CHANGCHAI COMPANY, LIMITED
SEMI-ANNUAL REPORT 2011
August 2011
Important 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.
All directors of the Company attended the Board meeting.
All Directors 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 2011 of the Company has not been audited.
English Translation for Reference Only. Should there be any discrepancy between the
two versions, the Chinese version shall prevail.
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 ---------------------8
V. Discussion and Analysis of the Management ------------------------------------------8
VI. Significant Events -------------------------------------------------------------------------10
VII. Financial Report---------------------------------------------------------------------------13
VIII. Documents Available for Reference --------------------------------------------------76
I. 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: Apr. 26, 2011
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, Jiangsu
II. Major Financial Highlights and Indices
1. Major accounting data and financial indices:
(Unit: RMB Yuan)
Increase/decrease of
the end of this
At the end of this At the period-end of last reporting period
reporting period year compared with the
period-end of last
year (%)
Total assets 3,127,516,355.37 3,422,525,753.79 -8.62
Owners’ equity attributable to
1,903,261,218.34 2,078,644,128.64 -8.44
shareholders of the listed company
Share capital 561,374,326.00 561,374,326.00 0.00
Net assets per share attributable to
shareholders of the listed company 3.39 3.70 -8.38
(Yuan/share)
Increase/decrease of
The reporting period The same period of last
current period
(Jan. -Jun.) year
year-on-year (%)
Total operating income 1,702,548,109.24 1,486,675,455.65 14.52
Total operating income 40,931,592.25 74,247,231.87 -44.87
Operating profit 47,558,149.99 76,052,323.60 -37.47
Total profit 37,156,614.70 62,560,326.88 -40.61
Net profit attributable to shareholders
31,604,115.97 60,930,569.42 -48.13
of the listed company
Net profit attributable to shareholders
of the listed company after deducting 0.07 0.11 -36.36
non-recurring gains and losses
Basic EPS (Yuan/share) 0.07 0.11 -36.36
Diluted EPS (Yuan/share) 1.87% 3.47% Down 1.60%
Net cash flows from operating
-48,652,001.52 73,577,854.63 ——
activities
Net cash flows per share from
-0.09 0.13 ——
operating activities (Yuan/share)
Item Amount Remark
Including: a net income of RMB
Gains and losses from non-current asset disposal 140,834.57 140,834.57 from fixed asset
disposal
Government subsidies recognized into current gains and losses
(excluding those subsidies which are closely related to the
5,922,000.00
Company’s business and are enjoyed at fixed amounts or proportions
according to unified state standards)
Gains and losses from fair value changes in transactional financial -66,665.37 Including: gains of RMB -66,665.37
assets and liabilities, and investment incomes from disposing from fair value change by holding
transactional financial assets and liabilities and financial assets transactional financial assets
available for sale, excluding the effective hedging business related to
the normal operation of the Company
Other non-operating incomes and expenses besides the items above 563,723.17
Effect on income tax -992,126.39
Effect on minority interests (after tax) -15,267.25
Total 5,552,498.73
2. Impact on net profit and net assets after the adjustment under IFRS:
(Unit: RMB Yuan)
Items Net profit Net assets
Under PRC GAAP 37,156,614.70 1,903,261,218.34
Under IFRS 37,156,614.70 1,903,261,218.34
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 (Yuan/share)
Profit in reporting period Weighted Basic earnings per Diluted earnings
Fully diluted
average share per share
Net profit attributable to shareholders of
1.95 1.87 0.07 0.07
ordinary shares of the Company
Net profit attributable to shareholders of
ordinary shares of the Company after 1.66 1.59 0.06 0.06
deducting non-recurring gains and losses
III. 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 reporting period.
(II) Particulars about shareholders
1. Number of shareholders and shares held by them
Total number of shareholders 100,329 shareholders in total（79,392 shareholders of A-share and 20,937 shareholders of B-share）
Particulars about shares held by the top ten shareholders
Proportion Increase/decrease Shares subject
Nature of Total number Shares pledged
Name of shareholder in total in the reporting to moratorium
shareholders of shares held or frozen
shares period held
1. State-owned Assets
Supervision and
On behalf of
Administration Commission 30.02% 168,497,736 0 0 28,068,716
the state
of Changzhou Municipal
Government
Domestic
2. Xu Jing 0.18% 1,007,263 0 0
natural person
3. ICBC - Yinhua Harmonious
Domestic
Theme Dynamic Asset 0.18% 1,000,000 0 0
legal person
Allocation Mixed Type Fund
Domestic
4. Li Tao 0.15% 838,391 0 0
natural person
Foreign legal
5. Sinoauto Company, Ltd. 0.15% 820,000 0 0
person
Domestic
6. Ma Zeqi 0.13% 712,500 0 0
natural person
7. Guosen Securities Co., Ltd.
Domestic
- Guarantee Account for 0.12% 656,600 0 0
legal person
Customer Credit Transaction
Domestic
8. Liu Guosheng 0.11% 591,400 0 0
natural person
Domestic
9. Zhu Shuanglian 0.10% 585,715 0 0
natural person
Domestic
10. Xu Meixia 0.10% 565,950 0 0
natural person
Particulars about shares held by the top ten shareholders not subject to trading moratorium
Number of shares not subject to trading
Name of shareholders Type of shares
moratorium held by the shareholder
1. State-owned Assets Supervision and Administration
168,497,736 Renminbi ordinary shares
Commission of Changzhou Municipal Government
2. Xu Jing 1,007,263 Renminbi ordinary shares
3. ICBC - Yinhua Harmonious Theme Dynamic Asset
1,000,000 Renminbi ordinary shares
Allocation Mixed Type Fund
Domestically listed foreign
4. Li Tao 838,391
shares
Domestically listed foreign
5. Sinoauto Company, Ltd. 820,000
shares
Domestically listed foreign
6. Ma Zeqi 712,500
shares
7. Guosen Securities Co., Ltd. - Guarantee Account for
656,600 Renminbi ordinary shares
Customer Credit Transaction
Domestically listed foreign
8. Liu Guosheng 591,400
shares
9. Zhu Shuanglian 585,715 Renminbi ordinary shares
10. Xu Meixia 565,950 Renminbi ordinary shares
It is unknown whether there was any associated relationship among the top
ten tradable shareholders and among the top ten shareholders not subject to
Explanation on associated relationship and
moratorium, or whether there is any action-in-concert among them as
action-in-concert among the top ten shareholders
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 reporting period, the controlling shareholder and actual controller
remained unchanged.
IV. Particulars about Directors, Supervisors and Senior Executives
1. In the reporting period, there was no change in shares held by directors, supervisors
and senior executives of the Company.
2. In the reporting period, there was no engagement or dismissal of directors,
supervisors and senior executives.
V. Discussion and Analysis by the Management
1. Overall performance of the Company in the reporting period
For the first half of 2011, the Company accumulatively sold various diesel engines
and power generation sets of 700,300 in number, an increase of 10.20% year on year,
including 91,100 sets of multi-cylinder diesel engines, up 15.60% as compared with
the same period of last year. It achieved export earnings of US$ 22.80 million, up
33.69% from a year earlier. Meanwhile, it realized sales revenues of RMB
1,702,548,100, an increase of 14.52% year on year and realized a net profit of RMB
37,156,600, down 40.61% from a year earlier.
During the reporting period, the government’s economic stimulus package faded out,
which resulted in a tightening credit. Automobile sales weakened, causing a general
slide in the diesel engine market. In the first half of 2011, following closely the annual
development goals set for the year, the Company expanded markets, upgraded
products and enhanced cost management, increasing its sales volume as a result. But
due to the price rise of raw and auxiliary materials, increasing labor cost and other
factors, the Company’s gross profit ratio dropped significantly, which led to a
relatively large drop in profit on a year-on-year basis.
In the coming six months, the Company will continue with its various innovation
activities, strengthen the cooperation with key customers and put great effort in
building and improving overseas marketing platforms, with the purpose of increasing
its comprehensive competitiveness and promoting healthy development.
2. Analysis on operation of the Company in the reporting 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, etc..
(1) Breakdown of main business income for the reporting period according to
products
Operating income (RMB Operating cost (RMB
Product Gross profit rate (%)
Yuan) Yuan)
Diesel engines and
1,702,548,109.24 1,563,753,985.22 8.16
fittings
Total 1,702,548,109.24 1,563,753,985.22 8.16
(2) Breakdown of main business income for the reporting period according to regions
Region Operating income (RMB Yuan) Year-on-year increase/decrease (%)
East China 748,576,787.00 15.10
Northeast China 72,368,781.26 -11.93
Southwest China 137,606,973.09 -9.86
Central China 208,131,200.95 26.45
North China 98,796,946.11 18.88
Northwest China 52,611,686.96 14.83
South China 141,990,576.05 34.56
Export 126,470,875.17 33.69
(3) Affected by the price rise of raw and auxiliary materials and other elements, the
gross profit rate dropped from 13.08% in the same period of last year to 8.16% in the
reporting period.
(4) In the reporting period, there were no other operating activities that had a
significant influence on the net profit.
(5) Problems and difficulties
Fluctuations in the prices of raw and auxiliary materials, including parts, created
pressure on the Company’s cost control. And the Company’s profit structure needs
further adjustment.
3. Investments made by the Company in the reporting period
(1) The Company did not carry out any re-financing in the previous three years.
(2) The Company did not launch any project invested with non-raised funds in the
reporting period.
VI. Significant Events
1. Corporate governance in the reporting 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. No profit distribution plan, capitalization plan of public reserves or plan on issue of
new shares was drawn out in previous period and executed in the reporting period.
Neither profit distribution plan nor capitalization plan of public reserves was drawn
out in the 1st half of Y2011.
3. In the reporting 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 reporting period. For more details, please refer to the notes of the financial
statements in this report.
4. In the reporting period, there is no significant asset acquisition or sale.
5. In the reporting period, the Company did not conduct any significant related
transaction with its actual controller or its subsidiaries.
6. In the reporting period, the Company provided loan guarantees of RMB 22 million
for its holding subsidiary—Changchai Benniu Diesel Engine Fittings Co., Ltd, with
the term from 22 Mar. 2011 to 21 Mar. 2012. There are no other guarantees.
7. Securities investment in the reporting period
(1) Transactional financial assets
Proportion in
Profits or
Initial total
Sequ Number of Book value at losses in the
Securities Short form investment securities
ence Stock code shares held period-end reporting
variety of stock amount (RMB investment at
No. (share) (RMB Yuan) period (RMB
Yuan) period-end
Yuan)
(%)
Dongfeng
1 Fund A00007 200,000.00 198,468.70 196,508.74 26.82 -10,513.96
No.6
Wenfeng
2 Stock 601010 440,000.00 22,000.00 396,220.00 54.07 -43,780.00
Stock
3 Stock 002588 Shidanli 157,500.00 4,500.00 140,040.00 19.11 -17,460.00
Other securities investment held at period-end 0 0 0 0 0
Profits or losses from securities investment sold in
— — — — 144,741.20
the reporting period
Total 797,500.00 — 732,768.74 100.00 72,987.24
(2) Equity held by the Company of other listed companies
Profits
or losses
Proportio
Initial investment Book value at in the Change of owner’ s
Stock Short form n of Accounti Source of
amount (RMB period-end (RMB reporting equity in the
code of stock sharehold ng item stock
Yuan) Yuan) period reporting period
ing
(RMB
Yuan)
Exchange
Financial of assets
Foton assets with
600166 41,784,000.00 3.42% 627,130,000.00 0.00 -249,985,000.00
Motor available Changcai
for sale Group in
1999
Financial
Ninghu assets Transfer by
600377 90,500.00 270,500.00 0.00 -61,500.00
Expressway available agreement
for sale
Total 41,874,500.00 — 627,400,500.00 0.00 -250,046,500.00
(3) Equity held by the Company of non-listed financial enterprises and companies to
be listed
Profits or
losses in
Initial Proportion Change of
Number of Book value at the Name of
Name of the investment in equity owner’ s equity Accounting
shares held period-end (RMB reporting the held
held party amount (RMB of the held in the reporting item
(share) Yuan) period party
Yuan) party period
(RMB
Yuan)
Long-term
Bank of Sponsor’s
38000000.00 38000000 0.48% 38000000.00 0 0 equity
Jiangsu shares
investment
Total 38000000.00 38000000 0.48% 38000000.00 0 0
8. In the reporting period, the Company did not sign any significant contract.
9. Reception of researches, interviews and visits in the reporting period.
Way of Main discussion and the materials
Time Place Visitor
reception provided by the Company
2011.4.9 The Company By telephone Individual investor Main operation status of the Company
Meeting Room No.3 Main operation status and future
2011.5.18 Field research Huatai Securities
of the Company development of the Company
Meeting Room No.3 Main operation status and future
2011.6.14 Field research CITIC Securities
of the Company development of the Company
10. In the reporting period, there were no commitments that greatly affect operating
results or financial status of the Company made by shareholders holding over 5%
(including 5%) shares in the previous period and carried down to the reporting period.
11. No shareholders holding over 5% of the Company’s shares made any further
commitments concerning the trading moratorium on shares in 2011.
12. In the reporting 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 was no non-operational occupation of the Company’s capital by the holding
shareholder or other related parties.
In the reporting 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 controlling 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.
VII. Financial Report
(I) Financial statement
Balance Sheet
Prepared by Changchai Company, Limited 30 Jun. 2011 Unit: RMB Yuan
Closing balance Opening balance
Items
Consolidation Parent company Consolidation Parent company
Current assets:
Monetary funds 686,687,180.70 652,410,923.04 763,106,649.01 727,580,790.13
Settlement fund reserve
Dismantle fund
Transaction financial asset 732,768.74 292,091.61
Notes receivable 129,518,471.79 124,498,471.79 142,352,378.25 142,018,290.85
Account receivable 477,162,025.52 435,547,683.57 381,350,829.22 338,138,200.12
Account paid in advance 21,611,963.06 36,519,712.56 26,774,287.46 26,207,238.46
Premium receivables
Receivables from reinsurers
Reinsurance contract reserve
receivables
Interest receivable
Dividend receivable
Other account receivable 24,718,530.99 12,868,230.26 26,169,152.47 14,379,561.94
Financial assets purchased under
agreements to resell
Inventories 362,131,024.39 280,108,058.73 421,623,254.40 360,914,154.92
Non-current assets due within 1
year
Other current assets 130,029.34
Total current assets 1,702,691,994.53 1,541,953,079.95 1,761,668,642.42 1,609,238,236.42
Non-current assets:
Loans and advance
Available for sale financial assets 627,400,500.00 627,400,500.00 877,447,000.00 877,447,000.00
Held to maturity investments
Long-term account receivable
Long-term equity investment 63,007,887.47 139,347,687.47 63,007,887.47 139,347,687.47
Investing property 67,218,563.63 67,218,563.63 68,322,734.03 68,322,734.03
Fixed asset 432,078,778.12 377,528,320.70 426,833,093.03 371,065,554.46
Project in construction 144,305,085.91 130,824,846.63 125,825,846.40 125,772,036.03
Engineering material
Fixed asset disposal
Bearer biological asset
Oil assets
Intangible assets 89,460,119.34 87,261,244.52 98,495,664.77 96,270,212.38
Development expense
Goodwill
Long-term expense to be
apportioned
Deferred tax assets 924,885.67 924,885.67 924,885.67 924,885.67
Other non-current assets
Total of non-current assets 1,424,395,820.14 1,430,506,048.62 1,660,857,111.37 1,679,150,110.04
Total assets 3,127,087,814.67 2,972,459,128.57 3,422,525,753.79 3,288,388,346.46
Current liabilities:
Short-term borrowings 37,500,000.00 26,000,000.00
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 335,140,000.00 320,430,000.00 281,272,700.00 268,580,000.00
Account payable 459,779,113.62 422,497,233.45 561,406,743.51 525,392,317.83
Account received in advance 61,830,127.73 61,917,616.42 97,326,286.93 97,179,884.05
Financial assets sold under agreements
to repurchase
Handling charges and commission
payable
Employee’s compensation payable 28,099,781.43 23,720,971.09 51,491,411.51 46,464,096.56
Tax payable -20,488,877.73 -16,242,202.84 -18,752,267.69 -15,988,487.82
Interest payable
dividend payable 3,891,433.83 3,243,179.97 3,891,433.83 3,243,179.97
Other account payable 147,447,177.89 138,677,697.06 136,395,687.65 132,339,997.54
Due to reinsurers
Insurance contract reserve
Customer deposits
Amount payables under security
underwriting
Non-current liabilities due within 1
year
Other current liabilities 1,121,904.80 1,034,108.52
Total current liabilities 1,054,320,661.57 954,244,495.15 1,140,066,104.26 1,057,210,988.13
Non-current liabilities:
Long-term borrowings 30,000,000.00 30,000,000.00 30,000,000.00 30,000,000.00
Debentures payable
Long-term payables
Specific purpose account payables
Provisions for contingent liabilities
Deferred tax liabilities 87,828,900.00 87,828,900.00 125,335,875.00 125,335,875.00
Other non-current liabilities 38,612,436.81 38,612,436.81 36,185,416.63 36,185,416.63
Total non-current liabilities 156,441,336.81 156,441,336.81 191,521,291.63 191,521,291.63
Total liabilities 1,210,761,998.38 1,110,685,831.96 1,331,587,395.89 1,248,732,279.76
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 671,062,223.76 680,741,409.95 883,601,748.76 893,280,934.95
Less: Treasury Stock
Specific reserves
Reserved fund 273,072,577.59 273,072,577.59 273,072,577.59 273,072,577.59
General risk provision
Retained earnings 397,752,090.99 346,584,983.07 360,595,476.29 311,928,228.16
Foreign exchange difference
Total owners' equity attributable to
1,903,261,218.34 1,861,773,296.61 2,078,644,128.64 2,039,656,066.70
holding company
Minority interest 13,064,597.95 12,294,229.26
Total owner’s equity 1,916,325,816.29 1,861,773,296.61 2,090,938,357.90 2,039,656,066.70
Total liabilities and owner’s equity 3,127,087,814.67 2,972,459,128.57 3,422,525,753.79 3,288,388,346.46
Income Statement
Prepared by Changchai Company, Limited Jan.-Jun. 2011 Unit: RMB Yuan
In current period The same period of last year
Items
Consolidation Parent company Consolidation Parent company
I. Total operation income 1,702,548,109.24 1,698,786,025.65 1,486,675,455.65 1,498,628,361.73
Including: Sales income 1,702,548,109.24 1,698,786,025.65 1,486,675,455.65 1,498,628,361.73
Interest income
Premium income
Handling charges and
commission income
II. Total operation cost 1,671,832,162.82 1,672,513,179.64 1,419,173,571.05 1,434,391,178.32
Including: Cost of sales 1,563,753,985.22 1,576,529,249.38 1,287,727,677.72 1,315,285,655.58
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 313,245.25 174,893.55
Selling expenses 53,181,896.91 50,057,012.94 51,194,531.22 47,503,047.78
Administrative expenses 59,829,955.18 51,705,886.62 81,383,842.99 74,136,284.41
Financial expenses -5,675,460.45 -6,084,501.00 -1,307,374.43 -2,533,809.45
Impairment loss 428,540.71 305,531.70
Add: gain from change in fair value
-66,665.37 0.00 5,534.10
(“-” means loss)
Gain from investment (“-” means
10,282,311.20 10,115,000.00 6,739,813.17 6,502,500.00
loss)
Including: income form
investment in affiliated enterprise and
joint ventures
Foreign exchange difference (“-”
means loss)
III. Operation profit (“-” means loss) 40,931,592.25 36,387,846.01 74,247,231.87 70,739,683.41
Add: non-operation income 9,002,588.33 8,834,166.57 5,984,057.24 5,532,540.35
Less: non-business expense 2,376,030.59 2,360,206.85 4,178,965.51 4,108,049.91
Including: loss from non-current asset
disposal
IV. Total profit (“-” means loss) 47,558,149.99 42,861,805.73 76,052,323.60 72,164,173.85
Less: income tax expense 9,631,166.60 8,205,050.82 12,786,669.47 11,695,386.73
V. Net profit (“-” means loss) 37,926,983.39 34,656,754.91 63,265,654.13 60,468,787.12
Attributable to owners of parent
37,156,614.70 34,656,754.91 62,560,326.88 60,468,787.12
company
Minority interest 770,368.69 705,327.25
VI. Earnings per share
(I) Basic earnings per share 0.07 0.11
(II) Diluted earnings per share 0.07 0.11
VII. Other composite income -212,539,525.00 -212,539,525.00 -57,158,250.00 -57,158,250.00
VIII. Total composite income -174,612,541.61 -177,882,770.09 6,107,404.13 3,310,537.12
Attributable to owners of parent
-175,382,910.30 -177,882,770.09 5,402,076.88 3,310,537.12
company
Minority interest 770,368.69 705,327.25
Cash Flow Statement
Prepared by Changchai Company, Limited Jan.-Jun. 2011 Unit: RMB Yuan
In current period The same period of last year
Items
Consolidation Parent company Consolidation Parent company
I. Cash flows from operating activities:
Cash received from sale of commodities
1,742,112,976.28 1,739,971,070.13 1,505,587,808.41 1,503,082,113.31
and rendering of service
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 24,805,590.94 24,805,590.94
Other cash received relating to operating
15,950,302.31 14,233,689.48 12,585,252.55 11,928,811.41
activities
Subtotal of cash inflows from operating
1,782,868,869.53 1,779,010,350.55 1,518,173,060.96 1,515,010,924.72
activities
Cash paid for purchase of commodities
1,605,540,702.84 1,632,168,132.83 1,254,234,969.24 1,257,962,515.57
and reception of service
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 146,277,793.39 130,085,632.70 121,374,684.34 108,737,449.09
Various taxes paid 34,717,093.95 28,995,696.24 23,288,817.95 19,871,179.06
Other cash paid relating to operating
44,985,280.87 41,143,545.90 45,696,734.80 40,822,295.89
activities
Subtotal of cash outflows from operating
1,831,520,871.05 1,832,393,007.67 1,444,595,206.33 1,427,393,439.61
activities
Net cash flows from operating activities -48,652,001.52 -53,382,657.12 73,577,854.63 87,617,485.11
II. Cash Flows from investment activities:
Cash received from disposal of
232,202.20
investments
Cash received from investment income 10,312,803.27 10,115,000.00 6,739,813.17 6,502,500.00
Net cash received from disposal of fixed
assets, intangible assets and other long-term 20,297,786.84 20,143,379.50 26,045,985.49 26,031,054.23
assets
Net cash received from disposal of
subsidiary or other business units
Other cash received relating to
52,189.02
investment activities
Subtotal of cash inflows from
30,894,981.33 30,258,379.50 32,785,798.66 32,533,554.23
investment activities
Cash paid to acquire fixed assets,
66,890,197.14 50,816,604.10 82,785,627.24 78,162,015.84
intangible assets and other long-term assets
Cash paid for investment 663,948.24 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
67,554,145.38 50,816,604.10 93,352,467.24 108,162,015.84
activities
Net cash flows from investment activities -36,659,164.05 -20,558,224.60 -60,566,668.58 -75,628,461.61
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 43,500,000.00 51,500,000.00 30,000,000.00
Cash received from issuance of bonds
Other cash received relating to
financing activities
Subtotal of cash inflows from financing
43,500,000.00 51,500,000.00 30,000,000.00
activities
Cash paid to repay loans 32,000,000.00 31,500,000.00
Cash paid for interest expenses and
2,608,302.74 1,228,985.37 2,762,597.41 1,080,545.61
distribution of dividends or profit
Including: dividends or profit paid to
minority shareholders by subsidiaries
Other cash payments relating to
financing activities
Sub-total of cash outflows from financing
34,608,302.74 1,228,985.37 34,262,597.41 1,080,545.61
activities
Net cash flows from financing activities 8,891,697.26 -1,228,985.37 17,237,402.59 28,919,454.39
IV. Effect of foreign exchange rate changes
on cash and cash equivalents
V. Net increase in cash and cash
-76,419,468.31 -75,169,867.09 30,248,588.64 40,908,477.89
equivalents
Add: beginning balance of cash and
763,106,649.01 727,580,790.13 770,721,154.44 732,773,854.30
cash equivalents
VI. Closing balance of cash and cash
686,687,180.70 652,410,923.04 800,969,743.08 773,682,332.19
equivalents
Consolidated Statement of Changes in Owners’ Equity
Prepared by Changchai Company, Limited For the first half year of 2011 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
Paid-in Minorit
Items Less: Specifi Surplus Genera Total Paid-in Less: Specifi Surplus Genera Total
Minority y
capital Capital c Retaine Other owners capital Capital c Retaine owners
treasur public l risk interests treasur public l risk Others interest ’ equity
(or share reserve reserve d profit s ’ equity (or share reserve reserve d profit s
y stock s reserve reserve y stock s reserve reserve
capital) capital)
883,60 273,07 360,59 2,090,9 262,05 251,06 1,808,4
561,374, 12,294,2 561,374, 723,029,3 10,913,
I. Balance at the end of last year 1,748.7 2,577.5 5,476.2 38,357. 9,351.4 6,746.0 43,509.
326.00 29.26 326.00 11.26 774.33
6 9 9 90 1 7 07
Add: change of accounting policy 0.00
Correction of errors in previous
0.00
periods
Others 0.00
883,60 273,07 360,59 2,090,9 262,05 251,06 1,808,4
II. Balance at the beginning of this 561,374, 12,294,2 561,374, 723,029,3 10,913,
1,748.7 0.00 0.00 2,577.5 0.00 5,476.2 0.00 38,357. 0.00 0.00 9,351.4 0.00 6,746.0 0.00 43,509.
year 326.00 29.26 326.00 11.26 774.33
6 9 9 90 1 7 07
-212,53 -174,61 109,52 282,49
III. Increase/ decrease of amount in 37,156, 770,368. 160,572,4 11,013, 1,380,4
0.00 9,525.0 2,541.6 0.00 8,730.2 4,848.8
this year (“-” means decrease) 614.70 69 37.50 226.18 54.93
0 1 2 3
120,54 121,92
37,156, 770,368. 37,926, 1,380,4
(I) Net profit 1,956.4 2,411.3
614.70 69 983.39 54.93
0 3
(II) Gain/loss recorded in owners’ -212,53 -212,53 160,572,4 160,57
equity directly 9,525.0 9,525.0 37.50 2,437.5
0 0 0
1. Net amount on changes in -212,53 -174,61 120,54 282,49
37,156, 770,368. 160,572,4 1,380,4
fair value of financial assets 9,525.0 2,541.6 0.00 1,956.4 4,848.8
614.70 69 37.50 54.93
available for sale 0 1 0 3
2. Effect on changes in other
owners’ equity of invested units 0.00 0.00 0.00 0.00
under equity method
3. Effect of income tax
0.00
recorded in owners’ equity
4. Other 0.00
Subtotal of (I) and (II) 0.00
（III）Input and reduced capital 11,013, -11,013
0.00 0.00 0.00
of owners 226.18 ,226.18
11,013, -11,013
1. Capital input by owners 0.00
226.18 ,226.18
2. Amount of shares-based
0.00
payment recorded in owner’s equity
3. Other 0.00 0.00
(IV) Profit distribution 0.00
1. Appropriating surplus
0.00 0.00 0.00 0.00 0.00 0.00
reserve
2. Appropriating general risk
0.00
reserve
3. Distribution to owners
0.00
(shareholders)
4. Other 0.00
(V) Internal carry-over of
0.00 0.00 0.00
owner’s equity
1. Transferring capital reserve
into capital (share capital)
2. Transferring surplus reserve
into capital (share capital)
3. Making up losses with
0.00
surplus reserve
4. Other 0.00
883,60 273,07 360,59 2,090,9 262,05 251,06 1,808,4
561,374, 12,294,2 561,374, 723,029,3 10,913,
IV. Balance as at the period-end 1,748.7 2,577.5 5,476.2 38,357. 9,351.4 6,746.0 43,509.
326.00 29.26 326.00 11.26 774.33
6 9 9 90 1 7 07
Statement of Change in Owners’ Equity of Parent Company
Prepared by Changchai Company, Limited For the first half year of 2011 Unit: RMB Yuan
Amount for the current period Amount for the previous period
Paid-in Less: Surplus General Total Paid-in capital Less: Surplus
Items Capital Retained Capital General
Specific Specific
capital (or treasury public risk owners’ (or share treasury public
reserve reserves profit reserve reserves risk reserve
share capital) stock reserve reserve equity capital) stock reserve
561,374,326. 893,280,93 273,072,57 311,928,22 2,039,656,0 561,374,32 732,708,497.4 262,059,35 212,809,19 1,768,951,3
I. Balance at the end of last year
00 4.95 7.59 8.16 66.70 6.00 5 1.41 2.52 67.38
Add: change of accounting
0.00 0.00
policy
Correction of errors in previous
0.00 0.00
periods
Others 0.00 0.00
II. Balance at the beginning of 561,374,326. 893,280,93 273,072,57 311,928,22 2,039,656,0 561,374,32 732,708,497.4 262,059,35 212,809,19 1,768,951,3
0.00 0.00
this year 00 4.95 7.59 8.16 66.70 6.00 5 1.41 2.52 67.38
III. Increase/ decrease of amount -212,539,5 34,656,754 -177,882,77 160,572,437.5 11,013,226 99,119,035 270,704,69
0.00 0.00
in this year (“-” means decrease) 25.00 .91 0.09 0 .18 .64 9.32
34,656,754 34,656,754. 110,132,26 110,132,26
(I) Net profit
.91 91 1.82 1.82
(II) Gain/loss recorded in -212,539,5 -212,539,52 160,572,437.5 160,572,43
owners’ equity directly 25.00 5.00 0 7.50
1. Net amount on changes in
-212,539,5 34,656,754 -177,882,77 160,572,437.5 110,132,26 270,704,69
fair value of financial assets 0.00
25.00 .91 0.09 0 1.82 9.32
available for sale
2. Effect on changes in other
0.00 0.00 0.00
owners’ equity of invested units
under equity method
3. Effect of income tax
0.00
recorded in owners’ equity
4. Other 0.00
Subtotal of (I) and (II) 0.00
（III）Input and reduced capital 11,013,226 -11,013,22
0.00
of owners .18 6.18
11,013,226 -11,013,22
1. Capital input by owners 0.00
.18 6.18
2. Amount of shares-based
payment recorded in owner’s 0.00
equity
3. Other 0.00
(IV) Profit distribution 0.00 0.00 0.00 0.00 0.00
1. Appropriating surplus
0.00
reserve
2. Distribution to owners
0.00
(shareholders)
3. Other 0.00
(V) Internal carry-over of
0.00
owner’s equity
1. Transferring capital
reserve into capital (share capital)
2. Transferring surplus
reserve into capital (share capital)
3. Making up losses with 0.00 0.00
surplus reserve
4. Other 0.00 0.00
561,374,326. 893,280,93 273,072,57 311,928,22 2,039,656,0 561,374,32 732,708,497.4 262,059,35 212,809,19 1,768,951,3
IV. Balance as at the period-end
00 4.95 7.59 8.16 66.70 6.00 5 1.41 2.52 67.38
(II) Notes to Financial Statement
N o t e 1 : C o m p a n y P ro f i l e
Changchai Company, Limited (hereinafter referred to as “the Company”) was founded on 5 May 1994,
which is a company limited by shares promoted solely by Changzhou Diesel Engine Plant through the
approval by the State Commission for Restructuring the Economic Systems with document TGS [1993] No.
9 on 15 Jan. 1993 by way of public offering of shares. With the approved of the People's Government of
Jiangsu Province SZF [1993] No. 67, as well as reexamined and approved by China Securities Regulatory
Commission (“CSRC”) through document ZJFSZ (1994) No. 9, the Company initially issued A shares to the
public from 15 Mar. 1994 to 30 Mar. 1994. As approved by the Shenzhen Stock Exchange through document
SZSFZ (1994) No. 15, such tradable shares of the public got listing on 1 Jul. 1994 at Shenzhen Stock
Exchange with “Su Changchai A” for short of stock, as well as “0570” as stock code (present stock code is
“000570”).
In 1996, with the recommendation of the Office of the People's Government of Jiangsu Province SZBH
[1996] No. 13, as well as first review by Shenzhen Municipal Securities Administration Office through
SZBZ [1996] No. 24, and approval of the State Council Securities Commission ZWF [1996] No. 27, the
Company issued 100 million B shares to qualified investors on 27 Aug. 1996 to 30 Aug. 1996, getting listed
on 13 Sep. 1996.
On 9 Jun. 2006, the Company held a shareholders’ general meeting related to A 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 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, 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.
All direct costs for the business combination, including expenses for audit, evaluating and legal services
shall be recorded into the profits and losses at the current period. The 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 direct costs for the business combination, including expense on audit, evaluating
and legal services shall be recorded into the gains 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.
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 the 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 assets
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 receivables
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 current 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 group recognition standard and the withdrawal method for the bad debt provision of the receivable
groups
A receivable group is recognized based on the component receivables’ credit risk feature (account ages) and
the corresponding bad-debt provision is withdrawn in accordance with the aging method.
(3) Accounts receivable with an insignificant single amount but for which a separate bad-debt provision is
withdrawn
Recognition standard for accounts receivable with an insignificant single amount: An account receivable
with an insignificant single amount is an account receivable (or other account receivable) with an amount
less than one million (not including one million).
Reason and method for separately withdrawing bad-debt provision for accounts receivable with an
insignificant single amount: As for an account receivable with an insignificant single amount and which can
not show its risk feature when withdrawing a bad-bet provision for it on the group basis, the bad-debt
provision for the account receivable shall be withdrawn based on the difference of the expected present value
of the account receivable’s future cash flows less than its carrying amount. The Company shall withdraw the
bad-debt provision for such an account receivable by combining the aging method and individual judgment
based on the debtor entity’s actual financial position, cash flows and other relevant information.
(4) Withdrawal Proportion of bad debts provision of the accounts receivable by aging analysis method:
Aging Ratio of the bad debt provision of Ratio of the bad debt provision of
the accounts receivable (%) the other receivables (%)
Within one year 2 2
1-2 years 5 5
2-3 years 15 15
3-4 years 30 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 of 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 the same control,
its initial investment cost shall regard as the combination cost calculated by the fair value of the assets,
equity instrument issued and liabilities incurred or undertaken on the 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.
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, but 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
yearly depreciation rate
Type depreciable life（Year）
（%）
Houses and buildings 20-40 2.50-5
Machine equipments 6-15 6.67-16.67
Transportation 5-10 10-20
equipments
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. 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 value of equipments installed,
cost of installation, trail run of projects. Costs of construction in process also include borrowing costs and
exchange gains and losses, which should be capitalized.
2) Standardization on construction in process transferred into fixed assets and time point
The construction in process, of which the fixed assets reach to the predicted condition for use, shall carry
forward fixed assets on schedule. The one that 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 of the actual cost
incurred of the specially borrowed loan at the present period minus the income of interests earned on the
unused borrowing loans as a deposit in the bank or as a temporary investment.
Where a general borrowing is used for the acquisition and construction or production of assets eligible for
capitalization, the enterprise shall calculate and determine the to-be-capitalized amount of interests on the
general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative
asset disbursements minus the general borrowing by the capitalization rate of the general borrowing used.
The capitalization rate shall be calculated and determined in light of the weighted average interest rate of the
general borrowing.
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.
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 be 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 rates
VAT Payable to sales revenue 13%、17%
Sales tax Payable to operating revenue 5%
Tax for maintaining and building Tax paid in accordance with the tax
Payable circulating tax amount
cities regulations of tax units location
Tax paid in accordance with the tax
15%
regulations of tax units location
Corporate income tax
Taxable income of parent company
25%
and subsidiary company Changwan
Taxable income of other subsidiary 12%
companies
Housing property tax
70% of original value of 1.2%
independent properties
Tax paid in accordance with the tax
Educational surtax Payable circulating tax amount
regulations of tax units location
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 Jun. 2011, the Company set up three controlling subsidiaries through investment:
Actual
Nature of Registered investment at
Business
Full name Type Registration place the capital the
scope
business (RMB’0000) period-end
(RMB’0000)
Changchai Wanzhou Limited No. 1101, Xiamen Production
Diesel Engine Co., Ltd. Liability Road, Wanzhou Industry 3,500 and sales of 2,100
(Changwan) Company District, Chongqing diesel engine
Changzhou Changchai Limited Nanguan Village, Production
Benniu Diesel Engine Liability Benniu Town, Wujin Industry 3,378.64 and sales of 2,533.98
Fittings Co., Ltd. Company District diesel engine
(Benniu) fittings
External
enterprise
Changzhou Housheng Limited No. 123, Huadei investments,
Service
Investment Co., Ltd Liability Middle Road, 3,000 investment 3,000
industry
(Housheng) Company Changzhou management,
consultancy
service
(Con.)
Other The The Included in Minority Deductible Balance of parent
essential proportion proportion consolidated Interest minority company’s equity
investment of holding of voting statements (RMB’0000) interest after deducting
shares(%) rights(%) the difference that
Full name loss of minority
interests exceed
equity obtained
by minority
shareholders
Changchai Wanzhou
Diesel Engine Co., 60 60 Yes 1035.58
Ltd. (Changwan)
Changzhou
Changchai Benniu
Diesel Engine 75 75 Yes 1308.72
Fittings Co., Ltd.
(Benniu)
Changzhou
Housheng
100 100 Yes
Investment Co., Ltd
(Housheng)
2. As at 30 Jun. 2011, no joint venture company exists in the Company.
Note 5：Notes to major items of the consolidated financial statements (the following
amounts are all expressed in RMB Yuan unless otherwise stated)
1. Monetary funds
Closing amount Opening amount
Items Original Exchange Original Exchange
Translated to RMB Translated to RMB
currency rate currency rate
Cash： 206,610.62 270,272.09
RMB 206,610.62 270,272.09
Bank savings： 582,334,970.18 659,225,428.73
RMB 565,969,013.31 654,437,521.15
USD 1,134,174.31 6.4716 7,339,922.46 253,758.64 6.6227 1,680,567.34
EUR 964,196.30 9.3612 9,026,034.40 352,846.22 8.8065 3,107,340.24
Other monetary
104,145,599.90 103,610,948.19
capital:
RMB 104,145,599.90 103,610,948.19
Total 686,687,180.70 763,106,649.01
Other monetary funds were guarantee funds for the acceptance bills issued by the Company.
2. Transactional financial assets
Item Closing fair value Opening fair value
Financial assets designated to be measured at fair value and of which changes are
732,768.74 292,091.61
recorded into current gains and losses
Total 732,768.74 292,091.61
3. Notes receivable
(1) Classification of notes receivable
Variety Closing amount Opening amount
Bank acceptance bills 129,518,471.79 142,352,378.25
Total 129,518,471.79 142,352,378.25
(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
Dongfeng Motor Corporation 2011-4-19 2011-10-19 4,577,000.00
Changzhou Dongfeng Agricultural
2011-4-22 2011-10-22 4,000,000.00
Machinery Group Co., Ltd.
Changzhou Dongfeng Agricultural
2011-4-22 2011-10-22 4,000,000.00
Machinery Group Co., Ltd.
Wuxi Mingji Machinery Manufacture
2011-2-24 2011-8-24 3,330,000.00
Co., Ltd.
Guangdong FODAY Automobile Co.,
2011-4-19 2011-10-19 3,000,000.00
LTD.
Total 18,907,000.00
4. Accounts receivable
(1) Classified by account nature
Closing amount Opening amount
Book balance Bad debt provision Book balance Bad debt provision
Type Propor Propor
Proporti Proportion
Amount tion Amount Amount tion Amount
on (%) (%)
(%) (%)
Individually
significant
accounts
11,726,765.20 1.69 6,805,264.54 58.03 11,726,765.20 1.97 6,805,264.54 58.03
receivable for
which
bad-debt
provisions are
made
individually
Accounts
receivable for
which
bad-debt -- -- -- --
provisions are
made on the
group basis
Aging groups 683,093,967.54 98.31 210,853,442.68 30.87 584,831,958.01 98.03 208,402,629.45 35.63
Accounts
receivable
which are
individually
insignificant
but for which
bad-debt
provisions are
made
individually
Total 694,820,732.74 100.00 217,658,707.22 31.33 596,558,723.21 100.00 215,207,893.99 36.07
1) Accounts receivable at the end of the reporting period which were individually significant
and for which bad-debt provisions are made individually
For the old-aged accounts receivable of 11,726,765.20, the Company made a bad-debt
provision of 6,805,264.54 according to their recoverability.
2) Receivable groups for which bad-debt provisions were made at the aging method
Closing amount Opening amount
Account Book balance Book balance
age Proportion Bad debt provision Proportion Bad debt provision
Amount Amount
(%) (%)
Within 1
465,862,399.13 68.20% 7,102,910.84 370,829,232.24 63.41 6,165,904.45
year
1-2 years 10,548,445.65 1.54% 527,422.29 9,173,830.10 1.57 458,691.51
2-3 years 1,256,590.84 0.18% 188,488.63 965,776.98 0.17 144,866.55
3-4 years 1,502,450.22 0.22% 450,735.07 1,370,180.84 0.23 411,054.26
4-5 years 3,350,489.60 0.49% 2,010,293.75 3,177,062.91 0.54 1,906,237.74
Over 5
200,573,592.10 29.36% 200,573,592.10 199,315,874.94 34.08 199,315,874.94
years
Total 683,093,967.54 100.00% 210,853,442.68 584,831,958.01 100.00 208,402,629.45
(2) 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
(3) Top five entities of the accounts receivable
Ratio to the total
Relationship with
Name of entity Amount Useful life accounts
the Company
receivable (%)
Dongfeng Motor Corporation Customer 66,302,477.28 Within 1 9.54%
year
Changzhou Dongfeng Agricultural Within 1
Customer 58,509,055.15 8.42%
Machinery Group Co., Ltd. year
Within 1
Customer 54,690,788.73 7.87%
Shandong Wuzheng Group Co., Ltd. year
Shunyi Plant of Beijing Automobile Works Within 1
Customer 22,510,663.04 3.24%
Co., Ltd. year
Guangdong FODAY Automobile Co., LTD. Within 1
Customer 18,158,471.14 2.61%
year
Total 220,171,455.34 31.69%
(4) No debts owned by the related parties among the accounts receivable in the reporting
period.
5. Advances to suppliers
(1) Aging analysis
Closing amount Opening amount
Account age Proportion Proportion
Amount Amount
(%) (%)
Within 1 year 19,108,224.37 88.42 24,323,877.82 90.85
1-2 years 1,460,584.32 6.76 1,415,196.64 5.29
2-3 years 154,332.13 0.71 148,445.14 0.55
3-4 years 2054.38 0.01
4-5 years - 17,821.73 0.07
Over 5 years 886,767.86 4.10 868,946.13 3.24
Total 21,611,963.06 100.00 26,774,287.46 100.00
(2) Top five entities in advances to suppliers
Relationship with Reason for
Name of entity Amount Useful life
the Company unsettlement
Xuzhou East China Casting Normal settlement
Supplier 11,079,832.93 Within 1 year
General Factory period
Changzhou Baolei Crankshaft Normal settlement
Supplier 2,862,029.12 Within 1 year
Co., Ltd. period
Ningbo Jingxin Die-casting Normal settlement
Supplier 1,233,000.00 1-2 years
Model Research Company period
Changzhou Delilai Machine Co., Normal settlement
Supplier 736,970.82 Within 1 year
Ltd. period
Normal settlement
Changzhou Tongji Tools Factory Supplier 628,321.77 Within 1 year
period
Total 16,540,154.64
(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.
6. Other receivable
(1) Other receivables disclosed according to types:
Ending amount Opening amount
Book balance Bad debt provision Book balance Bad debt provision
Type Proport Propor Proportio Proporti
Amount ion Amount tion Amount n Amount on
(%) (%) (%) (%)
Other receivables, of
which single item is
large in amount and is 2,853,188.02 4.67 2,853,188.02 100.00 2,853,188.02 4.41 2,853,188.02 100
individually allotted
for bad debt provision
Other receivables, of
which bad debt
-- -- -- --
provision is allotted in
group
Aging group 56,454,142.03 92.31 31,735,611.04 56.21 59,927,036.03 92.73 33,757,883.56 56.33
Other receivables, of
which single item is
not large in amount but 1,846,771.91 3.02 1,846,771.91 100.00 1,846,771.91 2.86 1,846,771.91 100.00
is individually allotted
for bad debt provision
Total 61,154,101.96 100.00 36,435,570.97 59.58 64,626,995.96 100.00 38,457,843.49 59.51
1) Other receivables, of which single item is large in amount and is individually allotted for
bad debt provision as at the end of the reporting period
The Company fully withdraws bad debt provision for other receivables of RMB 2,853,188.02,
which has long ages and is less likely to be recovered.
2) Other receivables allotted for bad debt provision by aging analysis method in group
Ending amount Opening amount
Book balance Book balance
Age Bad debt Bad debt
Proportion Proportion
Amount provision Amount provision
(%) (%)
Within 1 year 23,364,173.76 41.39 467,283.52 24,901,296.87 41.55 498,025.99
1-2 years 1,506,532.45 2.67 75,326.63 1,464,253.51 2.44 73,212.68
2-3 years 305,650.00 0.54 45,847.50 294,260.00 0.49 44,139.00
3-4 years 50,243.85 0.09 15,073.16 42,534.86 0.07 12,760.46
4-5 years 238,654.34 0.42 143,192.60 237,363.40 0.40 142,418.04
Over 5 years 30,988,887.63 54.89 30,988,887.63 32,987,327.39 55.05 32,987,327.39
Total 56,454,142.03 100.00 31,735,611.04 59,927,036.03 100.00 33,757,883.56
3) Other receivables, of which single item is not large in amount but is individually allotted for
bad debt provision as at the end of the reporting period
According to the possibility of recovery, the Company withdraws bad debt provision totaling to
RMB 1,846,771.91 for other receivables of RMB 1,846,771.91 which have long ages.
(2) In the reporting period, there’re no other receivables from shareholder units holding more
than 5% (including 5%) equity representing voting rights of the Company.
(3) Top five units owing largest amount of other receivables
Proportion in total
Relation with
Name Amount Age Nature of accounts amount of other
the Company
receivables (%)
Xuzhou Huadong Foundry
Supplier 10,000,000.00 Within 1 year Loan 16.35%
Plant
Changzhou Vehicle Co., Ltd. Client 5,879,038.74 Over 5 years Loan 9.61%
Changzhou Compressor Co., Incoming and outgoing
Client 2,940,000.00 Over 5 years 4.81%
Ltd. accounts
Changzhou New District Incoming and outgoing
Client 1,626,483.25 Over 5 years 2.66%
Accounting Center accounts
Changzhou Power Supply Incoming and outgoing
Client 1,118,980.07 Within 1 year 1.83%
Bureau accounts
Total 21,564,502.06 35.26%
(4) In the reporting period, there’re no other receivables from other related parties.
7. Inventory
(1) Classification of inventory
Ending amount Opening amount
Items Provision for Provision for
Book balance Book value Book balance Book value
falling price falling price
Raw material 54,600,605.55 6,969,408.44 47,631,197.11 73,846,025.86 6,969,408.44 66,876,617.42
Consigned materials
6,071,634.05 6,071,634.05 4,171,600.94 4,171,600.94
for processing
Goods in process 129,693,640.73 9,083,359.04 120,610,281.69 92,263,224.53 9,083,359.04 83,179,865.49
Finished products 190,064,288.58 2,246,377.04 187,817,911.54 269,641,547.59 2,246,377.04 267,395,170.55
Low-value
consumption
Total 380,430,168.91 18,299,144.52 362,131,024.39 439,922,398.92 18,299,144.52 421,623,254.40
(2) Provision for falling price of inventory
Opening book Provided in Decrease of this period Closing book
Category
balance current period Written back Written off balance
Raw materials 6,969,408.44 6,969,408.44
Finished goods 2,246,377.04 2,246,377.04
Goods in process 9,083,359.04 9,083,359.04
Total 18,299,144.52 18,299,144.52
(3) Circumstances of provision for falling price of inventory
Reason for switching back Ratio of amount switched back
Basis of withdrawing provision
Items provision for falling price of in current period to Closing
for falling price of inventory
inventory in current period balance of such inventory
Book cost is more than net
Raw materials
realizable value
Book cost is more than net
Finished goods
realizable value
Book cost is more than net
Goods in process
realizable value
(4) Closing balance of inventory excluded the amount of capitalization of borrowing costs.
(5) No right such as mortgage was restricted in the Closing balance of inventory at the end of
the reporting period.
8. Other current assets
Items Closing amount Opening amount
Deferred expense 130,029.34
Total 130,029.34
9. Available-for-sale financial assets
Items Closing fair value Opening fair value
Available-for-sale equity instrument 627,400,500.00 877,447,000.00
Total 627,400,500.00 877,447,000.00
The above-mentioned available-for-sale equity instrument includes the shares of Foton Motor
and of Jiangsu Expressway held by the Company. The Closing fair market price of the shares is
closing price on the last trading day at the securities exchange.
10. Long-term equity investment
(1) Details for long-term equity investment
Initial
Accounting Change of increase
Name of investee entities investment Opening balance Closing balance
method and decrease
amount
Changzhou Fuji Changchai Robin
Equity method 12,294,546.00 20,007,887.47 20,007,887.47
Gasoline Engine Co., Ltd.
Beijing Tsinghua Industrial
Equity method 2,500,000.00 0.00 0.00
Investment Management Co., Ltd.
Jiangsu Bank Cost method 38,000,000.00 38,000,000.00 38,000,000.00
Lanzhou Northwest Vehicle
Cost method 5,000,000.00 5,000,000.00 5,000,000.00
Corporation
Chengdu Changwan Diesel Engine
Cost method 510,000.00 0.00 0.00
Markeing Corp.
Chongqing Wanzhou Changwan
Cost method 290,000.00 0.00 0.00
Diesel Engine Fitting Corp.
Other Cost method 410,000.00 0.00 0.00
Total 59,004,546.00 63,007,887.47 63,007,887.47
Continued
Proportion Proportion Note for difference Provision for Provision for Cash
Name of investee entities
of of voting between proportions impairment impairment divide
shareholding rights (%) of voting rights and withdrawn in nds
(%) shareholding hold current period
Changzhou Fuji Changchai
Robin Gasoline Engine Co., 33 33
Ltd.
Beijing Tsinghua Industrial
Investment Management 25 25 44,182.50
Co., Ltd.
Jiangsu Bank
Lanzhou Northwest Vehicle
5 5
Corporation
Chengdu Changwan Diesel
510,000.00
Engine Markeing Corp.
Chongqing Wanzhou
Changwan Diesel Engine 290,000.00
Fitting Corp.
Other 410,000.00
Total 1,254,182.50
Note: ① Beijing Tsinghua Industrial Investment Management Co., Ltd. has stopped to produce
or operate, so no impairment provision was withdrawn.
② 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) The capability of invested enterprises to transfer capital to investing enterprises was not
restricted.
11. Investment real estate
Investment real estate measured at cost
Opening book Increase of this Decrease of this Closing book
Items
balance period period 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 19,309,837.11 1,104,170.40 20,414,007.51
Houses & buildings 19,309,837.11 1,104,170.40 20,414,007.51
Ⅲ. Total net book value 68,322,734.03 67,218,563.63
Houses & buildings 68,322,734.03 67,218,563.63
Ⅳ. Total provision for impairment
loss
Houses & buildings
Ⅴ. Total book value 68,322,734.03 67,218,563.63
Houses & buildings 68,322,734.03 67,218,563.63
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.
12. Fixed assets
(1) Fixed assets
Increase of this
Items Opening amount Decrease of this period Closing amount
period
Ⅰ. Total original book value 924,271,554.42 45,127,332.15 39,593,518.24 929,805,368.33
Of which: Houses & buildings 369,138,881.39 10,933,335.97 26,922,737.32 353,149,480.04
Machinery equipment 496,770,737.42 32,633,784.48 10,924,674.44 518,479,847.46
Vehicles 23,013,533.41 1,146,239.18 390,743.40 23,769,029.19
Others 35,348,402.20 413,972.52 1,355,363.08 34,407,011.64
Ⅱ. Accumulated depreciation 482,395,841.63 25,338,801.31 25,050,672.49 482,683,970.45
Of which: Houses & buildings 163,482,265.86 6,126,173.12 5,174,657.07 164,433,781.91
Machinery equipment 279,090,075.49 16,656,757.68 18,292,884.74 277,453,948.43
Vehicles 13,500,855.44 805,434.26 378,449.49 13,927,840.21
Others 26,322,644.84 1,750,436.25 1,204,681.19 26,868,399.90
Ⅲ. Total net book value 441,875,712.79 447,121,397.88
Of which: Houses & buildings 205,656,615.53 188,715,698.13
Machinery equipment 217,680,661.93 241,025,899.03
Vehicles 9,512,677.97 9,841,188.98
Others 9,025,757.36 7,538,611.74
Ⅳ. Total provision for impairment
15,042,619.76 15,042,619.76
loss
Of which: Houses & buildings 11,344,597.44 11,344,597.44
Machinery equipment 3,698,022.32 3,698,022.32
Vehicles
Others
Ⅴ. Total book value 426,833,093.03 432,078,778.12
Of which: Houses & buildings 194,312,018.09 177,371,100.69
Machinery equipment 213,982,639.61 237,327,876.71
Vehicles 9,512,677.97 9,841,188.98
Others 9,025,757.36 7,538,611.74
In the reporting period, the depreciation is RMB 25,338,801.31.
In the reporting period, the original price that the construction in progress transferred into fixed
assets is RMB 36,978,403.03.
(2) Mortgage of fixed assets
Original carrying Net carrying
Items value (RMB value (RMB Loan balance
0’000) 0’000)
Houses & buildings 1250.60 861.99 Changwan Company borrowed
RMB 5 million form Chongqing
Machinery equipment 690.63 87.21 Sanxia Bank Gaosuntang
Sub-branch
13. Construction in progress
(1) Projects
Closing amount Opening amount
Items Provision Provision
Book balance for Net book value Book balance for Net book value
impairment impairment
Expansion capacity of
18,048,582.76 18,048,582.76
multi-cylinder
Experimental workshop
26,788,973.94 26,788,973.94 21,756,284.04 21,756,284.04
of technology center
Renovation of casting 20,341,271.69 20,341,271.69 22,085,805.19 22,085,805.19
Expansion capacity of
multi-cylinder (The 2nd 6,013,943.12 6,013,943.12 4,402,961.64 4,402,961.64
Period)
Non-road electric
9,184,990.93 9,184,990.93 8,127,058.81 8,127,058.81
generator Project
Base of land in Hehai
9,987,644.59 9,987,644.59 7,083,315.58 7,083,315.58
Road
Equipment to be
installed and payment 71,988,261.64 71,988,261.64 44,321,838.38 44,321,838.38
for projects
Total 144,305,085.91 144,305,085.91 125,825,846.40 125,825,846.40
(2) Change in main project of construction in progress
Transferring Capitalization
Opening Increase of this Other Resource of Closing
Name of project into fixed of interest of
amount period decrease capital amount
assets this period
Expansion capacity
18,048,582.76 18,048,582.76 Self-funding -
of multi-cylinder
Experimental
workshop of 21,756,284.04 9,095,818.96 4,063,129.06 Self-funding 26,788,973.94
technology center
Renovation of
22,085,805.19 10,499,263.40 12,243,796.90 Self-funding 20,341,271.69
casting
Expansion capacity
of multi-cylinder 4,402,961.64 1,649,406.68 38,425.20 Self-funding 6,013,943.12
nd
(The 2 Period)
Non-road electric
8,127,058.81 1,057,932.12 Self-funding 9,184,990.93
generator Project
Base of river way or
7,083,315.58 2,904,329.01 Self-funding 9,987,644.59
sea way
Total 81,504,008.02 25,206,750.17 34,393,933.92 - 72,316,824.27
(3) Among the Closing 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.
14. Intangible assets
(1) Intangible assets
Opening book Increase of this Decrease of this Closing book
Items
balance period period balance
Ⅰ. Total original book value 127,035,766.30 9,780,000.00 117,255,766.30
Land use right 126,992,266.30 9,780,000.00 117,212,266.30
Special technology 43,500.00 43,500.00
Ⅱ. Accumulative amortization 28,540,101.53 1,178,945.43 1,923,400.00 27,795,646.96
Land use right 28,496,601.53 1,178,945.43 1,923,400.00 27,752,146.96
Special technology 43,500.00 43,500.00
Ⅲ. Total net book value 98,495,664.77 89,460,119.34
Land use right 98,495,664.77 89,460,119.34
Special technology
Ⅳ . Total provision for
impairment
Land use right
Special technology
Ⅴ. Total book value 98,495,664.77 89,460,119.34
Land use right 98,495,664.77 89,460,119.34
Special technology
The amortization amount is RMB 1,178,945.43.
(2) Among the Closing 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.
15. Deferred income tax assets/deferred income tax liabilities
(1) Recognized deferred income tax assets and deferred income liabilities
Items Closing amount Opening amount
Deferred income tax assets
Provision for assets impairment 924,885.67 924,885.67
Subtotal 924,885.67 924,885.67
Deferred income tax liabilities
Change in fair value of available-for-sale financial
87,828,900.00 125,335,875.00
assets measured into capital reserve
Subtotal 87,828,900.00 125,335,875.00
（2）Temporary differences due from assets and liabilities
Items Amount of temporary differences
Provision for assets impairment 6,165,904.45
Change in fair value of available-for-sale financial assets
585,526,000.00
measured into capital reserve
Total 591,691,904.45
16. Provision for assets impairment
Decrease of this period
Opening book Increase of this Closing book
Items Written
balance period Written back balance
off
Bad debt provision 253,665,737.48 2,452,987.86 2,024,447.15 254,094,278.19
Provision for falling
18,299,144.52 18,299,144.52
price of inventory
Provision for
impairment of
1,254,182.50 1,254,182.50
long-term equity
investment
Provision for
impairment of fixed 15,042,619.76 15,042,619.76
assets
Provision for
impairment of 14,000,000.00 14,000,000.00
entrusted loan
Total 302,261,684.26 302,690,224.97
17. Short-term borrowings
(1) Varieties of short-term borrowings
Items Closing amount Opening amount
Loan on security 32,500,000.00 21,000,000.00
Collateral loan 5,000,000.00 5,000,000.00
Total 37,500,000.00 26,000,000.00
(2) Short-term borrowings that have been due up until the period-end but have not been paid
off.
18. Notes payable
Type Closing amount Opening amount
Bank acceptance bills 335,140,000.00 281,272,700.00
Total 335,140,000.00 281,272,700.00
19. Accounts payable
(1) Accounts payable classified according to nature
Items Closing amount Opening amount
Operating accounts payable 457,228,376.83 557,483,445.82
Accounts payable for engineering 2,550,736.79 3,923,297.69
Total 459,779,113.62 561,406,743.51
(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 account receivable of large amount with its age over one year as recorded in
the closing balance
20. Accounts from customers
Items 30 Jun. 2011 31 Dec. 2010
Accounts from customers 61,830,127.73 97,326,286.93
Total 61,830,127.73 97,326,286.93
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.
21. Payroll payable
Items Opening book Increased in Decreased in Ending book
balance current period current period balance
1. Wages, bonuses, allowances
45,298,364.04 114,696,001.82 135,615,555.52 24,378,810.34
and subsidies to employees
2. Welfare expense for
2,136,190.94 2,136,190.94
employees
3. Trade union funds and staff
6,193,047.47 2,399,406.95 4,871,483.33 3,720,971.09
training expense
4. Social insurances 19,366,440.19 19,366,440.19
Of which: endowment
12,266,955.19 12,266,955.19
insurance
Basic medical insurance 4,677,350.21 4,677,350.21
Unemployment
1,239,803.78 1,239,803.78
insurance
Work injury insurance 707,961.21 707,961.21
Maternity insurance 474,369.80 474,369.80
5. Housing accumulation funds 5,599,389.00 5,599,389.00
6. Compensation for employee
- -
dismissal
Total 51,491,411.51 144,197,428.90 167,589,058.98 28,099,781.43
There were no such amounts that the Company should pay but did not pay among the payroll
payable.
“Wages, bonuses, allowances and subsidies to employees” of the period-end mainly was
provisional money.
22. Taxes and fares payable
Items 30 Jun. 2011 31 Dec. 2010
VAT -26,870,595.87 -31,650,065.04
Business tax - 25,000.00
City maintenance construction tax 858,015.50 850,050.26
Corporate income tax 2,529,483.72 9,510,717.72
Housing property tax 63,618.36 343,678.09
Individual income tax 146,748.75 107,329.76
Educational surcharges - 378,554.91
Synthesis fee 2,783,851.81 1,682,466.61
Total -20,488,877.73 -18,752,267.69
23. Dividend payable
Reason for unpaid dividend exceeding
Items 30 Jun. 2011 31 Dec. 2010
one year
Common stock
3,243,179.97 3,243,179.97 No drawing
dividends payable
Dividends for
minority 648,253.86 648,253.86 No drawing
shareholders
Total 3,891,433.83 3,891,433.83
24. Other payable
(1)
Items 30 Jun. 2011 31 Dec. 2010
Other payables 144,447,177.89 136,395,687.65
Total 144,447,177.89 136,395,687.65
(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 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 quality.
25. Other current liabilities
Items 30 Jun. 2011 31 Dec. 2010
Charges for disposing
70,136.00 315,136.00
pollutants
Charges for electric power 511,576.47 676,518.35
Other 540,192.33 42,454.17
Total 1,121,904.80 1,034,108.52
26. Long-term borrowings
(1) Category of long-term borrowings
Items 30 Jun. 2011 31 Dec. 2010
Loan in credit 30,000,000.00 30,000,000.00
Total 30,000,000.00 30,000,000.00
(2) Breakdown of long-term borrowings
Currency Interest Ending amount Opening amount
Beginning Ending
Bank rate Foreign-currency Foreign-currency
date date RMB amount RMB amount
(%) amount amount
Changzhou
Subbranch
2010.3.29 2012.3.28 RMB 4.86 30,000,000.00 30,000,000.00
of Jiangsu
Bank
Total 30,000,000.00 30,000,000.00
27. Other non-current liabilities
Items 30 Jun. 2011 31 Dec. 2010
Government subsidy for
13,604,250.00 8,414,250.00
technology item
Compensation for relocation
11,864,289.02 14,493,602.10
for land in Zoucun（Note）
Deferred income (Note) 13,143,897.79 13,277,564.53
Total 38,612,436.81 36,185,416.63
Note: The Company’s land in Zoucun was taken back and stored by Changzhou Xinbei District
Land Reserve Centre, and transferred the amount of the land in Hehai Road.
28. Share capital
Increase / decrease this period
Capitali
Issuanc
zation Closing
Opening amount e of Bonus Other
of Subtotal amount
new share s
public
share
reserves
Total 561,374,326.0
561,374,326.00
shares 0
29. Capital public reserves
Items Opening amount Increased this period Decreased this period Closing amount
Premium of share capital 153,053,986.32 153,053,986.32
Other capital reserves 730,547,762.44 212,539,525.00 518,008,237.44
Total 883,601,748.76 212,539,525.00 671,062,223.76
Capital reserves this period decreased RMB 212,539,525.00 which was net amount from
changes in financial assets available for sales-stocks of Foton Motor and Ninhu Express held
by the Company and impact on relevant deferred income tax.
30. Surplus reserves
Items Opening amount Increased this period Decreased this period Closing amount
Statutory surplus
259,915,719.69 259,915,719.69
reserves
Free surplus reserves 13,156,857.90 13,156,857.90
Total 273,072,577.59 273,072,577.59
31. Retained profit
Withdrawal or
Items Amount
distribution proportion
Retained profit at the end of year before adjustment 360,595,476.29
Retained profit at the beginning of year to adjust
Retained profit at the year-begin after adjust 360,595,476.29
Add: Net profit attributable to owners of parent company in
37,156,614.70
this period
Less: Withdrawal of statutory surplus reserves
Withdrawal of free surplus reserves
Withdrawal of general risk provisions
Dividend of ordinary shares payable
Dividend of ordinary shares transferred to share capital
Retained profit at the period-end 397,752,090.99
32. Operating revenue and operating cost
(1) Operating revenue
Items Amount of current period Amount of previous period
Income from main business 1,687,334,145.34 1,473,185,173.95
Income from other business 15,213,963.90 13,490,281.70
Operating cost 1,563,753,985.22 1,287,727,677.72
(2) Main business classified according to products
Products Amount of current period Amount of previous period
Operating income Operating cost Operating income Operating cost
Diesels engines and
1,687,334,145.34 1,555,379,656.68 1,473,185,173.95 1,280,563,603.04
foundry fittings
Total 1,687,334,145.34 1,555,379,656.68 1,473,185,173.95 1,280,563,603.04
(3) Operating revenue of the top five clients of the Company
Proportion in operating revenue of the
Name of clients Operating revenue
Company (%)
Shandong Wuzheng (Group) Co., Ltd. 126,635,869.00 7.44
Changzhou Dongfeng Agricultural
108,933,798.02 6.40
Machinery Group Co., Ltd.
DongFeng Automobile Co.，Ltd. 102,592,287.67 6.03
Burma GOOD BROTHERS CO LTD 60,660,918.93 3.56
Guangdong Foday Automobile Co., Ltd. 50,096,194.33 2.94
Total 448,919,067.95 26.36
33. Business tax and surcharges
Amount of current period Amount of previous
Items Payment standard
period
Urban maintenance and Please refer to Note 3. 1 “Main tax type and
199,337.89 111,295.90
construction tax rate”
Please refer to Note 3. 1 “Main tax type and
Educational surtax 113,907.36 63,597.65
rate”
Total 313,245.25 174,893.55
34. Sales expense
Items Amount of current period Amount of previous period
Office expense 13,431,225.72 11,484,816.67
Payrolls 7,935,512.12 12,009,504.71
sales promotion expenses 10,397,085.03 7,432,831.51
Expense of guarantee for repair, replace
15,402,438.19 14,411,671.61
and refund
Freight 5,156,325.99 4,366,426.44
Others 859,309.86 1,489,280.28
Total 53,181,896.91 51,194,531.22
35. Administrative expense
Items Amount of current period Amount of previous period
Office expense 6,695,222.12 9,906,049.00
Payrolls 28,523,751.04 27,116,927.72
Depreciation and amortization 5,920,827.06 7,452,112.94
Fees for R & D 6,736,701.19 15,290,476.65
Freight 3,545,143.45 4,499,911.65
Repair charge 1,899,395.90 3,088,474.11
Tax 3,923,795.11 4,177,842.68
Other 2,585,119.31 9,852,048.24
Total 59,829,955.18 81,383,842.99
36. Financial expense
Items Amount of current period Amount of previous period
Interest expenses 2,507,193.28 2,511,743.12
Less: interest income 1,214,083.74 2,042,592.95
Exchange gains or losses 1,712,787.06 3,043,179.27
Other -8,681,357.05 -4,819,703.87
Total -5,675,460.45 -1,307,374.43
37. Loss from assets impairment
Items Amount of current period Amount of previous period
Loss on bad debt 428,540.71
Loss on falling price of inventory
Impairment provision for long-term
investment
Loss from impairment of fixed assets
Total 428,540.71
38. Income from changes in fair value
Source of income from changes in fair
Amount of current period Amount of previous period
value
Transaction financial assets -66,665.37 5,534.10
Of which: income from changes in fair
value of derivative financial instruments
Total -66,665.37 5,534.10
Income from changes in fair value in current period was the change in income of Wengfeng
Share, Shidanli Shares and Dongfeng Fund No. 6 which was classified as transaction financial
assets held by the subsidiary Changzhou Housheng Investment Co., Ltd..
39. Investment income
(1) Breakdown of investment
Items Amount of current period Amount of previous period
Long-term equity investment income measured
with cost method
Long-term equity investment income measured
with equity method
Investment income from transaction financial
10,115,000.00 6,502,500.00
assets or financial assets available for sale held
Income from disposal of long-term equity
investment
Investment income from disposal of transaction
167,311.20 237,313.17
financial assets
Other
Total 10,282,311.20 6,739,813.17
(2) Long-term equity investment income measured with cost method
Amount of current
Invested unit Amount of previous period Reason for change
period
No dividend received in current
Bank of Jiangsu
period
No dividend received in current
Foton Motor Group 10,115,000.00 6,502,500.00
period
Total 10,115,000.00 6,502,500.00
40. Non-operating income
(1)
Amount recorded
Amount of current Amount of previous into non-recurring
Item
period period gains and losses of
current period
Total gains from disposal of non-current
157,337.81 1,678,604.36 157,337.81
assets
Including: gains from disposal of fixed
157,331.81 1,678,604.36 157,331.81
assets
Gains from disposal of intangible
assets
Insurance compensation 14,408.25
Penalty income
Government subsidy 5,922,000.00 623,730.84 5,922,000.00
Gains from disposal of current assets 2,724,753.55 3,043,862.81 2,724,753.55
Payables that need not to be paid
Others 198,496.97 623,450.98 198,496.97
Total 9,002,588.33 5,984,057.24 9,002,588.33
(2) Breakdown of government subsidy
Items Amount of previous
Amount of current period
period
Refund of value-added tax
Other rewards and subsidies 5,922,000.00 623,730.84
Total 5,922,000.00 623,730.84
41. Non-operating expenses
Amount recorded
Amount of current Amount of the into non-recurring
Items
period previous period gains and losses of
current period
Total loss on disposal of non-current
679.50 98,819.28 679.50
assets
Including: loss on disposal of fixed assets 679.50 98,819.28 679.50
Loss on disposal of intangible
assets
Subsidy funds for crop risk and
commodity prices
Donation
Penalty expense
Expense on flood prevention and security 1,683,572.06 1,469,089.73 1,683,572.06
Loss on disposal of current assets 670,195.29 1,316,129.05 670,195.29
Others 21,583.74 1,294,927.45 21,583.74
Total 2,376,030.59 4,178,965.51 2,376,030.59
42. Income tax expense
Items Amount of current period Amount of the previous period
Current income tax calculated at the Law of
9,631,166.60 12,786,669.47
Tax and relevant regulations
Adjustment of deferred income tax
Total 9,631,166.60 12,786,669.47
43. Calculation process of basic EPS and diluted EPS
The calculation process of basic EPS of the Company for the first half year 2011 is specified in
the following table:
Item Amount
Calculation of basic EPS and diluted EPS
(Ⅰ) Numerator
Net profit after tax 37,926,983.39
Adjustment: influence of preference share dividends and other tools
Gains/losses attributable to ordinary share holders of parent company
37,156,614.70
in the calculation of basic EPS
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
37,156,614.70
in the calculation of diluted EPS
(Ⅱ) Denominator
Weighted average number of common shares issued in the report
561,374,326.00
period in the calculation of basic EPS
Add: weighted average number of common shares converted from all
delusion potential common shares
Weighted average number of common shares issued in the report
561,374,326.00
period in the calculation of diluted EPS
(Ⅲ) EPS
Basic EPS
Net profit attributable to common share holders of the Company 0.07
Net profit attributable to common share holders of the Company
0.06
after deducting non-recurring gains/losses
Diluted EPS
Net profit attributable to common share holders of the Company 0.07
Net profit attributable to common share holders of the Company
0.06
after deducting non-recurring gains/losses
44. Other comprehensive incomes
Item Jan.- Jun. 2011 Jan.- Jun. 2010
1. Gain/loss from the financial assets available for sale -250,046,500.00 -67,245,000.00
Less: income tax impact caused by the financial assets
-37,506,975.00 -10,086,750.00
available for sale
Net amount previously included in other comprehensive
earnings and transferred into gain/loss in the report period
Subtotal -212,539,525.00 -57,158,250.00
2. Amount enjoyed by the Company in the invested unit’s
other comprehensive earnings and calculated by the equity
method
Less: 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
Less: 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 -212,539,525.00 -57,158,250.00
The gain/loss from financial assets available for sale in the reporting 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.
45. 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 15,950,300 with those important
items detailed as follows: (Unit: ten thousand Yuan)
Item Amount
Cash received from other activities 162.41
Subsidies and grants 1081.20
(2) Other cash paid related to operating activities
The amount that occurred in the report period stood at RMB 44,985,300 with those important
items detailed as follows: (Unit: ten thousand Yuan)
Item Amount
Various kinds of office expenses 2649.92
Expenses for promotion and guarantee of repair, replacement
557.53
and refund of substandard products
Expense on trial development 537.51
Cash paid for other activities 159.41
46. Supplementary information to the Cash Flow Statement
(1) Supplementary information to the Cash Flow Statement
Supplementary information Jan.- Jun. 2011 Jan.- Jun. 2010
1. Adjusting net profit into cash flows from
operating activities
Net profit 37,926,983.39 63,265,654.13
Plus: Provision for assets impairment
Depreciation of fixed assets, of oil-gas assets, of
26,442,971.71 24,633,046.65
productive biological assets
Amortization of intangible assets 1,178,945.43 1,322,416.86
Amortization of long-term deferred expense
Loss on disposal of fixed assets, intangible assets and
-140,834.57 -179,785.08
other long-term assets
Loss on retirement of fixed assets
Losses on change in fair value 66,665.37 -5,534.10
Financial expense 1,514,137.84 1,875,545.65
Investment losses -10,115,000.00 -6,739,813.17
Decrease in deferred income tax assets
Increase in deferred income tax liabilities -37,506,975.00 -10,086,750.00
Decrease of inventories 59,492,230.01 62,558,235.44
Decrease in operating receivables -85,978,757.50 -126,448,954.32
Increase in operating payables -41,532,368.20 63,383,792.57
Other
Net cash flows arising from operating activities -48,652,001.52 73,577,854.63
2. Investing and financing activities that do not
involving cash receipts and payment:
Conversion of debt into capital
Convertible bond due with one year
Fixed assets financed by finance leases
3. Net increase / decrease in cash and cash
equivalents:
Closing balance of cash 686,687,180.70 800,969,743.08
Less: Opening balance of cash 763,106,649.01 770,721,154.44
Add: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -76,419,468.31 30,248,588.64
(2) Composition of cash and cash equivalents
Items 30 June 2011 31 Dec. 2010
I. Cash 686,687,180.70 763,106,649.01
Including: Cash on hand 206,610.62 270,272.09
Bank deposit on demand 582,334,970.18 659,225,428.73
Other monetary funds on demand 104,145,599.90 103,610,948.19
II. Cash equivalent
Including: Bond investment due in three months
III. Closing balance of cash and cash equivalents 686,687,180.70 763,106,649.01
Note 6: Related parties and related parties transactions
1. Particulars about the parent company of the Company
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. 2011.
2. Particulars about subsidiaries of the Company
Registered Voting
Sharehold Code of
Full name of Type of Type of Registered Legal Business capital right
ing ratio organizatio
subsidiary subsidiary enterprise place representative nature (RMB ratio
(%) n
0’000) (%)
Changchai
Company
Wanzhou
Controlled with
Diesel Chongqing Yin Lihou Industry 3,500 60 60 20793370-5
subsidiary limited
Engine Co.,
liability
Ltd.
Changzhou
Changchai
Company
Benniu
Controlled with Qiang
Diesel Changzhou Industry 3,378.64 75 75 25083232-8
subsidiary limited Jinlong
Engine
liability
Fittings Co.,
Ltd.
Changzhou Company
Wholly
Housheng with
owned Changzhou Shi Jianchun Finances 3000 100 100 55027547-1
Investment limited
subsidiary
Co., Ltd. liability
3. Joint ventures and jointly-run enterprises of the Company
Voting right
Shareholding
ratio of the
Name of the invested Registered Legal Business Registered ratio of the
Type of enterprise Company in
entity place representative nature capital Company
the invested
(%)
entity (%)
1. The Company had no joint ventures.
2. Jointly-run enterprises
Changzhou Fuji
Company with limited USD
Changchai Robin Changzhou Shijing Qijie Industry 33 33
liability 4,500,000
Diesel Engine Co., Ltd.
Beijing Tsinghua
Company with limited Chen RMB
Investment Beijing Service 25 25
liability Zhangwu 10,000,000
Management Co., Ltd.
4. The Company had no other related parties.
5. The Company had no related transactions in the report period that needed to be
disclosed.
Note 7: Contingent Events
(I) Lawsuits and arbitrations in the report period
Date of Involved sum
Names of lawsuits &
Name of defendant accepting & Remarks
arbitration organs (RMB 0’000)
hearing
Pending lawsuits carried down to the report period from the previous periods
Changzhou During
1. Shandong Hongli Group
27 Jun. 2001 Intermediate People’s 1,436.00 bankruptcy
Co., Ltd.
Court liquidation
Total 1,436.00
Notes on the progress of the cases:
1. 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 Apr. 2002.
Currently, the defendant has started the bankruptcy procedure.
(II) Guarantees
In the report period, the Company provided a loan guarantee of RMB 22 million for its
controlled subsidiary—Changchai Benniu Diesel Engine Fittings Co., Ltd. with the guarantee
term from 22 Mar. 2011 to 21 Mar. 2012.
Note 8: Commitment Events
The Company had 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) Accounts receivable disclosed by types
30 Jun. 2011 31 Dec. 2010
Book balance Bad debt provision Book balance Bad debt provision
Type
Ratio Ratio Ratio Ratio
Amount Amount Amount Amount
(%) (%) (%) (%)
Accounts
receivable
with
61,997,325.41 9.42 36,459,418.20 58.81 61,997,325.41 11.11 36,459,418.20 58.81
significant
single amount
and being
individually
withdrawn bad
debt provision
Accounts
receivable
withdrawn bad -- -- -- --
debt provision
by groups
Aging group 595,828,697.37 90.58 185,818,921.01 31.19 496,089,235.07 88.89 183,488,942.16 36.99
Accounts
receivable
with
insignificant
single amount
but being
individually
withdrawn bad
debt provision
Total 657,826,022.78 100.00 222,278,339.21 33.79 558,086,560.48 100.00 219,948,360.36 39.41
1) Accounts receivable with significant single amount and being individually withdrawn bad
debt provision at the end of this period.
The Company withdrew bad debt provision of RMB 36,459,418.20 by property of recovery for
long aging account receivable of RMB 61,997,325.41.
2) Accounts receivable withdrawn bad debt provision by aging analysis method in groups
30 Jun. 2011 31 Dec. 2010
Book balance Book balance
Age Bad debt Bad debt
Ratio Ratio
Amount provision Amount provision
(%) (%)
Within 1
406,358,734.67 68.20 8,127,174.69 307,903,717.23 62.07 6,158,074.34
year
1-2 years 9,754,356.39 1.64 487,717.82 8,884,660.70 1.79 444,233.04
2-3 years 902,254.32 0.15 135,338.15 850,064.98 0.17 127,509.75
3-4 years 1,005,254.38 0.17 301,576.32 975,466.32 0.20 292,639.90
4-5 years 2,602,458.96 0.44 1,561,475.37 2,522,101.77 0.51 1,513,261.06
Over 5
175,205,638.65 29.41 175,205,638.65 174,953,224.07 35.26 174,953,224.07
years
Total 595,828,697.37 100.00 185,818,921.01 496,089,235.07 100.00 183,488,942.16
(2) There was no accounts receivable due from shareholders with more than 5% (including 5%)
of the voting shares of the Company in the report period
(3) Top five entities of the accounts receivable
Relationship Ratio to the
Name of entity Amount Year
with the total accounts
Company receivable
(%)
Dongfeng Automobile Co.,
Customer 66,302,477.28 Within 1 year 10.08
Ltd.
Changzhou Dongfeng
Agricultural Machinery Group Customer 58,509,055.15 Within 1 year 8.89
Co., Ltd.
Shangdong Wuzheng (Group)
Customer 54,690,788.73 Within 1 year 8.31
Co., Ltd.
Beijing Automobile Factory
Customer 22,510,663.04 Within 1 year 3.42
Shunyi Branch
Guangdong FODAY
Customer 18,158,471.14 Within 1 year 2.76
Automobile Co., LTD.
Total 220,171,455.34 33.47
(4) Other debts owed by related parties among the accounts receivable in the report period:
Changchai Wanzhou Diesel Engine Co., Ltd.: RMB 47,364,949.47.
2. Other receivables
(1) Other receivables disclosed by types
30 Jun. 2011 31 Dec. 2010
Book balance Bad debt provision Book balance Bad debt provision
Type
Ratio Ratio Ratio Ratio
Amount Amount Amount Amount
(%) (%) (%) (%)
Other
receivables
with
significant
single
amount and 2,853,188.02 6.12 2,853,188.02 100.00 2,853,188.02 5.69 2,853,188.02 100.00
being
individually
withdrawn
bad debt
provision
Other
receivables
withdrawn
-- -- -- --
bad debt
provision
by groups
Aging
41,945,236.91 89.92 29,077,006.65 69.32 45,481,015.74 90.63 31,101,453.80 68.38
group
Other
1,846,771.91 3.96 1,846,771.91 100.00 1,846,771.91 3.68 1,846,771.91 100.00
receivables
with
insignifican
t single
amount but
being
individually
withdrawn
bad debt
provision
Total 46,645,196.84 100.00 33,776,966.58 72.41 50,180,975.67 100.00 35,801,413.73 71.34
1) Other receivables with significant single amount and being individually withdrawn bad debt
provision at the end of this period.
The Company totally withdrew bad debt provision for long aging and hardly collectable other
receivables of RMB 2,853,188.02.
2) Other receivables withdrawn bad debt provision by aging analysis method in groups
30 Jun. 2011 31 Dec. 2010
Book balance Book balance
Age Bad debt Bad debt
Ratio Ratio
Amount provision Amount provision
(%) (%)
Within 1
12,263,983.38 29.24 245,279.67 13,850,197.61 30.45 277,003.96
year
1-2 years 483,254.35 1.15 24,162.72 454,239.51 1.00 22,711.98
2-3 years 305,650.00 0.73 45,847.50 294,260.00 0.65 44,139.00
3-4 years 50,243.85 0.12 15,073.16 42,534.86 0.09 12,760.46
4-5 years 238,654.34 0.57 143,192.60 237,363.40 0.52 142,418.04
Over 5 years 28,603,450.99 68.19 28,603,450.99 30,602,420.36 67.29 30,602,420.36
Total 41,945,236.91 100.00 29,077,006.65 45,481,015.74 100.00 31,101,453.80
3) Other receivables with insignificant single amount but being individually withdrawn bad
debt provision at the end of this period.
The Company withdrew bad debt provision of RMB 1,846,771.91 by property of recovery for
long aging other receivables of RMB1,846,771.91.
(2) There was no other receivables due from shareholders with more than 5% (including 5%)
of the voting shares of the Company in the report period
(3) Top five entities of other receivables
Relationship Ratio to the total
Nature of
Name of entity with the Amount Year other receivables
account
Company (%)
Over 5
Changzhou Vehicle Co., Ltd. Customer 5,879,038.74 Borrowings 12.60
years
Outgoing
Over 5
Changzhou Compressor Plant Customer 2,940,000.00 and 6.30
years
incomings
Changzhou New District Over 5 Outgoing
Customer 1,626,483.25 3.49
Accounting Center years and
incomings
Outgoing
Changzhou Power Supply Within 1
Customer 1,118,980.07 and 2.40
Bureau year
incomings
Outgoing
Within 1
Changchai Property Co., Ltd. Customer 927,820.35 and 1.99
year
incomings
Total 12,492,322.41 26.78
(4) In terms of other receivables in the report period, no other related parties owed debts to the
Company.
3. Long-term equity investment
(1) Breakdown of long-term equity investment
Accountin Change of
Name of investee Initial investment
g method Opening balance increase and Ending balance
entities amount
decrease
Changchai Wanzhou
Cost
Diesel Engine Co., 21,000,000.00 21,000,000.00 21,000,000.00
method
Ltd
Changchai Benniu
Cost
Diesel Engine 25,339,800.00 25,339,800.00 25,339,800.00
method
Fittings Co., Ltd
Changzhou
Cost
Housheng 30,000,000.00 30,000,000.00 30,000,000.00
method
Investment Co., Ltd.
Changzhou Fuji
Changchai Robin Equity
12,294,546.00 20,007,887.47 20,007,887.47
Gasoline Engine method
Co., Ltd.
Beijing Tsinghua
Industrial
Equity
Investment 2,500,000.00 0.00 0.00
method
Management Co.,
Ltd.
Cost
Jiangsu Bank 38,000,000.00 38,000,000.00 38,000,000.00
method
Lanzhou Northwest Cost
5,000,000.00 5,000,000.00 5,000,000.00
Vehicle Corporation method
Cost
Others 410,000.00 0.00 0.00
method
Total 134,544,346.00 139,347,687.47 139,347,687.47
Continued:
Invested unit Proportion of Proportion Explanation on differ of Impairment Impairment Cash dividend
shareholding of voting proportion between provision provision in current
in invested right in shareholding and voting withdrawn period
units (%) invested right in invested units in current
units (%) period
Changchai Wanzhou
60 60
Diesel Engine Co., Ltd
Changchai Benniu
Diesel Engine Fittings 75 75
Co., Ltd
Nanjing Changli
Agro-engine Fitting 100 100
Market Co., Ltd
Changzhou Housheng
100 100
Investment Co., Ltd.
Changzhou Fuji
Changchai Robin
33 33
Gasoline Engine Co.,
Ltd.
Beijing Tsinghua
Industrial Investment 25 25 44,182.50 0
Management Co., Ltd.
Jiangsu Bank
Lanzhou Northwest
5 5
Vehicle Corporation
Others 410,000.00
Total 454,182.50
Notes: ① Beijing Tsinghua Industrial Investment Management Co., Ltd. was no longer
involved in any production or operation in reality. The impairment provision was thus reduced
to zero.
② 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.
4. Operating revenue and operating cost
(1) Operating revenue
Items Jan. –Jun. 2011 Jan. –Jun. 2010
Income from main
1,683,572,061.75 1,485,138,080.03
business
Income from other
15,213,963.90 13,490,281.70
business
Operating cost 1,576,529,249.38 1,315,285,655.58
(2) Main business classified according to products
Jan. –Jun. 2011 Jan. –Jun. 2010
Products
Operating income Operating cost Operating income Operating cost
Diesels engines and
1,683,572,061.75 1,568,154,920.84 1,485,138,080.03 1,308,121,577.30
foundry fittings
Total 1,683,572,061.75 1,568,154,920.84 1,485,138,080.03 1,308,121,577.30
(3) Operating revenue from the top five clients of the Company
Proportion in operating revenues of
Name of clients Operating revenue
the Company (%)
Shandong Wuzheng (Group) Co., Ltd 126,635,869.00 7.45
Changzhou Dongfeng Agricultural Machinery
6.41
Group Co., Ltd. 108,933,798.02
Dongfeng Motor Corporation 102,592,287.67 6.04
GOOD BROTHERS CO LTD1 60,660,918.93 3.57
Guangdong FODAY Automobile Co., LTD. 50,096,194.33 2.95
Total 448,919,067.95 26.43
5. Investment income
(1) Breakdown of investment income
Items Jan. –Jun. 2011 Jan. –Jun. 2010
Long-term equity investment income measured
with cost method
Long-term equity investment income measured
with equity method
Investment income from transaction financial
10,115,000.00 6,502,500.00
assets or financial assets available for sale held
Income from disposal of long-term equity
investment
Investment income from disposal of transaction
financial assets
Total 10,115,000.00 6,502,500.00
(2) Long-term equity investment income measured with cost method
Reasons for year-on-year
Investee Jan. –Jun. 2011 Jan. –Jun. 2010
movements
Dividend was not yet received
Jiangsu Bank
in the reporting period.
Beiqi Foton Motor Dividend was received in the
10,115,000.00 6,502,500.00
Co., Ltd. reporting period.
Total 10,115,000.00 6,502,500.00
6. Supplementary information to the Cash Flow Statement
Supplementary information Jan. –Jun. 2011 Jan. –Jun. 2010
1. Reconciliation of net profit to net cash flows
generated from operating activities
Net profit 34,656,754.91 60,468,787.12
Add: Provision for impairment of assets
Depreciation of fixed assets 23,351,213.10 21,055,648.96
Amortization of intangible assets 1,178,945.43 1,292,726.52
Amortization of long-term deferred expense
Losses on disposal of property, plant and
equipment, intangible assets and other long-term assets -156,658.31 -138,445.67
Loss on retirement of fixed assets
Losses from variation of fair value
Financial cost 1,339,506.77 1,095,665.07
Investment loss -10,115,000.00 -6,502,500.00
Credit item of deferred tax
Debit item of deferred tax -37,506,975.00 -10,086,750.00
Decrease in inventory (increase: negative) 80,806,096.19 77,920,616.21
Decrease in accounts receivable from operating
-90,425,683.45
activities -128,289,654.33
Increase in payables from operating activities -56,510,856.76 70,801,391.23
Other
Net cash flows generated from operating activities -53,382,657.12 87,617,485.11
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 652,410,923.04 773,682,332.19
Less: Opening balance of cash 727,580,790.13 732,773,854.30
Add: closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -75,169,867.09 40,908,477.89
Notes 10: Supplementary information
1. Statement on extraordinary gains and losses
Items Amount Notes
Of which: net income from
Gains and losses from disposal of non-current assets 140,834.57 disposal of fixed assets was
140,834.57.
Government subsidies recorded into the current profit and
loss, except for those closely related with the normal 5,922,000.00
operation of the company and constantly received by the
Company at a fixed amount or quantity according to certain
standards of state policies
Capital occupation fees charged on non-financial enterprises
Profit or loss from changes in fair value of tradable financial Of which: Gain on fair value
changes of transactional
assets and liabilities held by the Company, and investment
financial assets held was
income from disposal of tradable financial assets and -66,665.37.
-66,665.37
liabilities as well as available-for-sale financial assets,
excluding the effective hedging businesses related with the
normal operations of the company
Some of the receivables for
which impairment tests were
Impairment provision reversal of accounts receivable for carried out separately and
which bad-debt provisions are made individually bad-debt provisions were made
at the full amount in previous
years were recovered.
Other non-operating income and expenses besides the above
563,723.17
items
Income tax effects 992,126.39
Minority interests effects (after tax) 15,267.25
Total 5,552,498.74
Note: Extraordinary gains and losses items were listed at the amount before tax.
2. Return on equity (ROE) and earnings per share (EPS)
Weighted average Earnings per share
Profit in current period
return on equity（%） Basic EPS Diluted EPS
Net profit attributable to ordinary
1.87 0.07 0.07
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company after
1.59 0.06 0.06
deducting non-recurring gains and
losses
3. Abnormal movements of major items in the consolidated financial statements of the
Company and explanation on reasons
(1) Short-term borrowings
The closing amount increased by 11.50 million over the opening amount, up 44.23%, which
was mainly due to borrowings for expanding business.
(2) Advances from customers
The closing amount decreased by 35,496,200 over the opening amount, down 36.47%, which
was mainly because deals involving some advances from customers at the end of the current
period were concluded.
(3) Payroll payable
The closing amount decreased by 23,391,600 over the opening amount, down 45.43%, which
was mainly because some salaries drawn in advance were paid.
(4) Financial expense
The amount for the current period decreased by 4,368,100 over the same period of last year,
down 334.11%, which was mainly due to decrease of foreign exchange loss and increase of
withheld sales-promotion expense.
(5) Investment income
The amount for the current period increased by 3,375,200 over the same period of last year, up
50.08%, which was mainly due to increase of the bonus from Beiqi Foton Motor Co., Ltd..
(6) Non-operating income
The amount for the current period increased by 3,018,500 over the same period of last year, up
50.44%, which was mainly due to state subsidies received.
(7) Non-operating expense
The amount for the current period decreased by 1,802,900 over the same period of last year,
down 43.14%, which was mainly due to decrease of the loss on fixed asset disposal in the
current period as compared with the same period of last year.
VIII. Documents Available for Reference
The following documents are available for reference:
1. Text of 2011 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
18 Aug. 2011
