CHANGCHAI COMPANY, LIMITED
SEMI-ANNUAL REPORT 2010
August 2010Important Notes
The Board of Directors, the Supervisory Committee as well as Directors, Supervisors
and Senior Executives of the Changchai Company, Limited (hereinafter referred to as
“the Company”) warrant that this report does not contain any false or misleading
statements or omit any material facts and shall take individual and joint responsibility
for the accuracy, truth and completeness of its contents.
Director He jianguang were absent from the Board meeting due to some reasons, and
respectively entrusted Director Shi Jianchun to vote on his behalf.
Person in charge of the Company Mr. Xue Guojun, person in charge of the accounting
work Mr. He Jianguang and person in charge of accounting organization Mr. Jiang He
hereby confirm that the Financial Report enclosed in this Semi-Annual Report was
true and complete.
The Semi-annual Report 2010 of the Company has not been audited.Contents
I. Company Profile-------------------------------------------------------------------------------4
II. Major Financial Highlights and Indices---------------------------------------------------5
III. Changes in Share Capital and Shares Held by Principal Shareholders---------------7
IV. Particulars about Directors, Supervisors and Senior Executives ---------------------9
V. Discussion and Analysis of the Management ------------------------------------------10
VI. Significant Events -------------------------------------------------------------------------11
VII. Financial Report---------------------------------------------------------------------------14
VIII. Documents Available for Reference --------------------------------------------------65I. Company Profile
(I). Legal Name of the Company
In Chinese: 常柴股份有限公司
In English: CHANGCHAI COMPANY, LIMITED
Abbr.: CHANGCHAI CO., LTD.
(II) Legal Representative: Mr. Xue Guojun
(III) Secretary of the Board of Directors: Mr. Shi Jianchun
Securities Affairs Representative: Mr. He Jianjiang
Contact Address: No. 123, Huaide Middle Road, Changzhou, Jiangsu, China
Tel: (86)519-68683155, (86)519-86610041
Fax: (86) 519-86630954
E-mail: ccsjc@changchai.com cchjj@changchai.com
(IV) Registered Address and Office Address: No. 123, Huaide Middle Road,
Changzhou, Jiangsu, China
Post Code: 213002
Internet Website: http://www.changchai.com.cn
E-mail: cctqm@public.cz.js.cn
(V) Newspapers Chosen for Disclosing Information of the Company: Securities
Times and Ta Kung Pao
The Place Where the Semi-annual Report is Prepared and Placed: Secretariat of
the Board
Internet Website Designated by CSRC for Publishing the Semi-annual Report of
the Company: http://www.cninfo.com.cn
(VI) Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of the Stock: Suchangchai A Stock Code: 000570
Suchangchai B 200570
(VII) Other Relevant Information of the Company
1. Initial registration date: May 5, 1994;
The registered institution with: Changzhou Municipal Administration Bureau
for Industry and Commence
2. The changed registration date: Mar. 8, 2010
The registered institution with: Changzhou Municipal Administration Bureau
for Industry and Commence
3. Registered number of the business license: 320400000004012
4. Registered number of tax: 320401137155863
5. Name of the Certified Public Accountants engaged by the Company:
Domestic: Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd.
Office address: 10/F, Yingtong Business Bldg., Changzhou, JiangsuII. Major Financial Highlights and Indices
1. Major accounting data and financial indices:
(Unit: RMB Yuan)
At the end of this
report period
At the period-end of
last year
Increase/decrease
of the end of this
report period
compared with the
period-end of last
year (%)
Total assets 3,007,912,252.62 2,940,087,431.89 2.31
Owners’ equity attributable to shareholders of the
listed company 1,802,931,811.62 1,797,529,734.74 0.30
Share capital 561,374,326.00 561,374,326.00 0.00
Net assets per share attributable to shareholders of
the listed company (Yuan/share) 3.21 3.20 0.31
The report period
(Jan. -Jun.)
The same period of
last year
Increase/decrease
of current period
year-on-year (%)
Total operating income 1,486,675,455.65 1,247,512,762.60 19.17
Operating profit 74,247,231.87 217,621,227.57 -65.88
Total profit 76,052,323.60 218,623,563.05 -65.21
Net profit attributable to shareholders of the listed
company 62,560,326.88 188,720,466.26 -66.85
Net profit attributable to shareholders of the listed
company after deducting non-recurring gains and
losses
60,930,569.42 60,359,887.38 0.95
Basic EPS (Yuan/share) 0.11 0.50 -78.00
Diluted EPS (Yuan/share) 0.11 0.50 -78.00
ROE (%) 3.47% 12.06% -8.59
Net cash flows from operating activities 73,577,854.63 279,337,848.92 -73.66
Net cash flows per share from operating activities
(Yuan/share) 0.13 0.75 -82.67
Item Amount Remark
Gains and losses from non-current asset disposal 1,579,785.08
Including: a net income of
RMB 1,579,785.08 from fixed
asset disposal
Government subsidies recognized into current gains and
losses (excluding those subsidies which are closely related
to the Company’s business and are enjoyed at fixed
amounts or proportions according to unified state
standards)
623,730.84
Gains and losses from fair value changes in transactional
financial assets and liabilities, and investment incomes
from disposing transactional financial assets and liabilities
and financial assets available for sale, excluding the
effective hedging business related to the normal operation
of the Company
242,847.27
Other non-operating incomes and expenses besides the
items above -398,424.19Effect on income tax -345,796.31
Effect on minority interests (after tax) -72,385.23
Total 1,629,757.46
2. Impact on net profit and net assets after the adjustment under IFRS:
(Unit: RMB Yuan)
Items Net profit Net assets
Under PRC GAAP 62,560,326.88 1,802,931,811.62
Under IFRS 62,560,326.88 1,802,931,811.62
Difference No difference
3. Calculating the return on equity and earnings per share according to No. 9
Guidelines on Contents and Format for Information Disclosure of Companies That
Make Public Offering of Securities issued by CSRC (Revised in 2007)
Supplementary Statement to Income Statement
Return on Equity (%) Earnings per Share
Profit in report period Fully (Yuan/share)
diluted
Weighted
average Basic Diluted
Net profit attributable to shareholders
of ordinary shares of the Company 3.47 3.48 0.11 0.11
Net profit attributable to shareholders
of ordinary shares of the Company
after deducting non-recurring gains
and losses
3.38 3.38 0.11 0.11III. Changes in Share Capital and Shares Held by Principal Shareholders
(I) Changes in share capital
The share capital of the Company remained unchanged in the report period.
(II) Particulars about shareholders
1. Number of shareholders and shares held by them
Total number of shareholders 114,543 shareholders in total (92,952 shareholders of A-share and 21,591 shareholders of B-share)
Particulars about shares held by the top ten shareholders
Name of shareholder Nature of
shareholders
Proportion
in total
shares
Total number
of shares held
Increase/decrease
in the report
period
Shares subject
to moratorium
held
Shares
pledged or
frozen
1. State-owned Assets
Supervision and Administration
Commission of Changzhou
Municipal Government
State-owned
shareholder
30.02% 168,497,736 0 0 28,068,716
2. NORGES BANK
Foreign
corporation
0.16% 898,350 0 0
3. Li Tao
Domestic
natural person
0.15% 838,391 0 0
4. Tong Chunxia
Domestic
natural person
0.15% 821,900 0 0
5. Wei Xianming
Domestic
natural person
0.15% 820,000 0 0
6. GUOTAI JUNAN
SECURITIES(HONGKONG)
LIMITED
Foreign
corporation
0.15% 817,350 0 0
7. Yu Xiaoping
Domestic
natural person
0.14% 790,000 0 0
8. Shenzhen Huarong Century
Investment Co., Ltd.
Domestic
corporation
0.13% 740,250 0 0
9. Ma Zeqi
Domestic
natural person
0.13% 712,500 0 0
10. Zhou Nan
Domestic
natural person
0.12% 670,141 0 0
Particulars about shares held by the top ten shareholders not subject to trading moratorium
Name of shareholders Number of shares not subject to trading
moratorium held by the shareholder Type of shares
1. State-owned Assets Supervision and Administration
Commission of Changzhou Municipal Government
168,497,736 Renminbi ordinary shares
2. NORGES BANK 898,350 Domestically listed foreignshares
3. Li Tao 838,391 Domestically listed foreign
shares
4. Tong Chunxia 821,900 Domestically listed foreign
shares
5. Wei Xianming 820,000 Renminbi ordinary shares
6. GUOTAI JUNAN SECURITIES(HONGKONG)
LIMITED 817,350 Domestically listed foreign
shares
7. Yu Xiaoping 790,000 Domestically listed foreign
shares
8. Shenzhen Huarong Century Investment Co., Ltd. 740,250 Renminbi ordinary shares
9. Ma Zeqi 712,500 Domestically listed foreign
shares
10. Zhou Nan 670,141 Renminbi ordinary shares
Explanation on associated relationship and action-in-concert
among the top ten shareholders
It is unknown whether there was any associated relationship among the top
ten tradable shareholders and among the top ten shareholders not subject
to moratorium, or whether there is any action-in-concert among them as
described by Measures for the Administrative of Disclosure of Shareholder
Equity Changes.
Note: 28,068,716 shares held by State-Owned Assets Supervision and Administrative
Commission of Changzhou Municipal Government has been pledged to Bank of
Jiangsu Co., Ltd Changzhou branch.
2. Particulars about changes in the controlling shareholder and actual controller
During the report period, the controlling shareholder and actual controller remained
unchanged.
IV. Particulars about Directors, Supervisors and Senior Executives
1. In the report period, there was no change in shares held by directors, supervisors
and senior executives of the Company.
2. Engagement or dismissal of directors, supervisors and senior executives in the
report period
The 2009 Annual Shareholders’ General Meeting was convened on 17 May 2010, at
which the proposal on re-electing the Board of Directors and the Supervisory
Committee were reviewed and approved to form the 6th Board of Directors and the 6th
Supervisory Committee. New members of the Board of Directors are Xue Guojun, He
Jianguang, Lu Jiaxiang, Shi Jianchun, Xu Zhenping, Zhuang Rongfa, Shen Ningwu,
Zhu Jianming, and Cao Huiming. And new members of the Supervisory Committee
are Lu Weimin, Yuan Xiaodong, Wu Keyun, Ni Mingliang and Lu Zhonggui. At the
1st Meeting of the 6th Board of Directors, Xue Guojun was elected as Chairman of the
Board, He Jianguang as GM, Shi Jianchun, Xu Zhenping, Yin Lihou, Xu Yi and Ni
Shiyuan as vice GMs, Shi Jianchun as Secretary to the Board, and He Jianjiang as
Securities Affair Representative. And Lu Weimin was elected as Chairman of the
Supervisory Committee at the 1st Meeting of the 6th Supervisory Committee. Details
were published on Securities Times and Ta Kung Pao dated 18 May 210.V. Discussion and Analysis of the Management
1. Overall operation of the Company in the report period
For the first half of 2010, the Company accumulatively sold various diesel engines
and power generation sets amounting to 635,600 in total, an increase of 18.49%
year-on-year, including 80,700 sets of multi-cylinder diesel engines, up 32.51%
year-on-year. The Company realized sales revenues of RMB 1,486,675,500, an
increase of 19.17% year-on-year and realized a net profit of RMB 62,560,300, down
66.85% year-on-year.
In the report period, the operating results were better than last year mainly due to the
government subsidy policy for the farm machinery. Sales in the first half of this year
also increased significantly when compared with the same period of last year,
especially sales of multi-cylinder diesel engines. However, in the first half of 2009,
35,117,105 “Kama B” shares held by the Company were transferred to China
Hengtian Group Co., Ltd. at the price of RMB 5.33 Yuan per share, which generated a
just-for-once before-tax income of RMB 155,467,758.02. And the Company had no
such just-for-once investment incomes in the first six months of 2010. As such, the net
profit achieved in the report period registered a considerable year-on-year decrease.
2. Analysis on operation of the Company in the report period
The Company belongs to the industry of machinery manufacturing, which is mainly
engaged in manufacturing and sales of single-cylinder diesel engines, multi-cylinder
diesel engines, fittings of diesels and power generation sets and etc.
(1) In the report period, the composing of the Company’s income from main
operations classified according to product was as follows:
Index Operating income Operating cost Gross profit rate
Product Amount (RMB) Amount (RMB) (%)
Diesel engines and
fittings 1,486,675,455.65 1,287,727,677.72 13.38
Total 1,486,675,455.65 1,287,727,677.72 13.38
(2) In the report period, the composing of the Company’s income from main
operations classified according to area was as follows:
Area Operating income (RMB) Year-on-year increase/decrease
(%)
East China 650,369,442.54 12.18
Northeast 82,168,972.27 10.86
Southwest 152,663,729.41 13.22
Central China 164,595,954.58 34.65
North China 83,109,036.01 -6.47
Northwest 45,818,139.69 11.61
South China 105,523,972.70 31.71
Export 94,597,420.27 59.22
(3) During the report period, no significant change occurred in profitability (gross
profit rate) of the main business when compared with the same period of last year.
(4) In the report period, there were no other businesses that had a significant influenceon the net profit.
(5) Problems and difficulties in operation
Price fluctuation of raw and auxiliary materials might create some difficulties for cost
control of the Company. And the product structure of the Company still needed to be
further adjusted.
3. Investments made by the Company in the report period
(1) The Company had not raised any funds during the previous three years.
(2) The Company did not launch any project invested with non-raised funds in the
report period.VI. Significant Events
1. Corporate governance in report period
In strict compliance with regulatory documents such as the Company Law and the
Code of Corporate Governance for Listed Companies, the Company kept perfecting
its corporate governance structure and operating in a regulated way. At present, the
corporate governance structure of the Company is considered basically in line with
the regulatory documents concerning the corporate governance of listed companies
issued by CSRC.
2. Neither profit distribution plan, capitalization plan of public reserves or plan on
issue of new shares were drawn out in previous period nor executed in the report
period.
3. In the report period, the accumulative capital in relation to the lawsuits and
arbitrations in which the Company was involved reached RMB 14.36 million. And the
said lawsuits and arbitrations were all cases carried down from the previous years to
the report period. For more details, please refer to the notes of the financial statements
in this report.
4. In the report period, there are no significant asset acquisition or sales
5. In the report period, the Company did not conduct any significant related
transaction with its actual controller or its subsidiaries.
6. In the report period, the Company provided loan guarantees of RMB 14.50 million
for its holding subsidiary—Changchai Benniu Diesel Engine Fittings Co., Ltd, with
the term from 20 Oct. 2009 to 29 Oct. 2010. there are no other guarantees.
7. Securities investment in report period
(1) Transactional financial assets
Sequ
ence
No.
Securities
variety
Stock
code
Short form of
stock
Initial
investment
amount (RMB)
Number of
shares held
(share)
Book value
at period-end
(RMB)）
Proportion in
total securities
investment at
period-end (%)
Profits or
losses in report
period (RMB)
1 Convertibl
e debt 113001
Convertible
debt from
BOC
473000.00 4730 478534.10 83.61 5534.10
2 Stock 601000 Tangshan Port 16400.00 2000 16400.00 2.87 0.00
3 Stock 002441 Zhong Yeda 19950.00 500 19950.00 3.49 0.00
4 Stock 002440 Runtu 31200.00 1000 31200.00 5.45 0.00
5 Stock 300094
Guolian
Aquatic
Products
7190.00 500 7190.00 1.26 0.00
6 Stock 300093 Golden glass 8100.00 500 8100.00 1.42 0.007 Stock 002443 Kingland
Pipeline 11000.00 500 11000.00 1.92 0.00
Other securities investment held at period-end 0 0 0 0 0
Profits or losses from securities investment sold
in report period
— — — — 237313.17
Total 566840.00 — 572374.10 242847.27
(2) Equity held by the Company of other listed companies
Stock
code
Short form
of stock
Initial
investment
amount (RMB)
Proportio
n of
sharehold
ing
Book value at
period-end
(RMB)
Profits or
losses in
report
period
(RMB)
Change of
owner’ s equity
in report period
Accounti
ng item
Source of
stock
600166 Foton
Motor
41784000.00 3.94% 620988750.00 0.00 -67192500.00
Financial
assets
available
for sale
Exchange
assets of
Changcai
Group in
1999
600377 Ninghu
Expressway
90500.00 304500.00 0.00 -52500.00
Financial
assets
available
for sale
Transfer by
agreement
Total 41874500.00 — 621293250.00 0.00 -67245000.00
(3) Equity held by the Company of non-listed financial enterprises and companies to
be listed
Name of the
held party
Initial
investment
amount (RMB)
Number of
shares held
(share)
Proportio
n in
equity of
the held
party
Book value at
period-end
(RMB)
Profits or
losses in
report
period
(RMB)
Change of
owner’ s
equity in
report period
Accounti
ng item
Name of
the held
party
Bank of
Jiangsu
38000000.00 38000000 0.48% 38000000.00 0 0
Long-ter
m equity
investme
nt
Sponsor’s
shares
Total 38000000.00 38000000 0.48% 38000000.00 0 0
8. In the report period, the Company did not sign any significant contract.
9. There were no reception of researches, interviews and visits in the report period.
10. No Commitments that greatly affect operating results or financial status of theCompany made by shareholders holding over 5% (including 5%) shares in the
previous period or carried down to the report period.
11. No shareholders holding over 5% of the Company’s shares made any further
commitments concerning the trading moratorium on shares in 2010.
12. In the report period, the Company, the Board of Directors of the Company and its
directors received no investigations, administrative punishment, criticism by circular
from CSRC, and no official criticism from the stock exchange; meanwhile, the
directors and management staff of the Company were not adopted any judicial
compulsory measure on.
13. Special explanation and independent opinion from independent directors on the
capital occupation by the Company’s related parties and its provision of external
guarantees
There were no non-operational occupation of the Company’s capital by the holding
shareholder or other related parties.
In the report period, the Company provided external guarantees and controlled the
relevant risks in strict compliance with relevant regulations. There existed no
violation of the Circular on Regulating Provision of External Guarantees by Listed
Companies. The Company only provided guarantees for the funds needed in the
normal production and operation of its holding subsidiaries, with a legal and
reasonable decision-making procedure for the said guarantees, which thus did no
harm to the interests of the Company and its shareholders.
14. Subsequent events
As reviewed and approved by the 19th Meeting of the 4th Board of Directors, the
Company set up Nanjing Changli Agro-engine Fitting Market Co., Ltd, whose
business scope are sales of various agricultural machinery products,
electromechanical products and fittings as well as maintenance service. As the local
government didn’t establish agro-engine market all through, this company neither had
not operate normally nor occurred any operating activities. The Company finished
procedure of cancellation of Nanjing Changli Agro-engine Fitting Market Co., Ltd in
Jul. 2010. Register capital of RMB 5 million had no loss .VII. Financial Report
(I) Financial statement
Balance Sheet
Prepared by Changchai Company, Limited 30 Jun. 2010 Unit: RMB Yuan
Items ConsolidatCiolons i ng balPaanrceen t company ConsolidOatpioenni n g bPalaarnecnet company
Current assets:
Monetary funds 800,969,743.08 773,682,332.19 770,721,154.44 732,773,854.30
Settlement fund reserve
Dismantle fund
Transaction financial asset 572,374.10
Notes receivable 67,834,743.30 60,004,743.30 83,834,240.00 76,174,240.00
Account receivable 403,658,371.80 369,873,054.48 255,668,271.46 218,589,252.04
Account paid in advance 16,886,791.62 15,069,974.73 23,512,432.19 24,502,835.32
Premium receivables
Receivables from reinsurers
Reinsurance contract reserve
receivables
Interest receivable
Dividend receivable
Other account receivable 18,799,047.07 7,408,289.89 15,656,250.31 14,418,443.89
Financial assets purchased under
agreements to resell
Inventories 307,865,529.22 234,977,061.34 370,423,764.66 312,897,677.55
Non-current assets due within 1
year
Other current assets 135,131.40 133,419.55
Total current assets 1,616,721,731.59 1,461,015,455.93 1,519,949,532.61 1,379,356,303.10
Non-current assets:
Loans and advance
Available for sale financial assets 621,293,250.00 621,293,250.00 688,538,250.00 688,538,250.00
Held to maturity investments 10,000,000.00
Long-term account receivable
Long-term equity investment 60,708,368.14 142,048,168.14 60,708,368.14 112,048,168.14
Investing property 69,426,904.43 69,426,904.43 70,531,074.83 70,531,074.83
Fixed asset 432,064,197.53 377,628,125.73 430,555,693.45 374,070,571.63
Project in construction 105,999,675.85 105,358,344.12 65,803,686.54 65,543,304.34
Engineering material
Fixed asset disposal
Bearer biological asset
Oil assets
Intangible assets 91,115,616.76 88,861,899.03 103,418,318.00 101,134,909.93
Development expense
Goodwill
Long-term expense to be
apportioned
Deferred tax assets 582,508.32 582,508.32 582,508.32 582,508.32
Other non-current assets
Total of non-current assets 1,391,190,521.03 1,405,199,199.77 1,420,137,899.28 1,412,448,787.19
Total assets 3,007,912,252.62 2,866,214,655.70 2,940,087,431.89 2,791,805,090.29
Current liabilities:
Short-term borrowings 31,500,000.00 41,500,000.00
Borrowing from Central Bank
Deposits and due to banks and other
financial institutions
Placements from banks and other
financial institutions
Transaction financial liabilities
Notes payable 335,289,100.00 318,170,000.00 323,666,300.00 294,380,000.00
Account payable 445,489,176.80 407,098,751.50 459,360,350.72 422,014,864.70
Account received in advance 60,493,742.68 57,546,332.70 37,892,215.77 36,868,917.59Financial assets sold under agreements
to repurchase
Handling charges and commission
payable
Employee’s compensation payable 28,512,794.67 24,560,704.13 49,743,183.62 44,412,398.41
Tax payable -3,849,824.71 213,550.77 -6,934,188.05 -1,294,677.52
Interest payable
dividend payable 3,891,433.83 3,243,179.97 3,891,433.83 3,243,179.97
Other account payable 167,061,268.94 159,874,419.63 119,130,766.55 120,169,477.26
Due to reinsurers
Insurance contract reserve
Customer deposits
Amount payables under security
underwriting
Non-current liabilities due within 1
year
Other current liabilities 1,727,834.71 334,297.88
Total current liabilities 1,070,115,526.92 970,706,938.70 1,028,584,360.32 919,794,160.41
Non-current liabilities:
Long-term borrowings 30,000,000.00 30,000,000.00
Debentures payable
Long-term payables
Specific purpose account payables
Provisions for contingent liabilities
Deferred tax liabilities 86,912,812.50 86,912,812.50 96,999,562.50 96,999,562.50
Other non-current liabilities 6,333,000.00 6,333,000.00 6,060,000.00 6,060,000.00
Total non-current liabilities 123,245,812.50 123,245,812.50 103,059,562.50 103,059,562.50
Total liabilities 1,193,361,339.42 1,093,952,751.20 1,131,643,922.82 1,022,853,722.91
Owner’s equity (or shareholders’
equity)
Paid-in capital (or share capital) 561,374,326.00 561,374,326.00 561,374,326.00 561,374,326.00
Capital surplus 665,871,061.26 675,550,247.45 723,029,311.26 732,708,497.45
Less: Treasury Stock
Specific reserves
Reserved fund 262,059,351.41 262,059,351.41 262,059,351.41 262,059,351.41
General risk provision
Retained earnings 313,627,072.95 273,277,979.64 251,066,746.07 212,809,192.52
Foreign exchange difference
Total owners' equity attributable to
holding company 1,802,931,811.62 1,772,261,904.50 1,797,529,734.74 1,768,951,367.38
Minority interest 11,619,101.58 10,913,774.33
Total owner’s equity 1,814,550,913.20 1,772,261,904.50 1,808,443,509.07 1,768,951,367.38
Total liabilities and owner’s equity 3,007,912,252.62 2,866,214,655.70 2,940,087,431.89 2,791,805,090.29Income Statement
Prepared by Changchai Company, Limited Jan.-Jun. 2010 Unit: RMB Yuan
Items ConsolidaItnio cnu r rent pPerairoedn t company CoTnshoel isdaamtieo np e riodP oafr elnats tc yoemapr any
I. Total operation income 1,486,675,455.65 1,498,628,361.73 1,247,512,762.60 1,255,320,258.61
Including: Sales income 1,486,675,455.65 1,498,628,361.73 1,247,512,762.60 1,255,320,258.61
Interest income
Premium income
Handling charges and
commission income
II. Total operation cost 1,419,173,571.05 1,434,391,178.32 1,201,087,846.36 1,214,002,985.79
Including: Cost of sales 1,287,727,677.72 1,315,285,655.58 1,083,838,249.11 1,106,419,500.15
Interest expenses
Handling charges and
commission expenses
Surrender value
Net amount of claims
Net amount of insurance
contract reserve withdrawn
Expenditure on policy
dividends
Reinsurance premium expenses
Taxes and associate charges 174,893.55 111,622.19
Selling expenses 51,194,531.22 47,503,047.78 55,539,292.48 53,477,331.68
Administrative expenses 81,383,842.99 74,136,284.41 61,026,897.65 54,740,529.53
Financial expenses -1,307,374.43 -2,533,809.45 -3,217,766.99 -4,533,199.69
Impairment loss 3,789,551.92 3,898,824.12
Add: gain from change in fair value
(“-” means loss) 5,534.10 -16,440,300.00 -16,440,300.00
Gain from investment (“-” means
loss) 6,739,813.17 6,502,500.00 187,636,611.33 187,636,611.33
Including: income form
investment in affiliated enterprise and
joint ventures
Foreign exchange difference (“-”
means loss)
III. Operation profit (“-” means loss) 74,247,231.87 70,739,683.41 217,621,227.57 212,513,584.15
Add: non-operation income 5,984,057.24 5,532,540.35 6,169,392.10 3,377,541.64
Less: non-business expense 4,178,965.51 4,108,049.91 5,167,056.62 5,167,056.62
Including: loss from non-current asset
disposal
IV. Total profit (“-” means loss) 76,052,323.60 72,164,173.85 218,623,563.05 210,724,069.17
Less: income tax expense 12,786,669.47 11,695,386.73 27,909,581.78 27,440,194.03
V. Net profit (“-” means loss) 63,265,654.13 60,468,787.12 190,713,981.27 183,283,875.14
Attributable to owners of parent
company 62,560,326.88 60,468,787.12 188,720,466.26 183,283,875.14
Minority interest 705,327.25 1,993,515.01
VI. Earnings per share
(I) Basic earnings per share 0.11 0.50
(II) Diluted earnings per share 0.11 0.50
VII. Other composite income -57,158,250.00 -57,158,250.00 228,691,375.50 228,705,375.50
VIII. Total composite income 6,107,404.13 3,310,537.12 419,405,356.77 411,989,250.64
Attributable to owners of parent
company 5,402,076.88 3,310,537.12 417,415,341.76 411,989,250.64
Minority interest 705,327.25 1,990,015.01Cash Flow Statement
Prepared by Changchai Company, Limited Jan.-Jun. 2010 Unit: RMB Yuan
Items ConsolidIant icounr rent Ppearrieondt company CoTnshoel isdaamtieo np eriodP oafr elnats tc yoemapr any
I. Cash flows from operating activities:
Cash received from sale of commodities
and rendering of service 1,505,587,808.41 1,503,082,113.31 1,381,845,211.20 1,362,060,681.86
Net increase of deposits from customers
and due from banks
Net increase of loans from the central
bank
Net increase of funds borrowed from
other financial institutions
Cash received from premium of original
insurance contracts
Net cash received from reinsurance
business
Net increase of savings of policy holders
and investment fund
Net increase of disposal of tradable
financial assets
Cash received from interest, handling
charges and commissions
Net increase of borrowed inter-bank
funds
Net increase of buy-back funds
Tax refunds received 8,197,024.83 5,794,682.48
Other cash received relating to operating
activities 12,585,252.55 11,928,811.41 3,436,274.54 2,970,907.40
Subtotal of cash inflows from operating
activities 1,518,173,060.96 1,515,010,924.72 1,393,478,510.57 1,370,826,271.74
Cash paid for purchase of commodities
and reception of service 1,254,234,969.24 1,257,962,515.57 975,548,726.70 1,006,219,223.95
Net increase of customer lending and
advance
Net increase of funds deposited in the
central bank and amount due from banks
Cash for paying claims of the original
insurance contract
Cash for paying interest, handling
charges and commissions
Cash for paying policy dividends
Cash paid to and for employees 121,374,684.34 108,737,449.09 99,411,807.47 89,838,515.04
Various taxes paid 23,288,817.95 19,871,179.06 9,855,748.36 4,997,007.37
Other cash paid relating to operating
activities 45,696,734.80 40,822,295.89 29,324,379.12 24,909,039.56
Subtotal of cash outflows from operating
activities 1,444,595,206.33 1,427,393,439.61 1,114,140,661.65 1,125,963,785.92
Net cash flows from operating activities 73,577,854.63 87,617,485.11 279,337,848.92 244,862,485.82
II. Cash Flows from investment activities:
Cash received from disposal of
investments 36,911,141.63 36,911,141.63
Cash received from investment income 6,739,813.17 6,502,500.00 187,339,903.02 187,339,903.02
Net cash received from disposal of fixed
assets, intangible assets and other long-term
assets
26,045,985.49 26,031,054.23 177,877.01 177,877.01
Net cash received from disposal of
subsidiary or other business units
Other cash received relating to
investment activities
Subtotal of cash inflows from
investment activities 32,785,798.66 32,533,554.23 224,428,921.66 224,428,921.66
Cash paid to acquire fixed assets,
intangible assets and other long-term assets 82,785,627.24 78,162,015.84 67,712,080.24 63,680,764.75Cash paid for investment 10,566,840.00 30,000,000.00
Net increase of pledged loans
Net cash paid to acquire subsidiaries and
other business units
Other cash paid relating to investment
activities
Subtotal of cash outflows from investment
activities 93,352,467.24 108,162,015.84 67,712,080.24 63,680,764.75
Net cash flows from investment activities -60,566,668.58 -75,628,461.61 156,716,841.42 160,748,156.91
III. Cash flows from financing activities:
Cash received from absorbing
investment
Including: Cash received by
subsidiaries from investment of minority
interest
Cash received from borrowings 51,500,000.00 30,000,000.00 57,700,000.00 20,000,000.00
Cash received from issuance of bonds
Other cash received relating to
financing activities
Subtotal of cash inflows from financing
activities 51,500,000.00 30,000,000.00 57,700,000.00 20,000,000.00
Cash paid to repay loans 31,500,000.00 41,400,000.00
Cash paid for interest expenses and
distribution of dividends or profit 2,762,597.41 1,080,545.61 4,033,686.23 2,213,344.50
Including: dividends or profit paid to
minority shareholders by subsidiaries
Other cash payments relating to
financing activities 1,112,800.00
Sub-total of cash outflows from financing
activities 34,262,597.41 1,080,545.61 46,546,486.23 2,213,344.50
Net cash flows from financing activities 17,237,402.59 28,919,454.39 11,153,513.77 17,786,655.50
IV. Effect of foreign exchange rate changes
on cash and cash equivalents
V. Net increase in cash and cash
equivalents 30,248,588.64 40,908,477.89 447,208,204.11 423,397,298.23
Add: beginning balance of cash and
cash equivalents 770,721,154.44 732,773,854.30 400,278,967.15 378,820,707.08
VI. Closing balance of cash and cash
equivalents 800,969,743.08 773,682,332.19 847,487,171.26 802,218,005.31Consolidated Statement of Changes in Owners’ Equity
Prepared by Changchai Company, Limited For the first half year of 2010 Unit: RMB Yuan
Amount for the current period Amount for the previous period
Owners’ equity attributable to parent company Owners’ equity attributable to parent company
Items Paid-in
capital
(or share
capital)
Capital
reserve
Less:
treasur
y stock
Specifi
c
reserve
s
Surplus
public
reserve
Genera
l risk
reserve
Retaine
d profit
Other
s
Minority
interests
Total
owners
’ equity
Paid-in
capital
(or share
capital)
Capital
reserve
Less:
treasur
y stock
Specifi
c
reserve
s
Surplus
public
reserve
Genera
l risk
reserve
Retaine
d profit Others
Minorit
y
interest
s
Total
owners
’ equity
I. Balance at the end of last year 561,374,
326.00
723,02
9,311.2
6
262,05
9,351.4
1
251,06
6,746.0
7
10,913,7
74.33
1,808,4
43,509.
07
374,249,
551.00
272,484,1
86.26
240,36
9,344.9
2
260,78
3,005.9
4
7,335,0
74.29
1,155,2
21,162.
41
Add: change of accounting policy
Correction of errors in previous
periods
Others
II. Balance at the beginning of this
year
561,374,
326.00
723,02
9,311.2
6
262,05
9,351.4
1
251,06
6,746.0
7
10,913,7
74.33
1,808,4
43,509.
07
374,249,
551.00
272,484,1
86.26
240,36
9,344.9
2
260,78
3,005.9
4
7,335,0
74.29
1,155,2
21,162.
41
III. Increase/ decrease of amount in
this year (“-” means decrease) -57,158
,250.00 62,560,
326.88 705,327.
25
6,107,4
04.13 228,694,8
75.50
188,72
0,466.2
6
1,990,0
15.01
419,40
5,356.7
7
(I) Net profit 62,560,
326.88 705,327.
25
63,265,
654.13
188,72
0,466.2
6
1,993,5
15.01
190,71
3,981.2
7
(II) Gain/loss recorded in owners’
equity directly -57,158
,250.00
-57,158
,250.00 228,694,8
75.50 -3,500.
00
228,69
1,375.5
0
1. Net amount on changes in
fair value of financial assets
available for sale
-57,158
,250.00
-57,158
,250.00 304,940,5
00.50
304,94
0,500.5
0
2. Effect on changes in other
owners’ equity of invested units
under equity method
-10,500.0
0 -10,500
.00
3. Effect of income tax
recorded in owners’ equity -76,235,1
25.00 -76,235
,125.00
4. Other -3,500.
00
-3,500.
00Subtotal of (I) and (II) -57,158
,250.00
62,560,
326.88 705,327.
25
6,107,4
04.13 228,694,8
75.50
188,72
0,466.2
6
1,990,0
15.01
419,40
5,356.7
7
（III）Input and reduced capital
of owners
1. Capital input by owners
2. Amount of shares-based
payment recorded in owner’s equity
3. Other
(IV) Profit distribution
1. Appropriating surplus
reserve
2. Appropriating general risk
reserve
3. Distribution to owners
(shareholders)
4. Other
(V) Internal carry-over of
owner’s equity
1. Transferring capital reserve
into capital (share capital)
2. Transferring surplus reserve
into capital (share capital)
3. Making up losses with
surplus reserve
4. Other
IV. Balance as at the period-end 561,374,
326.00
665,87
1,061.2
6
262,05
9,351.4
1
313,62
7,072.9
5
11,619,1
01.58
1,814,5
50,913.
20
374,249,
551.00
501,179,0
61.76
240,36
9,344.9
2
449,50
3,472.2
0
9,325,0
89.30
1,574,6
26,519.
18Statement of Change in Owners’ Equity of Parent Company
Prepared by Changchai Company, Limited For the first half year of 2010 Unit: RMB Yuan
Amount for the current period Amount for the previous period
Items Paid-in
capital (or
share capital)
Capital
reserve
Less:
treasury
stock
Specific
reserves
Surplus
public
reserve
General
risk
reserve
Retained
profit
Total
owners’
equity
Paid-in capital
(or share
capital)
Capital
reserve
Less:
treasury
stock
Specific
reserves
Surplus
public
reserve
General
risk reserve
I. Balance at the end of last year 561,374,326.
00
732,708,49
7.45
262,059,35
1.41
212,809,19
2.52
1,768,951,3
67.38
374,249,55
1.00
282,163,372.4
5
240,369,34
4.92
234,663,87
3.15
1,131,446,1
41.52
Add: change of accounting
policy
Correction of errors in previous
periods
Others
II. Balance at the beginning of
this year
561,374,326.
00
732,708,49
7.45
262,059,35
1.41
212,809,19
2.52
1,768,951,3
67.38
374,249,55
1.00
282,163,372.4
5
240,369,34
4.92
234,663,87
3.15
1,131,446,1
41.52
III. Increase/ decrease of amount
in this year (“-” means decrease) -57,158,25
0.00
60,468,787
.12
3,310,537.1
2 228,705,375.5
0
183,283,87
5.14
411,989,25
0.64
(I) Net profit 60,468,787
.12
60,468,787.
12 183,283,87
5.14
183,283,87
5.14
(II) Gain/loss recorded in
owners’ equity directly -57,158,25
0.00
-57,158,250
.00 228,705,375.5
0 228,705,37
5.50
1. Net amount on changes in
fair value of financial assets
available for sale
-57,158,25
0.00
-57,158,250
.00 304,940,500.5
0 304,940,50
0.50
2. Effect on changes in other
owners’ equity of invested units
under equity method
3. Effect of income tax
recorded in owners’ equity -76,235,125.0
0 -76,235,125
.00
4. Other
Subtotal of (I) and (II) -57,158,25
0.00
60,468,787
.12
3,310,537.1
2 228,705,375.5
0
183,283,87
5.14
411,989,25
0.64
（III）Input and reduced capital
of owners
1. Capital input by owners
2. Amount of shares-based
payment recorded in owner’sequity
3. Other
(IV) Profit distribution
1. Appropriating surplus
reserve
2. Distribution to owners
(shareholders)
3. Other
(V) Internal carry-over of
owner’s equity
1. Transferring capital
reserve into capital (share capital)
2. Transferring surplus
reserve into capital (share capital)
3. Making up losses with
surplus reserve
4. Other
IV. Balance as at the period-end 561,374,326.
00
675,550,24
7.45
262,059,35
1.41
273,277,97
9.64
1,772,261,9
04.50
374,249,55
1.00
510,868,747.9
5
240,369,34
4.92
417,947,74
8.29
1,543,435,3
92.16Semi-Annual Report 2010
23
Statement to the Provision for Impairment of Assets
Prepared by Changchai Company, Limited 30 Jun. 2010 Unit: RMB Yuan
Items Opening book Decrease in the reporting period
balance
Withdrawn amount
in this period Switching back Writing-off
Closing book
balance
I. Provision for bad debts 303,183,615.15 11,947,576.38 291,236,038.77
II. Provision for falling price of
inventory 5,709,240.20 5,709,240.20
III. Provision for impairment of
financial assets available for sale
IV. Provision for impairment of
held-to-maturity investment
V. Provision for impairment of
long-term equity investment 8,646,389.00 8,646,389.00
VI. Provision for impairment of
investment real estate
VII. Provision for impairment of fixed
assets 15,042,619.76 15,042,619.76
VIII. Provision for impairment of
project materials
IX. Provision for impairment of
construction in progress
X. Provision for impairment of
productive biological assets
Of which: Provision for impairment
of mature productive biological assets
XI. Provision for impairment of oil–gas
assets
XII. Provision for impairment of
intangible assets
XIII. Provision for impairment of
goodwill
XIV. Other 14,000,000.00 14,000,000.00
Total 346,581,864.11 0.00 0.00 11,947,576.38 334,634,287.73Semi-Annual Report 2010
24
(II) Notes to Financial Statement
Note 1: Company status
Changchai Company, Limited (hereinafter referred to as “the Company”) was founded on 5 May
1994, who is a company limited by shares promoted by only Changzhou Diesel Engine Plant
through the approval by the State Commission for Restructuring the Economic Systems with
document TGS [1993] No. 9 on 15 Jan. 1993 by way of public offering of shares. With the
approved of the People's Government of Jiangsu Province SZF [1993] No. 67, as well as
reexamined and approved by China Securities Regulatory Commission (“CSRC”) through
document ZJFSZ (1994) No. 9, the Company initially issued A shares to the public from 15 Mar.
1994 to 30 Mar. 1994. As approved by the Shenzhen Stock Exchange through document SZSFZ
(1994) No. 15, such tradable shares of the public got listing on 1 Jul. 1994 at Shenzhen Stock
Exchange with “Su Changchai A” for short of stock, as well as “0570” as stock code (present stock
code is “000570”).
In 1996, with the recommendation of the Office of the People's Government of Jiangsu Province
SZBH [1996] No. 13, as well as first review by Shenzhen Municipal Securities Administration
Office through SZBZ [1996] No. 24, and approval of the State Council Securities Commission
ZWF [1996] No. 27, the Company issued 100 million B shares to qualified investors on 27 Aug.
1996 to 30 Aug. 1996, getting listed on 13 Sep. 1996.
On 9 Jun. 2006, the Company held a shareholders’ general meeting related to A share market to
examine and approve share merger reform plan, and performed the share merger reform on 19 Jun.
2006.
As examined and approved at the 2009 2nd Extraordinary Shareholders’ General Meeting in Sep.
2009, based on the total share capital of 374,249,551 shares as at 30 Jun. 2009, the Company
implemented the profit distribution plan, i.e. to distribute 5 bonus shares and cash of RMB 0.8 for
every 10 shares, with registered capital increased by RMB 187,124,775.00, as well as registered
capital of RMB 561,374,326.00 after change. As at 31 Dec. 2009, the total share capital of the
Company is 561,374,326 shares, as well as registered capital of RMB 561,374,326.00, which
verified by Jiangsu Gongzheng Tianye Certified Public Accountants Company Limited with issuing
Capital Verification Report SGC [2010] No. B002. The Company had registered the change with
the administrative authorities for industry and commerce, and obtained the renewed the business
license as legal person with No. 320400000004012. The Company’s registered address is situated at
No. 123 Huaide Middle Road, Changzhou, Jiangsu, as well as its head office located at No. 123
Huaide Middle Road, Changzhou, Jiangsu.
The Company belongs to manufacturing with business scope including manufacturing and sale of
diesel engine, diesel engines part and casting, grain harvesting machine, rotary cultivators, walking
tractor, mould and fixtures, assembling and sale of diesel generating set and pumping unit. The
Company mainly engaged in the production and sales of small and medium-sized single cylinders
and multi-cylinder diesel engine with the label of Changchai Brand. The diesel engine produced and
sold by the Company were mainly used in tractors, combine harvest models, light commercial
vehicle, farm equipment, small-sized construction machinery, generating sets and shipborne
machinery and equipment, etc.. The Company’s main business remained unchanged in the reporting
period.
The Company established the Shareholders’ General Meeting, the Board of Directors and the Board
of Supervisors，Corporate office, Financial Department, Political Department, Investment and
Development Department, Enterprise Management Department, Human Recourses Department,
Production Department, Procurement Department, Sales Company, Market Department, Chief
Engineer Office, Technology Center, QA Department, Foundry Branch, Machine Processing Branch,Semi-Annual Report 2010
25
Single-cylinder Engine branch, Multi-cylinder Engine Branch and Overseas Business Department
in the Company.
Note 2: Main accounting policies, accounting estimates and prior period errors
1. Basis of preparation
With going-concern assumption as the basis, the Company prepares its financial statement in light
of the actual transactions and matters, as well as the accounting standard for business enterprise
promulgated by the Ministry of Finance of PRC on 15 Feb. 2006 and the following important
accounting policies and accounting estimates.
2. Statement on following Accounting Standard for Business Enterprises
The Company declared that the Financial Report prepared by the Company was in line with
requirements of the Accounting Standard for Business Enterprises, which reflected the financial
status, operating results and cash flow of the Company truly and objectively.
3. Fiscal period
The fiscal periods are divided into fiscal year and metaphase, the fiscal year is from Jan. 1 to Dec.
31 and as the metaphase included monthly, quarterly and semi-yearly periods.
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:
The combination consideration paid by the combining party and net assets obtained by the
combining party in a business combination shall be measured on the basis of their carrying amount.
As for the balance between the carrying amount of the net assets obtained by the combining party
and the carrying amount of the consideration paid by it (or the total par value of the shares issued),
the additional paid-in capital shall be adjusted. If the additional paid-in capital is not sufficient to be
offset, the retained earnings shall be adjusted. The direct cost for the business combination of the
combining party shall be recorded into the profits and losses at the current period. The handling fees,
commissions and other expenses for the issuance of equity securities or bonds for the business
combination shall be recorded into the amount of initial measurement of the shareholders’ equity or
liabilities.
2) Business combinations not under the same control
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
from the acquiree as business reputation. The balance that the combination costs are less than the
fair value of the identifiable net assets the acquirer obtains from the acquiree in a business
combination shall be recorded into the profits and losses at the current period. All relevant direct
costs incurred to the acquirer for the business combination shall also be recorded into the cost of
business combination. The handling fees, commissions and other expenses for the issuance of
equity securities or bonds for the business combination shall be recorded into the amount of initial
measurement of the shareholders’ equity or liabilities.
6. Preparation methods for consolidated financial statements
The Company shall start consolidating the subsidiary companies since the date the Company
obtained the actual control right of the subsidiaries and stop consolidating since the date theSemi-Annual Report 2010
26
Company lost the actual control right of the subsidiaries. All significant current balance, investment,
transactions and unrealized profits between the Company and subsidiary company or among the
subsidiaries shall be offset when preparing the consolidated financial statement. As for the shares in
the owner’s equity of subsidiary company not belong to the Company, shall be indicated in the item
of “minority shareholders’ equity” belonging the owner’s equity in the consolidated balance sheet.
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 statement.
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 current status of each party participating in the consolidation
when the final control party starts implementing control.
7. Recognition standard for cash and cash equivalents
The term “cash” refers to cash on hand and deposits that are available for payment at any time. The
term “cash equivalents” refers to short-term ( within 3 months from the purchase date) and highly
liquid investments that are readily convertible to known amounts of cash and which are subject to
an insignificant risk of change in value.
8. Business of foreign currencies and the translation of foreign currency statements
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 recording currency according to the middle price of the market
exchange rates disclosed by the People’s Bank of China on the balance sheet date. The difference
between the recording-currency amount converted according to the exchange rate on the balance
sheet date and the original book recording-currency amount shall be recognized as gains/losses
from foreign exchange. And the exchange gain/loss caused by the foreign-currency borrowings
related to purchasing fixed assets shall be handled according to the principle of capitalizing
borrowing expenses; the exchange gain/loss incurred in the establishment period shall be recorded
into the establishment expense; others shall be recorded into the financial expenses for the current
period.
On the balance sheet date, the foreign-currency non-monetary items measured by historical cost
shall be converted according to the middle price of the market exchange disclosed by the People’s
Bank of China on the date of the transaction, with no changes in the original recording-currency
amount; while the foreign-currency non-monetary items measured by fair value shall be converted
according to the middle price of the market exchange disclosed by the People’s Bank of China on
the date when the fair value is recognized, and the exchange gain/loss caused thereof shall be
recognized as the gain/loss from fair value changes and recorded into the gain/loss of the current
period.
9. Financial instruments
1) Recognition of the financial assetsSemi-Annual Report 2010
27
When an enterprise becomes a party to a financial instrument, it shall recognize a financial asset or
financial liability.
Where a financial asset satisfies any of the following requirements, the recognition of it shall be
terminated:
(1) Where the contractual rights for collecting the cash flow of the said financial assets are
terminated;
(2) Where the said financial asset has been transferred and meets the conditions for recognizing the
termination of financial assets as provided for in Accounting Standard for Business Enterprises No.
23 – Transfer of Financial Assets.
Only when the prevailing obligations of a financial liability are relieved in all or in part may the
recognition of the financial liability be terminated in all or partly.
2) The classification, recognition and measurement of financial assets and financial liabilities
The financial assets or financial liabilities got or born by the Company are measured according to
the following classifications:
(1) The financial assets or financial liabilities which are measured at their fair value and the
variation of which is recorded into the profits and losses of the current period
The interest rate or cash dividend which was gained in the period when the financial assets held by
the Company are measured at its fair value and of which the variation is recorded into the profits
and losses in the current period shall be recognized as investment income. On balance sheet date,
the in change in the fair value of the financial asset or financial liability which is measured at its fair
value and of which the variation is recorded into the profits and losses of the current period, shall be
recorded into the profits and losses of the current period; When the said financial assets of financial
liabilities are on disposal, the difference between the fair value and the amount in initial account
shall be recognized as investment income, meanwhile, the profits and losses arising from the
change in fair value shall be adjusted.
(2) The investments which will be held to their maturity
The investments which will be held to their maturity will regard the sum between the gained fair
value and the transaction expense thereof as the initially recognized amount. The interest on bonds
in payment, of which the mature interest is not drawn, shall be solely recognized as the receivables.
The interest revenue which is measured and recognized by the amortized cost and actual interest
rate during the period of the investments which will be held to their maturity shall be recorded into
investment income. The actual interest rate which is recognized in the period of gaining the
investments which will be held to their maturity, shall maintain unchanged within the predicted
term of existence or within a shorter applicable term of the said investment which will be held to
their maturity. The little difference between actual interest rate and coupon rate of which interest
revenue can be measured at the coupon rate shall be recorded into the profits of losses in the current
period.
When the investments which will be held to their maturity are on disposal, the difference between
the obtained price and investment book value shall be recorded into the profits and losses in the
current period.
(3) The accounts receivablesSemi-Annual Report 2010
28
The creditor’s right receivable formed during the Company selling commodity outside or offering
labor shall be regarded as the initially recognize amount in according with the receivable price
stipulated in the contract or agreement signed between the Company and the buyers.
When the Company recovers or disposes the accounts receivable, the difference between the
obtained price and the book value of the accounts receivable shall be recorded into the profits and
losses in the current period.
(4) Financial assets available for sale
The financial assets available for sale will be regarded as the initial recognized amount in according
with the sum between the fair value obtained from the said financial assets and the transaction
expense thereof. The interest on bonds of which the mature interest rate is not drawn in the payment
or the cash dividend which is declared but not extended in the payment shall be solely recognized as
the receivables.
The interest rate or cash dividend gained during the period of holding the financial assets available
for sale shall be recorded into investment income. On balance sheet date, the financial assets shall
be measured through fair value, while the change in fair value is recorded into capital reserves
(other capital reserves).
When the financial assets are on disposal, the difference between the obtained price and the book
value of the financial assets shall be recorded into investment income, meanwhile, the amount on
proposal transferring out from the accumulated amount which is directly recorded into shareholders’
equity and arises from the variation of the fair value, shall be recorded into investment income.
(5) Other financial liabilities
Other financial liabilities are regarded as the initial recognized amount in accordance with the sum
between the fair value and the transaction expense thereof. The Company shall make subsequent
measurement on other financial liabilities on the basis of the post-amortization costs.
3) Main recognition method for the fair value of the financial assets or financial liabilities
(1) The quotation in the active market shall be used to recognize the fair value of the financial assets
or financial liabilities existing in active market.
(2) If the financial instruments do not exist in the active market, the fair value shall be recognized
by value appraisal techniques.
(3) As for the financial assets initially obtained of produced at source and the financial liabilities
assumed, the fair value thereof shall be determined on the basis of the transaction price of the
market.
4) Main impairment test method of the financial assets and impairment provision method
The recognition standard for impairment provision of the financial assets: the Company shall carry
out an inspection, on the balance sheet day, on the carrying amount of the financial assets other than
those measured at their fair values and of which the variation is recorded into the profits and losses
of the current period. Where there is any objective evidence proving that such financial asset has
been impaired, an impairment provision shall be made.
The withdrawal method for impairment provision of the financial assets: as for the impairment
provision of the financial assets is measured on the basis of post-amortization costs, if the currentSemi-Annual Report 2010
29
value of the predicted future cash flow of the financial assets is below the difference in the carrying
amount of the said financial asset, the impairment provision of the financial assets shall be made; as
for the impairment provision of the financial assets available for sale, if the recoverable amount is
below the difference in the carrying amount, the impairment provision shall be made. Where a
sellable financial asset is impaired, even if the recognition of the financial asset has not been
terminated, the accumulative losses arising from the decrease of the fair value of the owners’ equity
which was directly included shall be transferred out and recorded into the profits and losses of the
current period.
10. Accounts receivable
1) Recognition standard for the bad debt provision of accounts receivable
Receivables are considered uncollectible after liquidation with statutory procedures for debtors are
in canceling or bankrupt, due death of debtors who has no bequest and no undertaker on obligation,
or caused by debtors fail to perform their obligation to pay a debt over three years, and it will be
recognized as bad debt.
2) Withdrawal method of bad debt provision
(1) The recognition standard and the withdrawal method for the bad debt provision of the accounts
receivable with significant single amounts
The recognition standard for the bad debt provision of the accounts receivable with significant
single amounts: significant single amount refers to an accounts receivable (including accounts
receivable and other receivables) with the single amount more than RMB 1,000,000 (including
RMB 1,000,000).
Withdrawal method of bad debt provision of the accounts receivable with significant single amounts:
an independent impairment test shall be made on the accounts receivable with significant single
amounts, and provision for bad debts shall be withdrawn on the basis of the balance between the
current values of the predicted future cash flow lower than book value. Upon independent
impairment test, the accounts receivable with significant single amounts has not been impaired, it
shall be withdrawn bad debt provision based on ending balance by adopting aging analysis method.
(2) The recognition standard and the withdrawal method for the bad debt provision of the accounts
receivable with insignificant single amounts
The recognition standard for the bad debt provision of the accounts receivable with insignificant
single amounts: insignificant single amount refers to an accounts receivable (including accounts
receivable and other receivables) with the single amount less than RMB 1,000,000 (excluding RMB
1,000,000).
Withdrawal method of bad debt provision of the accounts receivable with insignificant single
amounts: the accounts receivable with insignificant single amounts shall be withdrawn bad debt
provision based on ending balance by adopting aging analysis method.
(3) Withdrawal Proportion of bad debts provision of the accounts receivable by aging analysis
method:
Aging Ratio of the bad debt provision of
the accounts receivable (%)
Ratio of the bad debt provision of
the other receivables (%)
Within one year 2 2
1-2 years 5 5
2-3 years 15 15
3-4 years 30 30Semi-Annual Report 2010
30
4-5 years 60 60
Over 5 years 100 100
Withdrawal policies for bad debt reserves of related parties: according to the 9th meeting of the 4th
Board of Directors, as for the accounts receivable of the related party of the Company with
continuous operation ability, the withdrawal of bad debt reserves could not excess 60% at most.
11. Inventory
1) Classification of the inventories
Inventories of the Company include raw material, material purchasing, Self-manufactured goods,
unfinished products, finished products and low-value consumption.
2) Pricing method
The cost of various inventories shall be measured in light of planned cost when buying in and
putting in storage, while the cost shall be recorded in light of weighted average when issuing from
the storage; the cost of good manufactured shall be carried forward at actual cost of the current
period, while sales cost shall be carried forward at weighted average method.
3) Determination basis of the net realizable value of inventory and withdrawal method of the
provision for falling price of inventory
The inventories at the end of the report period will be priced according to the lower of the product
cost and the net realizable value. When all the inventories are checked roundly, those which were
destroyed, outdated in all or in part, sold at a loss, etc, shall be withdrawn the inventory falling price
reserve. Where the coat 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. The net realizable inventory falling price reserve refers to the value minus the predicted
expense needed in the process of completing the production and sales from the predicted price for
sale when the Company runs normally. If the value of the inventory with inventory falling price
reserve can be resumed, the inventory falling price reserve and the current income shall be adjusted
in line with the increase amount by being resumed (the increase amount should be limited by the
original withdrawal amount).
(4) The inventory system is on the basis of perpetual inventory method.
(5) Amortization method of low-value consumption and packing materials
Low value consumables shall be amortized by employing the one-off write-off method when
claiming.
12. Long-term equity investment
1) Recognition 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 long-term equity investment acquired through the merger of enterprises under the same
control, 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
acquisition cost and initial investment cost shall offset against the capital reserve. If the capital
reserve is insufficient to dilute, the retained earnings shall be adjusted.
(2) As for long-term equity investment acquired through the merger of enterprises not under theSemi-Annual Report 2010
31
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 transaction
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.
(3)Long-term equity investment obtained by other means
① The initial cost of a long-term equity investment obtained by making payment in cash shall be
the purchase cost which is actually paid.
② 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.
③ 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.
④ 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
he assets surrendered shall be recognized as the initial cost of the long-term equity investment
received.
⑤ 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.
2) Subsequent measurement and recognition of profits and losses
(2) A 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) A 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. Where the Company holds the shares of an entity between 20%
and 50%, and has no real control to the said entity, or, while the Company holds the shares of an
entity below 20%, but has a significant influence to the said entity, then the said entity shall be the
joint enterprise or associated enterprise of the Company.
The Company 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 policies and
accounting periods adopted by the invested entity are different from those adopted by the Company,
an adjustment shall be made to the financial statements of the invested entity in accordance with the
accounting policies and accounting periods of the Company and recognize the investment profits or
losses.Semi-Annual Report 2010
32
As for other change of owners’ equity excluding net gains and losses of the investing enterprise, the
book value of the long-term equity investment shall be adjusted and measured into the owner’s
equity.
(3) Long-term equity investment without control, joint control and significant influences
Long-term equity investment for which there is no offer in the active market and of which the fair
value cannot be reliably measured shall be measured by employing the cost method.
Long-term equity investment for which there is offer in the active market and of which the fair
value can be reliably shall be showed in the item “available-for-sale financial assets”, and recorded
at fair value. Change in its fair value shall be included in the shareholders’ equity.
3) Recognition basis of joint control and significant influences to the investing enterprise
Joint control to the investing enterprise refers to the control over an economic activity in accordance
with the contracts and agreements, which does not exist unless the investing parties of the economic
activity with one an assent on sharing the control power over the relevant important financial and
operating decisions. Significant influences to the investing enterprise refers to the power to
participate in making decisions on the financial and operating policies of an enterprise, but not to
control or do joint control together with other parties over the formulation of these policies.
4) Method of impairment test of long-term equity investment and withdrawal method of impairment
provision
Method of impairment test of long-term equity investment: Where the long-term equity investment
with a sign of impairment, its recoverable amount shall be tested. The recoverable amount shall be
determined in light of the higher one of the net amount of the selling fair value of the long-term
equity investment and the current value of the expected future cash flow of the long-term equity
investment. .
At the end of reporting period, the Company shall check the long-term equity investment. Where
there is a sign of impairment exists, the recoverable amount shall be estimated. Where its
recoverable amount is lower than its book value, the impairment of long-term investment shall be
made in light of the difference that its recoverable amount is less than its book value.
As for Long-term equity investment for which there is no offer in the active market and of which
the fair value cannot be reliably measured, where the amount that its book value is lower than the
current value due to impact upon the discount for the expected future cash flow the current market
earnings yield of similar financial assets shall be recognized as impairment loss recording into the
profits and losses of the current period.
As for other long-term equity investment except for the available-for-sales financial assets, once
any provision for impairment is recognized, it shall not be switched back within the asset’s useful
life. The impairment loss of available-for-sales financial asset shall be switched back through
equity.
13. Investment real estates
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 estates invested
by investors shall be recorded at the value stipulated in the investment contracts or agreements, butSemi-Annual Report 2010
33
the unfair value appointed in the contract or agreement shall be entered into the account book at the
fair value.
The Company shall make a follow-up measurement to the investment real estate by adopting the
cost pattern. The depreciation or amortization for investment real estate shall be made in the light of
such relevant policies as depreciation or amortization of fixed assets and intangible assets.
As for withdrawal basis of provision for impairment of investment real estates, please refer to
withdrawal method for provision for impairment of fixed assets.
14. Fixed Assets
1) Recognition of fixed assets
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; b. Their useful life is in excess of one fiscal year; and c. Their unit value is higher.
The fixed assets shall be measured at its cost when obtaining. Its depreciation shall be withdrawn by
adopting straight line since the next month that bring the fixed asset to the expected conditions for
use.
2) Depreciation method of various fixed assets
Type depreciable life（Year） Yearly depreciation rate
（%）
Houses and buildings 20-40 2.50-5
Machine equipments 6-15 6.67-16.67
Transportation
equipments
5-10 10-20
Other 5-10 10-20
For a fixed asset, the provision for depreciation has been made, the depreciable amount shall be
measured on the basis of deducting the accumulative amount of the provision for impairment of the
depreciated fixed asset.
The Company shall, at the end of each fiscal year, have a check on the useful life, expected net
salvage and depreciation method of the fixed assets.
3) Methods for impairment test of fixed assets and withdrawal method of provision for impairment
The Company shall make inspection to fixed assets at the end of reporting period. Where there is
any evidence indicates that the recoverable amount of fixed assets is lower than its book value, such
fixed asset shall be subject to an impairment test on the balance sheet date. As for the fixed assets
that its recoverable amount is lower than its book value, its provision for impairment shall be
withdrawn at the difference that recoverable amount of assets is lower than its book value. Where
the provision for impairment shall be withdrawn on the basis of single item assets. Where it is
difficult to do so, it shall be withdrawn on the basis of the asset group to which the asset belongs.
Once any loss of asset impairment is recognized, it shall not be switched back in the future
accounting periods.
15. Construction in process
1) Pricing
The engineering cost shall be recognized at the actual expenditure. 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 valueSemi-Annual Report 2010
34
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 hasn’t audit 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.
3) Method of impairment test of construction in process and withdrawal method of impairment
Where a sign of impairment exists, recoverable amount of construction in process shall be tested.
The recoverable amount of construction in process shall be recognized according to the high one
between the net amount of fair value after deducting disposal costs and the current value of the
expected future cash flow of construction in process.
At the end of fiscal year, the Company shall check the construction in process roundly. Where there
is a sign of impairment occur, the recoverable amount shall be estimated, and impairment of
construction in process shall be made in light of the difference that its recoverable amount is less
than its book value. Once any provision for impairment is recognized, it shall not be switched back
within the asset’s useful life.
16. 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 has already incurred; and (3) The acquisition and construction or
production activities which are necessary to prepare the asset for its intended use or sale have
already started.
2) The period of capitalization of borrowing costs
The borrowing costs arising from acquisition and construction of fixed assets, investment real
estates and inventories, if they meet the above-mentioned capitalization conditions, the
capitalization of the borrowing costs shall be measured into asset cost before such assets reach to
the intended use or sale, Where acquisition and construction of fixed assets, investment real estates
and inventories is interrupted abnormally and the interruption period lasts for more than 3 months,
the capitalization of the borrowing costs shall be suspended, and recorded into the current expense,
till the acquisition and construction of the assets restarts. When the qualified asset is ready for the
intended use or sale, the capitalization of the borrowing costs shall be ceased, the borrowing costs
occurred later shall be included into the financial expense directly at the current period.
3) Measurement method of capitalization amount of borrowing costs
As for specifically borrowed loans for the acquisition and construction or production of assets
eligible for capitalization, the to-be-capitalized amount of interests shall be determined in light ofSemi-Annual Report 2010
35
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.
17. Intangible assets
1) Pricing of the intangible assets
The intangible assets shall be initially measured according to its cost.
(1) The cost of outsourcing intangible assets shall include the purchase price, relevant taxes and
other necessary expenditure directly attributable to intangible assets for the expected purpose.
(2) The cost of self-developed intangible assets shall include the total expenditures incurred during
the period from the time when it meets the following conditions to the time when the expected
purposes of use are realized, except that the expenditures which have already been treated prior to
the said period shall not be adjusted.
① It is feasible technically to finish intangible assets for use or sale;
② It is intended to finish and use or sell the intangible assets;
③ 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 manufacturing by
applying the intangible assets or there is a potential market for the intangible assets itself or the
intangible assets will be used internally.
④ 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;
⑤ The development expenditures of the intangible assets can be reliably measured.
(3) The cost invested into intangible assets by investors shall be determined according to the
conventional value in the investment contract or agreement.
(4) The costs of intangible assets acquired from non-monetary assets transaction, debt
recombination, government subsides, and merger of enterprises shall be determined respectively
according to the Accounting Standard for Business Enterprises No. 7 - Non-monetary Assets,
Accounting Standard for Business Enterprises No. 12 – Debt Restructurings, Accounting Standard
for Business Enterprises No. 16 – Government Grants and Accounting Standard for Business
Enterprises No. 20 – Business Combinations.
2) Amortization of the intangible assets
(1) 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.
(2) 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 in (1).
(3) The rights to use land of the Company shall be amortized according to the rest service life.Semi-Annual Report 2010
36
3) Test method on impairment and provision for impairment of intangible assets.
Intangible assets trending to impairment can be tested by its recoverable amount.
The recoverable amount of intangible assets shall be recognized according to the high one between
the net amount of fair value after deducting disposal costs and the current value of the expected
future cash flow of intangible assets.
At the end of fiscal year, the Company shall check the intangible assets roundly. Where there is a
sign of impairment occur, the recoverable amount shall be estimated, and impairment of intangible
assets shall be made in light of the difference that its recoverable amount is less than its book value.
Once any provision for asset impairment is recognized, it shall not be switched back within the
asset’s useful life.
18. Long-term deferred expenses
The long-term deferred expenses occurred in the Company shall be priced at its historical cost and
conducted average amortization at the expected beneficial period. As for the long-term deferred
expenses item that cannot bring benefit in the afterward accounting period, the amortized value in
the said item shall be recorded into the current profits and losses in total when it is recognized.
19. Estimated debts
1) Recognition basis
The obligation pertinent to Contingencies shall be recognized as estimated debts when the
following conditions are satisfied simultaneously:
(1) That obligation is a current obligation of the enterprise;
(2) It is likely to cause any economic benefit to flow out of the enterprise as a result of performance
of the obligation;
(3) The amount of the obligation can be measured in a reliable way.
2) Measurement method
The estimated debts recognized by the Company shall be initially measured in accordance with the
best estimate of the necessary expenses for the performance of the current obligation.
The Company shall check the book value of the estimated debts on the balance sheet date. If there is
any exact evidence indicating that the book value cannot really reflect the current best estimate, the
enterprise shall adjust the book value in accordance with the current best estimate.
20. Revenues
1) The recognition of the revenue from selling goods: the revenue from selling shall be recognized
by the following conditions: The significant risks and rewards of ownership of the goods have been
transferred to the buyer by the Company; the Company retains neither continuous management
right that usually keeps relation with the ownership nor effective control over the sold goods; the
relevant amount of revenue can be measured in a reliable way; the relevant revenue and costs of
selling goods can be measured in a reliable way.
2) The recognition of the revenue from providing labor services: When the total revenue and costs
from providing labor can be measured in a reliable way; the relevant economic benefits are likely to
flow into the enterprise; the schedule of completion under the transaction can be measured in a
reliable way, the revenue from providing labor shall be recognized.
3) The recognition of the revenue from abalienating the right to use assets: When the relevant
economic benefits are likely to flow into the enterprises and the amount of revenues can beSemi-Annual Report 2010
37
measured in a reliable way, the revenue from abalienating the right to use assets shall be recognized.
21. Government Subsidies
The government subsidies pertinent to incomes shall be treated respectively in accordance with the
circumstances as follows: (1) Those subsidies used for compensating the related future expenses or
losses of the Company shall be recognized as deferred income and shall included in the current
profits and losses during the period when the relevant expenses are recognized; or (2) Those
subsidies used for compensating the related expenses or losses incurred to the enterprise shall be
directly included in the current profits and losses.
The government subsidies pertinent to assets shall be recognized as deferred income, equally
distributed within the useful lives of the relevant assets, and included in the current profits and
losses. But the government subsidies measured at their nominal amounts shall be directly included
in the current profits and losses.
22. Deferred income tax assets or deferred income tax liabilities
Where there is difference (temporary difference) between the carrying amounts of the assets or
liabilities and its tax base, the deferred income tax assets or the deferred income tax liabilities shall
be determined. According to tax law, the deductible loss and tax deduction which can deduct the
taxable amount in the subsequent years, regarding as temporary difference, shall be recognized as
the corresponding deferred income tax assets. As for the temporary difference arising from the
initial recognition of the goodwill, the corresponding deferred income tax liabilities. When the
temporary difference is arisen from the initial recognition of the assets or liabilities incurring in the
transaction which is not business combination and does not affect the accounting profits or the
taxable amount (or the deductible loss), the corresponding deferred income tax assets and deferred
income tax liabilities shall not recognized. On the balance sheet date, the deferred income tax assets
and deferred income tax liabilities shall be measured at the tax rate applicable to the period during
which the assets are expected to be recovered or the liabilities are expected to be settled.
The Company shall recognize the deferred income tax assets to the extent of the amount of the
taxable income which it is likely to obtain and which can be deducted from the deductible
temporary difference, deductible loss and tax deduction.
The deferred income tax liabilities arising from the temporary differences related to the investments
of subsidiary companies, associated enterprises and joint enterprises shall be recognized. However,
the deferred tax income assets and deferred income tax liabilities shall not recognized which meet
the conditions that the Company can control the time of the reverse of temporary differences which
are likely to be reversed in the expected future.
23. Change in main accounting policies and accounting estimates
1) Change in accounting policies
Main accounting policies remained unchanged in the reporting period.
2) Change in accounting estimates
Main accounting estimates remained unchanged in the reporting period.
24. Correction of previous accounting errors
No correction of previous accounting errors occurred in the reporting period.
Note 3: Tax and tax preference
1. Main taxes and tax rate in the reporting period
Type of tax Taxation basis Tax ratesSemi-Annual Report 2010
38
VAT Payable to sales revenue 13%、17%
Sales tax Payable to operating revenue 5%
Tax for maintaining and building
cities Payable circulating tax amount Tax paid in accordance with the tax
regulations of tax units location
Taxable income of parent company
and subsidiary company Changwan 15%
Corporate income tax Taxable income of other subsidiary
companies 25%
Income from leasing out property 12%
Housing property tax 70% of original value of
independent properties
1.2%
Educational surtax Payable circulating tax amount Tax paid in accordance with the tax
regulations of tax units location
As for full name of the subsidiaries, please see Note 4.1 for details.
2. Tax preference and official documents
In 2009, parent company has been identified as High-tech Enterprises, therefore, it enjoys
15-percent preferential rate for corporate income tax; Changchai Wanzhou Diesel Engine Co., Ltd.,
the controlling subsidiary company, paid the corporate income tax at tax rate 15% from 2001 to
2010 in accordance with the Notice of the Ministry of Finance, the National Administration of
Taxation and the General Administration of Customs of PRC about the Preferential Tax Policies for
the Western Development.
Note 4. Business Combinations and consolidated financial statement
1. Subsidiary
As at 30 June 2010, the Company set up four controlling subsidiaries through investment:
Full name Type Registration place
nature of
the
business
Registered
capital
(RMB’0000)
Business scope
Actual
investment at
the
period-end
(RMB’0000)
Changchai Wanzhou
Diesel Engine Co., Ltd.
(Changwan)
Limited
Liability
Company
No. 1101, Xiamen
Road, Wanzhou
District, Chongqing
Industry 3,500
Production and
sales of diesel
engine
2,100
Changzhou Changchai
Benniu Diesel Engine
Fittings Co., Ltd.
(Benniu)
Limited
Liability
Company
Nanguan Village,
Benniu Town, Wujin
District
Industry 3,378.64
Production and
sales of diesel
engine fittings
2,533.98
Nanjing Changli
Agricultural Machinery
Fittings Co., Ltd.
(Changli)
Limited
Liability
Company
North factory district,
Economy
Development Zone
of Lishui County,
Nanjing
Industry 500
Agricultural
mechanization
production,
electromechanical
product, spare
parts and
maintenance
service
500
Changzhou Housheng
Investment Co., Ltd.
Limited
Liability
Company
123 Huaide Middle
Road, Changzhou Financing 3000
Foreign industrial
investment,
investment &
management and
consulting service
3000Semi-Annual Report 2010
39
(Con.)
Full name
Other
essential
investment
The
proportion
of holding
shares(%)
The
proportion
of voting
rights(%)
Included in
consolidated
statements
Minority
Interest
(RMB’0000)
Deductible
minority
interest
Balance of parent
company’s equity
after deducting
the difference that
loss of minority
interests exceed
equity obtained
by minority
shareholders
Changchai Wanzhou
Diesel Engine Co.,
Ltd. (Changwan)
60 60 Yes 1,332.14
Changzhou
Changchai Benniu
Diesel Engine
Fittings Co., Ltd.
(Benniu)
75 75 Yes 1161.91
Nanjing Changli
Agricultural
Machinery Fittings
Co., Ltd. (Changli)
100 100 Yes
Changzhou
Housheng
Investment Co., Ltd.
100 100 Yes
2. Change in consolidation scope
As at 30 June 2010, the Company increased a controlling subsidiary, namely, Changzhou Housheng
Investment Co., Ltd.
3. As at 30 June 2010, no joint venture company exists in the Company.
Note 5：Notes to major items of the consolidated financial statement (the following amount is
expressed in RMB unless otherwise special explanation)
1. Monetary funds
Items 30 Jun. 2010 31 Dec. 2009
Original currency
Exchange
rate
Translated to RMB Original currency
Exchange
rate
Translated to RMB
Cash： 350,578.05 411,084.77
RMB 350,578.05 411,084.77
Bank savings： 700,432,314.57 679,507,775.72
RMB 693,458,749.86 657,271,920.02
USD 575,154.64 6.7909 3,905,817.64 3,256,473.99 6.8282 22,235,855.70
EUR 370,904.01 8.2710 3,067,747.07
Other monetary
capital
100,186,850.46
90,802,293.95
RMB 100,186,850.46 90,802,293.95Semi-Annual Report 2010
40
USD
Total 800,969,743.08 770,721,154.44
2. Notes receivable
(1) Classification of notes receivable
Type 30 Jun. 2010 31 Dec. 2009
Bank acceptance bills 67,834,743.30 83,834,240.00
Total 67,834,743.30 83,834,240.00
(2) No pledged notes receivable existed in the notes receivable at the end of reporting period.
(3) Note that the endorsement has been made but not due yet (the top five)
Entities Date of draft Due date Amount
Changzhou Dongfeng Agricultural Machinery
Group Co., Ltd. 2010-5-22 2010-11-22 3,500,000.00
Guangdong Fudi Motor Co., Ltd. 2010-5-20 2010-11-20 3,000,000.00
Changzhou Dongfeng Agricultural Machinery
Group Co., Ltd. 2010-4-27 2010-8-27 3,000,000.00
Beijing Automobile Factory Shunyi Branch 2010-4-8 2010-10-8 2,000,000.00
Wuxi Mingji Machinery Manufacture Co., Ltd. 2010-3-1 2010-9-1 2,000,000.00
Total 13,500,000.00
3. Accounts receivable
(1) Classified by account nature
30 Jun. 2010 31 Dec. 2009
Book balance Bad debt provision Book balance Bad debt provision
Type
Amount Proporti
on (%)
Amount Proporti
on (%)
Amount Proporti
on (%)
Amount Propo
rtion
(%)
Significant
single amount 532,800,703.24 81.55 206,282,503.23 38.72 399,429,340.88 77.22 216,213,030.99 54.13
Other
insignificant
accounts
receivable
120,526,694.44 18.45 43,386,522.65 36.00 117,855,532.84 22.78 45,403,571.27 38.52
Total 653,327,397.68 100.00 249,669,025.88 38.21 517,284,873.72 100.00 261,616,602.26 50.57
An accounts receivable with the loan balance over one million (including one million) is recognized as an account
receivable with significant single amount. The Company conducts independent impairment tests on the accounts
receivable with significant single amount and withdraws bad debt provisions by the account age analysis method
on those accounts receivable of which there is no objective evidence to indicate the possible occurrence of
impairment.
（2）Bad debt provisions for closing accounts receivable with significant single amounts or insignificant but being
conducted an independent impairment test on:
Content Book balance Amount of bad debt Withholding
proportion
Reason
Customer 1 12,343,782.28 12,343,782.28 100% No current for a
long time
Customer 2 14,234,302.79 14,234,302.79 100% In bankruptcy
Total 26,578,085.07 26,578,085.07
(3) Aging analysisSemi-Annual Report 2010
41
30 Jun. 2010 31 Dec. 2009
Aging Book balance Book balance
Amount Proportion
(%)
Bad debt provision
Amount Proportion
(%)
Bad debt provision
Within 1
year 401,131,232.74 61.40 8,049,161.78 251,035,283.79 48.53 5,154,238.98
1-2 years 3,287,458.44 0.50 985,458.96 4,315,569.65 0.83 1,887,726.16
2-3 years 4,205,008.43 0.64 1,501,453.44 3,865,398.23 0.75 1,991,394.69
3-4 years 3,455,124.86 0.53 1,464,584.39 10,458,928.79 2.02 5,885,044.75
4-5 years 9,586,456.33 1.47 6,006,250.43 18,609,570.07 3.60 17,698,074.49
Over 5
years 231,662,116.88 35.46 231,662,116.88 229,000,123.19 44.27 229,000,123.19
Total 653,327,397.68 100.00 249,669,025.88 517,284,873.72 100.00 261,616,602.26
（4）Accounts receivable – foreign currency
Items 30 Jun. 2010 31 Dec. 2009
Amount of
foreign
currency
Conversion
rate RMB
Amount of
foreign
currency
Conversion
rate RMB
USD 3,165,844.47 6.7909 21,498,913.21 2,574,538.97 6.83 17,331,865.99
Total 3,165,844.47 21,498,913.21 2,574,538.97 17,331,865.99
（5）Accounts receivable actually canceled in the report period
Name of entity
Nature of
the account
receivable
Amount canceled
after verification Reasons for cancellation
Whether
caused by
related
transactions
Xinghua Feida Model Company Payment
for goods 1,034,847.84 Close of bankruptcy No
Suining Dayu Co., Ltd. Payment
for goods 638,586.50 Close of bankruptcy No
Guoyang Zhongyuan Trading Co., Ltd. Payment
for goods 665,760.00 Debt restructuring No
Xuchang Machinery Manufacturing Factory Payment
for goods 4,938,735.92 Close of bankruptcy No
Guantao County Chaoyuan Agricultural
Machinery Company
Payment
for goods 1,956,944.00 Close of bankruptcy No
Gansu Tiantai Agricultural Machinery
Electromechanical Co.,Ltd.
Payment
for goods 2,000,000.00 Debt restructuring No
Yunnan Zhang’an Trading Co., Ltd. Payment
for goods 712,702.12 Debt restructuring No
Total 11,947,576.38
(6) There was no accounts receivable due from shareholders with more than 5% (including 5%) of the voting
shares of the Company in the reporting period
(7)Top five entities of the accounts receivable
Name of entity Relationship with
the Company Amount Useful life
Ratio to the total
accounts receivable
(%)
Dongfeng Motor Group Co Ltd Customer 56,332,842.79 Within 1 year 8.62
Shandong Wuzheng Group Co., Ltd. Customer 44,506,116.80 Within 1 year 6.81
Changzhou Dongfeng Agricultural
Machinery Group Co., Ltd. Customer 41,251,658.42 Within 1 year 6.31
Chengdong Jifeng Agricultural
Machinery Co., Ltd. Customer 26,273,044.06 Within 1 year 4.02
Shenyang Jinbei Vehicles Manufacturing
Co., Ltd. Customer 17,212,149.33 Within 1 year 2.63Semi-Annual Report 2010
42
Total 185,575,811.40 28.40
(8) No debts owned by the related parties among the accounts receivable in the reporting period.
4. Payment to suppliers
(1) Aging analysis
Aging 30 Jun. 2010 31 Dec. 2009
Amount Proportion
(%)
Amount Proportion
(%)
Within 1 year 15,773,854.82 93.41 22,450,320.67 95.48
1-2 years 56,459.36 0.33 167,595.44 0.71
2-3 years 165,342.59 0.98 11,968.52 0.05
3-4 years 16,543.55 0.10 17,821.73 0.08
4-5 years 9,865.47 0.06
Over 5 years 864,725.83 5.12 864,725.83 3.68
Total 16,886,791.62 100.00 23,512,432.19 100.00
(2) Top five entities of prepayment in advance
Name of entity Relationship with
the Company Amount Useful life Reason for
unsettlement
Xuzhou East China Casting
General Factory Supplier 5,387,895.66 Within 1 year Normal settlement
period
Changzhou Baolei Crankshaft Co.,
Ltd. Supplier 5,322,960.37 Within 1 year Normal settlement
period
Ningbo Jingxin Die-casting Model
Research Company Supplier 1,233,000.00 Within 1 year Normal settlement
period
Changchun Yidong Clutch Co.,
Ltd. Supplier 463,829.28 Within 1 year Normal settlement
period
Changzhou Tongji Tools Factory Supplier 218,007.35 Within 1 year
Total 12,625,692.66
(3) There was no prepayment due from shareholders with more than 5% (including 5%) of the voting shares of the
Company in the reporting period.
5. Other receivable
(1) Other receivables disclosed according to categories :
30 Jun. 2010 31 Dec. 2009
Book balance Bad debt provision Book balance Bad debt provision
Categories
Amount Proportion
(%)
Amount Proportion
(%)
Amount Proportion
(%)
Amount Proportion
(%)
Significant
single amount 40,064,133.10 66.37 25,416,554.38 63.44 39,253,700.96 68.60 28,150,645.06 71.71
Other
insignificant
accounts
receivable
20,301,926.86 33.63 16,150,458.51 79.55 17,969,562.24 31.40 13,416,367.83 74.66
Total 60,366,059.96 100.00 41,567,012.89 68.86 57,223,263.20 100.00 41,567,012.89 72.64
The other receivables with the loan balance over one million (including one million) is recognized as one with
significant single amount. The Company made independent impairment tests on the other receivables with
significant single amount and withdraws bad debt provisions by the account aging analysis method on those other
receivables of which there is no objective evidence to indicate the possible occurrence of impairment.
(2) Aging analysis
30 Jun. 2010 31 Dec. 2009
Book balance Book balance
Aging
Amount Proportion
Bad debt provision
Amount Proportion
Bad debt provisionSemi-Annual Report 2010
43
(%) (%)
Within 1 year 19,050,555.54 31.56 812,659.67 15,194,342.64 26.55 303,886.84
1-2 years 225,689.36 0.37 15,499.58 569,260.00 0.99 28,463.00
2-3 years 498,778.31 0.83 450,005.64 3,076,433.68 5.38 3,029,866.55
3-4 years 2,965,487.55 4.91 2,682,496.68 460,176.08 0.80 294,021.70
4-5 years 320,756.84 0.53 301,558.96 103,768.18 0.18 91,492.18
Over 5 years 37,304,792.36 61.80 37,304,792.36 37,819,282.62 66.10 37,819,282.62
Total 60,366,059.96 100.00 41,567,012.89 57,223,263.20 100.00 41,567,012.89
(3)There was no other receivable due from shareholders with more than 5% (including 5%) of the voting shares of
the Company in the reporting period.
(4) Top five entities of other receivables
Name of entity
Relationship
with the
Company
Amount Useful life Nature Ratio to the total other
receivables (%)
Changzhou Jinhui Guaranty Co.,
Ltd. Customer 10,000,000.00 Within 1 year Current
payment 16.57
Changzhou Vehicle Co., Ltd. Customer 9,499,480.81 Over 5 years Borrowing 15.74
Changzhou Compressor Co., Ltd. Customer 2,940,000.00 Over 5 years Current
payment 4.87
Changchai Properties Company Customer 1,642,110.97 Within 1 year Current
payment 2.72
Changzhou New District
Accounting Center Customer 1,626,483.25 Over 5 years Current
payment 2.69
Total 25,708,075.03 42.59
(5) No debts owned by the related parties among the other receivables in the reporting period.
6. Inventory
(1) Classification of inventory
Items 30 Jun. 2010 31 Dec. 2009
Book balance Provision for falling
price
Book value Book balance Provision for falling
price
Book value
Raw material 81,155,999.36 3,385,967.39 77,770,031.97 93,826,839.63 3,385,967.39 90,440,872.24
Consigned materials
for processing 1,229,659.10 1,229,659.10 811,293.70 811,293.70
Goods in process 74,992,540.86 74,992,540.86 75,051,615.94 75,051,615.94
Finished products 155,571,728.28 2,323,272.81 153,248,455.47 205,704,515.00 2,323,272.81 203,381,242.19
Low-value
consumption 624,841.82 624,841.82 738,740.59 738,740.59
Total 313,574,769.42 5,709,240.20 307,865,529.22 376,133,004.86 5,709,240.20 370,423,764.66
(2) Provision for falling price of inventory
Decreased in current period
Category Opening book
balance
Accrued in current
period Reversal Writing off Ending book balance
Raw materials 3,385,967.39 3,385,967.39
Finished goods 2,323,272.81 2,323,272.81
Total 5,709,240.20 5,709,240.20
(3) Provision for falling price of inventory
Items Basis of withdrawing provision for
falling price of inventory
Reason for switching back
provision for falling price of
inventory in current period
Ratio of amount switched back in
current period to ending balance of
such inventory
Raw materials Book cost is more than net realizable
valueSemi-Annual Report 2010
44
Finished goods Book cost is more than net realizable
value
(4) Ending balance of inventory excluded the amount of capitalization of borrowing costs.
(5) No right such as mortgage was restricted in the ending balance of inventory at the end of the reporting period.
7. Other current assets
Items 30 Jun. 2010 31 Dec. 2009
Deferred expense 135,131.40 133,419.55
Total 135,131.40 133,419.55
8. Available-for-sale financial assets
Items 30 Jun. 2010 31 Dec. 2009
Available-for-sale equity instrument 621,293,250.00 688,538,250.00
Total 621,293,250.00 688,538,250.00
The above-mentioned available-for-sale equity instrument includes the shares of Foton Motor and of Jiangsu
Expressway held by the Company. The ending fair market price of the shares is closing price on the last trading
day at the securities exchange.
9. Long-term equity investment
(1) Details for long-term equity investment
Name of investee
entities
Accounting
method
Initial investment
amount Opening balance Change of increase
and decrease Ending balance
Changzhou Fuji
Changchai Robin
Gasoline Engine Co.,
Ltd.
Equity
method 12,294,546.00 17,664,185.64 17,664,185.64
Beijing Tsinghua
Industrial Investment
Management Co., Ltd.
Equity
method 2,500,000.00 44,182.50 44,182.50
Shenzhen Drgama
Network System Co.,
Ltd.
Equity
method 2,388,157.00 0.00 0.00
Jiangsu Bank Cost
method 38,000,000.00 38,000,000.00 38,000,000.00
Lanzhou Northwest
Vehicle Corporation
Cost
method 5,000,000.00 5,000,000.00 5,000,000.00
Chengdu Changwan
Diesel Engine
Markeing Corp.
Cost
method 510,000.00 0.00 0.00
Chongqing Wanzhou
Changwan Diesel
Engine Fitting Corp.
Cost
method 290,000.00 0.00 0.00
Other Cost
method 410,000.00 0.00 0.00
Total
61,392,703.00 60,708,368.14 60,708,368.14
Con.
Name of investee
entities
Proportion
of
shareholdin
g (%)
Proportion
of voting
rights (%)
Note for difference
between proportions of
voting rights and
shareholding hold Provision for
impairment
Provision
for
impairme
nt
withdrawn
in current
period
Cash dividendsSemi-Annual Report 2010
45
Changzhou Fuji
Changchai Robin
Gasoline Engine Co.,
Ltd.
33 33
Beijing Tsinghua
Industrial Investment
Management Co., Ltd.
25 25
Shenzhen Drgama
Network System Co.,
Ltd.
34 34
7,436,389.00
Jiangsu Bank
Lanzhou Northwest
Vehicle Corporation 5 5
Chengdu Changwan
Diesel Engine
Markeing Corp.
510,000.00
Chongqing Wanzhou
Changwan Diesel
Engine Fitting Corp.
290,000.00
Other 410,000.00
Total 8,646,389.00
①Notes: Others include RMB 20,000 invested in Changzhou Economic and Technology Development Company,
RMB 100,000 invested in Changzhou Tractor Plant, RMB 200,000 invested in Industry Fund Fraternity of
Changzhou Economic & Trade Commission, RMB 90,000 invested in Beijing Project Machine Agricultural
Machinery Co., Ltd.. The above four items were hard to take back fully withdrawn impairment provision.
②Shenzhen Drgama Network System Co., Ltd. failed to do annual inspection for industry and commerce
administration for several years. It is in disorganization actually, so the Company withdrawn impairment
provision fully.
(2) Investment in joint venture enterprises and associated enterprises
Name of invested entities Type Registration
place
Legal
representative
Nature of the
business
Registered
capital
(RMB’0000)
Proportion of
shareholding
(%)
Proportion of
voting right (%)
I. The Company has no joint venture enterprise.
II. Associated enterprises
Changzhou Fuji
Changchai Robin
Gasoline Engine Co.,
Ltd.
LLC Changzhou Shijing Qijie Industry USD 450 33 33
Beijing Tsinghua
Industrial Investment
Management Co., Ltd.
LLC Beijing Chen
Zhangwu Service 1000 25 25
(3) There is no situation for the capacity that the invested enterprise transfers capital to investing enterprise is
subjected to restriction.
10. Investment real estate
Investment real estate measured at cost
Items Opening book
balance
Increased in
current period
Decreased in
current period
Ending book
balance
I. Total costs 87,632,571.14 87,632,571.14
Houses & buildings 87,632,571.14 87,632,571.14
II. Accumulated depreciation 17,101,496.31 1,104,170.40 18,205,666.71
Houses & buildings 17,101,496.31 1,104,170.40 18,205,666.71
III. Total net book value 70,531,074.83 69,426,904.43
Houses & buildings 70,531,074.83 69,426,904.43
IV. Total provision for impairment lossSemi-Annual Report 2010
46
Houses & buildings
V. Total book value 70,531,074.83 69,426,904.43
Houses & buildings 70,531,074.83 69,426,904.43
In the reporting period, the depreciation is RMB 1,104,170.40.
In the reporting period, there is no investment real estate that measurement model is changed and the certificate of
title failed to be completed.
11. Fixed assets
(1) Fixed assets
Items Opening amount Increased in current
period
Decreased in current
period Ending amount
I. Total costs 910,045,486.75 27,667,609.48 11,459,860.08 926,253,236.15
Of which: Houses & buildings 373,295,111.07 1,930,301.20 371,364,809.87
Machinery equipment 476,453,669.72 24,787,121.01 6,276,551.21 494,964,239.52
Vehicles 22,826,004.56 1,891,822.59 2,161,120.42 22,556,706.73
Other 37,470,701.40 988,665.88 1,091,887.25 37,367,480.03
II. Accumulated depreciation 464,447,173.54 23,528,876.25 8,829,630.93 479,146,418.86
Of which: Houses & buildings 155,329,677.40 5,147,813.46 449,848.80 160,027,642.06
Machinery equipment 268,261,739.61 15,942,320.91 5,548,406.85 278,655,653.67
Vehicles 13,854,622.32 799,856.44 1,905,433.84 12,749,044.92
Other 27,001,134.21 1,638,885.44 925,941.44 27,714,078.21
III. Total net book value 445,598,313.21 447,106,817.29
Of which: Houses & buildings 217,965,433.67 211,337,167.81
Machinery equipment 208,191,930.11 216,308,585.85
Vehicles 8,971,382.24 9,807,661.81
Other 10,469,567.19 9,653,401.82
IV. Total provision for
impairment loss 15,042,619.76 15,042,619.76
Of which: Houses & buildings 11,344,597.44 11,344,597.44
Machinery equipment 3,698,022.32 3,698,022.32
Vehicles
Other
V. Total book value 430,555,693.45 432,064,197.53
Of which: Houses & buildings 206,620,836.23 199,992,570.37
Machinery equipment 204,493,907.79 212,610,563.53
Vehicles 8,971,382.24 9,807,661.81
Other 10,469,567.19 9,653,401.82
In the reporting period, the depreciation is RMB 23,528,876.25.
In the reporting period, the original price that the construction in progress transferred into fixed assets is RMB
24,976,952.75.
(2) Mortgage of the fixed assets
Items Original carrying
value Net carrying value Loan balance
Houses & buildings 12,506,000 8,754,500
Machinery equipment 6,976,200 1,219,200
Changwan Company
borrowed RMB 5.5 million
form Chongqing Sanxia
Bank Gaosuntang
Sub-branch
Houses & buildings 20,993,400 9,161,100
Benniu Company
borrowed RMB 2 million
from Jiangsu Wujin Rural
Commercial Bank Co.,
Ltd., and RMB 5 million
from Agricultural Bank
Wujin Sub-branchSemi-Annual Report 2010
47
(3) During the reporting period, the provision for impairment of fixed assets remained unchanged.
12. Construction in progress
(1) Projects
Items 30 Jun. 2010 31 Dec. 2009
Book balance Provision for
impairment
Net book value Book balance Provision for
impairment
Net book value
Expansion
capacity of
multi-cylinder
11,956,006.35 11,956,006.35 11,229,229.07 11,229,229.07
Experimental
workshop of
technology center
30,622,925.50 30,622,925.50 12,371,688.94 12,371,688.94
Renovation of
casting
37,817,868.14 37,817,868.14 21,122,871.29 21,122,871.29
Equipment to be
installed and
payment for
projects
25,602,875.86 25,602,875.86 21,079,897.24 21,079,897.24
Total 105,999,675.85 105,999,675.85 65,803,686.54 65,803,686.54
(2) Change in main project of construction in progress
Name of projects Opening
amount
Increased in
current period
Transferring into
fixed assets
Other
decrease
Amount of
interest
capitalized in
current period
Resource of
capital
Ending amount
Expansion
capacity of
multi-cylinder
11,229,229.07 2,261,478.16 1,534,700.88 Self-financing 11,956,006.35
Experimental
workshop of
technology center
12,371,688.94 21,337,009.69 3,085,773.13 Self-financing 30,622,925.50
Renovation of
casting
21,122,871.29 35,051,475.59 18,356,478.74 Self-financing 37,817,868.14
Total 44,723,789.30 58,649,963.44 22,976,952.75 Self-financing 80,396,799.99
(3) Among the ending balance of the construction in progress, there is no situation that its net realizable value is
lower than its book value, therefore, the Company did not made the provision for impairment.
(4) At the end of reporting period, there is no situation that the construction in progress was used for mortgage
guarantee.
13. Intangible assets
(1) Intangible assets
Items Opening book
balance
Increased in current
period
Decreased in current
period
Ending book balance
I. Total costs 131,201,684.40 12,200,316.00 119,001,368.40
Land use right 131,158,184.40 12,200,316.00 118,957,868.40
Proprietary technology 43,500.00 43,500.00
II. Accumulative amortization 27,783,366.40 1,322,416.86 1,220,031.62 27,885,751.64
Land use right 27,741,291.40 1,320,991.86 1,220,031.62 27,842,251.64
Proprietary technology 42,075.00 1,425.00 43,500.00
III. Total net book value 103,418,318.00 91,115,616.76
Land use right 103,416,893.00 91,115,616.76
Proprietary technology 1,425.00
IV. Total provision for
impairment
Land use right
Proprietary technologySemi-Annual Report 2010
48
V. Total book value 103,418,318.00 91,115,616.76
Land use right 103,416,893.00 91,115,616.76
Proprietary technology 1,425.00 0
The amortization amount is RMB 1,322,416.86 in the reporting period.
(2) Among the ending balance of the intangible assets, there is no situation that its net realizable value is lower
than its book value, therefore, the Company did not made the provision for impairment.
14. Deferred income tax assets/deferred income tax liabilities
(1) Recognized deferred income tax assets and deferred income liabilities
Items 30 Jun. 2010 31 Dec. 2009
Deferred income tax assets
Provision for assets impairment 582,508.32 582,508.32
Subtotal 582,508.32 582,508.32
Deferred income tax liabilities
Change in fair value of available-for-sale financial assets
measured into capital reserve 86,912,812.50 96,999,562.50
Subtotal 86,912,812.50 96,999,562.50
(2) Temporary differences due from assets and liabilities
Items Amount of temporary differences
Provision for assets impairment 3,883,388.80
Change in fair value of available-for-sale financial assets measured into
capital reserve 579,418,750.00
Total 583,302,138.80
15. Provision for assets impairment
Items Opening book Decreased in current period
balance
Increased in
current period Reversal Writing off
Ending book
balance
Bad debt provision 303,183,615.15 11,947,576.38 291,236,038.77
Provision for falling price of
inventory 5,709,240.20 5,709,240.20
Provision for impairment of
long-term equity investment 8,646,389.00 8,646,389.00
Provision for impairment of
fixed assets 15,042,619.76 15,042,619.76
Provision for impairment of
entrusted loan 14,000,000.00 14,000,000.00
Total 346,581,864.11 11,947,576.38 334,634,287.73
16. Short-term borrowings
(1) Varieties of short-term borrowings
Items 30 Jun. 2010 31 Dec. 2009
Guaranteed loan 14,000,000.00 24,000,000.00
Loan in mortgage 17,500,000.00 17,500,000.00
Consigned loan
Total 31,500,000.00 41,500,000.00
(2) Short-term borrowings that have been due up until the period-end but have not been paid off.
17. Notes payable
Type 30 Jun. 2010 31 Dec. 2009
Bank acceptance bills 335,289,100.00 323,666,300.00
Total 335,289,100.00 323,666,300.00Semi-Annual Report 2010
49
18. Accounts payable
(1) Accounts payable classified according to natures
Items 30 Jun. 2010 31 Dec. 2009
Operating accounts payable 441,940,517.35 454,897,462.79
Accounts payable for engineering 3,548,659.45 4,462,887.93
Total 445,489,176.80 459,360,350.72
(2) No accounts which were payable to shareholders holding over 5% (including 5%) voting-power shares of the
Company or related parties existed in the accounts payable as at the period-end.
(3) There was no large-amount accounts payable with an aging over one year among the closing balance.
19. Accounts from customers
Items 30 Jun. 2010 31 Dec. 2009
Accounts from customers 60,493,742.68 37,892,215.77
Total 60,493,742.68 37,892,215.77
There was no large-amount account from customers with an account age over one year among the closing balance.
There was no account collected in advance from shareholders holding over 5% (including 5%) voting-power
shares of the Company or related parties among the accounts collected in advance as at the period-end.
20. Payroll payable
Items Opening book
balance
Increased in current
period
Decreased in current
period
Ending book
balance
1. Wages, bonuses, allowances and
subsidies to employees 43,220,153.82 89,122,199.00 108,562,262.50 23,780,090.32
2. Welfare expense for employees 3,534,391.07 3,362,390.85 172,000.22
3. Trade union funds and staff
training expense 6,216,029.80 1,765,454.50 3,420,780.17 4,560,704.13
4. Social insurances 307,000.00 20,438,146.77 20,745,146.77
Of which: endowment insurance 13,180,051.37 13,180,051.37
Basic medical insurance 307,000.00 5,026,097.07 5,333,097.07
Unemployment insurance 1,104,213.78 1,104,213.78
Work injury insurance 626,546.51 626,546.51
Maternity insurance 501,238.04 501,238.04
5. Housing accumulation funds 6,252,683.81 6,252,683.81
6. Compensation for employee
dismissal 261,809.19 261,809.19
Total 49,743,183.62 121,374,684.34 142,605,073.29 28,512,794.67
There were no such amounts that the Company should pay but did not pay among the payroll payable.
21. Taxes and fares payable
Items 30 Jun. 2010 31 Dec. 2009
VAT -16,502,121.72 -29,024,764.10
Business tax 905,485.24 1,557,483.75
City maintenance construction tax 63,383.97 939,860.86
Corporate income tax 3,905,626.13 17,259,686.79
Housing property tax 355,684.26 343,677.10
Individual income tax 5,592,090.07 84,270.71
Educational surcharges 36,219.41 62,718.63
Synthesis fee 1,793,807.93 1,842,878.21
Total -3,849,824.71 -6,934,188.05
22. Dividend payableSemi-Annual Report 2010
50
Items 30 Jun. 2010 31 Dec. 2009 Reason for unpaid dividend exceeding
one year
Common stock
dividends payable 3,243,179.97 3,243,179.97 To fail to draw
Dividends for minority
shareholders 648,253.86 648,253.86 To fail to draw
Total 3,891,433.83 3,891,433.83
23. Other payables
(1) Other payables
Items 30 Jun. 2010 31 Dec. 2009
Other payables 167,061,268.94 119,130,766.55
Total 167,061,268.94 119,130,766.55
(2) There were no accounts owed to shareholders holding over 5% (including 5%) voting-power shares of the
Company or related parties among the other payables as at the period-end.
(3) There were no large-amount other payables with an account age over one year among the closing balance.
(4) The large-amount other payable as at the period-end were mainly selling concessions and claim expenses for
three guarantees of quality.
24. Other current liabilities
Items 30 Jun. 2010 31 Dec. 2009
Charges for disposing pollutants 250,000.00 300,000.00
Other 1,477,834.71 34,297.88
Total 1,727,834.71 334,297.88
25. Long-term borrowings
(1) Category of long-term borrowings
Items 30 Jun. 2010 31 Dec. 2009
Loan in credit 30,000,000.00
Total 30,000,000.00
(2) Breakdown of long-term borrowings
Bank Beginning Currency Ending amount Opening amount
date
Ending date
Interest
rate (%) Foreign-currency
amount
RMB amount Foreign-currency
amount
RMB amount
Wenhuagong
Subbranch
of Jiangsu
Bank
2010.3.29 2012.3.28 RMB 4.86 30,00,000.00
Total 30,00,000.00
26. Other non-current liabilities
Items 30 Jun. 2010 31 Dec. 2009
Government subsidy for
technology item
6,333,000.00 6,060,000.00
Total 6,333,000.00 6,060,000.00
27. Share capital
Increase/decrease of this change
Opening amount Issuance of
new share
Bonus
share
Capitalization of
public reserves Others Subtotal
Ending amount
Total shares 561,374,326.00 561,374,326.00Semi-Annual Report 2010
51
28. Capital public reserves
Items Opening amount Increased in current
period
Decreased in current
period
Ending amount
Premium of share capital 153,053,986.32 153,053,986.32
Other 569,975,324.94 57,158,250.00 512,817,074.94
Total 723,029,311.26 57,158,250.00 665,871,061.26
Capital reserves has increased RMB 57,158,250.00 in the reporting period, which was mainly because RMB
57,158,250.00, which was a amount both net amount from changes in fair value of financial assets available for
sales--stocks of Foton Motor and Ninghu Express held by the Company and impact on relevant deferred income
tax, was recorded into the capital reserve.
29. Surplus reserves
Items Opening amount Increased in current
period
Decreased in current
period
Ending amount
Statutory surplus reserves 248,902,493.51 248,902,493.51
Discretionary surplus reserves 13,156,857.90 13,156,857.90
Total 262,059,351.41 262,059,351.41
30. Retained profit
Items Amount Withholding or distribution
proportion
Retained profit at the end of previous year before adjustment 251,066,746.07
Adjustment of retained profit at the beginning of year
retained profit at the beginning of year after adjustment 251,066,746.07
Add: Net profit attributable to owners of parent company in this period 62,560,326.88
Less: Withdrawal of statutory surplus reserves
Withdrawal of discretionary surplus reserves
Withdrawal of general risk provisions
Dividend of common shares payable
Dividend of common shares transferred to share capital
Retained profit at the period-end 313,627,072.95
31. Operating revenue and operating cost
(1) Operating revenue
Items Jan. –Jun. 2010 Jan. –Jun. 2009
Income from main business 1,473,185,173.95 1,233,742,110.79
Income from other business 13,490,281.70 13,770,651.81
Operating cost 1,287,727,677.72 1,083,838,249.11
(2) Main business classified according to products
Products Jan. –Jun. 2010 Jan. –Jun. 2009
Operating income Operating cost Operating income Operating cost
Diesels engines and
foundry fittings 1,473,185,173.95 1,280,563,603.04 1,233,742,110.79 1,069,130,141.92
Total 1,473,185,173.95 1,280,563,603.04 1,233,742,110.79 1,069,130,141.92
(3) Operating revenue of the top five clients of the Company
Name of clients Operating revenue Proportion in operating revenue of the
Company (%)
Shandong Wuzheng (Group) Co., Ltd 121,305,923.94 8.16
DongFeng Automobile Co.，Ltd 99,083,436.37 6.66
Changzhou Dongfeng Agricultural Machinery Group
Co., Ltd 94,637,825.43 6.37Semi-Annual Report 2010
52
Liuzhou Gongxing Agricultural Machinery
Corporation 55,626,659.11 3.74
Burma GOOD BROTHERS CO LTD 52,679,162.28 3.54
Total 423,333,007.13 28.48
32. Business tax and surcharges
Items Jan. –Jun. 2010 Jan. –Jun. 2009
Urban maintenance and construction tax 111,295.90 62,012.34
Educational surcharge 63,597.65 49,609.85
Total 174,893.55 111,622.19
33. Loss on assets impairment
Items Jan. –Jun. 2010 Jan. –Jun. 2009
Loss on bad debt 12,113,276.86
Loss on falling price of inventory -10,354,852.74
Loss on impairment of fixed assets 2,031,127.80
Total 3,789,551.92
34. Income from changes in fair value
Source of income from changes in fair value Jan. –Jun. 2010 Jan. –Jun. 2009
Transaction financial assets 5,534.10 -16,440,300.00
Of which: income from changes in fair value of
derivative financial instruments
Total 5,534.10 -16,440,300.00
35. Investment income
Breakdown of investment income
Items Jan. –Jun. 2010 Jan. –Jun. 2009
Long-term equity investment income measured with cost
method
Long-term equity investment income measured with
equity method 296,708.31
Investment income from transaction financial assets or
financial assets available for sale held 6,502,500.00 722,500.00
Income from disposal of long-term equity investment 155,467,728.02
Investment income from disposal of transaction financial
assets 237,313.17 31,149,675.00
Other
Total 6,739,813.17 187,636,611.33
36. Non-operating income
（1）
Items Jan. –Jun. 2010 Jan. –Jun. 2009
Total gains from disposal of non-current assets 1,678,604.36 280,205.15
Including: gains from disposal of fixed assets 1,678,604.36 280,205.15
Insurance compensation 14,408.25 45,031.58
Penalty income 33,711.55
Government subsidy 623,730.84 2,502,342.35
Gains from disposal of current assets 3,043,862.81 3,155,621.35
Payables that need not to be paid
Others 623,450.98 152,480.12
Total 5,984,057.24 6,169,392.10Semi-Annual Report 2010
53
(2) Breakdown of government subsidy
Items Jan. –Jun. 2010 Jan. –Jun. 2009
Refund of value-added tax 2,402,342.35
Other rewards and subsidies 623,730.84 100,000.00
Total 623,730.84 2,502,342.35
Government subsidy has decreased, which was caused by no refund of VAT received by Benniu in the reporting
period.
37. Non-operating expenses
Items Jan. –Jun. 2010 Jan. –Jun. 2009
Total loss on disposal of non-current assets 98,819.28 22,899.97
Including: loss on disposal of fixed assets 98,819.28 22,899.97
Subsidy funds for crop risk and commodity prices 409,228.83
Donation
Penalty expense
Loss from debts restructuring
Expense on flood prevention and security 1,469,089.73 847,122.60
Loss on disposal of current assets 1,316,129.05 1,436,882.62
Others 1,294,927.45 2,450,922.60
Total 4,178,965.51 5,167,056.62
38. Income tax expense
Items Jan. –Jun. 2010 Jan. –Jun. 2009
Current income tax calculated at the Law of Tax and relevant
regulations
12,786,669.47
32,552,305.30
Adjustment of deferred income tax -4,642,723.52
Total 12,786,669.47 27,909,581.78
39. Calculation process of basic EPS and diluted EPS
The calculation process of basic EPS of the Company for the first half year 2010 is specified in the following
table:
Item Amount
Calculation of basic EPS and diluted EPS
(Ⅰ) Numerator
Net profit after tax 63,265,654.13
Adjustment: influence of preference share dividends and other tools
Gains/losses attributable to ordinary share holders of parent company in the calculation of basic EPS 62,560,326.88
Adjustment: dividends and interest related to dilution potential ordinary shares
Gain/loss changes caused by conversion of dilution potential ordinary shares
Gains/losses attributable to ordinary share holders of parent company in the calculation of diluted
EPS 62,560,326.88
(Ⅱ) Denominator
Weighted average number of common shares issued in the report period in the calculation of basic
EPS
561,374,326.00
Add: weighted average number of common shares converted from all delusion potential common
shares
Weighted average number of common shares issued in the report period in the calculation of diluted
EPS 561,374,326.00
(Ⅲ) EPSSemi-Annual Report 2010
54
Basic EPS
Net profit attributable to common share holders of the Company 0.11
Net profit attributable to common share holders of the Company after deducting non-recurring
gains/losses
Diluted EPS
Net profit attributable to common share holders of the Company 0.11
Net profit attributable to common share holders of the Company after deducting non-recurring
gains/losses
40. Other comprehensive incomes
Items Jan. –Jun. 2010 Jan. –Jun. 2009
1. Gain/loss from the financial assets available for sale -67,245,000.00 269,048,677.05
Minus: income tax impact caused by the financial assets available for sale -10,086,750.00 40,357,301.55
Net amount previously included in other comprehensive earnings and transferred
into gain/loss in the report period
Subtotal -57,158,250.00 228,691,375.50
2. Amount enjoyed by the Company in the invested unit’s other comprehensive
earnings and calculated by the equity method
Minus: the income tax impact caused by the amount enjoyed by the Company in
the invested unit’s other comprehensive earnings and calculated by the equity
method
Net amount previously included in other comprehensive earnings and transferred
into gain/loss in the report period
Subtotal
3. Others
Minus: income tax impact caused by other items included in other comprehensive
earnings
Net amount previously included in other comprehensive earnings and transferred
into gain/loss in the report period
Subtotal
Total -57,158,250.00 228,691,375.50
The gain/loss from financial assets available for sale in the report period came from the income from the fair value
changes of the financial assets available-for-sale—shares of Foton Automobile and Ninghu Expressway— held by
the parent company.
41. Notes to items in the Cash Flow Statement
(1) Other cash received related to operating activities
The amount that occurred in the report period stood at RMB 12,585,300 with those important items detailed as
follows: (Unit: ten thousand Yuan)
Item Amount
Cash received from other activities 513.03
Subsidies and grants 300.47
Interest income 167.87
(2) Other cash paid related to operating activities
The amount that occurred in the report period stood at RMB 45,696,700 with those important items detailed as
follows: (Unit: ten thousand Yuan)
Item Amount
Various kinds of office expenses and operating outlay 1186.64
Travel expenses 779.31
Expenses for transportation and repair 795.48
Expenses for promotion and guarantee of repair 183.49
Expense on trial development 228.75
Other 168.78
42. Supplementary information to the Cash Flow StatementSemi-Annual Report 2010
55
(1) Supplementary information to the Cash Flow Statement
Supplementary information Jan. –Jun. 2010 Jan. –Jun. 2009
1. Reconciliation of net profit to net cash flows generated from
operating activities
Net profit 63,265,654.13 190,713,981.27
Add: Provision for impairment of assets 3,789,551.92
Depreciation of fixed assets 24,633,046.65 22,358,451.97
Amortization of intangible assets 1,322,416.86 1,360,310.86
Amortization of long-term deferred expense
Losses on disposal of property, plant and equipment,
intangible assets and other long-term assets -179,785.08 -257,305.18
Loss on retirement of fixed assets
Losses from variation of fair value -5,534.10 16,440,300.00
Financial cost 1,875,545.65 1,922,468.08
Investment loss -6,739,813.17 -187,636,611.33
Credit item of deferred tax -532,648.52
Debit item of deferred tax -10,086,750.00 -4,110,075.00
Decrease in inventory (increase: negative) 62,558,235.44 71,220,449.21
Decrease in accounts receivable from operating activities -126,448,954.32 -110,860,564.01
Increase in payables from operating activities 63,383,792.57 274,929,539.65
Other
Net cash flows generated from operating activities 73,577,854.63 279,337,848.92
2. Investing and financing activities that do not involving cash
receipts and payment:
Conversion of debt into capital
Convertible bond due within one year
Fixed assets financed by finance leases
3. Net increase in cash and cash equivalents:
Closing balance of cash 800,969,743.08 847,487,171.26
Less: Opening balance of cash 770,721,154.44 400,278,967.15
Add: closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents 30,248,588.64 447,208,204.11
(2) Composition of cash and cash equivalents
Items 30 June 2010 31 Dec. 2009
I. Cash 800,969,743.08 770,721,154.44
Including: Cash on hand 350,578.05 411,084.77
Bank deposit on demand 700,432,314.57 679,507,775.72
Other monetary funds on demand 100,186,850.46 90,802,293.95
II. Cash equivalent
Including: Bond investment due in three months
III. Closing balance of cash and cash equivalents 800,969,743.08 770,721,154.44
Note 6: Related parties and related parties transactions
1. Particulars about the parent company of the CompanySemi-Annual Report 2010
56
The State-owned Assets Supervision and Administration Commission of Changzhou Municipal Government is the
actual controller of the Company, which held 30.02% equities of the Company (state-owned equities) as at 30 Jun.
2010.
2. Particulars about subsidiaries of the Company
Full name of
subsidiary
Type of
subsidiary
Type of
enterprise
Registered
place
Legal
representative
Business
nature
Registered
capital
(RMB
0’000)
Shareholding
ratio (%)
Voting
power
ratio
(%)
Code of
organization
Changchai
Wanzhou
Diesel Engine
Co., Ltd.
Controlling
subsidiary
Company
with
limited
liability
Chongqing
City Yin Lihou Industry 3,500 60 60 20793370-5
Changzhou
Changchai
Benniu Diesel
Engine Fittings
Co., Ltd.
Controlling
subsidiary
Company
with
limited
liability
Changzhou
City
Qiang
Jinlong Industry 3,378.64 75 75 25083232-8
Nanjing
Changli
Agricultural
Machinery
Fittings Co.,
Ltd.
Wholly-funded
subsidiary
Company
with
limited
liability
Nanjing
City Xue Guojun Industry 500 100 100 66065240-X
Changzhou
Housheng
Investment Co.,
Ltd.
Wholly-funded
subsidiary
Company
with
limited
liability
Changzhou Shi Jianchun Financing 3000 100 100 55027547-1
3. Joint ventures and jointly-run enterprises of the Company
Name of the invested entity Type of enterprise Registered
place
Legal
representative
Business
nature
Registered
capital (RMB
0’000)
Shareholding
ratio of the
Company (%)
Voting power ratio
of the Company in
the invested entity
(%)
1. The Company had no joint ventures.
2. Jointly-run enterprises
Changzhou Fuji Changchai
Robin Diesel Engine Co.,
Ltd.
Company with
limited liability Changzhou Shijing Qijie Industry USD 4.5 million 33 33
Beijing Tsinghua Investment
Management Co., Ltd.
Company with
limited liability Beijing Chen
Zhangwu Service 1000 25 25
4. No other related parties existed in the Company.
5. The Company has no related transactions in the report period that needed to be disclosed.
Note 7: Contingent Events
(I) Lawsuits and arbitrations in the report period
Name of defendant Date of accepting &
hearing
Names of lawsuits &
arbitration organs
Involved sum
(RMB 0’000) Remarks
Pending lawsuits carried down to the report period from the previous periods
1. Nanjing Jinwa Share-holding
Co., Ltd.
9 Jul. 2002
Changzhou Intermediate
People’s Court 1,419.00 In the process of
execution
2.Shandong Hongli Group Co.,
Ltd. 27 Jun. 2001
Changzhou Intermediate
People’s Court 1,436.00 During bankruptcy
liquidation
Total 2855.00
1. About the lawsuit case of Nanjing Jinwa Share-holding Co., Ltd.: The Company has signed a settlement
agreement where Lishui County Public-owned Assets Operation Co., Ltd. shall pay the debt of RMB 14.19
million owed by Nanjing Jinwa Share-holding Co., Ltd. with 80 mu of land. On 31 May 2010, through executionSemi-Annual Report 2010
57
made by the Count, Lishui County Public-owned Assets Operation Co., Ltd. had repaid the said debt with a cash
of RMB 9 million instead of Nanjing Jinwa Share-holding Co., Ltd.. This case has been settled.
2. About the lawsuit case of Shandong Hongli Group Co., Ltd.: The accused company owed accumulatively RMB
14.36 million to the Company. The Company sued to Changzhou Intermediate People’s Court in 2001 and sued
for compulsory execution in April, 2002. Currently, the defendant has started the bankruptcy procedure.
(II) Guarantees
In the report period, the Company provided a loan guarantee of RMB 11.50 million for its controlling
subsidiary—Changchai Benniu Diesel Engine Fittings Co., Ltd. with the guarantee term from 29 Oct. 2009 to 29
Oct. 2010.
Note 8: Commitment Events
The Company has no commitment events that needed to be disclosed.
Note 9: Notes to the main items of the parent company’s financial statements
(If not specified, the monetary units of the items below are set at RMB Yuan.)
1. Accounts receivable
(1) Classified by account nature
30 Jun. 2010 31 Dec. 2009
Book balance Bad debt provision Book balance Bad debt provision
Categories
Amount Proporti
on (%)
Amount Proporti
on (%)
Amount Proportio
n (%)
Amount Propor
tion
(%)
Significant
single amount 510,229,537.69 82.29 193,705,394.28 37.96 400,500,232.81 83.31 203,635,922.04 50.85
Other
insignificant
accounts
receivable
109,831,322.36 17.71 56,482,411.29 51.43 80,224,401.18 16.69 58,499,459.91 72.92
Total 620,060,860.05 100.00 250,187,805.57 40.35 480,724,633.99 100 262,135,381.95 54.53
An accounts receivable with the loan balance over one million (including one million) is recognized as an account
receivable with significant single amount. The Company conducts independent impairment tests on the accounts
receivable with significant single amount and withdraws bad debt provisions by the account age analysis method
on those accounts receivable of which there is no objective evidence to indicate the possible occurrence of
impairment.
（2）Bad debt provisions for closing accounts receivable with significant single amounts or insignificant but being
conducted an independent impairment test on:
Content Book balance Amount of bad debt Withholding proportion Reason
Customer 1 50,170,093.11 29,714,026.76
Within 5 years: withholding
at the aging,
Over 5 year: withholding at
60%
Through the resolution made by
the Board of Directors, related
parties adopted withholding
proportion not exceeding 60%
Customer 2 12,343,782.28 12,343,782.28 100% No current for a long time
Customer 3 14,234,302.79 14,234,302.79 100% In bankruptcy
Total 76,748,178.18 56,292,111.83
(3) Aging analysis
30 Jun. 2010 31 Dec. 2009
Book balance Book balance
Aging
Amount Proportion
(%)
Bad debt provision
Amount Proportion
(%)
Bad debt provision
Within 1
year 339,633,433.47 54.77 7,908,055.55 195,562,891.43 40.68 5,154,093.98
1-2 years 349,633,433.47 56.39 7,908,055.55 195,562,891.43 40.68 5,154,093.98
2-3 years 2,510,008.97 0.40 958,864.54 4,310,615.25 0.90 1,887,726.16
3-4 years 3,953,455.27 0.64 1,741,187.52 3,717,294.41 0.77 1,969,179.12
4-5 years 3,459,254.82 0.56 1,924,367.97 9,970,299.15 2.07 5,738,455.86Semi-Annual Report 2010
58
Over 5
years 8,056,487.93 1.30 5,795,459.36 16,803,976.01 3.50 16,614,718.05
Total 252,448,219.59 40.71 231,859,870.63 250,359,557.74 52.08 230,771,208.78
（4）Accounts receivable actually canceled in the report period
Name of entity
Nature of
the account
receivable
Amount canceled
after verification Reasons for cancellation
Whether
caused by
related
transactions
Xinghua Feida Model Company Payment
for goods 1,034,847.84 Close of bankruptcy No
Suining Dayu Co., Ltd. Payment
for goods 638,586.50 Close of bankruptcy No
Guoyang Zhongyuan Trading Co., Ltd. Payment
for goods 665,760.00 Debt restructuring No
Xuchang Machinery Manufacturing Factory Payment
for goods 4,938,735.92 Close of bankruptcy No
Guantao County Chaoyuan Agricultural
Machinery Company
Payment
for goods 1,956,944.00 Close of bankruptcy No
Gansu Tiantai Agricultural Machinery
Electromechanical Co.,Ltd.
Payment
for goods 2,000,000.00 Debt restructuring No
Yunnan Zhang’an Trading Co., Ltd. Payment
for goods 712,702.12 Debt restructuring No
Total 11,947,576.38
(5)There was no accounts receivable due from shareholders with more than 5% (including 5%) of the voting
shares of the Company in the reporting period
(6)Top five entities of the accounts receivable
Name of entity
Relationship
with the
Company
Amount Useful life
Ratio to the total
accounts receivable
(%)
Dongfeng Motor Group Co., Ltd. Customer 56,332,842.79 Within 1 year 9.09
Changchai Wanzhou Diesel
Engine Co., Ltd.
Controlling
subsidiary 50,033,686.61 Within 4 years and
over 5 years 8.07
Shandong Wuzheng Group Co.,
Ltd. Customer 44,506,116.80 Within 1 year 7.18
Changzhou Dongfeng
Agricultural Machinery Group
Co., Ltd.
Customer 41,251,658.42 Within 1 year 6.65
Chengdong Jifeng Agricultural
Machinery Co., Ltd. Customer 26,273,044.06 Within 1 year 4.24
Total 218,397,348.68 35.22
(7) Other debts owed by related parties among the accounts receivable in the report period
Changchai Wanzhou Diesel Engine Co., Ltd.: RMB 50,033,686.61
2. Other receivable
(1) Other receivables disclosed according to categories:
30 Jun. 2010 31 Dec. 2009
Book balance Bad debt provision Book balance Bad debt provision
Categories
Amount Proportion
(%)
Amount Proportio
n
(%)
Amount Proporti
on
(%)
Amount Proporti
on
(%)
Significant
single amount 33,547,946.37 72.06 27,058,441.58 80.66 39,253,700.96 73.28 28,150,645.06 71.71
Other
insignificant
accounts
receivable 13,005,483.24 27.94 12,086,698.14 92.94 14,309,882.65 26.72 10,994,494.66 76.83
Total 46,553,429.61 100.00 39,145,139.72 84.09 53,563,583.61 100 39,145,139.72 73.08Semi-Annual Report 2010
59
The other receivables with the loan balance over one million (including one million) is recognized as one with
significant single amount. The Company made independent impairment tests on the other receivables with
significant single amount and withdraws bad debt provisions by the account aging analysis method on those other
receivables of which there is no objective evidence to indicate the possible occurrence of impairment.
(2) Aging analysis
30 Jun. 2010 31 Dec. 2009
Book balance Book balance
Aging
Amount Proportion
(%)
Bad debt provision
Amount Proportion
(%)
Bad debt provision
Within 1 year 7,085,623.75 15.22 191,582.62 13,953,610.08 26.05 279,072.20
1-2 years 218,885.49 0.47 14,574.23 569,260.00 1.06 28,463.00
2-3 years 498,778.31 1.07 250,005.64 3,064,183.68 5.72 3,028,029.05
3-4 years 2,819,556.42 6.06 2,777,589.47 460,176.08 0.86 294,021.70
4-5 years 320,756.84 0.69 301,558.96 75,078.18 0.14 74,278.18
Over 5 years 35,609,828.80 76.49 35,609,828.80 35,441,275.59 66.17 35,441,275.59
Total 46,553,429.61 100 39,145,139.72 53,563,583.61 100 39,145,139.72
(3)There was no other receivable due from shareholders with more than 5% (including 5%) of the voting shares of
the Company in the reporting period.
(4) Top five entities of other receivables
Name of entity
Relationship
with the
Company
Amount Useful life Nature
Ratio to the total
other receivables
(%)
Changzhou Vehicle Co., Ltd. Customer 9,499,480.81 Over 5 years Borrowing 20.41
Changzhou Compressor Co., Ltd. Customer 2,940,000.00 Over 5 years Current
payment 6.32
Changchai Properties Company Customer 1,642,110.97 Within 1 year Current
payment 3.53
Changzhou New District
Accounting Center Customer 1,626,483.25 Over 5 years Current
payment 3.49
Settlement center of Changchai
Group Customer 1,000,000.00 Over 5 years Current
payment 2.15
Total 16,708,075.03 35.89
(5) No debts owned by the related parties among the other receivables in the reporting period.
3. Long-term equity investment
(1) Breakdown of long-term equity investment
Name of investee
entities
Accounting
method
Initial investment
amount Opening balance Change of increase
and decrease Ending balance
Changchai Wanzhou
Diesel Engine Co., Ltd
Cost
method 21,000,000.00 21,000,000.00 21,000,000.00
Changchai Benniu
Diesel Engine Fittings
Co., Ltd
Cost
method 25,339,800.00 25,339,800.00 25,339,800.00
Nanjing Changli
Agro-engine Fitting
Market Co., Ltd
Cost
method 5,000,000.00 5,000,000.00 5,000,000.00
Changzhou Fuji
Changchai Robin
Gasoline Engine Co.,
Ltd.
Equity
method 12,294,546.00 17,664,185.64 17,664,185.64
Beijing Tsinghua
Industrial Investment
Management Co., Ltd.
Equity
method 2,500,000.00 44,182.50 44,182.50Semi-Annual Report 2010
60
Shenzhen Drgama
Network System Co.,
Ltd.
Equity
method 2,388,157.00 0.00 0.00
Jiangsu Bank Cost
method 38,000,000.00 38,000,000.00 38,000,000.00
Lanzhou Northwest
Vehicle Corporation
Cost
method 5,000,000.00 5,000,000.00 5,000,000.00
Changzhou Housheng
Investment Co., Ltd.
Cost
method 30,000,000.00 30,000,000.00
Others Cost
method 410,000.00 0.00 0.00
Total 141,932,503.00 112,048,168.14 0.00 142,048,168.14
Con.
Invested unit
Proportion
of
shareholdin
g in
invested
units (%)
Proportion
of voting
right in
invested
units (%)
Explanation on differ of
proportion between
shareholding and voting
right in invested units
Impairment
provision
Impairme
nt
provision
withdrawn
in current
period
Cash dividend in
current period
Changchai Wanzhou
Diesel Engine Co., Ltd 60 60
Changchai Benniu
Diesel Engine Fittings
Co., Ltd
75 75
Nanjing Changli
Agro-engine Fitting
Market Co., Ltd
100 100
Changzhou Fuji
Changchai Robin
Gasoline Engine Co.,
Ltd.
33 33
Beijing Tsinghua
Industrial Investment
Management Co., Ltd.
25 25
Shenzhen Drgama
Network System Co.,
Ltd.
34 34
7,436,389.00
Jiangsu Bank
Lanzhou Northwest
Vehicle Corporation 5 5
Changzhou Housheng
Investment Co., Ltd. 100 100
Others 410,000.00
Total 7,846,389.00
Notes: ① Others: RMB 20,000 was invested to Changzhou Economic and Technology Development Company,
RMB 100,000 was invested to Changzhou Tractor Plant, RMB 200,000 was invested to Industry Fund Fraternity
of Changzhou Economic & Trade Commission, RMB 90,000 was invested to Beijing Project Machine
Agricultural Machinery Co., Ltd.. The above four items were hard to take back fully withdrawn impairment
provision.
② Shenzhen Drgama Network System Co., Ltd. failed to do annual inspection for industry and commerce
administration for four years. It is in disorganization actually, so the Company withdrawn impairment provision
fully.
4. Operating revenue and operating cost
(1) Operating revenue
Items Jan. –Jun. 2010 Jan. –Jun. 2009
Income from main
business 1,485,138,080.03 1,242,540,082.16Semi-Annual Report 2010
61
Income from other
business 13,490,281.70 12,780,176.45
Operating cost 1,315,285,655.58 1,106,419,500.15
(2) Main business classified according to products
Products Jan. –Jun. 2010 Jan. –Jun. 2009
Operating income Operating cost Operating income Operating cost
Diesels engines 1,485,138,080.03 1,308,121,577.30 1,242,540,082.16 1,091,941,451.32
Total 1,485,138,080.03 1,308,121,577.30 1,242,540,082.16 1,091,941,451.32
(3) Operating revenue of the top five clients of the Company
Name of clients Operating revenue Proportion in operating revenue of the
Company (%)
Shandong Wuzheng (Group) Co., Ltd 106,222,350.21 7.09
DongFeng Automobile Co.，Ltd 86,763,079.13 5.79
Changzhou Dongfeng Agricultural Machinery Group
Co., Ltd 82,870,249.94 5.53
Liuzhou Gongxing Agricultural Machinery
Corporation 48,709,859.12 3.25
GOOD BROTHERS CO LTD1 46,128,863.64 3.08
Total 370,694,402.04 24.74
5. Investment income
Breakdown of investment income
Items Jan. –Jun. 2010 Jan. –Jun. 2009
Long-term equity investment income measured with cost
method 722,500.00
Long-term equity investment income measured with
equity method 296,708.31
Investment income from transaction financial assets or
financial assets available for sale held 6,502,500.00
Income from disposal of long-term equity investment 155,467,728.02
Investment income from disposal of transaction financial
assets 31,149,675.00
Total 6,502,500.00 187,636,611.33
6. Supplementary information to the Cash Flow Statement
Supplementary information Jan. –Jun. 2010 Jan. –Jun. 2009
1. Reconciliation of net profit to net cash flows generated from
operating activities
Net profit 60,468,787.12 183,283,875.14
Add: Provision for impairment of assets 3,898,824.12
Depreciation of fixed assets 21,055,648.96 18,798,994.00
Amortization of intangible assets 1,292,726.52 1,329,195.52
Amortization of long-term deferred expense
Losses on disposal of property, plant and equipment,
intangible assets and other long-term assets -138,445.67 -141,574.40
Loss on retirement of fixed assets
Losses from variation of fair value 16,440,300.00
Financial cost 1,095,665.07
Investment loss -6,502,500.00 -187,636,611.33
Credit item of deferred tax -532,648.52
Debit item of deferred tax -10,086,750.00 -4,110,075.00
Decrease in inventory (increase: negative) 77,920,616.21 79,201,291.22
Decrease in accounts receivable from operating activities -128,289,654.33 -118,965,026.36
Increase in payables from operating activities 70,801,391.23 253,295,941.43Semi-Annual Report 2010
62
Other
Net cash flows generated from operating activities 87,617,485.11 244,862,485.82
2. Investing and financing activities that do not involving cash
receipts and payment:
Conversion of debt into capital
Convertible bond due within one year
Fixed assets financed by finance leases
3. Net increase in cash and cash equivalents:
Closing balance of cash 773,682,332.19 802,218,005.31
Less: Opening balance of cash 732,773,854.30 378,820,707.08
Add: closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents 40,908,477.89 423,397,298.23
Notes 10: Supplementary information
1. Statement on extraordinary gains and losses
Items Amount Notes
Gains and losses from disposal of non-current assets 1,579,785.08
Of which: net income from disposal
of fixed assets was RMB
1,579,785.08
Government subsidies recorded into the current profit and loss,
except for those closely related with the normal operation of the
company and constantly received by the Company at a fixed amount
or quantity according to certain standards of state policies
623,730.84
Profit or loss from changes in fair value of tradable financial assets
and liabilities held by the Company, and investment income from
disposal of tradable financial assets and liabilities as well as
available-for-sale financial assets, excluding the effective hedging
businesses related with the normal operations of the company
242,847.27
Other non-operating income and expenses besides the above items -398,424.19
Amount affected by income tax -345,796.31
Amount affected by minority interest (after tax) -72,385.23
Total 1,629,757.46
Note: Extraordinary gains and losses items were listed at the amount before tax
2. Return on equity (ROE) and earnings per share (EPS)
Earnings per share
Profit in current period Weighted average
return on equity（%） Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders of the
Company 3.48 0.11 0.11
Net profit attributable to ordinary shareholders of the
Company after deducting non-recurring gains and losses 3.38 0.11 0.11
3. Abnormity of major items in consolidated financial statements of the Company and explanation
on reasons
(1) Ending balance increased by RMB 147,990,100 comparing with the opening balance, 57.88%
up, which was caused by increase of sales volume, as well as undue sale on account according to
the contract.
(2) Ending balance increased by RMB 40,456,400 comparing with the opening balance, an increaseSemi-Annual Report 2010
63
of 61.08%, which was caused by increase of technological renovation inputs, adding some new
equipment.
(3) Accounts from customers
Ending balance increased by RMB 22,601,600 comparing with the opening balance, up by 59.65%,
mainly because dealer prepaid part accounts for goods to the Company, which was prepared fittings
stock for production midseason.
(4) Payroll payable
Ending balance decreased by RMB 21,230,400 comparing with the opening balance, 42.68% down,
which was caused by increase of sales volume, and operating performance of the Company was
better, and salary and bonus increased accordingly.
(5) Taxes payable
Ending balance increased RMB 3,084,400 comparing with the opening balance, an increase of
44.48%, mainly due to increase of sales volumes and adjustment of products structure, and VAT
increased accordingly.
(6) Financial expenses
Ending balance increased by RMB 1,910,400 comparing with the opening balance, 58.37% up,
mainly because of increase of interest expenses paid on the borrowing and decrease of sales
promotion expenses deducted from suppliers.
(7) Net income form investment
Ending balance decreased by RMB 180,896,800 comparing with the opening balance, 96.41%
down, mainly because the Company disposed the part of tradable financial assets and equities at the
same period of last year, but noting in this reporting period.
(8) Income tax
Ending balance decreased by RMB 15,122,900 comparing with the opening balance, 54.19% down,
mainly because the income as of this reporting period is less than that of last year.Semi-Annual Report 2010
64
VIII. Documents Available for Reference
The following documents are available for reference:
1. Text of 2010 Semi-Annual Report carrying the signature of Chairman of the Board;
2. Accounting statements carrying the signatures and seals of the person-in-charge of the Company,
the person-in-charge of accounting and the person-in-charge of the accounting agency;
3. Originals of all the Company’s documents and public notices ever disclosed on Securities Times
and Ta Kung Pao designated by CSRC in the report period;
4. Articles of Association of the Company.
The above-mentioned documents for reference are readily available in the Secretariat of the Board
of Directors of the Company.
This Semi-Annual Report was prepared both in Chinese and English. Should there be any
difference in interpretation of the two versions, the Chinese version shall prevail.
Board of Directors
Changchai Company, Limited
19 Aug. 2010
