.2.4 Credit impairment allowance for investments in
other debt obligations
6.2.5 Reserve for cash flow hedges
6.2.6 Differences arising from the translation of
foreign currency-denominated financial statements
6.2.7 Other
Attributable to non-controlling interests
7. Total comprehensive income -31,824,011.60 106,497,350.04
Attributable to owners of the Company as the parent -32,001,495.27 106,448,335.69
Attributable to non-controlling interests 177,483.67 49,014.35
8. Earnings per share
8.1 Basic earnings per share 0.0493 0.0341
8.2 Diluted earnings per share 0.0493 0.0341
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
4. Income Statement of the Company as the Parent
Unit: RMB
Item H1 2020 H1 2019
1. Operating revenue 1,081,469,803.12 1,033,329,175.58
Less: Cost of sales 923,422,022.77 907,286,315.49
Taxes and surcharges 5,359,697.76 3,963,893.19
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Changchai Company, Limited Interim Report 2020
Selling expense 57,376,397.80 53,346,830.95
Administrative expense 26,796,437.18 25,476,365.88
R&D expense 31,647,738.36 27,891,685.42
Finance costs -1,390,764.55 -3,010,192.35
Including: Interest expense 2,303,571.52 1,314,360.50
Interest income 2,529,399.84 1,165,423.09
Add: Other income 1,931,604.92 129,300.00
Return on investment (“-” for loss) 4,983,988.73
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) -5,440,782.47 -5,260,420.00
Asset impairment loss (“-” for loss) -15,816,298.12 -26,096.43
Asset disposal income (“-” for loss) 10,781.75 988,535.95
2. Operating profit (“-” for loss) 23,927,568.61 14,205,596.52
Add: Non-operating income 238,948.92 230,353.36
Less: Non-operating expense 4,025.58 166,954.64
3. Profit before tax (“-” for loss) 24,162,491.95 14,268,995.24
Less: Income tax expense 609,572.51 -4,118,680.40
4. Net profit (“-” for net loss) 23,552,919.44 18,387,675.64
4.1 Net profit from continuing operations (“-” for net loss) 23,552,919.44 18,387,675.64
4.2 Net profit from discontinued operations (“-” for net
loss)
5. Other comprehensive income, net of tax -59,691,806.33 87,330,700.00
5.1 Items that will not be reclassified to profit or loss -59,691,806.33 87,330,700.00
5.1.1 Changes caused by remeasurements on defined
benefit 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 investments in other
-59,691,806.33 87,330,700.00
equity instruments
5.1.4 Changes in the fair value arising from changes in
own credit risk
5.1.5 Other
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Changchai Company, Limited Interim Report 2020
5.2 Items that will be reclassified to profit or 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 Other comprehensive income arising from the
reclassification of financial assets
5.2.4 Credit impairment allowance for investments in
other debt obligations
5.2.5 Reserve for cash flow hedges
5.2.6 Differences arising from the translation of foreign
currency-denominated financial statements
5.2.7 Other
6. Total comprehensive income -36,138,886.89 105,718,375.64
7. Earnings per share
7.1 Basic earnings per share
7.2 Diluted earnings per share
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
5. Consolidated Cash Flow Statement
Unit: RMB
Item H1 2020 H1 2019
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 860,915,528.67 925,855,455.10
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
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Changchai Company, Limited Interim Report 2020
Tax rebates 13,166,033.29 21,598,658.84
Cash generated from other operating activities 7,744,404.19 8,402,843.81
Subtotal of cash generated from operating activities 881,825,966.15 955,856,957.75
Payments for commodities and services 657,759,091.59 900,048,290.07
Net increase in loans and advances to customers
Net increase in deposits in the central bank and in interbank
loans granted
Payments for claims on original insurance contracts
Net increase in interbank loans granted
Interest, handling charges and commissions paid
Policy dividends paid
Cash paid to and for employees 152,057,875.00 152,284,424.64
Taxes paid 19,245,929.17 18,008,386.04
Cash used in other operating activities 73,117,799.64 38,837,349.87
Subtotal of cash used in operating activities 902,180,695.40 1,109,178,450.62
Net cash generated from/used in operating activities -20,354,729.25 -153,321,492.87
2. Cash flows from investing activities:
Proceeds from disinvestment 3,550,487.00 7,900,000.00
Return on investment 5,384,597.04 184,349.63
Net proceeds from the disposal of fixed assets, intangible assets
108,370.88 988,535.95
and other long-lived assets
Net proceeds from the disposal of subsidiaries and other business
units
Cash generated from other investing activities 97,150.00
Subtotal of cash generated from investing activities 9,140,604.92 9,072,885.58
Payments for the acquisition of fixed assets, intangible assets
33,004,278.41 11,800,890.16
and other long-lived assets
Payments for investments 4,600,000.00 16,538,441.76
Net increase in pledged loans granted
Net payments for the acquisition of subsidiaries and other
business units
Cash used in other investing activities 930,300.00
Subtotal of cash used in investing activities 38,534,578.41 28,339,331.92
Net cash generated from/used in investing activities -29,393,973.49 -19,266,446.34
3. Cash flows from financing activities:
Capital contributions received
16
Changchai Company, Limited Interim Report 2020
Including: Capital contributions by non-controlling interests to
subsidiaries
Borrowings raised 10,000,000.00 12,000,000.00
Cash generated from other financing activities
Subtotal of cash generated from financing activities 10,000,000.00 12,000,000.00
Repayment of borrowings 10,000,000.00 19,000,000.00
Interest and dividends paid 2,212,485.64 15,977,861.20
Including: Dividends paid by subsidiaries to non-controlling
interests
Cash used in other financing activities
Subtotal of cash used in financing activities 12,212,485.64 34,977,861.20
Net cash generated from/used in financing activities -2,212,485.64 -22,977,861.20
4. Effect of foreign exchange rates changes on cash and cash
-361,452.02
equivalents
5. Net increase in cash and cash equivalents -52,322,640.40 -195,565,800.41
Add: Cash and cash equivalents, beginning of the period 545,959,998.20 691,266,373.34
6. Cash and cash equivalents, end of the period 493,637,357.80 495,700,572.93
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item H1 2020 H1 2019
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 731,880,356.33 825,164,929.97
Tax rebates 8,380,462.40 16,338,954.71
Cash generated from other operating activities 6,294,839.20 5,103,265.56
Subtotal of cash generated from operating activities 746,555,657.93 846,607,150.24
Payments for commodities and services 566,778,723.71 834,695,159.25
Cash paid to and for employees 130,215,884.89 127,977,021.88
Taxes paid 12,974,529.61 9,992,032.82
Cash used in other operating activities 65,655,389.30 30,159,658.65
Subtotal of cash used in operating activities 775,624,527.51 1,002,823,872.60
Net cash generated from/used in operating activities -29,068,869.58 -156,216,722.36
17
Changchai Company, Limited Interim Report 2020
2. Cash flows from investing activities:
Proceeds from disinvestment 500,487.00
Return on investment 4,983,988.73
Net proceeds from the disposal of fixed assets, intangible assets
107,470.88 988,535.95
and 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 investing activities 5,591,946.61 988,535.95
Payments for the acquisition of fixed assets, intangible assets and
2,365,851.07 9,220,626.97
other long-lived assets
Payments for investments 35,000,000.00 10,000,000.00
Net payments for the acquisition of subsidiaries and other
business units
Cash used in other investing activities
Subtotal of cash used in investing activities 37,365,851.07 19,220,626.97
Net cash generated from/used in investing activities -31,773,904.46 -18,232,091.02
3. Cash flows from financing activities:
Capital contributions received
Borrowings raised 5,000,000.00 5,000,000.00
Cash generated from other financing activities
Subtotal of cash generated from financing activities 5,000,000.00 5,000,000.00
Repayment of borrowings 5,000,000.00 10,000,000.00
Interest and dividends paid 914,216.00 15,404,432.84
Cash used in other financing activities
Subtotal of cash used in financing activities 5,914,216.00 25,404,432.84
Net cash generated from/used in financing activities -914,216.00 -20,404,432.84
4. Effect of foreign exchange rates changes on cash and cash
-491,932.82
equivalents
5. Net increase in cash and cash equivalents -62,248,922.86 -194,853,246.22
Add: Cash and cash equivalents, beginning of the period 497,777,104.81 651,854,206.79
6. Cash and cash equivalents, end of the period 435,528,181.95 457,000,960.57
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
18
Changchai Company, Limited Interim Report 2020
7. Consolidated Statements of Changes in Owners’ Equity
H1 2020
Unit: RMB
H1 2020
Equity attributable to owners of the Company as the parent
Other equity Non-co
instruments Other Retaine ntrollin Total
Item Share Capital Less: Specifi Surplus Genera
Prefe Perp compre d Subtota g owners
capita reserve Treasur c reserve l Other interest ’ equity
rred etual Othe hensive earning l
l s y stock reserve s reserve
share bond r income s s
s s
1. Balance as at the 561,3 164,32 317,05 322,22 726,68 2,109,2 2,128,8
17,560, 19,636,
end of the prior 74,32 8,665.4 9,775.0 6,700.3 9,929.1 39,597. 75,878.
202.07 281.01
year 6.00 3 0 4 0 94 95
Add: Adjustment
for change in
accounting policy
Adjustment for
1,833.3 1,651,3 1,653,1 1,653,1
correction of
8 36.26 69.64 69.64
previous error
Adjustment for
business
combination under
common control
Other
19
Changchai Company, Limited Interim Report 2020
adjustments
2. Balance as at the 561,3 164,32 317,05 322,22 728,34 2,110,8 2,130,5
17,560, 19,636,
beginning of the 74,32 8,665.4 9,775.0 8,533.7 1,265.3 92,767. 29,048.
202.07 281.01
year 6.00 3 0 2 6 58 59
3. Increase/
-30,94
decrease in the -60,040 878,44 28,038, -31,123 177,48
5,563.1
period (“-” for ,175.00 8.44 679.73 ,046.83 3.67
6
decrease)
3.1 Total -31,82
-59,691 27,690, -32,001 177,48
comprehensive 4,011.6
,806.33 311.06 ,495.27 3.67
income 0
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
20
Changchai Company, Limited Interim Report 2020
3.3 Profit
distribution
3.3.1
Appropriation to
surplus reserves
3.3.2
Appropriation to
general reserve
3.3.3
Appropriation to
owners (or
shareholders)
3.3.4 Other
3.4 Transfers
-348,36 348,36
within owners’
8.67 8.67
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
3.4.4 Changes
21
Changchai Company, Limited Interim Report 2020
in defined benefit
schemes
transferred to
retained earnings
3.4.5 Other
comprehensive
income transferred
to retained
earnings
-348,36 348,36
3.4.6 Other
8.67 8.67
3.5 Specific 878,44 878,44 878,44
reserve 8.44 8.44 8.44
3.5.1 Increase 1,883,1 1,883,1 1,883,1
in the period 45.87 45.87 45.87
3.5.2 Used in 1,004,6 1,004,6 1,004,6
the period 97.43 97.43 97.43
3.6 Other
561,3 164,32 257,01 322,22 756,37 2,079,7 2,099,5
4. Balance as at the 18,438, 19,813,
74,32 8,665.4 9,600.0 8,533.7 9,945.0 69,720. 83,485.
end of the period 650.51 764.68
6.00 3 0 2 9 75 43
H1 2019
Unit: RMB
H1 2019
Item
Equity attributable to owners of the Company as the parent Non-con Total
22
Changchai Company, Limited Interim Report 2020
Other equity trolling owners’
Other interests equity
instruments Surplu Retaine
Share Capital Less: compre Specifi Genera
Prefe Perp s d Subtot
capita reserve Treasur hensiv c l Other
rred etual reserve earning al
l Other s y stock e reserve reserve
share bond s s
income
s s
1. Balance as at 561,3 164,32 264,40 320,13 717,88 2,043,
15,182, 19,618,4 2,062,92
the end of the 74,32 8,665.4 5,675.0 3,050.1 3,351.3 308,02
958.83 80.11 6,506.85
prior year 6.00 3 0 5 3 6.74
Add: Adjustment
for change in
accounting policy
Adjustment for
1,364.0 1,619,8 1,621, 1,621,22
correction of
8 64.82 228.90 8.90
previous error
Adjustment for
business
combination
under common
control
Other
adjustments
2. Balance as at 561,3 164,32 264,40 320,13 719,50 2,044,
15,182, 19,618,4 2,064,54
the beginning of 74,32 8,665.4 5,675.0 4,414.2 3,216.1 929,25
958.83 80.11 7,735.75
the year 6.00 3 0 3 5 5.64
3. Increase/ 87,330, 5,083,2 92,413 49,014.3 92,462,9
decrease in the 700.00 77.54 ,977.5 5 91.89
23
Changchai Company, Limited Interim Report 2020
period (“-” for 4
decrease)
3.1 Total 106,44
87,330, 19,117, 49,014.3 106,497,
comprehensive 8,335.
700.00 635.69 5 350.04
income 69
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
-14,03
3.3 Profit -14,034 -14,034,
4,358.
distribution ,358.15 358.15
15
3.3.1
24
Changchai Company, Limited Interim Report 2020
Appropriation to
surplus reserves
3.3.2
Appropriation to
general reserve
3.3.3
-14,03
Appropriation to -14,034 -14,034,
4,358.
owners (or ,358.15 358.15
15
shareholders)
3.3.4 Other
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
3.4.4
Changes in
25
Changchai Company, Limited Interim Report 2020
defined benefit
schemes
transferred to
retained earnings
3.4.5 Other
comprehensive
income
transferred to
retained earnings
3.4.6 Other
3.5 Specific
reserve
3.5.1
Increase in the
period
3.5.2 Used in
the period
3.6 Other
4. Balance as at 561,3 164,32 351,73 320,13 724,58 2,137,
15,182, 19,667,4 2,157,01
the end of the 74,32 8,665.4 6,375.0 4,414.2 6,493.6 343,23
958.83 94.46 0,727.64
period 6.00 3 0 3 9 3.18
Legal representative: Shi Xinkun General Manager: Zhang Xin Head of the accounting department: Jiang He
8. Statements of Changes in Owners’ Equity of the Company as the Parent
H1 2020
26
Changchai Company, Limited Interim Report 2020
Unit: RMB
H1 2020
Other equity instruments Other Retaine
Less: Total
Item Share Preferre Perpetu Capital comprehe Specific Surplus d
Treasury Other owners’
capital d al Other reserves nsive reserve reserves earning
stock equity
shares bonds income s
1. Balance as at the 561,374 183,071,1 317,059,7 17,560,20 322,226,7 648,776 2,050,069,1
end of the prior year ,326.00 47.70 75.00 2.07 00.34 ,959.53 10.64
Add: Adjustment
for change in
accounting policy
Adjustment for
16,500.
correction of 1,833.38 18,333.82
44
previous error
Other
adjustments
2. Balance as at the
561,374 183,071,1 317,059,7 17,560,20 322,228,5 648,793 2,050,087,4
beginning of the
,326.00 47.70 75.00 2.07 33.72 ,459.97 44.46
year
3. Increase/
decrease in the -60,040,1 878,448.4 23,901, -35,260,438
period (“-” for 75.00 4 288.11 .45
decrease)
3.1 Total
-59,691,8 23,552, -36,138,886
comprehensive
06.33 919.44 .89
income
3.2 Capital
27
Changchai Company, Limited Interim Report 2020
increased and
reduced by owners
3.2.1 Ordinary
shares increased by
owners
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
payments included
in owners’ equity
3.2.4 Other
3.3 Profit
distribution
3.3.1
Appropriation to
surplus reserves
3.3.2
Appropriation to
owners (or
shareholders)
3.3.3 Other
3.4 Transfers
-348,368. 348,368
within owners’
67 .67
equity
28
Changchai Company, Limited Interim Report 2020
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
schemes transferred
to retained earnings
3.4.5 Other
comprehensive -348,368. 348,368
income transferred 67 .67
to retained earnings
3.4.6 Other
3.5 Specific 878,448.4
878,448.44
reserve 4
3.5.1 Increase 1,883,145 1,883,145.8
in the period .87 7
3.5.2 Used in 1,004,697 1,004,697.4
the period .43 3
3.6 Other
29
Changchai Company, Limited Interim Report 2020
4. Balance as at the 561,374 183,071,1 257,019,6 18,438,65 322,228,5 672,694 2,014,827,0
end of the period ,326.00 47.70 00.00 0.51 33.72 ,748.08 06.01
H1 2019
Unit: RMB
H1 2019
Other equity instruments Other
Less:
Item Share Preferr Perpet Capital compreh Specific Surplus Retained Total owners’
Treasury Other
capital ed ual Other reserves ensive reserve reserves earnings equity
stock
shares bonds income
1. Balance as at 561,37
183,071, 264,405, 15,182,95 320,133, 643,980,74 1,988,147,90
the end of the 4,326.0
147.70 675.00 8.83 050.15 2.64 0.32
prior year 0
Add: Adjustment
for change in
accounting policy
Adjustment for
correction of 1,364.08 1,364.08
previous error
Other
adjustments
2. Balance as at 561,37
183,071, 264,405, 15,182,95 320,134, 643,980,74 1,988,149,26
the beginning of 4,326.0
147.70 675.00 8.83 414.23 2.64 4.40
the year 0
3. Increase/
87,330,7 4,358,502. 91,689,202.1
decrease in the
00.00 17 7
period (“-” for
30
Changchai Company, Limited Interim Report 2020
decrease)
3.1 Total
87,330,7 18,392,860 105,723,560.
comprehensive
00.00 .32 32
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
3.3 Profit -14,034,35 -14,034,358.
distribution 8.15 15
3.3.1
Appropriation to
surplus reserves
3.3.2
-14,034,35 -14,034,358.
Appropriation to
8.15 15
owners (or
31
Changchai Company, Limited Interim Report 2020
shareholders)
3.3.3 Other
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
3.4.4
Changes in
defined benefit
schemes
transferred to
retained earnings
3.4.5 Other
comprehensive
income transferred
to retained
earnings
3.4.6 Other
32
Changchai Company, Limited Interim Report 2020
3.5 Specific
reserve
3.5.1 Increase
in the period
3.5.2 Used in
the period
3.6 Other
4. Balance as at 561,37
183,071, 351,736, 15,182,95 320,134, 648,339,24 2,079,838,46
the end of the 4,326.0
147.70 375.00 8.83 414.23 4.81 6.57
period 0
Legal representative: Shi Xinkun General Manager: Zhang Xin Head of the accounting department: Jiang He
33
Changchai Company, Limited Interim Report 2020
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 Jiangsu Gongzheng Tianye Certified
Public Accountants Company Limited with issuing Capital Verification Report SGC [2010] No. B002. And
the unified social credit code of the enterprise business license of the Company is 91320400134792410W.
The Company’s registered address is situated at No. 123 Huaide Middle Road, Changzhou, Jiangsu, as
well as its head office located at No. 123 Huaide Middle Road, Changzhou, Jiangsu.
The Company belongs to manufacturing with business scope including manufacturing and sale of diesel
engine, diesel engines part and casting, grain harvesting machine, rotary cultivators, walking tractor, mould
and fixtures, assembling and sale of diesel generating set and pumping unit. The Company mainly engaged
in the production and sales of small and medium-sized single cylinders and multi-cylinder diesel engine
with the label of Changchai Brand. The diesel engine produced and sold by the Company were mainly
used in tractors, combine harvest models, light commercial vehicle, farm equipment, small-sized
construction machinery, generating sets and marine engine and equipment, etc. The Company’s
corebusiness 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,
34
Changchai Company, Limited Interim Report 2020
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 29 July 2020.
The consolidated scope of the Company of the Reporting Period includes the Company as the parent and 7
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 Group prepared financial statements in accordance with The Accounting Standards for
Business Enterprises—Basic Standard issued by the Ministry of Finance with Decree No. 33 and revised
with Decree No. 76, the 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 Group
adopted the accrual basis in accounting. Except for some financial instruments, where impairment occurred
on an asset, an impairment reserve was withdrawn accordingly pursuant to relevant requirements.
2. Continuation
The Company comprehensively evaluated the information acquired recently that there would be no such
factors in the 12 months from the end of the Reporting Period that would obviously influence the
continuation capability of the Company and predicted that the operating activities would continue in the
future 12 months of the Company. The financial statement compiled base on the continuous operation.
V. Important Accounting Policies and Estimations
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.
35
Changchai Company, Limited Interim Report 2020
1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Group are in compliance with in compliance with the Accounting
Standards for Business Enterprises, which factually and completely present the Company’s and the
Group’s financial positions, business results and cash flows and other relevant information.
2. Fiscal Period
The fiscal periods are divided into fiscal year and metaphase, the fiscal year is from January 1 to December
31 and as the metaphase included monthly, quarterly and semi-yearly periods.
3. Operating Cycle
A normal operating cycle refers to a period from the Group purchasing assets for processing to realizing
cash or cash equivalents. An operating cycle for the Group is 12 months, which is also the classification
criterion for the liquidity of its assets and liabilities.
4. Currency Used in Bookkeeping
Renminbi is functional currency of the Company.
5. Accounting Methods for Business Combinations under the Same Control and Business
Combinations not under the Same Control
(1) Business combinations under the same control:
A business combination under the same control is a business combination in which all of the combining
enterprises are ultimately controlled by the same party or the same parties both before and after the
business combination and on which the control is not temporary.
For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it
makes payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard
the share of the book value of the owner's equity of the merged enterprise as the initial cost of the
long-term equity investment. The difference between the initial cost of the long-term equity investment and
the payment in cash, non-cash assets transferred as well as the book value of the debts borne by the
merging party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the
retained earnings shall be adjusted.
If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of
merger, regard the share of the book value of the owner's equity of the merged enterprise as the initial cost
of the long-term equity investment. The total face value of the stocks issued shall be regarded as the capital
stock, while the difference between the initial cost of the long-term equity investment and total face value
of the shares issued shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the
retained earnings shall be adjusted.
All direct costs for the business combination, including expenses for audit, evaluating and legal services
36
Changchai Company, Limited Interim Report 2020
shall be recorded into the profits and losses at the current period. The expenses such as the handling
charges and commission etc, premium income of deducting the equity securities, and as for the premium
income was insufficient to dilute, the retained earnings shall be written down.
Owning to the reasons such as the additional investment, for the equity investment held before acquiring
the control right of the combined parties, the confirmed relevant gains and losses, other comprehensive
income and the changes of other net assets since the date of the earlier one between the date when
acquiring the original equity right and the date when the combine parties and combined ones were under
the same control to the combination date, should be respectively written down and compared with the
beginning balance of retained earnings or the current gains and losses during the statement period.
(2) Business combinations not under the same control
A business combination not under the same control is a business combination in which the combining
enterprises are not ultimately controlled by the same party or the same parties both before and after the
business combination.
The combination costs of the acquirer and the identifiable net assets obtained by the acquirer in a business
combination shall be measured at the fair values. The acquirer shall recognize the positive balance between
the combination costs and the fair value of the identifiable net assets it obtains forms the acquiree as
business reputation. The direct relevant expenses occurred from the enterprise combination should be
included in the current gains and losses when occurred. The combination costs of the acquirer and the
identifiable net assets obtained by it in the combination shall be measured according to their fair values at
the acquiring date. The difference between the fair value of the assets paid out by the Company and its
book value should be included in the current gains and losses. The purchase date refers to the date that the
purchaser acquires the control right of the acquiree.
For the business combinations not under the same control realized through step by step multiple
transaction, as for the equity interests that the Group holds in the acquiree before the acquiring date, they
shall be re-measured according to their fair values at the acquiring date; the positive difference between
their fair values and carrying amounts shall be recorded into the investment gains for the period including
the acquiring date. The equity holed by the acquiree which involved with the other comprehensive income
and the other owners’ equities changes except for the net gains and losses, other comprehensive income
and the profits distribution and other related comprehensive gains and other owners’ equities which in
relation to the equity interests that the Group holds in the acquiree before the acquiring date should be
transferred into the current investment income on the acquiring date, except for the other comprehensive
income occurred from the re-measurement of the net profits of the defined benefit plans or the changes of
the net assets of the investees.
6. Methods for Preparing Consolidated Financial Statements
The Company confirms the consolidated scope based on the control and includes the subsidiaries with
actual control right into the consolidated financial statement.
The consolidated financial statement of the Company is compiled according to the regulations of No. 33 of
ASBE-Consolidated Financial Statement and the relevant regulations and as for the whole significant
come-and-go balance, investment, transaction and the unrealized profits should be written off when
compiling the consolidated financial statement. The portion of a subsidiary’s shareholders’ equity and the
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portion of a subsidiary’s net profits and losses for the period not held by the Group are recognized as
minority interests and minority shareholder profits and losses respectively and presented separately under
shareholders’ equity and net profits in the consolidation financial statements. The portion of a subsidiary’s
net profits and losses for the period that belong to minority interests is presented as the item of “minority
shareholder profits and losses” under the bigger item of net profits in the consolidated financial statements.
Where the loss of a subsidiary shared by minority shareholders exceeds the portion enjoyed by minority
shareholders in the subsidiary’s opening owners’ equity, minority interests are offset.
The accounting policy or accounting period of each subsidiary is different from which of the Company,
which shall be adjusted as the Company; or subsidiaries shall prepare financial statement again required by
the Company when preparing the consolidated financial statements.
As for the added subsidiary company not controlled by the same enterprise preparing the consolidated
financial statement, shall adjust individual financial statement based on the fair value of the identifiable net
assets on the acquisition date; as for the added subsidiary companies controlled by the same enterprise
preparing the financial statement, shall not adjust the financial statement of the subsidiaries, namely
survived by integration as participating in the consolidation when the final control party starts
implementing control and should adjust the period-begin amount of the consolidated balance sheet and at
the same time adjust the relevant items of the compared statement.
As for the disposed subsidiaries, the operation result and the cash flow should be included in the
consolidated income statement and the consolidated cash flow before the disposing date; the disposed
subsidiaries of the current period, should not be adjusted the period-begin amount of the consolidated
balance sheet.
Where the Group losses control on its original subsidiaries due to disposal of some equity investments or
other reasons, the residual equity interests are re-measured according to the fair value on the date when
such control ceases. The summation of the consideration obtained from the disposal of equity interests and
the fair value of the residual equity interests, minus the portion in the original subsidiary’s net assets
measured on a continuous basis from the acquisition date that is enjoyable by the Group according to the
original shareholding percentage in the subsidiary, is recorded in investment gains for the period when the
Group’s control on the subsidiary ceases. Other comprehensive incomes in relation to the equity
investment and the other owners’ equities changes except for the net gains and losses, other comprehensive
income and profits distribution in the original subsidiary are treated on the same accounting basis as the
acquiree directly disposes the relevant assets or liabilities (that is, except for the changes in the net
liabilities or assets with a defined benefit plan resulted from re-measurement of the original subsidiary, the
rest shall all be transferred into current investment gains) when such control ceases. And subsequent
measurement is conducted on the residual equity interests according to the No.2 Accounting Standard for
Business Enterprises-Long-term Equity Investments or the No.22 Accounting Standard for Business
Enterprises-Recognition and Measurement of Financial Instruments.
For the disposal of equity investment belongs to a package deal, should be considered as a transaction and
conduct accounting treatment. However, Before losing control, every disposal cost and corresponding net
assets balance of subsidiary of disposal investment are confirmed as other comprehensive income in
consolidated financial statements, which together transferred into the current profits and losses in the loss
of control, when the Group losing control on its subsidiary.
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For the disposal of the equity investment not belongs to a package deal, should be executed accounting
treatment according to the relevant policies of partly disposing the equity investment of the subsidiaries
under the situation not lose the control right before losing the control right; when losing the control right,
the former should be executed accounting treatment according to the general disposing method of the
disposal of the subsidiaries.
7. Classification of Joint Arrangements and Accounting Treatment of Joint Operations
The Group classifies joint arrangements into joint operations and joint ventures.
A joint operation refers to a joint arrangement where the Group is the joint operations party of the joint
arrangement and enjoys assets and has to bear liabilities related to the arrangement. The Company
confirms the following items related to the interests share among the joint operations and executes
accounting treatment according to the regulations of the relevant ASBE:
(1) Recognizes the assets that it holds and bears in the joint operation and recognizes the jointly-held assets
according to the Group’s stake in the joint operation;
(2) Recognizes the liabilities that it holds and bears in the joint operation and recognizes the jointly-held
liabilities according to the Group’s stake in the joint operation;
(3) Recognizes the income from sale of the Group’s share in the output of the joint operation
(4) Recognizes the income from sale of the joint operation’s outputs according to the Group’s stake in it
(5) Recognizes the expense solely incurred to the Group and the expense incurred to the joint operation
according to the Group’s stake in it.
8. Recognition Standard for Cash and Cash Equivalents
In the Group’s understanding, cash and cash equivalents include cash on hand, any deposit that can be used
for cover, and short-term (usually due within 3 months since the day of purchase) and high circulating
investments, which are easily convertible into known amount of cash and whose risks in change of value
are minimal.
9. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
(1) Foreign currency business
Concerning the foreign-currency transactions that occurred, the foreign currency shall be converted into
the recording currency according to the middle price of the market exchange rate disclosed by the People’s
Bank of China on the date of the transaction. Among the said transactions that occurred, those involving
foreign exchanges shall be converted according to the exchange rates adopted in the actual transactions.
On the balance sheet date, the foreign-currency monetary assets and the balance of the liability account
shall be converted into the recoding currency according to the middle price of the market exchange rates
disclosed by the People’s Bank of China on the Balance Sheet Date. The difference between the
recording-currency amount converted according to the exchange rate on the Balance Sheet Date and the
original book recording-currency amount shall be recognized as gains/losses from foreign exchange. And
the exchange gain/loss caused by the foreign-currency borrowings related to purchasing fixed assets shall
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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 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
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Changchai Company, Limited Interim Report 2020
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. 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
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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
cumulative change of expected credit loss within the whole duration after initial confirmation on the
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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
calculates 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
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Changchai Company, Limited Interim Report 2020
receivable credit loss rate over the entire life
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
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Changchai Company, Limited Interim Report 2020
impairment loss of accounts receivable.
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
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Changchai Company, Limited Interim Report 2020
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.
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14. Contract Assets
Contract Assets means that the Company is endowed with the right to charge the consideration through
transferring any commodity or service to the client, and such right depends on other factors except the
passing of time. The Company’s unconditional right (only depending on the passing of time) of charging
the consideration from the client shall be separately presented as receivables.
The recognition method and accounting treatment method of the estimated credit loss of contract assets are
consistent with that specified in Notes V.12.
15. Contract Costs
(1) Costs from Acquiring Contract
If the incremental cost resulting from the Company’s acquiring of contract (namely costs merely resulting
from the acquiring of contract) is predicted to be retrieved, it shall be recognized as an assets, amortized by
adopting the same basis with the recognition of commodities or service revenues related to the assets and
included into the current profit and loss. If the assets’ amortization period does not exceed one year, it shall
be immediately included into the current profit and loss. Other expenses resulting from the Company’s
acquiring of contract shall also be included into the current profit and loss unless it is explicitly borne by
the client.
(2) Costs from Executing Contract
The Company’s costs from executing contract is not covered by other ASBE except for Revenue Standards,
and when the following situations are met, such costs can be recognized as an assets: ① the costs are
directly related to a current or predicted contract; ② the costs increase the Company’s resources applied to
fulfill performance obligations in the future; ③ the costs are predicted to be retrieved. The recognized
assets shall be amortized by adopting the same basis with the recognition of commodities or service
revenues related to the assets and included into the current profit and loss.
If the book value of contract costs is higher than the difference of the following two items, corresponding
depreciation reserves shall be counted and withdrawn and it shall be recognized as the assets depreciation
loss: ① the residual consideration predicted to be acquired by transferring commodities related to the
assets; ② the costs predicted to occur due to the transfer of related commodities.
If the difference between ① and ② is higher than the book value of contract costs due to any change in
various factors causing depreciation in previous periods, it shall be restituted to the withdrawn assets
depreciation reserves and included in the current profit and loss. However, the book value of restituted
contract costs shall not exceed the book value of the assets on the day of restitution based on the
hypothesis that depreciation reserves are not counted and withdrawn.
16. Assets Held for Sale
The Company recognizes the components (or the non-current assets) which meet with the following
conditions as assets held for sale:
(1) The components must be immediately sold only according to the usual terms of selling this kind of
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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.
17. 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.
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3) Long-term equity investment obtained by other means
The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase
cost which is actually paid.
The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be
the fair value of the equity securities issued.
The initial cost of a long-term equity investment of an investor shall be the value stipulated in the
investment contract or agreement, the unfair value stipulated in the contract or agreement shall be
measured at fair value.
As for long-term investment obtained by the exchange of non-monetary assets, where it is commercial in
nature, the fair value of the assets surrendered shall be recognized as the initial cost of the long-term equity
investment received; where it is not commercial in nature, the book value of the assets surrendered shall be
recognized as the initial cost of the long-term equity investment received.
The initial cost of a long-term equity investment obtained by recombination of liabilities shall be
recognized at fair value of long-term equity investment.
(3) Subsequent measurement and recognition of profits and losses
1) An investment in the subsidiary company shall be measured by employing the cost method
Where the Company hold, and is able to do equity investment with control over an invested entity, the
invested entity shall be its subsidiary company. Where the Company holds the shares of an entity over 50%,
or, while the Company holds the shares of an entity below 50%, but has a real control to the said entity,
then the said entity shall be its subsidiary company.
2) An investment in the joint enterprise or associated enterprise shall be measured by employing the equity
method
Where the Company hold, and is able to do equity investment with joint control with other parties over an
invested entity, the invested entity shall be its joint enterprise. Where the Company hold, and is able to
have equity investment with significant influences on an invested entity, the invested entity shall be its
associated entity.
After the Company acquired the long-term equity investment, should respectively recognize investment
income and other comprehensive income according to the net gains and losses as well as the portion of
other comprehensive income which should be enjoyed or be shared, and at the same time adjust the book
value of the long-term equity investment; corresponding reduce the book value of the long-term equity
investment according to profits which be declared to distribute by the investees or the portion of the
calculation of cash dividends which should be enjoyed; for the other changes except for the net gains and
losses, other comprehensive income and the owners’ equity except for the profits distribution of the
investees, should adjust the book value of the long-term equity investment as well as include in the owners’
equity .
The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity
when it obtains the investment, recognize the attributable share of the net profits and losses of the invested
entity after it adjusts the net profits of the invested entity.
If the accounting 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.
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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, 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
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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 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.
18. 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.
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19. Fixed Assets
(1) Recognition Conditions
Fixed assets refers to the tangible assets that simultaneously possess the features as follows: (a) they are
held for the sake of producing commodities, rendering labor service, renting or business management; and
(b) their useful life is in excess of one fiscal year. The fixed assets are only recognized when the relevant
economic benefits probably flow in the Company and its cost could be reliable measured.
(2) Depreciation Method
Category of fixed assets Method Useful life Annual deprecation
Housing and building Average method of
20-40 2.50%-5%
useful life
Machinery equipment Average method of
6-15 6.67%-16.67%
useful life
Transportation Average method of
5-10 10%-20%
equipment useful life
Average method of
Other equipment 5-10 10%-20%
useful 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
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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
20. 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.
21. 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
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abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing
costs shall be suspended, and recorded into the current expense, till the acquisition and construction of the
assets restarts. When the qualified asset is ready for the intended use or sale, the capitalization of the
borrowing costs shall be ceased, the borrowing costs occurred later shall be included into the financial
expense directly at the current period.
(3) Measurement method of capitalization amount of borrowing costs
As for specifically borrowed loans for the acquisition and construction or production of assets eligible for
capitalization, the to-be-capitalized amount of interests shall be determined in light of the actual cost
incurred of the specially borrowed loan at the present period minus the income of interests earned on the
unused borrowing loans as a deposit in the bank or as a temporary investment.
Where a general borrowing is used for the acquisition and construction or production of assets eligible for
capitalization, the enterprise shall calculate and determine the to-be-capitalized amount of interests on the
general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative
asset disbursements minus the general borrowing by the capitalization rate of the general borrowing used.
The capitalization rate shall be calculated and determined in light of the weighted average interest rate of
the general borrowing.
22. 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.
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(2) Accounting Polices of Internal R & D Costs
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 costs 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 costs 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 costs of the intangible
assets can be reliably measured.
23. 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
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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.
24. 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.
25. Contract Liabilities
Contract liabilities refer to the Company’s obligations in transferring commodities or services to the client
for the received or predicted consideration. Contract assets and contract liabilities under the same contract
shall be presented based on the net amount.
26. Employee Benefits
(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.
(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
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Changchai Company, Limited Interim Report 2020
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.
27. Provisions
(1) Criteria of provisions
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 provisions
The Company shall measure the provisions 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 provisions 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.
28. Revenue
Accounting policies for recognition and measurement of revenue:
When the Company fulfills its due performance obligations (namely when the client obtains the control
over related commodities or services), revenues shall be recognized based on the obligation’s amortized
transaction price. Performance Obligation refers to the Company’s promise of transferring commodities or
services that can be clearly defined to the client. Transaction Price refers to the consideration amount duly
charged by the Company for transferring commodities or services to the client, excluding any amount
charged by the third party and any amount predicted to be returned to the client. Control Over Relevant
Commodities means that the use of commodities can be controlled and almost all economic interests can
be obtained.
On the contract commencement day, the Company shall evaluate the contract, recognize individual
performance obligation and confirm that individual performance obligation is fulfilled in a certain period
or at a certain time. When one of the following conditions is met, such performance obligation shall be
deemed as fulfilled in a certain period, and the Company shall recognize it as revenue within a certain
period according to the performance schedule: (1) the client obtains and consumes the economic interests
resulting from the Company’s performance of contract while performing the contract; (2) the client is able
to control the commodities under construction during the performance; (3) commodities produced by the
Company during the performance possess the irreplaceable purpose, and the Company has the right to
charge all finished parts during the contract period; otherwise, the Company shall recognize the revenue
when the client obtains the control over relevant commodities or services.
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The Company shall adopt the Input Method to determine the Performance Schedule. Namely, the
Performance Schedule shall be determined according to the Company’s input for fulfilling performance
obligations. When the Performance Schedule cannot be reasonably determined and all resulting costs are
predicted to be compensated, the Company shall recognize the revenue based on the resulting cost amount
till the Performance Schedule can be reasonably determined.
When the contract involves two or more than two performance obligations, the transaction price shall be
amortized to each single performance obligation on the contract commencement day according to the
relative proportion of the independent selling price of commodities or services under each single
performance obligation. If any solid evidence proves that the contract discount or variable consideration
only relates to one or more than one (not all) performance obligation under the contract, the Company shall
amortize the contract discount or variable consideration to one or more than one related performance
obligations. Independent selling price refers to the price adopted by the Company to independently sell
commodities or services to the client. However, independent selling price cannot be directly observed. The
Company shall estimate the independent selling price by comprehensively considering all related
information that can be reasonably obtained and maximally adopting the observable input value.
Variable Consideration
If any variable consideration exists in the contract, the Company shall determine the optimal estimation of
the variable consideration based on the expected values or the most possible amount. The variable
consideration’s transaction price shall be included without exceeding the total revenue amount recognized
without the risk of significant restitution when all uncertainties are eliminated. On each balance sheet day,
the Company shall re-estimate the variable consideration amount to be included in the transaction price.
Consideration Payable to the Client
If any consideration payable to the client exists in the contract, the Company shall use such consideration
to offset the transaction price unless such consideration is paid for acquiring other clearly-defined
commodities or services from the client, and write down the current revenue at the later time between the
time of recognizing relevant revenues and the time of paying (or promising the payment) the consideration
to the client.
Sales with the Quality Assurance
For sales with the Quality Assurance, if the Quality Assurance involves another separate service except for
the guarantee of all sold commodities or services meeting all established standards, the Quality Assurance
shall constitute a single Performance Obligation; otherwise, the Company shall make corresponding
accounting treatment to the Quality Assurance according to ASBE No.13--Contingency.
Main Responsibility Person/Agent
According to whether the control over commodities or services is obtained before they are transferred to
the client, the Company can judge whether it is Main Responsibility Person or Agent based on its status
during the transaction. If the Company can control commodities or services before they are transferred to
the client, the Company shall be Main Responsibility Person, and revenues shall be recognized according
to the total consideration amount received or to be received; otherwise, the Company shall be Agent, and
revenues shall be recognized according to the commission or service fees predicted to be duly charged.
However, such amount shall be determined based on the net amount after deducting other amounts payable
to other related parties from the total consideration received or to be duly received or the fixed commission
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amount or proportion.
Interest Revenue
Interest Revenue shall be determined according to the time of the Company’s use of monetary capital and
the actual interest rate.
Rental Income
The rental income from operating lease shall be recognized during each lease period according to the
straight-line method, and the contingent rent shall be included into the current profit and loss without
delay.
29. Government Grants
(1) Type
A government grant means the monetary or non-monetary assets obtained free by an enterprise from the
government. Government grants consist of the government grants pertinent to assets and government
grants 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 grants 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 grants as well as could be acquired.
If the government grants are the monetary assets, should be measured according to the received or
receivable amount; and for the government grants are the non-monetary assets, should be measured by fair
value.
(3) Accounting Treatment
The government grants 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 grants 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 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 grants 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 grants 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 grants 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
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gains and losses or adjusting the book value of assets for the government grants 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.
30. Deferred Income Tax Assets/Deferred Income Tax 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 asset 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 liability 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.
31. Lease
(1) Accounting Treatment of Operating Lease
Lessee in an operating lease shall treat the lease payment under an operating lease as a relevant asset cost or
the current profit or loss on a straight-line basis over the lease term. The initial direct costs incurred shall be
recognized as the current profit or loss; Contingent rents shall be charged as expenses in the periods in which
they are incurred.
Lessors in an operating lease shall be recognized as the current profit or loss on a straight-line basis over the
lease term; Initial direct costs incurred by lessors shall be recognized as the current profit or loss; the initial
direct expenses occur should be directly included in the current gains and losses except for those with larger
amount and be capitalized as well as be included in the gains and losses by stages. Contingent rents shall be
charged as expenses in the periods in which they are incurred.
(2) Accounting Treatments of Financial Lease
When the Company as the lessee, On the lease beginning date, the Company shall record the lower one of
the fair value of the leased asset and the present value of the minimum lease payments on the lease
60
Changchai Company, Limited Interim Report 2020
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.
32. Other Significant Accounting Policies and Estimates
(1) Operation termination
Operation termination refers to the compose part that meet with one of the following conditions which had
been disposed by the Group or be classified to held-to-sold as well as could be individually distinguished
in operating and compiling the financial statement:
1) The compose part represents an individual main business or a main operation area;
2) The compose part is a part intends to dispose and plan an individual main business or a main operation
area;
3) The compose part is a subsidiary which be acquired only for resold.
(2) Hedging accounting
The term “hedging” refers to one or more hedging instruments which are designated by an enterprise for
avoiding the risks of foreign exchange, interest rate, commodity price, stock price, credit and etc., and
which is expected to make the changes in fair value or cash flow of hedging instrument(s) to offset all or
part of the changes in the fair value or cash flow of the hedged item.
The term “hedging instrument” shall refer to a derivative instrument which is designated by an enterprise
for hedging and by which it is expected that changes in its fair value or cash flow can offset the changes in
fair value or cash flow of the hedged item. For a hedging of foreign exchange risk, a non-derivative
financial asset or non-derivative financial liability may be used as a hedging instrument.
The “hedged item” shall refer to the following items which make an enterprise faced to changes in fair
value or cash flow and are designated as the hedged objectives.
The hedging should be executed by the hedging accounting methods when satisfying the following
conditions at the same time:
1) At the commencement of the hedging, the enterprise shall specify the hedging relationship formally
(namely the relationship between the hedging instrument and the hedged item) and prepare a formal
written document on the hedging relationship, risk management objectives and the strategies of hedging.
2) The hedging expectation is highly efficient and meets the risk management strategy, which is confirmed
for the hedging relationship by enterprise at the very beginning.
3) For a cash flow hedging of forecast transaction, the forecast transaction shall be likely to occur and shall
61
Changchai Company, Limited Interim Report 2020
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.
33. 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
On 28 April 2020, the
The Ministry of Finance issued the Notice on
Company held the 2nd Meeting
Revising and Printing the Accounting Standards for
of the 9th Board of Directors
Business Enterprises No.14-Revenue
and the 2nd Meeting of the 9th
(CK[2017]No.22) (hereinafter referred to as the
Supervisory Committee and
“New Standards governing Revenue”) in July 2017
approved the Proposal on
and required all domestically listed companies to
Changes of Some Accounting
implement it since 1 January 2020.
Policies
(1) Influence of Implementing the New Standards Governing Revenue
Affected items in the consolidated balance sheet and amount thereof:
Item 31 December 2019 Affected by classification and 1 January 2020
measurement
Advances from
31,789,001.78 -31,789,001.78
customers
Contract liabilities 31,789,001.78
Affected items in the balance sheet of the Company as the parent and amount thereof:
Item 31 December 2019 Affected by classification and 1 January 2020
measurement
Advances from
28,673,664.87 -28,673,664.87
customers
Contract liabilities 28,673,664.87
(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 Revenue or Leases since 2020
Applicable
62
Changchai Company, Limited Interim Report 2020
Consolidated Balance Sheet
Unit: RMB
Item 31 December 2019 1 January 2020 Adjusted
Current assets:
Monetary assets 638,589,260.09 638,589,260.09
Settlement reserve
Interbank loans granted
Held-for-trading financial
13,050,000.00 13,050,000.00
assets
Derivative financial assets
Notes receivable 606,283,023.05 606,283,023.05
Accounts receivable 419,302,056.87 419,302,056.87
Accounts receivable
financing
Prepayments 12,968,746.16 12,968,746.16
Premiums receivable
Reinsurance receivables
Receivable reinsurance
contract reserve
Other receivables 9,703,390.94 9,703,390.94
Including: Interest
receivable
Dividends
receivable
Financial assets purchased
under resale agreements
Inventories 473,359,168.90 473,359,168.90
Contract assets
Assets held for sale
Current portion of
non-current assets
Other current assets 6,421,275.47 6,421,275.47
Total current assets 2,179,676,921.48 2,179,676,921.48
Non-current assets:
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Changchai Company, Limited Interim Report 2020
Loans and advances to
customers
Investments in debt
obligations
Investments in other debt
obligations
Long-term receivables
Long-term equity
investments
Investments in other
532,886,000.00 532,886,000.00
equity instruments
Other non-current
77,952,101.63 77,952,101.63
financial assets
Investment property 48,447,666.83 48,447,666.83
Fixed assets 457,722,667.32 457,722,667.32
Construction in progress 91,358,156.24 91,358,156.24
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 99,699,450.26 99,699,450.26
Development costs
Goodwill
Long-term prepaid
53,497.80 53,497.80
expense
Deferred income tax
1,023,863.04 1,023,863.04
assets
Other non-current assets
Total non-current assets 1,309,143,403.12 1,309,143,403.12
Total assets 3,488,820,324.60 3,488,820,324.60
Current liabilities:
Short-term borrowings 22,000,000.00 22,000,000.00
Borrowings from the
central bank
Interbank loans obtained
Held-for-trading financial
64
Changchai Company, Limited Interim Report 2020
liabilities
Derivative financial
liabilities
Notes payable 403,035,000.00 403,035,000.00
Accounts payable 525,625,016.89 525,625,016.89
Advances from customers 31,789,001.78 -31,789,001.78
Contract liabilities 31,789,001.78 31,789,001.78
Financial assets sold
under repurchase agreements
Customer deposits and
interbank deposits
Payables for acting
trading of securities
Payables for underwriting
of securities
Employee benefits
44,559,015.79 44,559,015.79
payable
Taxes payable 9,094,382.58 9,094,382.58
Other payables 205,064,145.10 205,064,145.10
Including: Interest
payable
Dividends
3,891,433.83 3,891,433.83
payable
Handling charges and
commissions payable
Reinsurance payables
Liabilities directly
associated with assets held
for sale
Current portion of
non-current liabilities
Other current liabilities 1,177,712.38 1,177,712.38
Total current liabilities 1,242,344,274.52 1,242,344,274.52
Non-current liabilities:
Insurance contract reserve
Long-term borrowings
65
Changchai Company, Limited Interim Report 2020
Bonds payable
Including: Preferred
shares
Perpetual
bonds
Lease liabilities
Long-term payables
Long-term employee
benefits payable
Provisions
Deferred income 58,864,111.22 58,864,111.22
Deferred income tax
57,082,890.27 57,082,890.27
liabilities
Other non-current
liabilities
Total non-current liabilities 115,947,001.49 115,947,001.49
Total liabilities 1,358,291,276.01 1,358,291,276.01
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
317,059,775.00 317,059,775.00
income
Specific reserve 17,560,202.07 17,560,202.07
Surplus reserves 322,228,533.72 322,228,533.72
General reserve
Retained earnings 728,341,265.36 728,341,265.36
Total equity attributable to
owners of the Company as 2,110,892,767.58 2,110,892,767.58
the parent
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Changchai Company, Limited Interim Report 2020
Non-controlling interests 19,636,281.01 19,636,281.01
Total owners’ equity 2,130,529,048.59 2,130,529,048.59
Total liabilities and owners’
3,488,820,324.60 3,488,820,324.60
equity
Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2019 1 January 2020 Adjusted
Current assets:
Monetary assets 584,957,678.96 584,957,678.96
Held-for-trading financial
assets
Derivative financial assets
Notes receivable 576,948,023.05 576,948,023.05
Accounts receivable 337,447,538.04 337,447,538.04
Accounts receivable
financing
Prepayments 6,386,284.14 6,386,284.14
Other receivables 22,741,542.22 22,741,542.22
Including: Interest
receivable
Dividends
receivable
Inventories 368,653,472.39 368,653,472.39
Contract assets
Assets held for sale
Current portion of
non-current assets
Other current assets 3,898,333.51 3,898,333.51
Total current assets 1,901,032,872.31 1,901,032,872.31
Non-current assets:
Investments in debt
obligations
Investments in other debt
obligations
67
Changchai Company, Limited Interim Report 2020
Long-term receivables
Long-term equity
252,752,730.03 252,752,730.03
investments
Investments in other
532,886,000.00 532,886,000.00
equity instruments
Other non-current
50,000,000.00 50,000,000.00
financial assets
Investment property 48,447,666.83 48,447,666.83
Fixed assets 364,071,199.07 364,071,199.07
Construction in progress 89,330,161.60 89,330,161.60
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 70,169,770.91 70,169,770.91
Development costs
Goodwill
Long-term prepaid
expense
Deferred income tax
970,026.67 970,026.67
assets
Other non-current assets
Total non-current assets 1,408,627,555.11 1,408,627,555.11
Total assets 3,309,660,427.42 3,309,660,427.42
Current liabilities:
Short-term borrowings 5,000,000.00 5,000,000.00
Held-for-trading financial
liabilities
Derivative financial
liabilities
Notes payable 392,105,000.00 392,105,000.00
Accounts payable 481,854,210.18 481,854,210.18
Advances from customers 28,673,664.87 -28,673,664.87
Contract liabilities 28,673,664.87 28,673,664.87
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Changchai Company, Limited Interim Report 2020
Employee benefits
39,125,477.30 39,125,477.30
payable
Taxes payable 5,952,664.10 5,952,664.10
Other payables 192,046,130.29 192,046,130.29
Including: Interest
payable
Dividends
3,243,179.97 3,243,179.97
payable
Liabilities directly
associated with assets held
for sale
Current portion of
non-current liabilities
Other current liabilities
Total current liabilities 1,144,757,146.74 1,144,757,146.74
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred
shares
Perpetual
bonds
Lease liabilities
Long-term payables
Long-term employee
benefits payable
Provisions
Deferred income 58,864,111.22 58,864,111.22
Deferred income tax
55,951,725.00 55,951,725.00
liabilities
Other non-current
liabilities
Total non-current liabilities 114,815,836.22 114,815,836.22
Total liabilities 1,259,572,982.96 1,259,572,982.96
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
69
Changchai Company, Limited Interim Report 2020
Other equity instruments
Including: Preferred
shares
Perpetual
bonds
Capital reserves 183,071,147.70 183,071,147.70
Less: Treasury stock
Other comprehensive
317,059,775.00 317,059,775.00
income
Specific reserve 17,560,202.07 17,560,202.07
Surplus reserves 322,228,533.72 322,228,533.72
Retained earnings 648,793,459.97 648,793,459.97
Total owners’ equity 2,050,087,444.46 2,050,087,444.46
Total liabilities and owners’
3,309,660,427.42 3,309,660,427.42
equity
(4) Retroactive Adjustments to Comparative Data of Prior Years when First Execution of any New
Standards Governing Revenue or Leases since 2020
□ Applicable √ Not applicable
VI. Taxation
1. Main Taxes and Tax Rate
Category of taxes Tax basis Tax rate
VAT Payable to sales revenue 13%, 9%, 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 Company, Limited 15%
Changchai Wanzhou Diesel Engine Co., Ltd. 15%
Changzhou Changchai Benniu Diesel Engine Fittings Co., Ltd. 25%
70
Changchai Company, Limited Interim Report 2020
Changzhou Housheng Investment Co., Ltd. 5%
Changzhou Changchai Housheng Agricultural Equipment Co., Ltd. 25%
Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. 25%
Jiangsu Changchai Machinery Co., Ltd. 25%
Changzhou Xingsheng Real Estate Management Co., Ltd. 25%
Changzhou Xingsheng Real Estate Management Co., Ltd. 5%
2. Tax Preference
On 24 October 2018, the Company obtained the Certificates for High-tech Enterprises again, and it still
enjoys 15-percent preferential rate for corporate income tax during the Reporting Period; 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 wholly-owned subsidiaries Changzhou Housheng Investment Co., Ltd. and Changzhou Xingsheng
Real Estate Management Co., Ltd. are eligible small enterprises with low profits and shall pay the
corporate income tax at the tax rate from 5% to 10% for small enterprises with low profits during the
Reporting Period.
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 348,885.71 181,115.21
Bank deposits 489,583,551.02 545,271,159.50
Other monetary assets 110,342,332.72 93,136,985.38
Total 600,274,769.45 638,589,260.09
Of which: Total amount deposited
overseas
Total amount of
restriction in use by guaranteed,
pledged or frozen
At the period-end, the restricted monetary assets of the Company was RMB106,637,411.65, of which
RMB105,752,474.15 was the cash deposit for bank acceptance bills, and RMB884,937.50 was cash
deposit for environment.
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Changchai Company, Limited Interim Report 2020
2. Trading Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Financial assets at fair value
14,600,000.00 13,050,000.00
through profit or loss
Of which: Financial products 14,600,000.00 13,050,000.00
Total 14,600,000.00 13,050,000.00
3. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
Item Ending balance Beginning balance
Bank acceptance bill 508,401,509.54 606,283,023.05
Total 508,401,509.54 606,283,023.05
(2) There Were No Notes Receivable Pledged by the Company at the Period-end
(3) Notes Receivable which Had Endorsed by the Company or had Discounted but 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 372,860,750.83
Total 372,860,750.83
(4) There Were No Notes Transferred to Accounts Receivable because Drawer of the Notes Failed to
Execute the Contract or Agreement at the Period-end
4. Accounts Receivable
(1) Accounts Receivable Classified by Category
Unit: RMB
Category Ending balance Beginning balance
72
Changchai Company, Limited Interim Report 2020
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
35,35 33,45 1,895, 35,53 33,449
which bad debt 2,084,7
4,686. 9,099. 586.8 4,574. 5.31 ,794.4
provision 3.85 94.64 94.13 80.14
26 42 4 55 1
separately
accrued
Of which:
Accounts
receivable with
significant
30,51 28,61 1,895, 30,64 28,557
amount for 2,084,7
5,544. 9,957. 586.8 2,717. 4.58 ,937.4
which bad debt 3.32 93.79 93.20 80.14
63 79 4 62 8
provision
separately
accrued
Accounts
receivable with
insignificant
4,839, 4,839, 4,891,
amount for 100.0 4,891, 100.0
141.6 141.6 0.00 856.9 0.73 0.00
which bad debt 0.53 0 856.93 0
3 3 3
provision
separately
accrued
Accounts
receivable for
882,7 154,2 728,5 633,0 215,84
which bad debt 417,217
96,35 92,25 04,10 62,36 94.69 5,088.
provision 96.15 17.48 34.10 ,276.73
6.12 0.39 5.73 5.04 31
accrued by
group
Of which:
Accounts 882,7 154,2 728,5 633,0 215,84
417,217
receivable for 96,35 92,25 04,10 62,36 94.69 5,088.
96.15 17.48 34.10 ,276.73
which bad debt 6.12 0.39 5.73 5.04 31
73
Changchai Company, Limited Interim Report 2020
provision
accrued by
credit risk
features group
918,1 187,7 730,3 668,5 249,29
100.0 419,302
Total 51,04 51,34 99,69 96,93 100.00 4,882.
0 20.45 37.29 ,056.87
2.38 9.81 2.57 9.59 72
Account receivables withdrawn bad debt provision separately with significant amount at the period end:
Unit: RMB
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
2,254,860.60 2,175,814.37 96.49% difficultly recover
Expected to
Customer 5
3,633,081.23 1,816,540.62 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 1,747,839.10 1,747,839.10 100.00% Difficult to recover
Total 30,515,544.63 28,619,957.79 -- --
Accounts receivable for which bad debt provision accrued by credit risk features group:
Unit: RMB
Ending balance
Aging
Carrying amount Bad debt provision Withdrawal proportion
Within 1 year 723,172,550.57 14,463,451.49 2.00
1 to 2 years 11,827,502.09 591,375.09 5.00
2 to 3 years 7,877,220.88 1,181,583.14 15.00
74
Changchai Company, Limited Interim Report 2020
3 to 4 years 1,938,785.27 581,635.58 30.00
4 to 5 years 1,265,230.57 759,138.34 60.00
Over 5 years 136,715,066.75 136,715,066.75 100.00
Total 882,796,356.12 154,292,250.39 --
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 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) 723,172,550.56
1 to 2 years 12,928,501.44
2 to 3 years 11,061,670.64
Over 3 years 170,988,319.74
3 to 4 years 5,336,135.78
4 to 5 years 2,864,816.64
Over 5 years 162,787,367.32
Total 918,151,042.38
(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
75
Changchai Company, Limited Interim Report 2020
Bad debt
provision
33,449,794.41 65,231.52 55,926.51 33,459,099.42
withdrawn
separately
Bad debt
provision
215,845,088.31 6,592,063.00 68,144,900.92 154,292,250.39
withdrawn by
group
Total 249,294,882.72 6,657,294.52 55,926.51 68,144,900.92 187,751,349.81
Of which bad debt provision reversed or recovered with significant amount in the Reporting Period: No.
(3) Accounts Receivable with Actual Verification during the Reporting Period
Unit: RMB
Item Verified amount
Accounts receivable with actual verification 68,144,900.92
Of which the verification of significant accounts receivable:
Unit: RMB
Arising from
Nature of the Verification
Name of the Reason for related-party
accounts Verified amount procedures
entity verification transactions or
receivable performed
not
Wuwei Jinwa The aging of The Company
Vehicle held the 3rd
10,000,000.00 canceled
Manufacturing Meeting of the
receivables
Co., Ltd. shall exceed 5 9th Board of
Xuzhou years and result Directors and
Zhengda from fruitless the 3rd Meeting
Agricultural 7,583,232.65 collection, and of the 9th
Machinery if any single Supervisory
Bad debt losses Not
Company client’s large Committee on
amount is 28 June 2020
Shandong
involved and approved
Agricultural
Machinery without any the Proposal on
Verification of
Group Heze 4,581,880.41 business
Agricultural transaction with Some Accounts
Machinery the Company Receivable.
Company for over ten
76
Changchai Company, Limited Interim Report 2020
Sichuan Tiantai years, the
Electromechani client’s
cal Agricultural 3,600,000.00 qualification for
Machinery Co., business
Ltd. operation shall
be canceled or
Puyang Shifeng
the insolvency
Agricultural
2,752,840.00 liquidation is
Machinery
finished without
Company
any production
Jining Water and operation
Conservancy activities.
Drilling 2,450,966.67
Machinery
Factory
Zhanjiang
Agricultural
2,180,243.72
Machinery
Company
Kaifeng Tractor
Manufacturing 1,976,282.47
Factory
Linyi
Agricultural
Machinery 1,860,830.82
Group
Corporation
Henan Zhongcu
Industrial 1,758,686.48
Corporation
Shanxi
Jiaocheng
1,662,052.98
Xinyuan Iron
Factory
Ganyu
Agricultural
1,285,160.60
Machinery Co.,
Ltd.
Nanning
1,236,225.30
Changshunrong
77
Changchai Company, Limited Interim Report 2020
Agricultural
Machinery Co.,
Ltd.
Longma
Agricultural
1,235,170.95
Vehicle Co.,
Ltd.
Xinjiang Korla
Feihong
Agricultural 1,200,000.00
Machinery Co.,
Ltd.
Gaotang
Raoyang
County 1,149,217.70
Agricultural
Machinery City
Haining Bus
848,158.92
General Factory
Yunnan
Nanping
Agricultural 841,642.86
Machinery
Management
Tongshan
Dongfang
Agricultural
830,000.00
Machinery
Sales
Department
Juning Huaihai
Agricultural
Machinery 800,000.00
Trading
Company
Jiangxi Lida
Agricultural
797,786.72
Machinery
Sales Co., Ltd.
78
Changchai Company, Limited Interim Report 2020
Shenyang
Fusang
Agricultural 796,226.73
Machinery
Corporation
Anhui Guoyang
Agricultural
760,197.20
Machinery
Corporation
Tai’an Guotai
728,666.36
Tractor Factory
Lijin Yongxing
Agricultural
677,250.00
Machinery
Sales Co., Ltd.
Hefei Xinfa
Materials Co., 551,305.36
Ltd.
Changqing
County
Agricultural 549,800.00
Machinery
Company
Henan Boai
Agricultural
537,698.10
Machinery
Company
Shandong
Shuangli Group 12,343,782.28
Co., Ltd.
Shandong
Dongchang
Group Labor 520,892.51
Service
Corporation
Total -- 68,096,197.79 -- -- --
79
Changchai Company, Limited Interim Report 2020
(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 1 376,475,098.82 41.00% 7,529,501.98
Customer 2 54,293,467.67 5.91% 1,085,869.35
Customer 3 32,287,845.17 3.52% 763,817.03
Customer 4 21,395,243.36 2.33% 427,904.87
Customer 5 18,593,170.87 2.03% 371,863.42
Total 503,044,825.89 54.79%
At the end of the period, the sum of the top five accounts receivable collected according to the arrears
amounted to RMB 503,044,825.89, accounting for54.79% of the total balance at the end of the period. The
corresponding ending balance of bad debt provision is RMB10,178,956.65 .
5. Prepayments
(1) List by Aging Analysis
Unit: RMB
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 8,202,915.10 80.36% 10,857,776.65 83.72%
1 to 2 years 769,139.60 7.53% 993,030.99 7.66%
2 to 3 years 233,809.27 2.29% 115,335.90 0.89%
Over 3 years 1,002,582.11 9.82% 1,002,602.62 7.73%
Total 10,208,446.08 -- 12,968,746.16 --
There was no prepayment with significant amount aging over one year as of the period-end.
(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 RMB5,352,129.27 accounting for 52.43% of the total ending balance of
prepayments.
80
Changchai Company, Limited Interim Report 2020
6. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Interest receivable 0.00 0.00
Dividend receivable 0.00 0.00
Other receivables 10,280,692.50 9,703,390.94
Total 10,280,692.50 9,703,390.94
(1) Other Receivables
1) Other Receivables Classified by Accounts Nature
Unit: RMB
Nature Ending carrying value Beginning carrying value
Margin and cash pledge 4,200.00 7,758.60
Intercourse funds 27,822,768.62 24,536,151.71
Petty cash and borrowings by employees 1,600,421.35 3,208,541.67
Other 13,654,933.26 15,374,916.41
Total 43,082,323.23 43,127,368.39
2) Withdrawal of Bad Debt Provision
Unit: RMB
First stage Second stage Third stage
Expected loss in the
Bad debt provision Expected credit Expected loss in the Total
duration (credit
loss of the next duration (credit
impairment not
12 months impairment occurred)
occurred)
Balance of 1
33,423,977.45 33,423,977.45
January 2020
Balance of 1
January 2020 in the —— ——
Current Period
--Transfer to
Second stage
81
Changchai Company, Limited Interim Report 2020
-- Transfer to Third
stage
-- Reverse to
Second stage
-- Reverse to First
stage
Withdrawal of the
26,813.06 26,813.06
Current Period
Reversal of the
649,159.78 649,159.78
Current Period
Write-offs of the
Current Period
Verification of the
Current Period
Other changes
Balance of 30 June
32,801,630.73 32,801,630.73
2020
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 5,923,228.62
1 to 2 years 3,274,854.15
2 to 3 years 605,754.36
Over 3 years 33,278,486.10
3 to 4 years 1,014,471.63
4 to 5 years 190,365.24
Over 5 years 32,073,649.23
Total 43,082,323.23
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Information of withdrawal of bad debt provision:
82
Changchai Company, Limited Interim Report 2020
Unit: RMB
Changes in the Reporting Period
Category Beginning balance Reversal or Write- Ending balance
Withdrawal Other
recovery off
Bad debt 5,042,448.58 25,814.56 5,068,263.14
provision for
which accrued
separately
Bad debt 28,381,528.87 998.50 649,159.78 27,733,367.59
provision for
which accrued by
group
Total 33,423,977.45 26,813.06 649,159.78 32,801,630.73
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
ending balance
Name of the entity Nature Ending balance Aging of bad debt
of other
provision
receivables
Changzhou Changjiang 5,000,000.00 11.61% 100,000.00
Intercourse Within 1
Casting Materials Co.,
funds year
Ltd.
Changzhou Intercourse 2,940,000.00 Over 5 6.82% 2,940,000.00
Compressors Factory funds years
Changchai Group Imp. Intercourse 2,853,188.02 Over 5 6.62% 2,853,188.02
& Exp. Co., Ltd. funds years
Changzhou New 1,626,483.25 3.78% 1,626,483.25
Intercourse Over 5
District Accounting
funds years
Centre
Changchai Group Intercourse 1,140,722.16 Over 5 2.65% 1,140,722.16
Settlement Centre funds years
Total -- 13,560,393.43 -- 31.48% 8,660,393.43
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Changchai Company, Limited Interim Report 2020
7. Inventory
Whether the Company needs to comply with the requirements of real estate industry
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 126,396,694. 119,238,102. 125,757,856. 6,539,831.39 119,218,025.
7,158,592.68
materials 75 07 89 50
Materials 12,444,566.4 183,111.28 12,261,455.1
12,579,124.5 12,396,013.2
processed on 183,111.28 1 3
0 2
commission
Goods in 120,787,978. 25,872,020.6 94,915,957.9 142,399,981. 26,985,350.1 115,414,631.
process 56 6 0 66 4 52
Finished 215,181,247. 15,698,168.0 199,483,079. 239,701,513. 15,404,153.2 224,297,359.
goods 70 5 65 09 9 80
Low priced 3,373,235.80 1,205,538.85 2,167,696.95
and easily 3,377,456.53 1,205,538.85 2,171,917.68
worn articles
478,322,502. 50,117,431.5 428,205,070. 523,677,153. 50,317,984.9 473,359,168.
Total
04 2 52 85 5 90
(2) Falling Price Reserves
Unit: RMB
Increase Decrease
Beginning
Item Reversal or Ending balance
balance Withdrawal Other Other
write-off
Raw materials 6,539,831.39 661,773.68 43,012.40 7,158,592.67
Materials
processed on 183,111.28 183,111.28
commission
Goods in
26,985,350.14 9,115,845.06 10,229,174.54 25,872,020.66
process
84
Changchai Company, Limited Interim Report 2020
Finished goods 15,404,153.29 6,566,186.26 6,272,171.49 15,698,168.06
Low priced and
easily worn 1,205,538.85 1,205,538.85
articles
Total 50,317,984.95 16,343,805.00 16,544,358.43 50,117,431.52
(3) There Was No Capitalized Borrowing Expense in the Ending Balance of Inventories
8. Other Current Assets
Unit: RMB
Item Ending balance Beginning balance
The VAT tax credits 7,748,855.06 6,043,473.29
Prepaid expense 802,628.31 98,856.26
Other 25,479.42 278,945.92
Total 8,576,962.79 6,421,275.47
9. Long-term Equity Investment
Unit: RMB
Increase/decrease
Gain Adjust Endin
Begin Cash Endin
or loss ment Withd g
ning bonus g
recogn of rawal balanc
balanc Additi Reduc Chang or balanc
Invest ized other of e of
e onal ed es in profit e
ees under compr deprec Other deprec
(carryi invest invest other annou (carryi
the ehensi iation iation
ng ment ment equity nced ng
equity ve reserv reserv
value) to value)
metho incom es es
issue
d e
II. Associated enterprises
85
Changchai Company, Limited Interim Report 2020
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
10. Other Equity Instrument Investment
Unit: RMB
Item Ending balance Beginning balance
Changzhou Synergetic Innovation Private Equity
100,000,000.00 100,000,000.00
Fund (Limited Partnership)
Other equity instrument investment measured by
362,160,000.00 432,886,000.00
fair value
Total 462,160,000.00 532,886,000.00
Non-trading equity instrument investment disclosed by category
Unit: RMB
Reason for
Amount of Reason for assigning
other
Accu other to measure by fair
Dividend comprehensi
Accumulative mulat comprehensiv value of which
Item income ve income
gains ive e transferred changes be included to
recognized transferred to
losses to retained other comprehensive
retained
earnings income
earnings
Foton Motor Co., Non-trading equity
39,015,000.00
Ltd. investment
86
Changchai Company, Limited Interim Report 2020
Non-trading equity
Bank of Jiangsu 4,865,000.00 27,725,000.00
investment
Changzhou
Synergetic
Innovation Non-trading equity
Private Equity investment
Fund (Limited
Partnership)
Total 4,865,000.00 66,740,000.00
Other notes:
(1) 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.
(2) The corporate securities of accommodation business still on lending at the period-end: 7,183,900 shares
of Foton Motor Co., Ltd. and 1,900,000 of Bank of Jiangsu.
12. Other Non-current Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Jiangsu Liance Electromechanical Technology Co., 7,200,000.00 7,200,000.00
Ltd.
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 50,000,000.00
Total 77,952,101.63 77,952,101.63
12. Investment Property
(1) Investment Property Adopting the Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMB
87
Changchai Company, Limited Interim Report 2020
Item Houses and buildings Total
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 39,184,904.31 39,184,904.31
2.Increased amount of the period 1,104,170.40 1,104,170.40
(1) Withdrawal or amortization 1,104,170.40 1,104,170.40
3.Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance 40,289,074.71 40,289,074.71
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 47,343,496.43 47,343,496.43
2.Beginning carrying value 48,447,666.83 48,447,666.83
88
Changchai Company, Limited Interim Report 2020
13. Fixed Assets
Unit: RMB
Item Ending balance Beginning balance
Fixed assets 437,411,354.41 457,722,667.32
Disposal of fixed assets
Total 437,411,354.41 457,722,667.32
(1) List of Fixed Assets
Unit: RMB
Houses and Machinery Transportation Other
Item Total
buildings equipment equipment equipment
I. Original
carrying value
1. Beginning
448,688,661.22 956,138,240.18 17,283,169.54 42,791,587.37 1,464,901,658.31
balance
2. Increased
amount of the 16,099,288.86 1,086,367.26 1,088,767.65 307,824.30 18,582,248.07
period
(1) Purchase 418,626.65 77,522.12 243,538.31 196,178.30 935,865.38
(2) Transfer
from
15,680,662.21 1,008,845.14 845,229.34 111,646.00 17,646,382.69
construction in
progress
(3) Enterprise
combination
increase
3. Decreased
amount of the - 10,459,143.75 1,595,757.66 327,228.60 12,382,130.01
period
(1) Disposal or
- 10,459,143.75 1,595,757.66 327,228.60 12,382,130.01
scrap
4. Ending
464,787,950.08 946,765,463.69 16,776,179.53 42,772,183.07
balance 1,471,101,776.37
II.Accumulative
depreciation
89
Changchai Company, Limited Interim Report 2020
1. Beginning
281,666,582.26 674,545,182.51 13,892,318.80 35,580,792.42
balance 1,005,684,875.99
2. Increased
amount of the 8,083,059.02 30,085,167.12 558,563.27 90,156.56 38,816,945.97
period
(1) Withdrawal 8,083,059.02 30,085,167.12 558,563.27 90,156.56 38,816,945.97
3. Decreased
amount of the 1,235.25 10,459,143.75 1,520,233.58 324,902.42 12,305,515.00
period
(1) Disposal or
1,235.25 10,459,143.75 1,520,233.58 324,902.42 12,305,515.00
scrap
4. Ending
289,748,406.03 694,171,205.88 12,930,648.49 35,346,046.56
balance 1,032,196,306.96
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
175,039,544.05 251,100,142.81 3,845,531.04 7,426,136.51 437,411,354.41
carrying value
2. Beginning
167,022,078.96 280,098,942.67 3,390,850.74 7,210,794.95 457,722,667.32
carrying value
14. Construction in Progress
90
Changchai Company, Limited Interim Report 2020
Unit: RMB
Item Ending balance Beginning balance
Construction in progress 71,668,151.01 63,216,445.03
Engineering materials 31,338,225.01 28,141,711.21
Total 103,006,376.02 91,358,156.24
(1) List of Construction in Progress
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciatio Carrying Carrying Depreciati Carrying
amount n reserves value amount on reserves value
Expansion
capacity of
multi-cylinde 1,097,435.90 1,097,435.90 11,375,531.74 11,375,531.74
r (The 2nd
Period)
Diesel
Engine
Cylinder
Body 38,444,213.42 38,444,213.42 38,266,788.31 38,266,788.31
Flexible
Manufacturin
g Line
35KV
1,321,959.41 1,321,959.41
Substation
Oily water
separating 340,800.00 340,800.00 340,800.00 340,800.00
equipment
Relocation
project of
28,903,701.88 28,903,701.88 1,687,194.64 1,687,194.64
light engine
and casting
91
Changchai Company, Limited Interim Report 2020
Equipment to
be installed
2,881,999.81 2,881,999.81 10,224,170.93
and payment 10,224,170.93
for projects
Total 71,668,151.01 71,668,151.01 63,216,445.03 63,216,445.03
(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 ed unt of rate
Trans Other
Begin Incre Endin ed 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 for resou
fixed amou ule
ce nt ce in st sts for the rces
assets nt
constr capita the Repor
uctio lizati Repor ting
ns to on ting Perio
budge Perio d
t d
Expa
nsion
capac
ity of
multi- 79,00 11,37 10,27 1,097 Unco
Self-f
cylin 0,000 5,531 8,095 ,435. mplet
unded
.00 .74 .84 90 ed
der
(The
2nd
Perio
d)
92
Changchai Company, Limited Interim Report 2020
Diese
l
Engin
e
Cylin
der 116,0 38,26 38,44 Unco
217,7 40,34 Self-f
Body 40,00 6,788 4,213 mplet
69.94 4.83 unded
Flexi 0.00 .31 .42 ed
ble
Manu
factur
ing
Line
35KV 73,29 1,321 1,712
390,6 Self-f
Subst 0,000 ,959. ,635. 0.00
76.04 unded
ation .00 41 45
Reloc
ation
proje
ct of 452,8 1,687 27,21 28,90 Unco
6.38 Self-f
light 63,80 ,194. 6,507 3,701 mplet
% unded
engin 0.00 64 .24 .88 ed
e and
castin
g
721,1 52,65 27,82 12,03 68,44
Total 93,80 1,474 4,953 1,076 5,351 -- -- --
0.00 .10 .22 .12 .20
(3) Engineering Materials
Unit: RMB
Ending balance Beginning balance
Depreciati
Item Carrying Carrying Carrying Depreciation Carrying
on
amount value amount reserves value
reserves
Engineerin
31,338,225.01 31,338,225.01 28,141,711.21 28,141,711.21
g materials
Total 31,338,225.01 31,338,225.01 28,141,711.21 28,141,711.21
93
Changchai Company, Limited Interim Report 2020
15. 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 144,770,507.8 12,866,992.58 5,488,000.00 163,125,500.43
5
2. Increased amount of the
period
(1) Purchase
(2) Internal R&D
(3) Business combination
increase
3. Decreased amount of the
period
(1) Disposal
144,770,507.8
4. Ending balance 12,866,992.58 5,488,000.00 163,125,500.43
5
II. Accumulated amortization
1. Beginning balance 51,100,000.82 10,771,116.13 1,554,933.22 63,426,050.17
2. Increased amount of the 1,485,989.14 564,866.00 274,399.98 2,325,255.12
period
(1) Withdrawal 1,485,989.14 564,866.00 274,399.98 2,325,255.12
3. Decreased amount of the
period
(1) Disposal
4. Ending balance 52,585,989.96 11,335,982.13 1,829,333.20 65,751,305.29
III. Depreciation reserves
1. Beginning balance
2. Increased amount of the
period
(1) Withdrawal
94
Changchai Company, Limited Interim Report 2020
3. Decreased amount of the
period
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying value 92,184,517.89 1,531,010.45 3,658,666.80 97,374,195.14
2. Beginning carrying value 93,670,507.03 2,095,876.45 3,933,066.78 99,699,450.26
16. Long-term Prepaid Expenses
Item Beginning Increase Amortized Decrease Ending
balance amount balance
Furniture of
employee 53,497.80 19,902.30 33,595.50
dormitory, etc.
Total 53,497.80 19,902.30 33,595.50
17. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets that Had not Been Off-set
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 13,050,698.84 1,979,974.43 6,682,294.34 1,023,863.04
assets
Total 13,050,698.84 1,979,974.43 6,682,294.34 1,023,863.04
(2) Deferred Income Tax Liabilities Had Not Been Off-set
Unit: RMB
Ending balance Beginning balance
Item Taxable temporary Deferred income Taxable temporary Deferred income
difference tax liabilities difference tax liabilities
95
Changchai Company, Limited Interim Report 2020
Changes in fair
value of other
302,376,000.00 45,356,400.00 373,011,500.00 55,951,725.00
equity instrument
investment
Assets evaluation
appreciation for
business
4,169,298.89 1,042,324.72 4,524,661.07 1,131,165.27
combination not
under the same
control
Total 306,545,298.89 46,398,724.72 377,536,161.07 57,082,890.27
(3) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
Item Ending balance Beginning balance
Bad debt provision 207,502,281.70 276,036,565.83
Falling price reserves of inventories 50,117,431.52 50,317,984.95
Total 257,619,713.22 326,354,550.78
18. Other Non-current Assets
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciatio Carrying Carrying Depreciation
Carrying value
amount n reserves value amount reserves
Advances
payment of 177,400.00 177,400.00
equipments
Total 177,400.00 177,400.00
19. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Guaranteed loans 10,000,000.00 10,000,000.00
96
Changchai Company, Limited Interim Report 2020
Mortgage loans 7,000,000.00 7,000,000.00
Credit loans 5,000,000.00 5,000,000.00
Total 22,000,000.00 22,000,000.00
(2) There Was No Short-term Borrowings Overdue but Unpaid.
20. Notes Payable
Unit: RMB
Category Ending balance Beginning balance
Bank acceptance bill 479,515,000.00 403,035,000.00
Total 479,515,000.00 403,035,000.00
21. Accounts Payable
(1) List of Accounts Payable
Unit: RMB
Item Ending balance Beginning balance
Loans 580,840,786.08 525,625,016.89
Total 580,840,786.08 525,625,016.89
(2) There Was No Significant Accounts Payable Aging over One Year
22. Contract Liabilities
Unit: RMB
Item Ending balance Beginning balance
Contract liabilities 31,527,438.40 31,789,001.78
Total 31,527,438.40 31,789,001.78
Refer to “V Significant Accounting Policies, Estimates-33(1) Changes to Significant Accounting Policies”
for the difference between the beginning balance and ending balance of prior period (31 December 2019).
23. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
97
Changchai Company, Limited Interim Report 2020
Item Beginning balance Increase Decrease Ending balance
I. Short-term salary 44,559,015.79 117,786,801.08 143,388,161.32 18,957,655.55
II.Post-employment
benefit-defined 8,626,798.61 8,626,798.61
contribution plans
III. Termination
306,693.00 306,693.00
benefits
Total 44,559,015.79 126,720,292.69 152,321,652.93 18,957,655.55
(2) List of Short-term Salary
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Salary, bonus,
36,894,953.71 98,842,788.54 124,423,164.48 11,314,577.77
allowance, subsidy
2.Employee welfare 1,592.74 1,451,667.16 1,451,667.16 1,592.74
3. Social insurance 5,601,857.94 5,601,857.94
Of which: Medical
insurance 4,466,934.01 4,466,934.01
premiums
Work-related injury
388,321.79 388,321.79
insurance
Maternity insurance 746,602.14 746,602.14
4. Housing fund 9,419,253.40 9,419,253.40
5.Labor union
budget and
7,662,469.34 2,471,234.04 2,492,218.34 7,641,485.04
employee education
budget
6. Short-term
absence with salary
7. Short-term profit
sharing scheme
Total 44,559,015.79 117,786,801.08 143,388,161.32 18,957,655.55
(3) List of Defined Contribution Plans
Unit: RMB
98
Changchai Company, Limited Interim Report 2020
Item Beginning balance Increase Decrease Ending balance
1. Basic pension 8,207,802.43 8,207,802.43
benefits
2. Unemployment 257,200.18 257,200.18
insurance
3. Enterprise 161,796.00 161,796.00
annuities
Total 8,626,798.61 8,626,798.61
24. Taxes Payable
Unit: RMB
Item Ending balance Beginning balance
VAT 532,081.43 1,290,060.47
Corporate income tax 5,430,266.89 5,090,781.18
Personal income tax 88,470.51 367,624.40
Urban maintenance and
886,662.32
construction tax 970,067.92
Property tax 94,257.18 94,257.20
Land use tax 100,135.19 100,135.19
Stamp duty 5,554.00 6,282.95
Education Surcharge 160,541.11 99,824.96
Comprehensive fees 954,843.18 1,075,134.76
Environmental protection tax 230.34 213.55
Total 8,253,042.15 9,094,382.58
25. Other Payables
Unit: RMB
Item Ending balance Beginning balance
Interest payable
Dividends payable 3,891,433.83 3,891,433.83
Other payables 186,845,303.36 201,172,711.27
Total 190,736,737.19 205,064,145.10
99
Changchai Company, Limited Interim Report 2020
(1) Dividends Payable
Unit: RMB
Item Ending balance Beginning balance
Ordinary share 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
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 & cash pledged 3,574,326.23 3,271,541.83
Intercourse funds among units 10,501,265.91 11,321,462.95
Intercourse funds among individuals 423,702.83 430,612.05
Sales discount and three guarantees 133,978,988.49 143,497,522.22
Other 38,367,019.90 42,651,572.22
Total 186,845,303.36 201,172,711.27
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. Other Current Liabilities
Unit: RMB
Item Ending balance Beginning balance
100
Changchai Company, Limited Interim Report 2020
Sale service fee 229,387.96
Transportation storage fee 132,551.86
Electric charge 2,147,922.70 815,772.56
Rental expense 92,920.38
Total 2,240,843.08 1,177,712.38
27. Deferred Income
Unit: RMB
Beginning Reason for
Item Increase Decrease Ending balance
balance formation
Government Government
58,864,111.22 532,186.81 58,331,924.41
grants appropriation
Total 58,864,111.22 532,186.81 58,331,924.41 --
Item involving government grants:
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
101
Changchai Company, Limited Interim Report 2020
Electric
control
of diesel
engine
research
and 199,200. Related
248,400.00 49,200.00
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
19,845,711. 332,986. 19,512,724. Related
compens
22 81 41 to assets
ation
102
Changchai Company, Limited Interim Report 2020
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
58,864,111. 532,186. 58,331,924.
Total
22 81 41
28. Share Capital
Unit: RMB
Increase/decrease (+/-)
Beginning Bonus Ending
balance New shares Bonus balance
issue from Other Subtotal
issued shares
profit
The sum of 561,374,32 561,374,32
shares 6.00 6.00
29. Capital Reserves
Unit: RMB
103
Changchai Company, Limited Interim Report 2020
Item Beginning balance Increase Decrease Ending balance
Capital premium
143,990,690.24 143,990,690.24
(premium on stock)
Other capital reserves 20,337,975.19 20,337,975.19
Total 164,328,665.43 164,328,665.43
30. Other Comprehensive Income
Unit: RMB
Reporting Period
Less:
Record
Less: ed in
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 in rred in 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 -70,22 -10,53 -60,04 257,0
317,059, 348,36
income that will not be 5,654.5 3,848.1 0,175.0 19,60
775.00 8.67
reclassified to profit or loss 0 7 0 0.00
Of which: Changes caused
by re-measurements on
defined benefit pension
schemes
104
Changchai Company, Limited Interim Report 2020
Share of other
comprehensive income of
investees that will not be
reclassified to profit or loss
under equity method
Changes in fair value of -70,22 -10,53 -60,04 257,0
317,059, 348,36
other equity instrument 5,654.5 3,848.1 0,175.0 19,60
775.00 8.67
investment 0 7 0 0.00
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
investment in other debt
obligations
Amount of financial assets
reclassified to other
comprehensive income
Credit depreciation
reserves of investment in
other debt obligations
Reserves for cash flow
hedges
Differences arising from
translation of foreign
currency-denominated
financial statements
-70,22 -10,53 -60,04 257,0
Total of other 317,059, 348,36
5,654.5 3,848.1 0,175.0 19,60
comprehensive income 775.00 8.67
0 7 0 0.00
105
Changchai Company, Limited Interim Report 2020
31. Specific Reserve
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Safety production
17,560,202.07 1,883,145.87 1,004,697.43 18,438,650.51
cost
Total 17,560,202.07 1,883,145.87 1,004,697.43 18,438,650.51
32. Surplus Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Statutory surplus
309,071,675.82 309,071,675.82
reserves
Discretional surplus
13,156,857.90 13,156,857.90
reserves
Total 322,228,533.72 322,228,533.72
33. Retained Earnings
Unit: RMB
Item Reporting Period Same period of last year
Beginning balance of retained earnings before
726,689,929.10 717,883,351.33
adjustments
Total retained earnings at the beginning of the
adjustment period (“+” means up, “-” means 1,651,336.26 1,619,864.82
down)
Beginning balance of retained earnings after
728,341,265.36 719,503,216.15
adjustments
Add: Net profit attributable to owners of the
27,690,311.06 24,966,526.85
Company as the parent
Less: Withdrawal of statutory surplus reserves 2,094,119.49
Withdrawal of discretional surplus
reserves
Withdrawal of general reserve
Dividend of ordinary shares payable 14,034,358.15
106
Changchai Company, Limited Interim Report 2020
Dividends of ordinary shares transferred as
share capital
Recorded in other comprehensive income
in prior period and transferred in retained profits 348,368.67
in the Current Period
Ending retained earnings 756,379,945.09 728,341,265.36
The retained earnings at the beginning of the adjustment period due to the accounting errors correction in
previous period: RMB1,651,336.26 at the period-beginning of 2020, and RMB1,619,864.82 at the
period-beginning of 2019.
34. 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 1,149,231,063.13 974,846,243.01 1,099,044,681.77 958,911,511.17
Other operations 18,224,719.17 10,996,475.67 19,826,443.23 14,073,262.37
Total 1,167,455,782.30 985,842,718.68 1,118,871,125.00 972,984,773.54
Information related to performance obligations: performing according to the contract offer
Information related to transaction value assigned to residual performance obligations:
The amount of revenue corresponding to performance obligations of contracts signed but not performed or
not fully performed yet was RMB0 at the period-end.
35. Taxes and Surtaxes
Unit: RMB
Item Reporting Period Same period of last year
Urban maintenance and construction tax 1,188,616.29 581,717.24
Education surcharge 849,011.61 271,520.11
Property tax 2,212,278.84 1,986,524.35
Land use tax 1,804,439.63 1,713,504.95
Vehicle and vessel use tax 300.00
Stamp duty 394,779.95 456,518.80
Environment tax 60,179.21
Other 42,000.00 -92.50
Total 6,551,605.53 5,009,692.95
107
Changchai Company, Limited Interim Report 2020
36. Selling Expense
Unit: RMB
Item Reporting Period Same period of last year
Office expenses 4,629,025.89 2,915,326.32
Employee benefits 13,886,073.89 12,563,212.25
Sales promotional expense 5,545,750.00 3,165,350.00
Three guarantees 27,893,180.55 31,616,012.47
Transport charge 3,641,245.55 1,767,281.30
Other 7,797,082.64 6,231,216.64
Total 63,392,358.52 58,258,398.98
37. Administrative Expense
Unit: RMB
Item Reporting Period Same period of last year
Office expenses 6,035,491.45 6,839,822.78
Employee benefits 17,294,526.56 11,909,173.93
Depreciation and amortization 5,263,681.34 7,665,203.65
Transport fees 1,073,680.39 1,205,423.26
Repair charge 138,950.52 992,564.62
Safety expenses 1,883,145.87 1,005,623.68
Other 3,919,554.61 4,942,250.38
Total 35,609,030.74 34,560,062.30
38. Development Costs
Unit: RMB
Item Reporting Period Same period of last year
Direct input expense 19,721,929.05 19,912,601.44
Employee benefits 9,551,798.98 8,459,434.34
Depreciation and amortization 2,063,723.78 1,367,141.44
Entrusted development charges 32,231.13
Other 968,567.84 325,106.24
108
Changchai Company, Limited Interim Report 2020
Total 32,338,250.78 30,064,283.46
39. Finance Costs
Unit: RMB
Item Reporting Period Same period of last year
Interest expense 3,340,575.91 1,567,625.50
Interest income 2,792,152.75 1,647,206.24
Net foreign exchange gains or losses -1,097,813.30 -1,047,246.55
Other -170,269.84 -657,598.04
Total -719,659.98 -1,784,425.33
40. Other Income
Unit: RMB
Sources Reporting Period Same period of last year
Government grants 2,657,218.07 134,037.71
Other (Additional deduction of input tax) 20,746.75
41. 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
4,983,988.73
instrument investment
Investment income from holding of held-to
–maturity investment
109
Changchai Company, Limited Interim Report 2020
Investment income from holding of
available-for-sale financial assets
Investment income from disposal of
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 investment in debt
obligations
Interest income from holding of investment in
other debt obligations
Investment income from disposal of investment in
other debt obligations
Investment income from holding of other
149,121.58
non-current financial assets
Investment income from disposal of financial
251,486.73 184,349.63
products of securities company
Total 5,384,597.04 184,349.63
42. Credit Impairment Loss
Unit: RMB
Item Reporting Period Same period of last year
Bad debt loss of other receivables 622,346.72 4,859.68
Bad debt loss of accounts receivable -6,601,368.01 -9,257,470.42
Impairment loss of entrusted loan 4,000,000.00
Total -5,979,021.29 -5,252,610.74
43. Asset Impairment Loss
Unit: RMB
Item Reporting Period Same period of last year
I. Bad debt loss
110
Changchai Company, Limited Interim Report 2020
II. Loss on inventory valuation and contract
-16,343,805.00 -26,096.43
performance cost
III. Impairment loss on long-term equity investment
IV. Impairment loss on investment property
V. Impairment loss on fixed assets
VI. Impairment loss on engineering materials
VII. Impairment loss on construction in progress
VIII. Impairment loss on productive living assets
IX. Impairment loss on oil and gas assets
X. Impairment loss on intangible assets
XI. Impairment loss on goodwill
XII. Other
Total -16,343,805.00 -26,096.43
44. Asset Disposal Income
Unit: RMB
Sources Reporting Period Same period of last year
Disposal income of fixed assets 10,977.61 988,535.95
45. Non-operating Income
Unit: RMB
Amount recorded in the
Item Reporting Period Same period of last year current non-recurring
profit or loss
Income from penalty 181,076.00 181,076.00
Income generated from
324,516.28
disposal of current assets
Other 287,214.78 258,421.20 287,214.78
Total 468,290.78 582,937.48 468,290.78
46. Non-operating Expense
Unit: RMB
111
Changchai Company, Limited Interim Report 2020
Amount recorded in the
Item Reporting Period Same period of last year current non-recurring
profit or loss
Retirement loss of
1,725.58 215,077.98 1,725.58
non-current assets
Other 393,650.10 2,760.00 393,650.10
Total 395,375.68 217,837.98 395,375.68
47. Income Tax Expense
(1) List of Income Tax Expense
Unit: RMB
Item Reporting Period Same period of last year
Current income tax expense 3,442,263.52 -2,995,296.80
Deferred income tax expense -1,044,951.94 301.48
Total 2,397,311.58 -2,994,995.32
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
Item Reporting Period
Profit before taxation 30,265,106.31
Current income tax expense accounted at statutory/applicable tax rate 4,539,765.95
Influence of applying different tax rates by subsidiaries 708,102.34
Influence of income tax before adjustment -717,080.73
Influence of non-taxable income
Influence of non-deductable costs, expenses and losses -1,249,574.37
Influence of deductable losses of unrecognized deferred income tax at the
-27,842.32
beginning of the Reporting Period
Influence of deductable temporary difference or deductable losses of
-729,438.12
unrecognized deferred income tax assets in the Reporting Period
Tax preference generated from eligible expense -126,621.17
Income tax expense 2,397,311.58
112
Changchai Company, Limited Interim Report 2020
48. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Subsidy and appropriation 2,125,031.26 129,300.00
Other intercourses in cash 2,450,124.78 6,626,337.57
Interest income 2,792,152.75 1,647,206.24
Other 377,095.40
Total 7,744,404.19 8,402,843.81
(2) Cash Used in Other Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Selling expense paid in cash 42,790,201.08 22,265,032.54
Administrative expense paid in cash 28,635,717.97 15,932,156.09
Handling charges 850,745.30 276,917.44
Other 841,135.29 363,243.80
Total 73,117,799.64 38,837,349.87
(3) Cash Generated from Other Investing Activities
Item Reporting Period Same period of last year
Performance bond 97,150.00
Total 97,150.00
(4) Cash Used in Other Investing Activities
Item Reporting Period Same period of last year
Product margin 930,300.00
Total 930,300.00
113
Changchai Company, Limited Interim Report 2020
49. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Unit: RMB
Same period of last
Supplemental information Reporting Period
year
1. Reconciliation of net profit to net cash flows generated
-- --
from operating activities
Net profit 27,867,794.73 19,166,650.04
Add: Provision for impairment of assets 22,322,826.29 5,278,707.17
Depreciation of fixed assets, of oil and gas assets, of
39,921,116.37 45,097,580.24
productive living assets
Depreciation of right-of-use assets
Amortization of intangible assets 2,325,255.12 2,667,349.89
Amortization of long-term deferred expenses 19,902.30 19,902.30
Losses on disposal of fixed assets, intangible assets and other
-10,977.61 -988,535.95
long-term assets (gains by “-”)
Losses on the scrapping of fixed assets (gains by “-”) 1,725.58
Losses on the changes in fair value (gains by “-”)
Financial expenses (gains by “-”) 3,702,027.93 -1,780,811.62
Investment losses (gains by “-”) -5,384,597.04 -5,275.78
Decrease in deferred income tax assets (increase by “-”) -956,111.39 301.48
Increase in deferred income tax liabilities (decrease by “-”) -88,840.55
Decrease in inventory (increase by “-”) 28,810,293.38 77,790,426.75
Decrease in accounts receivable from operating activities
-219,167,832.28 -399,676,635.32
(increase by “-”)
Increase in payables from operating activities (decrease by
93,944,576.05 102,084,867.92
“-”)
Other -13,661,888.13 -2,976,019.99
Net cash flows generated from operating activities -20,354,729.25 -153,321,492.87
2. Investing and financing activities that do not involving cash
-- --
receipts and payment:
Debt transferred as capital
Convertible corporate bond due within one year
114
Changchai Company, Limited Interim Report 2020
Fixed assets from financing lease
3. Net increase in cash and cash equivalents -- --
Ending balance of cash 493,637,357.80 495,700,572.93
Less: Beginning balance of cash 545,959,998.20 691,266,373.34
Add: Ending balance of cash equivalents
Less: Beginning balance of cash equivalents
Net increase in cash and cash equivalents -52,322,640.40 -195,565,800.41
(2) Cash and Cash Equivalents
Unit: RMB
Item Ending balance Beginning balance
I. Cash 493,637,357.80 545,959,998.20
Including: Cash on hand 348,885.71 181,115.21
Bank deposit on demand 489,583,551.02 545,271,159.5
Other monetary assets on demand 3,704,921.07 507,723.49
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 equivalents 493,637,357.80 545,959,998.20
Of which: Cash and cash equivalents with restriction in use
for the Company as the parent or subsidiaries of the Group
50. Assets with Restricted Ownership or Right to Use
Unit: RMB
Item Ending carrying value Reason for restriction
As cash deposit for bank acceptance bill
Monetary assets 106,637,411.65
and environment
Houses and buildings 9,933,008.28 Mortgaged for borrowings from banks
Land use right 989,620.82 Mortgaged for borrowings from banks
Machinery equipment 38,139,602.80 Mortgaged for borrowings from banks
Total 155,699,643.55 --
115
Changchai Company, Limited Interim Report 2020
51. 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 -- -- 88,036,406.31
Of which: USD 12,318,549.63 7.0795 87,209,172.11
EUR
HKD 285,400.46 0.9134 260,684.78
SGD 54,427.95 5.0813 276,564.74
JPY 4,407,062.00 0.0658 289,984.68
Accounts receivable -- -- 56,189,918.16
Of which: USD 7,936,989.64 7.0795 56,189,918.16
Accounts payable 2,142.26
Of which: USD 302.60 7.0795 2,142.26
(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
52. Government Grants
(1) Basic Information on Government Grants
Unit: RMB
Amount recorded in the
Category Amount Listed items
current profit or loss
Subsidy for stabilizing posts 1,462,592.43 Other income 1,462,592.43
Patent rewards 100,000.00 Other income 100,000.00
The first-year fund for district-level
demonstration base for training 20,000.00 Other income 20,000.00
high-level skilled personnel in 2019
High-skilled personnel training award 15,000.00 Other income 15,000.00
116
Changchai Company, Limited Interim Report 2020
Tax award 50,000.00 Other income 50,000.00
Individual income tax commission 8,587.83 Other income 8,587.83
Special fund for business development 10,600.00 Other income 10,600.00
Innovation-driven rewards 6,000.00 Other income 6,000.00
Funds of development of international
14,200.00 Other income 14,200.00
market project
Subsidy fund of New District Finance
7,882.00 Other income 7,882.00
Bureau award
Provincial-level special fund for
industrial and information industry 150,000.00 Other income 150,000.00
transformation and upgrading
Special award and subsidy funds used to
230,169.00 Other income 230,169.00
stabilize employment
Relocation compensation 332,986.81 Other income 332,986.81
R & D and industrialization of off-road
199,200.00 Other income 199,200.00
diesel engine controlled by electricity
Talent special fund 50,000.00 Other income 50,000.00
Additional deduction of input tax 20,746.75 Other income 20,746.75
Appropriation of off-road diesel engine
controlled by electricity 49,200.00 Deferred income
National major special appropriation 28,770,000.00 Deferred income
Relocation compensation 19,512,724.41 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 Grants
□ Applicable √ Not applicable
VIII. Changes of Consolidation Scope
None
117
Changchai Company, Limited Interim Report 2020
IX. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
Holding percentage
Main Registrat
Nature of (%) Way of
Name operatin ion
business Indirect gaining
g place place Directly
ly
Changchai Wanzhou Diesel Engine Chongq Chongqi
Industry 60.00% Set-up
Co., Ltd. ing ng
Changzhou Changchai Benniu Diesel Changz Changzh
Industry 99.00% 1.00% Set-up
Engine Fittings Co., Ltd. hou ou
Changzhou Housheng Investment Changz Changzh
Service 100.00% Set-up
Co., Ltd. hou ou
Changzhou Changchai Housheng Changz Changzh
Industry 70.00% 25.00% Set-up
Agricultural Equipment Co., Ltd. hou ou
Combinati
on not
Changzhou Fuji Changchai Robin Changz Changzh
Industry 100.00% under the
Gasoline Engine Co., Ltd. hou ou
same
control
Jiangsu Changchai Machinery Co., Changz Changzh
Industry 100.00% Set-up
Ltd. hou ou
Changzhou Xingsheng Property Changz Changzh
Service 100.00% Set-up
Management Co., Ltd. hou ou
(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% 187,651.15 19,801,599.87
Engine Co., Ltd.
118
Changchai Company, Limited Interim Report 2020
Changzhou
Changchai
Housheng
5.00% -10,167.48 12,164.81
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
Name Curre curre Total Curre curre Total
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 50,39 25,36 75,76 26,26 26,26 43,80 25,82 69,62 20,59 20,59
Diese 6,468 8,758 5,227 1,228 1,228 7,991 1,314 9,305 4,433 4,433
l .90 .87 .77 .09 .09 .71 .00 .71 .90 .90
Engin
e Co.,
Ltd.
Chan
gzhou
Chan
gchai
Hous
heng 28,97 29,43 29,19 29,19 28,57 29,08 28,64 28,64
464,3 514,6
Agric 1,588 5,971 2,675 2,675 3,892 8,562 1,916 1,916
82.91 69.94
ultura .41 .32 .01 .01 .12 .06 .23 .23
l
Equip
ment
Co.,
Ltd.
119
Changchai Company, Limited Interim Report 2020
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 24,477,85 469,127.8 469,127.8 1,744,069 23,600,85 257,014.1 257,014.1 -862,600.
Diesel 0.44 7 7 .06 7.49 6 6 33
Engine
Co., Ltd.
Changzh
ou
Changcha
i
Houshen
9,272,539 -203,349. -203,349. -784,927. 6,815,423 -570,014. -570,014. -1,101,48
g
.79 52 52 87 .91 57 57 9.23
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 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
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Changchai Company, Limited Interim Report 2020
reduced the negative impact to the operation performance of the Company in the lowest level and
maximized the interests of shareholders and other equity investors. Base on the risk management goal, the
basis strategy of the Company’s risk management was to recognized and analyze all kinds of risk that the
Company faced, set up suitable risk bottom line and conduct risk management, and supervised the risks
timely and reliably and control the risk within the limited scope.
The main risks of the Company due to financial instruments were credit risk, liquidity risk and market risk.
The management level had reviewed and approved the policies to manage the risks, which summarized as
follows:
(I) Credit Risk
Credit risk was one party of the contract failed to fulfill the obligations and causes loss of financial assets
of the other party.
The credit of risk of the Company mainly was related to account receivable, in order to control the risk, the
Company conduct the following methods.
The Company only conducts related transaction with approved and reputable third party, in line with the
policy of the Company, the Company need to conduct credit-check for the clients adopting way of credit to
conduct transaction. In addition, the Company continuously monitors the balance of account receivable to
ensure the Company would not face the significant bad debt risk.
(II) Liquidity Risk
Liquidity risk 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 refer to risk of the fair value or future cash flow of financial instrument changed due to the
change of market price, including foreign exchange rate risk, interest rate risk.
1. Interest Rate Risk
Interest rate risk is 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. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMB
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Changchai Company, Limited Interim Report 2020
Ending fair value
Fair value
Fair value Fair value
Item 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
362,160,000.00 192,552,101.63 554,712,101.63
through profit or loss
1. Trading financial assets 92,552,101.63 92,552,101.63
(1) Debt instrument investment 14,600,000.00 14,600,000.00
(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
362,160,000.00 100,000,000.00 462,160,000.00
investment
(2) Equity instrument investment
(IV) Investment property
1. Land use right for lease
2. Buildings leased out
3. Land use right held and planned
to be transferred once appreciating
(V) Living assets
1. Consumptive living assets
2. Productive living assets
Total assets consistently measured
362,160,000.00 192,552,101.63 554,712,101.63
by fair value
(VI) Trading financial liabilities
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Changchai Company, Limited Interim Report 2020
Of which: Issued trading bonds
Derivative financial
liabilities
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) Assets held for sale
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 treated 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
123
Changchai Company, Limited Interim Report 2020
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 treated 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 treated as reasonable estimation of fair
value to measure at the period-end. As for other equity instrument, the investment in Chengdu Changwan
Diesel Engine Distribution Co., Ltd., Chongqing Changwan Diesel Engine Accessories Co., Ltd.,
Changzhou Economic and Technological Development Co., Ltd., Changzhou Tractor Co., Ltd., Changzhou
Economic and Industrial Fund Mutual-aid Association, Beijing Engineering Machinery Agricultural
Machinery Co., Ltd. totals RMB1,210,000.00, and because the investment is difficult to recover, the fair
value is RMB0.00.
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
124
Changchai Company, Limited Interim Report 2020
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.
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
Donghai Securities Co., Ltd. Controlled by the same Company as the parent
4. Related-party Transactions
(1) Other Related-party Transaction
On 28 June 2020, the 3rd Meeting of the 9th Board of Directors approved the Proposal on Signature of Joint
Sponsorship Underwriting Agreement of the Private Placement of A shares and Related-party Transaction,
which allowed the Company signing the joint sponsorship underwriting agreement with Industrial
Securities Co., Ltd. (hereinafter referred to as “Industrial Securities”) and Donghai Securities Co., Ltd.
(hereinafter referred to as “Donghai Securities”), and appointing Industrial Securities and Donghai
Securities as the co-sponsor underwriters for the private placement of A shares of the Company with
sponsor fee of RMB3 million to Industrial Securities and Donghai Securities and the underwriting fee of
no more than RMB11 million (inclusive of RMB11 million).
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Changchai Company, Limited Interim Report 2020
XIII. Commitments and Contingency
1. Significant Commitments
Significant commitments on balance sheet date
As of 30 June 2020, 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., 27 June 2001 Changzhou Intermediate 1,436.00 Under the
Ltd. People’s Court bankruptcy and
liquidation
Notes:
About the lawsuit case of Shandong Hongli Group Co., Ltd., the accused company owed accumulatively
RMB14.36 million to the Company. The Company sued to Changzhou Intermediate People’s Court in
2001 and sued for compulsory execution in April 2002. Currently, the defendant has started the bankruptcy
procedure. The aforesaid payment has arranged for the full provision for bad debts.
XIV. Events after Balance Sheet Date
1. Profit Distribution
Unit: RMB
Profits or dividends to be distributed 0
2. Notes to Other Events after Balance Sheet Date
As of the approval issue date of financial statements, there was no significant event after
balance sheet date that shall be disclosed.
126
Changchai Company, Limited Interim Report 2020
XV. Other Significant Events
1. Correction of Previous Accounting Error
(1) Retrospective Restatement
Unit: RMB
Processing Affected financial statement line items of the Cumulative
Content
procedure comparative periods effects
Consolidated Balance Sheet in 2019-Mnetary assets 1,375,254.03
Consolidated Balance Sheet in 2019-Trading
3,050,000.00
financial assets
Consolidated Balance Sheet in 2019-Accounts
Changzhou 6,391.36
receivable
Xingsheng
Consolidated Balance Sheet in 2019-Prepayment 38,200.00
Property
Management Consolidated Balance Sheet in 2019-Other
-893,682.24
Co., Ltd. that receivables
was not Consolidated Balance Sheet in 2019-Inventories 7,158.32
included in
The 4th Meeting Consolidated Balance Sheet in 2019-Other current
the scope of 67,355.14
of the 9th Board assets
consolidated
of Directors held Consolidated Balance Sheet in 2019-Total of current
statements 4,632,342.79
on 29 July 2020 assets
before has
reviewed and
been Consolidated Balance Sheet in 2019-Fixed assets 140,153.19
approved the
conducted Consolidated Balance Sheet in 2019-Long-term
Proposal on 53,497.80
accounting prepaid expenses
Accounting
treatment
Errors Correction Consolidated Balance Sheet in 2019-Deferred
according to 6.52
in Previous income tax assets
the
Period.
provisions of Consolidated Balance Sheet in 2019-Total of
193,657.51
the non-current assets
accounting Consolidated Balance Sheet in 2019- Total assets 4,826,000.30
standards
Consolidated Balance Sheet in 2019-Accounts
during the 14,760.00
payable
Reporting
Period. Consolidated Balance Sheet in 2019-Advances from
952,386.57
customers
Consolidated Balance Sheet in 2019-Other payables 1,224,017.91
Consolidated Balance Sheet in 2019-Total of current
2,191,164.48
liabilities
127
Changchai Company, Limited Interim Report 2020
Consolidated Balance Sheet in 2019-Total liabilities 2,191,164.48
Consolidated Balance Sheet in 2019-Surplus
163,483.58
reserves
Consolidated Balance Sheet in 2019- Retained
1,471,352.24
earnings
Consolidated Balance Sheet in 2019- Total equity
2,634,835.82
attributable to owners of the Company as the parent
Consolidated Balance Sheet in 2019- Total owners’
2,634,835.82
equity
Consolidated Balance Sheet in 2019- Total liabilities
4,826,000.30
and owners’ equity
Consolidated Income Statement in 2019- Revenue 5,687,083.80
Consolidated Income Statement in 2019- Operating
5,687,083.80
revenue
Consolidated Income Statement in 2019-Operating
5,726,254.73
costs
Consolidated Income Statement in 2019- Cost of
4,884,089.75
sales
Consolidated Income Statement in 2019- Taxes and
21,043.17
surtaxes
Consolidated Income Statement in 2019-
832,824.01
Administrative expense
Consolidated Income Statement in 2019- Finance
-11,702.20
costs
Consolidated Income Statement in 2019-Interest
13,193.10
income
Consolidated Income Statement in 2019- Other
12,063.29
income
Consolidated Income Statement in 2019- Investment
58,549.24
income
Consolidated Income Statement in 2019-Credit
7,317.61
impairment loss
Consolidated Income Statement in 2019-Operating
38,759.21
profit
Consolidated Income Statement in 2019-
16,006.10
Non-operating income
128
Changchai Company, Limited Interim Report 2020
Consolidated Income Statement in 2019-
12,597.35
Non-operating expense
Consolidated Income Statement in 2019- Profit
42,167.96
before taxation
Consolidated Income Statement in 2019- Income tax 10,227.22
Consolidated Income Statement in 2019-Net profit 31,940.74
Consolidated Income Statement in 2019- Net profit
31,940.74
from continuing operations
Consolidated Income Statement in 2019- Net profit
31,940.74
attributable to owners of the Company as the parent
Consolidated Income Statement in 2019-Total
31,940.74
comprehensive income
Consolidated Income Statement in 2019-
31,940.74
Attributable to owners of the Company as the parent
Consolidated Income Statement in 2019-Earnings
0.00005
per share
Consolidated Income Statement in 2019- Diluted
0.00005
earnings per share
Consolidated Cash Flow Statement in
2019-Proceeds from sale of commodities and 6,150,306.39
rendering of services
Consolidated Cash Flow Statement in 2019- Cash
110,627.50
generated from other operating activities
Consolidated Cash Flow Statement in 2019-Subtotal
6,260,933.89
of cash used in operating activities
Consolidated Cash Flow Statement in 2019-
4,051,587.11
Payments for commodities and services
Consolidated Cash Flow Statement in 2019- Cash
1,415,158.29
paid to and for employees
Consolidated Cash Flow Statement in 2019- Taxes
223,381.96
paid
Consolidated Cash Flow Statement in 2019- Cash
353,138.57
used in other operating activities
Consolidated Cash Flow Statement in 2019- Subtotal
6,043,265.93
of cash used in operating activities
Consolidated Cash Flow Statement in 2019- Net 217,667.96
129
Changchai Company, Limited Interim Report 2020
cash generated from/used in operating activities
Consolidated Cash Flow Statement in
3,900,000.00
2019-Proceeds from disinvestments
Consolidated Cash Flow Statement in 2019-
58,549.24
Investment income
Consolidated Cash Flow Statement in 2019- Subtotal
3,958,549.24
of cash generated from investing activities
Consolidated Cash Flow Statement in
2019-Payments for acquisition of fixed assets, 37,696.92
intangible assets and other long-lived assets
Consolidated Cash Flow Statement in 2019-
6,950,000.00
Payments for investments
Consolidated Cash Flow Statement in 2019- Subtotal
6,987,696.92
of cash used in investing activities
Consolidated Cash Flow Statement in 2019- Net
-3,029,147.68
cash generated from/used in investing activities
Consolidated Cash Flow Statement in 2019- Cash
-2,811,479.72
and cash equivalents, end of the period
2. 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.
3. Other Significant Transactions and Events with Influence on Investors’ Decision-making
None
XVI. Notes of Main Ite ms 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
130
Changchai Company, Limited Interim Report 2020
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
35,35 33,45 1,895, 37,51 33,788
which bad debt 94.64 90.08 3,721,7
4,686. 4.37% 9,099. 586.8 0,056. ,291.8
provision % 6.66% % 65.04
26 43 3 90 6
separately
accrued
Of which:
Accounts
receivable with
significant
30,51 28,61 1,895, 32,61 28,896
single amount 93.79 88.59 3,721,7
5,544. 3.77% 9,957. 586.8 8,199. ,434.9
for which bad % 5.79% % 65.04
63 80 3 97 3
debt provision
separately
accrued
Accounts
receivable with
insignificant
4,839, 4,839, 4,891,
single amount 100.0 4,891, 100.0
141.6 0.60% 141.6 856.9
for which bad 0% 0.87% 856.93 0%
3 3 3
debt provision
separately
accrued
Accounts
receivable for
773,1 130,4 642,7 525,8 192,14
which bad debt 95.63 16.87 36.54 333,725
93,38 45,85 47,53 74,42 93.34 8,650.
provision % % % ,773.00
2.27 1.87 0.40 3.56 % 56
accrued by
group
Of which:
131
Changchai Company, Limited Interim Report 2020
Accounts
receivable for
which bad debt 773,1 130,4 642,7 525,8 192,14
95.63 16.87 36.54 333,725
provision 93,38 45,85 47,53 74,42 93.34 8,650.
% % % ,773.00
accrued by 2.27 1.87 0.40 3.56 % 56
credit risk
features group
808,5 163,9 644,6 563,3 225,93
100.0 20.27 100.00 40.10 337,447
Total 48,06 04,95 43,117 84,48 6,942.
0% % % % ,538.04
8.53 1.30 .23 0.46 42
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
1,470,110.64 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
2,254,860.60 2,175,814.38 96.49% difficultly recover
Expected to
Customer 5
3,633,081.23 1,816,540.62 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 1,747,839.10 1,747,839.10 100.00% Difficult to recover
Total 30,515,544.63 28,619,957.80 -- --
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
132
Changchai Company, Limited Interim Report 2020
Within 1 year 642,166,048.04 12,843,320.94 2.00%
1 to 2 years 8,755,103.78 437,755.18 5.00%
2 to 3 years 4,792,557.78 718,883.67 15.00%
3 to 4 years 1,052,669.09 315,800.73 30.00%
4 to 5 years 742,280.57 445,368.34 60.00%
Over 5 years 115,684,723.01 115,684,723.01 100.00%
Total 773,193,382.27 130,445,851.87 -
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) 642,166,048.04
1 to 2 years 9,856,103.13
2 to 3 years 7,977,007.54
Over 3 years 148,548,909.82
3 to 4 years 4,450,019.60
4 to 5 years 2,341,866.64
Over 5 years 141,757,023.58
Total 808,548,068.53
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversal or Write-o Ending balance
balance Withdrawal Other
recovery ff
133
Changchai Company, Limited Interim Report 2020
Bad debt
provision
33,788,291.86 65,231.52 272,117.93 33,581,405.45
withdrawn
separately
Bad debt
provision 68,144,
192,148,650.56 6,319,796.20 130,323,545.84
withdrawn 900.92
by group
68,144,
Total 225,936,942.42 6,385,027.72 272,117.93 163,904,951.29
900.92
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
Unit: RMB
Item Amount
Actual verification of accounts receivable 68,144,900.92
Of which the verification of significant accounts receivable:
Unit: RMB
Performanc Whether
Amount e of generated from
Name of the entity Nature Reason
verified verification related-party
procedures transaction
Wuwei Golden Frog
The aging of The 3rd
Vehicle Manufacturing 10,000,000.00
canceled Meeting of
Co., Ltd.
receivables the 9th
Xuzhou Zhengda shall exceed 5 Board of
Agricultural Machinery 7,583,232.65 years and result Directors
Co., Ltd. from fruitless and the 3rd
Shandong Agricultural collection, and Meeting of
Bad debt loss No
Machinery Group Heze if any single the 9th
4,581,880.41
Area Agricultural client’s large Supervisor
Machinery Co., Ltd. amount is y
involved Committee
Sichuan Tiantai
without any held on 26
Electromechanical
3,600,000.00 business June 2020
Agricultural Machinery
transaction reviewed
Co., Ltd.
134
Changchai Company, Limited Interim Report 2020
Puyang Shifeng with the and
Agricultural Machinery 2,752,840.00 Company for approved
Co., Ltd. over ten years, the
the client’s Proposal
Jining Hydraulic
2,450,966.67 qualification on
Drilling Plant
for business Verificatio
Zhanjiang Agricultural operation shall n of Partial
2,180,243.72
Machinery Co., Ltd. be canceled or Accounts
Kaifeng Tractor the insolvency Receivable
1,976,282.47
Factory liquidation is .
Linyi Agricultural finished
Machinery Group 1,860,830.82 without any
Corporation production and
operation
Henan Zhongjian
1,758,686.48 activities.
Industrial Co., Ltd.
Shanxi Jiaocheng
1,662,052.98
Xinyuan Iron Factory
Ganyu Agricultural
1,285,160.60
Machinery Co., Ltd.
Nanning
Changshunrong
1,236,225.30
Agricultural Machinery
Co., Ltd.
Longma Agricultural
1,235,170.95
Vehicle Co., Ltd.
Xinjiang Korla Feihong
Agricultural Machinery 1,200,000.00
Co., Ltd.
Gaotang Raoyang
County Agricultural 1,149,217.70
Machinery City
Haining Bus General
848,158.92
Factory
Yunnan Nanping
Agricultural Machinery 841,642.86
Management
Tongshan Dongfang
Agricultural Machinery 830,000.00
Sales Department
135
Changchai Company, Limited Interim Report 2020
Juning Huaihai
Agricultural Machinery 800,000.00
Trading Co., Ltd.
Jiangxi Lida
Agricultural Machinery 797,786.72
Sales Co., Ltd.
Shenyang Fusang
Agricultural Machinery 796,226.73
Co., Ltd.
Anhui Woyang
Agricultural Machinery 760,197.20
Co., Ltd.
Tai 'an Guotai Tractor
728,666.36
Factory
Lijin Yongxing
Agricultural Machinery 677,250.00
Sales Co., Ltd.
Hefei Xinfa Materials
551,305.36
Co., Ltd.
Changqing County
Agricultural Machinery 549,800.00
Company
Henan Boai
Agricultural Machinery 537,698.10
Co., Ltd.
Shandong Shuangli
12,343,782.28
Group Co., Ltd.
Shandong Dongchang
Group Labor Service 520,892.51
Co., Ltd.
Total -- 68,096,197.79 -- -- --
(4) Top 5 of the Ending Balance of Other Receivables Collected according to the 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
136
Changchai Company, Limited Interim Report 2020
Customer 1 376,475,098.82 46.56% 7,529,501.98
Customer 2 54,293,467.67 6.71% 1,085,869.35
Customer 3 32,287,845.17 3.99% 763,817.03
Customer 4 21,395,243.36 2.65% 427,904.87
Customer 5 18,593,170.87 2.30% 371,863.42
Total 503,044,825.89 62.22%
At the end of the period, the sum of the top five accounts receivable collected according to the arrears
amounted to RMB 503,044,825.89, accounting for 62.22% of the total balance at the end of the period.
The corresponding ending balance of bad debt provision is RMB10,178,956.65.
2. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Other receivables 22,243,041.97 22,741,542.22
Total 22,243,041.97 22,741,542.22
(1) Other Receivable
1) Other Receivables Classified by Account Nature
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Cash deposit and Margin 4,200.00 4,200.00
Intercourse funds among units 38,118,999.36 37,618,642.29
Petty cash and borrowings by employees 671,871.57 624,083.07
Other 13,654,433.26 15,373,206.41
Total 52,449,504.19 53,620,131.77
2) Withdrawal of Bad Debt Provision
Unit: RMB
Bad debt provision First stage Second stage Third stage Total
137
Changchai Company, Limited Interim Report 2020
Expected loss in the
Expected credit Expected loss in the
duration (credit
loss of the next duration (credit
impairment not
12 months impairment occurred)
occurred)
Balance of 1
30,878,589.55 30,878,589.55
January 2020
Balance of 1
January 2020 in the —— —— —— ——
Current Period
--Transfer to
Second stage
-- Transfer to Third
stage
-- Reverse to
Second stage
-- Reverse to First
stage
Withdrawal of the
25,814.56 25,814.56
Current Period
Reversal of the
697,941.89 697,941.89
Current Period
Write-offs of the
Current Period
Verification of the
Current Period
Other changes
Balance of 30 June
30,206,462.22 30,206,462.22
2020
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) 19,721,955.40
1 to 2 years 1,720,886.24
138
Changchai Company, Limited Interim Report 2020
2 to 3 years 592,647.80
Over 3 years 30,414,014.75
3 to 4 years 1,007,667.17
4 to 5 years 178,915.24
Over 5 years 29,227,432.34
Total 52,449,504.19
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
Category Reversal or Write-of Ending balance
balance Withdrawal Other
recovery f
Bad debt
provision
5,042,448.58 25,814.56 5,068,263.14
withdrawn
separately
Bad debt
provision
25,836,140.97 697,941.89 25,138,199.08
withdrawn by
group
Total 30,878,589.55 25,814.56 697,941.89 30,206,462.22
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
total ending Ending balance
Name of the entity Nature Ending balance Aging balance of of bad debt
other provision
receivables
Changzhou Changchai Interco
Benniu Diesel Engine urse 10,000,000.00 Within 1 year 19.07% 200,000.00
Fittings Co., Ltd. funds
139
Changchai Company, Limited Interim Report 2020
Within 1 year
with
RMB8,125,173.7
Changzhou Changchai Interco 9, 1 to 2 years
Housheng Agricultural urse 9,415,165.78 with 17.95% 235,305.55
Equipment Co., Ltd. funds RMB1,206,967.2
8, 2 to 3 years
with
RMB83,024.71.
Interco
Changzhou Compressors
urse 2,940,000.00 Over 5 years 5.61% 2,940,000.00
Factory
funds
Interco
Changchai Group Imp.
urse 2,853,188.02 Over 5 years 5.44% 2,853,188.02
& Exp. Co., Ltd.
funds
Interco
Changzhou New District
urse 1,626,483.25 Over 5 years 3.10% 1,626,483.25
Accounting Centre
funds
Total -- 26,834,837.05 -- 51.16% 7,854,976.82
3. Long-term Equity Investment
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciation Carrying Carrying Depreciation Carrying
amount reserves value amount reserves value
Investment to 287,752,730. 287,752,730. 252,752,730. 252,752,730.
subsidiaries 03 03 03 03
Investment to
joint ventures
and 44,182.50 44,182.50 44,182.50 44,182.50
associated
enterprises
287,796,912. 287,752,730. 252,796,912. 252,752,730.
Total 44,182.50 44,182.50
53 03 53 03
(1) Investment to Subsidiaries
Unit: RMB
140
Changchai Company, Limited Interim Report 2020
Increase/decrease
Beginning Ending Ending
balance Withdrawa balance balance of
Investee Additional Reduced l of
(carrying Other (carrying depreciatio
investment investment depreciatio
value) value) n reserve
n reserve
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.
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 35， 45,000,000
Machinery .00 000,000.00 .00
Co., Ltd.
141
Changchai Company, Limited Interim Report 2020
Changzhou
Xingsheng
1,000,000. 1,000,000.
Property
00 00
Managemen
t Co., Ltd.
252,752,73 35,000,000 287,752,73
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 e
metho issue
e
d
II. Associated enterprises
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
142
Changchai Company, Limited Interim Report 2020
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 1,066,808,215.93 914,519,611.82 1,016,544,011.76 895,758,979.30
Other operations 14,661,587.19 8,902,410.95 16,785,163.82 11,527,336.19
Total 1,081,469,803.12 923,422,022.77 1,033,329,175.58 907,286,315.49
Information related to performance obligations: performing according to the contract offer
Information related to transaction value assigned to residual performance obligations:
The amount of revenue corresponding to performance obligations of contracts signed but not performed or
not fully performed yet was RMB0 at the period-end.
5. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Dividend income from holding of other equity
4,865,000.00
instrument investment
Investment income from holding of
available-for-sale financial assets
Investment income from disposal of
available-for-sale financial assets
Income from transferring to accommodation
118,988.73
business
Total 4,983,988.73
XVII. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
√ Applicable □ Not applicable
Unit: RMB
Item Amount Note
143
Changchai Company, Limited Interim Report 2020
Gain or loss on disposal of non-current assets 9,252.03
Government subsidies charged to current profit or loss
(exclusive of government subsidies given in the
2,657,218.07
Company’s ordinary course of business at fixed quotas
or amounts as per the government’s uniform standards)
Capital occupation charges on non-financial enterprises
257,714.14
that are 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 derivative financial 5,384,597.04
assets and liabilities, and investment in other debt
obligations, other than valid hedging related to the
Company’s common businesses
Other non-operating income and expenses other than the
95,387.43
above
Less: Income tax effects 1,205,579.18
Non-controlling interests effects 180,418.43
Total 7,018,171.10 --
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 1.32 0.0493 0.0493
Company
Net profit attributable to
ordinary shareholders of the
0.99 0.0368 0.0368
Company after deduction of
non-recurring profit or loss
144
Changchai Company, Limited Interim Report 2019
Changchai Company, Limited
29 July 2020
145
