Changchai Company, Limited
Financial Report For the Year 2020
I Independent Auditor’s Report
Type of the independent auditor’s opinion Unmodified unqualified opinion
Date of signing this report 13 April 2021
Gongzheng Tianye Certified Public Accountants
Name of the independent auditor
(Special General Partnership)
No. of the auditor’s report SGW[2021]ANo.359
Name of the certified public accountants Dai Weizhong, Xu Wenxiang
Text of the Independent Auditor’s Report
To the Shareholders of Changchai Company, Limited,
I Opinion
We have audited the accompanying financial statements of Changchai Company, Limited. (together with its
consolidated subsidiaries included in the consolidated financial statements, the “Company”), which comprise the
parent’s and consolidated balance sheets as at 31 December 2020, the parent’s and consolidated income statements,
the parent’s and consolidated cash flow statements, the parent’s and consolidated statements of changes in owners’
equity for the year then ended, as well as the notes to the financial statements.
In our opinion, the financial statements attached were prepared in line with the regulations of Accounting
Standards for Business Enterprises in all significant aspects which gave a true and fair view of the consolidated
and parent financial position of Changchai Company, Limited. as at 31 December 2020 and the consolidated and
parent business performance and cash flow for 2020.
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for Audit of Financial
Statements section of our report. We are independent of the Company in accordance with the China Code of
Ethics for Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance with
the said Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
III Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. And key audit matter identified in our audit is summarized as follows:
(I) Recognition of revenue
1. Description of the item
For details of accounting policies governing revenue recognition, please refer to the Note III-28 Revenue and the
Note V-35 Operating Revenue and Cost of Sales. The operating revenue of the Company in 2020 is
RMB2,296,464,700.
Since the operating revenue is one of key performance indicators of the Company, and there is the inherent risk
that the management may manipulate the timing of revenue recognition for the purpose of achieving certain goals
or expectations, so we identify the revenue recognition as a key audit item.
2. Response for audit
(1) Know the key internal control related to revenue recognition, evaluate whether its design and execution are
valid or not, and test the operation effectiveness of the related internal control.
(2) Interview the management, know about the recognition policies regarding revenue of the Company, get and
check contracts or agreements of the Company signed with customers, identify contract terms related to the
recognition of sales revenue of products and evaluate whether the revenue recognition of the Company meets the
requirements of accounting standards for business enterprises.
(3) Check the supporting documents related to revenue recognition, such as sales contracts, order form, invoice
for sales, shipping order, declaration for exportation, and etc.
(4) Check the operating revenue recognized before and after the balance sheet date to the supporting documents,
such as shipping order, declaration for exportation, and etc by sampling method to assess whether the operating
revenue is recognized within appropriate period.
(5) Implement the confirmation by drawing sample to recognize the balance of accounts receivable and the
amount of sales revenue according to the features and natures of customer transaction.
(II) Bad debt provision for accounts receivable
1. Description of the item
Please refer to the accounting policies stipulated in the Note III-10 Impairment of Financial Instruments and the
Note V-4 Accounts Receivable. On 31 December 2020, as for accounts receivable of the Company, the carrying
amount was RMB563.1894 million, the bad debt provision was RMB166.0354 million, and the carrying value
was RMB397.154 million, accounting for 10.05% of total assets at the period-end. The bad debt of accounts
receivable due to failure of recovery at maturity or failure of recovery will generate significant impacts on
financial statements, thus, we identify the impairment of accounts receivable as a key audit item.
2. Response for audit
(1) Access Changchai’s internal control systems of sales and accounts receivable management to understand and
evaluate the design of internal control, and carry out walk-through test to confirm the implementation of internal
control systems.
(2) Analyze and confirm the reasonableness of Changchai’s accounting estimates of bad debt provision for
accounts receivable, including the basis for determining the combination of accounts receivable, the expected
credit loss rate and the judgment of impairment test of accounts receivable evaluated individually.
(3) Access and check the account receivable details, aging schedule, statement of provisions for bad debts, and
confirm the reasonableness of bad debt provision for accounts receivable by combining with the request of
confirmation of balance and subsequent collection inspection;
(4) Understand the reasons for accounts receivable, check Changchai’s reconciliation and collection during the
reporting period and any other data related to payment recovery, verify and confirm its accounts receivable
without transaction dispute at the end of the reporting period, as well as the adequacy of bad debt provision for
accounts receivable.
(5) Send request for confirmation of balance, and confirm the authenticity and accuracy of the amount of accounts
receivable on the balance sheet date by combining with subsequent inspection and other procedures.
IV Other Information
The Company’s management (hereinafter referred to as “management”) is responsible for the other information.
The other information comprises all of the information included in the Company’s 2020 Annual Report other than
the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information; we are required to report
that fact. We have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance for Financial Statements
The management is responsible for the preparation of the financial statements that give a fair view in accordance
with CAS, and for designing, implementing and maintaining such internal control as the management determines
is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, matters related to going concern and using the going concern basis of
accounting unless the management either intends to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with CAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required by CAS to draw users’ attention in our auditor’s report to the related
disclosures in the financial statements. If such disclosures are inadequate, we need to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events
or conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Company to express an opinion on the financial statements. We are responsible for the
direction, supervision and performance of the Company audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding the planned scope and timing of the audit and
significant audit findings, including any noteworthy deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Gongzheng Tianye Certified Public Accountants Chinese CPA Dai Weizhong
(Special General Partnership) (Engagement Partner)
Chinese CPA Xu Wenxiang
Wuxi China 13 April 2021
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Changchai Company, Limited
31 December 2020
Unit: RMB
Item 31 December 2020 31 December 2019
Current assets:
Monetary assets 760,728,222.85 638,589,260.09
Settlement reserve
Interbank loans granted
Held-for-trading financial assets 11,500,272.00 13,050,000.00
Derivative financial assets
Notes receivable 600,140,938.05 606,283,023.05
Accounts receivable 397,154,016.49 419,302,056.87
Accounts receivable financing
Prepayments 9,357,840.75 12,968,746.16
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract
reserve
Other receivables 6,212,062.80 9,703,390.94
Including: Interest receivable
Dividends receivable
Financial assets purchased under
resale agreements
Inventories 606,680,340.55 473,359,168.90
Contract assets
Assets held for sale
Current portion of non-current
assets
Other current assets 27,299,362.72 6,421,275.47
Total current assets 2,419,073,056.21 2,179,676,921.48
Non-current assets:
Loans and advances to customers
Investments in debt obligations
Investments in other debt
obligations
Long-term receivables
Long-term equity investments
Investments in other equity
685,137,950.87 532,886,000.00
instruments
Other non-current financial assets 98,732,938.63 77,952,101.63
Investment property 46,239,326.03 48,447,666.83
Fixed assets 454,181,555.68 457,722,667.32
Construction in progress 66,502,432.41 91,358,156.24
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 158,870,631.71 99,699,450.26
Development costs
Goodwill
Long-term prepaid expense 13,693.20 53,497.80
Deferred income tax assets 4,231,873.15 1,023,863.04
Other non-current assets 19,971,006.56
Total non-current assets 1,533,881,408.24 1,309,143,403.12
Total assets 3,952,954,464.45 3,488,820,324.60
Current liabilities:
Short-term borrowings 22,000,000.00 22,000,000.00
Borrowings from the central bank
Interbank loans obtained
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable 595,346,000.00 403,035,000.00
Accounts payable 612,757,392.46 525,625,016.89
Advances from customers 661,612.17 31,789,001.78
Contract liabilities 35,944,517.15
Financial assets sold under
repurchase agreements
Customer deposits and interbank
deposits
Payables for acting trading of
securities
Payables for underwriting of
securities
Employee benefits payable 50,127,161.47 44,559,015.79
Taxes payable 2,869,485.41 9,094,382.58
Other payables 197,545,076.08 205,064,145.10
Including: Interest payable
Dividends payable 3,891,433.83 3,891,433.83
Handling charges and commissions
payable
Reinsurance payables
Liabilities directly associated with
assets held for sale
Current portion of non-current
liabilities
Other current liabilities 5,233,947.12 1,177,712.38
Total current liabilities 1,522,485,191.86 1,242,344,274.52
Non-current liabilities:
Insurance contract reserve
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term employee benefits
payable
Provisions
Deferred income 56,949,737.60 58,864,111.22
Deferred income tax liabilities 80,671,598.82 57,082,890.27
Other non-current liabilities
Total non-current liabilities 137,621,336.42 115,947,001.49
Total liabilities 1,660,106,528.28 1,358,291,276.01
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 164,328,665.43 164,328,665.43
Less: Treasury stock
Other comprehensive income 425,482,758.24 317,059,775.00
Specific reserve 18,812,986.55 17,560,202.07
Surplus reserves 325,451,531.14 322,228,533.72
General reserve
Retained earnings 777,899,079.66 728,341,265.36
Total equity attributable to owners of
2,273,349,347.02 2,110,892,767.58
the Company as the parent
Non-controlling interests 19,498,589.15 19,636,281.01
Total owners’ equity 2,292,847,936.17 2,130,529,048.59
Total liabilities and owners’ equity 3,952,954,464.45 3,488,820,324.60
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2020 31 December 2019
Current assets:
Monetary assets 682,322,659.41 584,957,678.96
Held-for-trading financial
assets
Derivative financial assets
Notes receivable 581,230,938.05 576,948,023.05
Accounts receivable 317,828,161.25 337,447,538.04
Accounts receivable
financing
Prepayments 6,592,567.26 6,386,284.14
Other receivables 24,327,355.36 22,741,542.22
Including: Interest
receivable
Dividends
receivable
Inventories 475,688,026.57 368,653,472.39
Contract assets
Assets held for sale
Current portion of
non-current assets
Other current assets 17,521,203.46 3,898,333.51
Total current assets 2,105,510,911.36 1,901,032,872.31
Non-current assets:
Investments in debt
obligations
Investments in other debt
obligations
Long-term receivables
Long-term equity investments 375,752,730.03 252,752,730.03
Investments in other equity
685,137,950.87 532,886,000.00
instruments
Other non-current financial
52,500,000.00 50,000,000.00
assets
Investment property 46,239,326.03 48,447,666.83
Fixed assets 369,194,314.03 364,071,199.07
Construction in progress 26,195,189.06 89,330,161.60
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 68,088,982.37 70,169,770.91
Development costs
Goodwill
Long-term prepaid expense
Deferred income tax assets 4,179,544.86 970,026.67
Other non-current assets
Total non-current assets 1,627,288,037.25 1,408,627,555.11
Total assets 3,732,798,948.61 3,309,660,427.42
Current liabilities:
Short-term borrowings 5,000,000.00 5,000,000.00
Held-for-trading financial
liabilities
Derivative financial liabilities
Notes payable 589,534,000.00 392,105,000.00
Accounts payable 550,360,564.07 481,854,210.18
Advances from customers 661,612.17 28,673,664.87
Contract liabilities 32,344,514.86
Employee benefits payable 42,455,158.67 39,125,477.30
Taxes payable 1,099,861.63 5,952,664.10
Other payables 184,513,545.20 192,046,130.29
Including: Interest payable
Dividends
3,243,179.97 3,243,179.97
payable
Liabilities directly associated
with assets held for sale
Current portion of
non-current liabilities
Other current liabilities 2,426,575.40
Total current liabilities 1,408,395,832.00 1,144,757,146.74
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term employee benefits
payable
Provisions
Deferred income 56,949,737.60 58,864,111.22
Deferred income tax
75,460,192.63 55,951,725.00
liabilities
Other non-current liabilities
Total non-current liabilities 132,409,930.23 114,815,836.22
Total liabilities 1,540,805,762.23 1,259,572,982.96
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 183,071,147.70 183,071,147.70
Less: Treasury stock
Other comprehensive income 425,482,758.24 317,059,775.00
Specific reserve 18,812,986.55 17,560,202.07
Surplus reserves 325,451,531.14 322,228,533.72
Retained earnings 677,800,436.75 648,793,459.97
Total owners’ equity 2,191,993,186.38 2,050,087,444.46
Total liabilities and owners’
3,732,798,948.61 3,309,660,427.42
equity
3. Consolidated Income Statement
Unit: RMB
Item 2020 2019
1. Revenue 2,296,464,711.24 2,045,820,801.10
Including: Operating revenue 2,296,464,711.24 2,045,820,801.10
Interest income
Insurance premium
income
Handling charge and
commission income
2. Costs and expenses 2,267,289,166.18 1,991,399,859.93
Including: Cost of sales 1,950,573,991.27 1,714,533,867.50
Interest expense
Handling charge and
commission expense
Surrenders
Net insurance claims
paid
Net amount provided
as insurance contract reserve
Expenditure on
policy dividends
Reinsurance
premium expense
Taxes and surcharges 12,869,609.15 10,980,115.06
Selling expense 128,372,278.62 97,085,117.05
Administrative
87,446,195.74 107,015,957.41
expense
R&D expense 72,258,781.08 66,221,376.27
Finance costs 15,768,310.32 -4,436,573.36
Including: Interest
8,084,428.03 5,722,554.43
expense
Interest
6,249,975.99 6,733,183.88
income
Add: Other income 7,808,732.52 5,324,358.80
Return on investment (“-”
6,545,826.85 8,010,260.85
for loss)
Including: Share of profit
or loss of joint ventures and
associates
Income from the
derecognition of financial assets at
amortized cost (“-” for loss)
Exchange gain (“-” for loss)
Net gain on exposure hedges
(“-” for loss)
Gain on changes in fair value
20,981,109.00 -49,255.00
(“-” for loss)
Credit impairment loss (“-”
2,378,630.68 -925,811.28
for loss)
Asset impairment loss (“-”
-11,155,930.76 -42,371,202.17
for loss)
Asset disposal income (“-”
229,121.29 2,059,668.56
for loss)
3. Operating profit (“-” for loss) 55,963,034.64 26,468,960.93
Add: Non-operating income 1,047,114.21 462,351.48
Less: Non-operating expense 2,629,797.33 231,938.89
4. Profit before tax (“-” for loss) 54,380,351.52 26,699,373.52
Less: Income tax expense 2,085,600.33 1,715,045.77
5. Net profit (“-” for net loss) 52,294,751.19 24,984,327.75
5.1 By operating continuity
5.1.1 Net profit from
continuing operations (“-” for net 52,294,751.19 24,984,327.75
loss)
5.1.2 Net profit from
discontinued operations (“-” for net
loss)
5.2 By ownership
5.2.1 Net profit attributable to
shareholders of the Company as 52,432,443.05 24,966,526.85
the parent
5.2.1 Net profit attributable to
-137,691.86 17,800.90
non-controlling interests
6. Other comprehensive income,
108,771,351.91 52,654,100.00
net of tax
Attributable to owners of the
108,771,351.91 52,654,100.00
Company as the parent
6.1 Items that will not be
108,771,351.91 52,654,100.00
reclassified to profit or loss
6.1.1 Changes caused by
remeasurements on defined benefit
schemes
6.1.2 Other comprehensive
income that will not be reclassified
to profit or loss under the equity
method
6.1.3 Changes in the fair
value of investments in other 108,771,351.91 52,654,100.00
equity instruments
6.1.4 Changes in the fair
value arising from changes in own
credit risk
6.1.5 Other
6.2 Items that will be
reclassified to profit or loss
6.2.1 Other comprehensive
income that will be reclassified to
profit or loss under the equity
method
6.2.2 Changes in the fair
value of investments in other debt
obligations
6.2.3 Other comprehensive
income arising from the
reclassification of financial assets
6.2.4 Credit impairment
allowance for investments in other
debt obligations
6.2.5 Reserve for cash flow
hedges
6.2.6 Differences arising
from the translation of foreign
currency-denominated financial
statements
6.2.7 Other
Attributable to non-controlling
interests
7. Total comprehensive income 161,066,103.10 77,638,427.75
Attributable to owners of the
161,203,794.96 77,620,626.85
Company as the parent
Attributable to non-controlling
-137,691.86 17,800.90
interests
8. Earnings per share
8.1 Basic earnings per share 0.0934 0.0445
8.2 Diluted earnings per share 0.0934 0.0445
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
4. Income Statement of the Company as the Parent
Unit: RMB
Item 2020 2019
1. Operating revenue 2,123,200,238.11 1,866,291,739.39
Less: Cost of sales 1,823,443,404.79 1,575,626,989.46
Taxes and surcharges 10,349,672.15 8,407,285.53
Selling expense 110,774,087.06 89,281,567.68
Administrative expense 70,342,720.73 89,269,943.25
R&D expense 67,074,041.38 60,705,823.99
Finance costs 10,879,173.24 -7,320,351.23
Including: Interest
5,197,914.71 3,477,128.23
expense
Interest
6,017,663.50 6,955,017.26
income
Add: Other income 5,478,200.87 3,864,303.74
Return on investment (“-”
5,437,925.05 6,206,814.50
for loss)
Including: Share of
profit or loss of joint ventures
and associates
Income from the
derecognition of financial assets
at amortized cost (“-” for loss)
Net gain on exposure
hedges (“-” for loss)
Gain on changes in fair
2,500,000.00
value (“-” for loss)
Credit impairment loss
2,599,053.83 755,537.33
(“-” for loss)
Asset impairment loss
-18,384,759.06 -41,914,242.93
(“-” for loss)
Asset disposal income
80,014.23 2,072,367.71
(“-” for loss)
2. Operating profit (“-” for loss) 28,047,573.68 21,305,261.06
Add: Non-operating income 542,506.89 13,825.00
Less: Non-operating expense 262,488.62 141,118.07
3. Profit before tax (“-” for loss) 28,327,591.95 21,177,967.99
Less: Income tax expense -3,554,013.58 236,773.02
4. Net profit (“-” for net loss) 31,881,605.53 20,941,194.97
4.1 Net profit from
continuing operations (“-” for 31,881,605.53 20,941,194.97
net loss)
4.2 Net profit from
discontinued operations (“-” for
net loss)
5. Other comprehensive income,
108,771,351.91 52,654,100.00
net of tax
5.1 Items that will not be
108,771,351.91 52,654,100.00
reclassified to profit or loss
5.1.1 Changes caused by
remeasurements on defined
benefit schemes
5.1.2 Other comprehensive
income that will not be
reclassified to profit or loss
under the equity method
5.1.3 Changes in the fair
value of investments in other 108,771,351.91 52,654,100.00
equity instruments
5.1.4 Changes in the fair
value arising from changes in
own credit risk
5.1.5 Other
5.2 Items that will be
reclassified to profit or loss
5.2.1 Other comprehensive
income that will be reclassified
to profit or loss under the equity
method
5.2.2 Changes in the fair
value of investments in other
debt obligations
5.2.3 Other comprehensive
income arising from the
reclassification of financial
assets
5.2.4 Credit impairment
allowance for investments in
other debt obligations
5.2.5 Reserve for cash flow
hedges
5.2.6 Differences arising
from the translation of foreign
currency-denominated financial
statements
5.2.7 Other
6. Total comprehensive income 140,652,957.44 73,595,294.97
7. Earnings per share
7.1 Basic earnings per share
7.2 Diluted earnings per
share
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2020 2019
1. Cash flows from operating
activities:
Proceeds from sale of
commodities and rendering of 2,230,952,492.49 2,178,835,433.27
services
Net increase in customer
deposits and interbank deposits
Net increase in borrowings
from the central bank
Net increase in loans from
other financial institutions
Premiums received on
original insurance contracts
Net proceeds from
reinsurance
Net increase in deposits and
investments of policy holders
Interest, handling charges and
commissions received
Net increase in interbank
loans obtained
Net increase in proceeds from
repurchase transactions
Net proceeds from acting
trading of securities
Tax rebates 33,693,741.46 42,607,617.45
Cash generated from other
16,977,100.96 11,790,596.40
operating activities
Subtotal of cash generated from
2,281,623,334.91 2,233,233,647.12
operating activities
Payments for commodities
1,571,967,433.96 1,824,178,697.91
and services
Net increase in loans and
advances to customers
Net increase in deposits in the
central bank and in interbank
loans granted
Payments for claims on
original insurance contracts
Net increase in interbank
loans granted
Interest, handling charges and
commissions paid
Policy dividends paid
Cash paid to and for
294,472,502.80 287,894,549.87
employees
Taxes paid 39,853,712.33 19,999,117.04
Cash used in other operating
123,533,031.29 121,486,471.86
activities
Subtotal of cash used in
2,029,826,680.38 2,253,558,836.68
operating activities
Net cash generated from/used in
251,796,654.53 -20,325,189.56
operating activities
2. Cash flows from investing
activities:
Proceeds from disinvestment 557,198,253.76 15,101,882.58
Return on investment 6,545,826.85 8,546,765.69
Net proceeds from the
disposal of fixed assets,
275,546.00 326,835.85
intangible assets and other
long-lived assets
Net proceeds from the
disposal of subsidiaries and
other business units
Cash generated from other
336,150.00
investing activities
Subtotal of cash generated from
564,355,776.61 23,975,484.12
investing activities
Payments for the acquisition
of fixed assets, intangible assets 133,737,262.64 39,236,511.40
and other long-lived assets
Payments for investments 579,733,766.76 65,930,496.31
Net increase in pledged loans
granted
Net payments for the
acquisition of subsidiaries and
other business units
Cash used in other investing
4,141,850.71
activities
Subtotal of cash used in
717,612,880.11 105,167,007.71
investing activities
Net cash generated from/used in
-153,257,103.50 -81,191,523.59
investing activities
3. Cash flows from financing
activities:
Capital contributions received
Including: Capital
contributions by non-controlling
interests to subsidiaries
Borrowings raised 22,000,000.00 34,000,000.00
Cash generated from other
financing activities
Subtotal of cash generated from
22,000,000.00 34,000,000.00
financing activities
Repayment of borrowings 22,000,000.00 59,500,000.00
Interest and dividends paid 3,232,890.38 19,005,058.96
Including: Dividends paid
by subsidiaries to
non-controlling interests
Cash used in other financing
2,500,000.00
activities
Subtotal of cash used in
27,732,890.38 78,505,058.96
financing activities
Net cash generated from/used in
-5,732,890.38 -44,505,058.96
financing activities
4. Effect of foreign exchange
rates changes on cash and cash -8,827,118.35 715,396.97
equivalents
5. Net increase in cash and cash
83,979,542.30 -145,306,375.14
equivalents
Add: Cash and cash equivalents,
545,959,998.20 691,266,373.34
beginning of the period
6. Cash and cash equivalents,
629,939,540.50 545,959,998.20
end of the period
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item 2020 2019
1. Cash flows from operating
activities:
Proceeds from sale of
commodities and rendering of 1,963,288,154.66 1,911,679,765.84
services
Tax rebates 25,903,016.36 34,035,423.13
Cash generated from other
9,006,278.01 9,754,947.38
operating activities
Subtotal of cash generated from
1,998,197,449.03 1,955,470,136.35
operating activities
Payments for commodities
1,388,644,147.32 1,637,576,894.25
and services
Cash paid to and for
247,717,051.40 237,310,147.26
employees
Taxes paid 26,755,852.89 8,675,558.38
Cash used in other operating
110,744,198.57 107,932,998.05
activities
Subtotal of cash used in
1,773,861,250.18 1,991,495,597.94
operating activities
Net cash generated from/used in
224,336,198.85 -36,025,461.59
operating activities
2. Cash flows from investing
activities:
Proceeds from disinvestment 500,487.00 4,000,000.00
Return on investment 5,437,925.05 6,206,814.50
Net proceeds from the
disposal of fixed assets,
183,890.00 297,935.85
intangible assets and other
long-lived assets
Net proceeds from the
disposal of subsidiaries and
other business units
Cash generated from other
9,718,669.72 9,500,000.00
investing activities
Subtotal of cash generated from
15,840,971.77 20,004,750.35
investing activities
Payments for the acquisition
of fixed assets, intangible assets 4,071,225.07 30,078,441.85
and other long-lived assets
Payments for investments 154,786,000.00 60,000,000.00
Net payments for the
acquisition of subsidiaries and
other business units
Cash used in other investing
9,000,000.00 9,500,000.00
activities
Subtotal of cash used in
167,857,225.07 99,578,441.85
investing activities
Net cash generated from/used in
-152,016,253.30 -79,573,691.50
investing activities
3. Cash flows from financing
activities:
Capital contributions received
Borrowings raised 5,000,000.00 5,000,000.00
Cash generated from other
financing activities
Subtotal of cash generated from
5,000,000.00 5,000,000.00
financing activities
Repayment of borrowings 5,000,000.00 28,500,000.00
Interest and dividends paid 1,027,748.70 16,009,069.84
Cash used in other financing
2,500,000.00
activities
Subtotal of cash used in
8,527,748.70 44,509,069.84
financing activities
Net cash generated from/used in
-3,527,748.70 -39,509,069.84
financing activities
4. Effect of foreign exchange
rates changes on cash and cash -6,995,969.85 1,031,120.95
equivalents
5. Net increase in cash and cash
61,796,227.00 -154,077,101.98
equivalents
Add: Cash and cash equivalents,
497,777,104.81 651,854,206.79
beginning of the period
6. Cash and cash equivalents,
559,573,331.81 497,777,104.81
end of the period
7. Consolidated Statements of Changes in Owners’ Equity
2020
Unit: RMB
2020
Equity attributable to owners of the Company as the parent
Other
equity
instrument
G
s
e
P
n
r P
Les e
e e
s: r O
f r Other Non-contr Total
Item Tre al t
Share e p Capital comprehen Specific Surplus Retained olling owners’
asu r h Subtotal
capital rr et reserves sive reserve reserves earnings interests equity
O ry e e
e u income
th sto s r
d al
er ck e
s b
r
h o
v
a n
e
r d
e s
s
1.
Bala
nce
561,374,32 164,328,66 317,059,77 17,560,20 322,226,70 726,689,92 2,109,239,59 19,636,28 2,128,875,87
as at
6.00 5.43 5.00 2.07 0.34 9.10 7.94 1.01 8.95
the
end
of
the
prior
year
Add:
Adju
stme
nt for
chan
ge in
acco
untin
g
polic
y
Adju
stme
nt for
corre 1,651,336.2
1,833.38 1,653,169.64 1,653,169.64
ction 6
of
previ
ous
error
Adju
stme
nt for
busin
ess
comb
inatio
n
under
com
mon
contr
ol
Other
adjus
tment
s
2.
Bala
nce
as at
the 561,374,32 164,328,66 317,059,77 17,560,20 322,228,53 728,341,26 2,110,892,76 19,636,28 2,130,529,04
begin 6.00 5.43 5.00 2.07 3.72 5.36 7.58 1.01 8.59
ning
of
the
year
3.
Incre
ase/
108,422,98 1,252,784. 3,222,997.4 49,557,814. 162,456,579. -137,691.8 162,318,887.
decre
3.24 48 2 30 44 6 58
ase
in the
perio
d
(“-”
for
decre
ase)
3.1
Total
comp
108,771,35 52,432,443. 161,203,794. -137,691.8 161,066,103.
rehen
1.91 05 96 6 10
sive
inco
me
3.2
Capit
al
incre
ased
and
reduc
ed by
owne
rs
3
.2.1
Ordi
nary
share
s
incre
ased
by
owne
rs
3
.2.2
Capit
al
incre
ased
by
holde
rs of
other
equit
y
instru
ment
s
3
.2.3
Share
-base
d
paym
ents
inclu
ded
in
owne
rs’
equit
y
3
.2.4
Other
3.3
Profit
3,222,997.4 -3,222,997.
distri
2 42
butio
n
3.3.1
Appr
opria
tion 3,222,997.4 -3,222,997.
to 2 42
surpl
us
reser
ves
3.3.2
Appr
opria
tion
to
gener
al
reser
ve
3.3.3
Appr
opria
tion
to
owne
rs (or
share
holde
rs)
3.3.4
Other
3.4
Trans
fers
withi
-348,368.6
n 348,368.67
7
owne
rs’
equit
y
3.4.1
Incre
ase
in
capit
al (or
share
capit
al)
from
capit
al
reser
ves
3.4.2
Incre
ase
in
capit
al (or
share
capit
al)
from
surpl
us
reser
ves
3.4.3
Loss
offset
by
surpl
us
reser
ves
3.4.4
Chan
ges
in
defin
ed
benef
it
sche
mes
transf
erred
to
retain
ed
earni
ngs
3.4.5
Other
comp
rehen
sive
inco
me
transf
erred
to
retain
ed
earni
ngs
-348,368.6
3.4.6 348,368.67
7
Other
3.5
Speci
1,252,784.
fic 1,252,784.48 1,252,784.48
48
reser
ve
3.5.1
Incre
3,766,291.
ase 3,766,291.74 3,766,291.74
74
in the
perio
d
3.5.2
Used 2,513,507.
2,513,507.26 2,513,507.26
in the 26
perio
d
3.6
Other
4. 561,374,32 164,328,66 425,482,75 18,812,98 325,451,53 777,899,07 2,273,349,34 19,498,58 2,292,847,93
Bala 6.00 5.43 8.24 6.55 1.14 9.66 7.02 9.15 6.17
nce
as at
the
end
of
the
perio
d
2019
Unit: RMB
2019
Equity attributable to owners of the Company as the parent
Other equity
instruments Less: Other Gen Non-cont Total
Item
Share Prefe Perpe Capital Trea compreh Specific Surplus eral Retained Ot rolling owners’
Subtotal
capital rred tual Ot reserves sury ensive reserve reserves reser earnings her interests equity
share bond her stock income ve
s s
1.
Balance
as at the 561,374, 164,328, 264,405, 15,182,9 320,133, 717,883, 2,043,308, 19,618,48 2,062,926,
end of 326.00 665.43 675.00 58.83 050.15 351.33 026.74 0.11 506.85
the prior
year
Add:
Adjustm
ent for
change
in
accounti
ng policy
Adjustm
ent for
1,619,86 1,621,228. 1,621,228.
correctio 1,364.08
4.82 90 90
n of
previous
error
Adjustm
ent for
business
combinat
ion
under
common
control
Other
adjustme
nts
2.
Balance
as at the 561,374, 164,328, 264,405, 15,182,9 320,134, 719,503, 2,044,929, 19,618,48 2,064,547,
beginnin 326.00 665.43 675.00 58.83 414.23 216.15 255.64 0.11 735.75
g of the
year
3.
Increase/ 52,654,1 2,377,24 2,094,11 8,838,04 65,963,51 65,981,31
17,800.90
decrease 00.00 3.24 9.49 9.21 1.94 2.84
in the
period
(“-” for
decrease
)
3.1
Total
52,654,1 24,966,5 77,620,62 77,638,42
compreh 17,800.90
00.00 26.85 6.85 7.75
ensive
income
3.2
Capital
increase
d and
reduced
by
owners
3.2.
1
Ordinary
shares
increase
d by
owners
3.2.
2 Capital
increase
d by
holders
of other
equity
instrume
nts
3.2.
3
Share-ba
sed
payment
s
included
in
owners’
equity
3.2.
4 Other
3.3
Profit 2,094,11 -16,128,4 -14,034,35 -14,034,35
distributi 9.49 77.64 8.15 8.15
on
3.3.1
Appropri 2,094,11 -2,094,11
ation to 9.49 9.49
surplus
reserves
3.3.2
Appropri
ation to
general
reserve
3.3.3
Appropri
ation to -14,034,3 -14,034,35 -14,034,35
owners 58.15 8.15 8.15
(or
sharehol
ders)
3.3.4
Other
3.4
Transfers
within
owners’
equity
3.4.1
Increase
in capital
(or share
capital)
from
capital
reserves
3.4.2
Increase
in capital
(or share
capital)
from
surplus
reserves
3.4.3
Loss
offset by
surplus
reserves
3.4.4
Changes
in
defined
benefit
schemes
transferr
ed to
retained
earnings
3.4.5
Other
compreh
ensive
income
transferr
ed to
retained
earnings
3.4.6
Other
3.5
2,377,24 2,377,243. 2,377,243.
Specific
3.24 24 24
reserve
3.5.1
3,868,72 3,868,727. 3,868,727.
Increase
7.07 07 07
in the
period
3.5.2
1,491,48 1,491,483. 1,491,483.
Used in
3.83 83 83
the
period
3.6
Other
4.
Balance
as at the 561,374, 164,328, 317,059, 17,560,2 322,228, 728,341, 2,110,892, 19,636,28 2,130,529,
end of 326.00 665.43 775.00 02.07 533.72 265.36 767.58 1.01 048.59
the
period
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2020
Unit: RMB
2020
Other equity instruments Less:
Other
Item Share Preferr Perpetu Capital Treasu Specific Surplus Retained Oth Total owners’
Oth comprehensi
capital ed al reserves ry reserve reserves earnings er equity
er ve income
shares bonds stock
1. Balance
as at the end 561,374,326 183,071,147 317,059,775 17,560,202 322,226,700 648,776,959 2,050,069,110
of the prior .00 .70 .00 .07 .34 .53 .64
year
Add:
Adjustment
for change
in
accounting
policy
Adjustment
for
1,833.38 16,500.44 18,333.82
correction
of previous
error
Other
adjustments
2. Balance
as at the 561,374,326 183,071,147 317,059,775 17,560,202 322,228,533 648,793,459 2,050,087,444
beginning .00 .70 .00 .07 .72 .97 .46
of the year
3. Increase/
decrease in
108,422,983 1,252,784. 3,222,997.4 29,006,976. 141,905,741.9
the period
.24 48 2 78 2
(“-” for
decrease)
3.1 Total
108,771,351 31,881,605. 140,652,957.4
comprehens
.91 53 4
ive income
3.2
Capital
increased
and reduced
by owners
3.2.1
Ordinary
shares
increased
by owners
3.2.2
Capital
increased
by holders
of other
equity
instruments
3.2.3
Share-based
payments
included in
owners’
equity
3.2.4
Other
3.3 Profit 3,222,997.4 -3,222,997.4
distribution 2 2
3.3.1
Appropriati
3,222,997.4 -3,222,997.4
on to
2 2
surplus
reserves
3.3.2
Appropriati
on to
owners (or
shareholder
s)
3.3.3
Other
3.4
Transfers
within -348,368.67 348,368.67
owners’
equity
3.4.1
Increase in
capital (or
share
capital)
from capital
reserves
3.4.2
Increase in
capital (or
share
capital)
from
surplus
reserves
3.4.3
Loss offset
by surplus
reserves
3.4.4
Changes in
defined
benefit
schemes
transferred
to retained
earnings
3.4.5
Other
comprehens
ive income -348,368.67 348,368.67
transferred
to retained
earnings
3.4.6
Other
3.5 1,252,784. 1,252,784.48
Specific 48
reserve
3.5.1
3,766,291.
Increase in 3,766,291.74
74
the period
3.5.2
2,513,507.
Used in the 2,513,507.26
26
period
3.6 Other
4. Balance
as at the end 561,374,326 183,071,147 425,482,758 18,812,986 325,451,531 677,800,436 2,191,993,186
of the .00 .70 .24 .55 .14 .75 .38
period
2019
Unit: RMB
2019
Other equity instruments Less:
Other
Item Share Preferr Perpetu Capital Treasu Specific Surplus Retained Oth Total owners’
Oth comprehensi
capital ed al reserves ry reserve reserves earnings er equity
er ve income
shares bonds stock
1. Balance
as at the end 561,374,326 183,071,147 264,405,675 15,182,958 320,133,050 643,968,465 1,988,135,623
of the prior .00 .70 .00 .83 .15 .93 .61
year
Add:
Adjustment
for change
in
accounting
policy
Adjustment
for
1,364.08 12,276.71 13,640.79
correction
of previous
error
Other
adjustments
2. Balance
as at the 561,374,326 183,071,147 264,405,675 15,182,958 320,134,414 643,980,742 1,988,149,264
beginning .00 .70 .00 .83 .23 .64 .40
of the year
3. Increase/
decrease in
52,654,100. 2,377,243. 2,094,119.4 4,812,717.3
the period 61,938,180.06
00 24 9 3
(“-” for
decrease)
3.1 Total
52,654,100. 20,941,194.
comprehens 73,595,294.97
00 97
ive income
3.2
Capital
increased
and reduced
by owners
3.2.1
Ordinary
shares
increased
by owners
3.2.2
Capital
increased
by holders
of other
equity
instruments
3.2.3
Share-based
payments
included in
owners’
equity
3.2.4
Other
3.3 Profit 2,094,119.4 -16,128,477. -14,034,358.1
distribution 9 64 5
3.3.1
Appropriati
2,094,119.4 -2,094,119.4
on to
9 9
surplus
reserves
3.3.2
Appropriati
on to -14,034,358. -14,034,358.1
owners (or 15 5
shareholder
s)
3.3.3
Other
3.4
Transfers
within
owners’
equity
3.4.1
Increase in
capital (or
share
capital)
from capital
reserves
3.4.2
Increase in
capital (or
share
capital)
from
surplus
reserves
3.4.3
Loss offset
by surplus
reserves
3.4.4
Changes in
defined
benefit
schemes
transferred
to retained
earnings
3.4.5
Other
comprehens
ive income
transferred
to retained
earnings
3.4.6
Other
3.5
2,377,243.
Specific 2,377,243.24
24
reserve
3.5.1
3,868,727.
Increase in 3,868,727.07
07
the period
3.5.2
1,491,483.
Used in the 1,491,483.83
83
period
3.6 Other
4. Balance
as at the end 561,374,326 183,071,147 317,059,775 17,560,202 322,228,533 648,793,459 2,050,087,444
of the .00 .70 .00 .07 .72 .97 .46
period
III. Company Profile
Changchai Company, Limited (hereinafter referred to as “the Company”) was founded on 5 May 1994, which is a
company limited by shares promoted solely by Changzhou Diesel Engine Plant through the approval by the State
Commission for Restructuring the Economic Systems with document TGS [1993] No. 9 on 15 January 1993 by
way of public offering of shares. With the approved of the People’s Government of Jiangsu Province SZF [1993]
No. 67, as well as reexamined and approved by China Securities Regulatory Commission (“CSRC”) through
document ZJFSZ (1994) No. 9, the Company initially issued A shares to the public from 15 March 1994 to 30
March 1994. As approved by the Shenzhen Stock Exchange through document SZSFZ (1994) No. 15, such
tradable shares of the public got listing on 1 July 1994 at Shenzhen Stock Exchange with “Su Changchai A” for
short of stock, as well as “0570” as stock code (present stock code is “000570”).
In 1996, with the recommendation of the Office of the People’s Government of Jiangsu Province SZBH [1996]
No. 13, as well as first review by Shenzhen Municipal Securities Administration Office through SZBZ [1996] No.
24, and approval of the State Council Securities Commission ZWF [1996] No. 27, the Company issued 100
million B shares to qualified investors on 27 August 1996 to 30 August 1996, getting listed on 13 September
1996.
On 9 June 2006, the Company held a shareholders’ general meeting related to A shares market to examine and
approve share merger reform plan, and performed the share merger reform on 19 June 2006.
As examined and approved at the 2nd Extraordinary General Meeting of 2009 in September 2009, based on the
total share capital of 374,249,551 shares as at 30 June 2009, the Company implemented the profit distribution plan,
i.e. to distribute 5 bonus shares and cash of RMB0.80 for every 10 shares, with registered capital increased by
RMB187,124,775.00, as well as registered capital of RMB561,374,326.00 after change. As at 31 December 2015,
the total share capital of the Company is 561,374,326.00 shares, as well as registered capital of
RMB561,374,326.00, which verified by Jiangsu Gongzheng Tianye Certified Public Accountants Company
Limited with issuing Capital Verification Report SGC [2010] No. B002. And the unified social credit code of the
enterprise business license of the Company is 91320400134792410W.
The Company’s registered address is situated at No. 123 Huaide Middle Road, Changzhou, Jiangsu, as well as its
head office located at No. 123 Huaide Middle Road, Changzhou, Jiangsu.
The Company belongs to manufacturing with business scope including manufacturing and sale of diesel engine,
diesel engines part and casting, grain harvesting machine, rotary cultivators, walking tractor, mould and fixtures,
assembling and sale of diesel generating set and pumping unit. The Company mainly engaged in the production
and sales of small and medium-sized single cylinders and multi-cylinder diesel engine with the label of Changchai
Brand. The diesel engine produced and sold by the Company were mainly used in tractors, combine harvest
models, light commercial vehicle, farm equipment, small-sized construction machinery, generating sets and
shipborne machinery and equipment, etc. The Company’s main business remained unchanged in the Reporting
Period.
The Company established the Shareholders’ General Meeting, the Board of Directors and the Supervisory
Committee, Corporate office, Financial Department, Political Department, Investment and Development
Department, Audit Department, Human Recourses Department, Production Department, Procurement Department,
Sales Company, Chief Engineer Office, Technology Center, QA Department, Foundry Branch, Machine
Processing Branch, Single-cylinder Engine branch, Multi-cylinder Engine Branch and Overseas Business
Department in the Company.
The financial report has been approved to be issued by the Board of Directors on 13 April 2021.
The consolidated scope of the Company of the Reporting Period includes the Company as the parent and 7
subsidiaries. For the details of the consolidated scope of the Reporting Period and the changes situation, please
refer to the changes of the consolidated scope of the notes to the financial report and the notes to the equities
among other entities.
IV. Basis for Preparation of the Financial Report
1. Basis for Preparation
With the going-concern assumption as the basis and based on transactions and other events that actually occurred,
the Group prepared financial statements in accordance with The Accounting Standards for Business
Enterprises—Basic Standard issued by the Ministry of Finance with Decree No. 33 and revised with Decree No.
76, the various specific accounting standards, the Application Guidance of Accounting Standards for Business
Enterprises, the Interpretation of Accounting Standards for Business Enterprises and other regulations issued and
revised from 15 February 2006 onwards (hereinafter jointly referred to as “the Accounting Standards for Business
Enterprises”, “China Accounting Standards” or “CAS”), as well as the Rules for Preparation Convention of
Disclosure of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014)
by China Securities Regulatory Commission.
In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the Group adopted
the accrual basis in accounting. Except for some financial instruments, where impairment occurred on an asset, an
impairment reserve was withdrawn accordingly pursuant to relevant requirements.
2. Continuation
The Company comprehensively evaluated the information acquired recently that there would be no such factors in
the 12 months from the end of the Reporting Period that would obviously influence the continuation capability of
the Company and predicted that the operating activities would continue in the future 12 months of the Company.
The financial statement compiled base on the continuous operation.
V. Important Accounting Policies and Estimations
Notification of specific accounting policies and accounting estimations:
The Company and each subsidiary according to the actual production and operation characteristics and in accord
with the regulations of the relevant ASBE, formulated certain specific accounting policies and accounting
estimations, which mainly reflected in the financial instruments, withdrawal method of the bad debt provision of
the accounts receivable, the measurement of the inventory and the depreciation of the fixed assets etc.
1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Group are in compliance with in compliance with the Accounting
Standards for Business Enterprises, which factually and completely present the Company’s and the Group’s
financial positions, business results and cash flows and other relevant information.
2. Fiscal Period
The fiscal periods are divided into fiscal year and metaphase, the fiscal year is from January 1 to December 31
and as the metaphase included monthly, quarterly and semi-yearly periods.
3. Operating Cycle
A normal operating cycle refers to a period from the Group purchasing assets for processing to realizing cash or
cash equivalents. An operating cycle for the Group is 12 months, which is also the classification criterion for the
liquidity of its assets and liabilities.
4. Currency Used in Bookkeeping
Renminbi is functional currency of the Company.
5. Accounting Methods for Business Combinations under the Same Control and Business Combinations not
under the Same Control
(1) Business combinations under the same control:
A business combination under the same control is a business combination in which all of the combining
enterprises are ultimately controlled by the same party or the same parties both before and after the business
combination and on which the control is not temporary.
For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it makes
payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share of the
book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment.
The difference between the initial cost of the long-term equity investment and the payment in cash, non-cash
assets transferred as well as the book value of the debts borne by the merging party shall offset against the capital
reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.
If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger,
regard the share of the book value of the owner's equity of the merged enterprise as the initial cost of the
long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while
the difference between the initial cost of the long-term equity investment and total face value of the shares issued
shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be
adjusted.
All direct costs for the business combination, including expenses for audit, evaluating and legal services shall be
recorded into the profits and losses at the current period. The expenses such as the handling charges and
commission etc, premium income of deducting the equity securities, and as for the premium income was
insufficient to dilute, the retained earnings shall be written down.
Owning to the reasons such as the additional investment, for the equity investment held before acquiring the
control right of the combined parties, the confirmed relevant gains and losses, other comprehensive income and
the changes of other net assets since the date of the earlier one between the date when acquiring the original equity
right and the date when the combine parties and combined ones were under the same control to the combination
date, should be respectively written down and compared with the beginning balance of retained earnings or the
current gains and losses during the statement period.
(2) Business combinations not under the same control
A business combination not under the same control is a business combination in which the combining enterprises
are not ultimately controlled by the same party or the same parties both before and after the business combination.
The combination costs of the acquirer and the identifiable net assets obtained by the acquirer in a business
combination shall be measured at the fair values. The acquirer shall recognize the positive balance between the
combination costs and the fair value of the identifiable net assets it obtains forms the acquiree as business
reputation. The direct relevant expenses occurred from the enterprise combination should be included in the
current gains and losses when occurred. The combination costs of the acquirer and the identifiable net assets
obtained by it in the combination shall be measured according to their fair values at the acquiring date. The
difference between the fair value of the assets paid out by the Company and its book value should be included in
the current gains and losses. The purchase date refers to the date that the purchaser acquires the control right of the
acquiree.
For the business combinations not under the same control realized through step by step multiple transaction, as for
the equity interests that the Group holds in the acquiree before the acquiring date, they shall be re-measured
according to their fair values at the acquiring date; the positive difference between their fair values and carrying
amounts shall be recorded into the investment gains for the period including the acquiring date. The equity holed
by the acquiree which involved with the other comprehensive income and the other owners’ equities changes
except for the net gains and losses, other comprehensive income and the profits distribution and other related
comprehensive gains and other owners’ equities which in relation to the equity interests that the Group holds in
the acquiree before the acquiring date should be transferred into the current investment income on the acquiring
date, except for the other comprehensive income occurred from the re-measurement of the net profits of the
defined benefit plans or the changes of the net assets of the investees.
6. Methods for Preparing Consolidated Financial Statements
The Company confirms the consolidated scope based on the control and includes the subsidiaries with actual
control right into the consolidated financial statement.
The consolidated financial statement of the Company is compiled according to the regulations of No. 33 of
ASBE-Consolidated Financial Statement and the relevant regulations and as for the whole significant
come-and-go balance, investment, transaction and the unrealized profits should be written off when compiling the
consolidated financial statement. The portion of a subsidiary’s shareholders’ equity and the portion of a
subsidiary’s net profits and losses for the period not held by the Group are recognized as minority interests and
minority shareholder profits and losses respectively and presented separately under shareholders’ equity and net
profits in the consolidation financial statements. The portion of a subsidiary’s net profits and losses for the period
that belong to minority interests is presented as the item of “minority shareholder profits and losses” under the
bigger item of net profits in the consolidated financial statements. Where the loss of a subsidiary shared by
minority shareholders exceeds the portion enjoyed by minority shareholders in the subsidiary’s opening owners’
equity, minority interests are offset.
The accounting policy or accounting period of each subsidiary is different from which of the Company, which
shall be adjusted as the Company; or subsidiaries shall prepare financial statement again required by the Company
when preparing the consolidated financial statements.
As for the added subsidiary company not controlled by the same enterprise preparing the consolidated financial
statement, shall adjust individual financial statement based on the fair value of the identifiable net assets on the
acquisition date; as for the added subsidiary companies controlled by the same enterprise preparing the financial
statement, shall not adjust the financial statement of the subsidiaries, namely survived by integration as
participating in the consolidation when the final control party starts implementing control and should adjust the
period-begin amount of the consolidated balance sheet and at the same time adjust the relevant items of the
compared statement.
As for the disposed subsidiaries, the operation result and the cash flow should be included in the consolidated
income statement and the consolidated cash flow before the disposing date; the disposed subsidiaries of the
current period, should not be adjusted the period-begin amount of the consolidated balance sheet.
Where the Group losses control on its original subsidiaries due to disposal of some equity investments or other
reasons, the residual equity interests are re-measured according to the fair value on the date when such control
ceases. The summation of the consideration obtained from the disposal of equity interests and the fair value of the
residual equity interests, minus the portion in the original subsidiary’s net assets measured on a continuous basis
from the acquisition date that is enjoyable by the Group according to the original shareholding percentage in the
subsidiary, is recorded in investment gains for the period when the Group’s control on the subsidiary ceases. Other
comprehensive incomes in relation to the equity investment and the other owners’ equities changes except for the
net gains and losses, other comprehensive income and profits distribution in the original subsidiary are treated on
the same accounting basis as the acquiree directly disposes the relevant assets or liabilities (that is, except for the
changes in the net liabilities or assets with a defined benefit plan resulted from re-measurement of the original
subsidiary, the rest shall all be transferred into current investment gains) when such control ceases. And
subsequent measurement is conducted on the residual equity interests according to the No.2 Accounting Standard
for Business Enterprises-Long-term Equity Investments or the No.22 Accounting Standard for Business
Enterprises-Recognition and Measurement of Financial Instruments.
For the disposal of equity investment belongs to a package deal, should be considered as a transaction and conduct
accounting treatment. However, Before losing control, every disposal cost and corresponding net assets balance of
subsidiary of disposal investment are confirmed as other comprehensive income in consolidated financial
statements, which together transferred into the current profits and losses in the loss of control, when the Group
losing control on its subsidiary.
For the disposal of the equity investment not belongs to a package deal, should be executed accounting treatment
according to the relevant policies of partly disposing the equity investment of the subsidiaries under the situation
not lose the control right before losing the control right; when losing the control right, the former should be
executed accounting treatment according to the general disposing method of the disposal of the subsidiaries.
7. Classification of Joint Arrangements and Accounting Treatment of Joint Operations
The Group classifies joint arrangements into joint operations and joint ventures.
A joint operation refers to a joint arrangement where the Group is the joint operations party of the joint
arrangement and enjoys assets and has to bear liabilities related to the arrangement. The Company confirms the
following items related to the interests share among the joint operations and executes accounting treatment
according to the regulations of the relevant ASBE:
(1) Recognizes the assets that it holds and bears in the joint operation and recognizes the jointly-held assets
according to the Group’s stake in the joint operation;
(2) Recognizes the liabilities that it holds and bears in the joint operation and recognizes the jointly-held liabilities
according to the Group’s stake in the joint operation;
(3) Recognizes the income from sale of the Group’s share in the output of the joint operation
(4) Recognizes the income from sale of the joint operation’s outputs according to the Group’s stake in it
(5) Recognizes the expense solely incurred to the Group and the expense incurred to the joint operation according
to the Group’s stake in it.
8. Recognition Standard for Cash and Cash Equivalents
In the Group’s understanding, cash and cash equivalents include cash on hand, any deposit that can be used for
cover, and short-term (usually due within 3 months since the day of purchase) and high circulating investments,
which are easily convertible into known amount of cash and whose risks in change of value are minimal.
9. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
(1) Foreign currency business
Concerning the foreign-currency transactions that occurred, the foreign currency shall be converted into the
recording currency according to the middle price of the market exchange rate disclosed by the People’s Bank of
China on the date of the transaction. Among the said transactions that occurred, those involving foreign exchanges
shall be converted according to the exchange rates adopted in the actual transactions.
On the balance sheet date, the foreign-currency monetary assets and the balance of the liability account shall be
converted into the recoding currency according to the middle price of the market exchange rates disclosed by the
People’s Bank of China on the Balance Sheet Date. The difference between the recording-currency amount
converted according to the exchange rate on the Balance Sheet Date and the original book recording-currency
amount shall be recognized as gains/losses from foreign exchange. And the exchange gain/loss caused by the
foreign-currency borrowings related to purchasing fixed assets shall be handled according to the principle of
capitalizing borrowing expenses; the exchange gain/loss incurred in the establishment period shall be recorded
into the establishment expense; others shall be recorded into the financial expenses for the current period.
On the balance sheet date, the foreign-currency non-monetary items measured by historical cost shall be converted
according to the middle price of the market exchange disclosed by the People’s Bank of China on the date of the
transaction, with no changes in the original recording-currency amount; while the foreign-currency non-monetary
items measured by fair value shall be converted according to the middle price of the market exchange disclosed by
the People’s Bank of China on the date when the fair value is recognized, and the exchange gain/loss caused
thereof shall be recognized as the gain/loss from fair value changes and recorded into the gain/loss of the current
period.
(2) Translation of foreign currency
The assets and liabilities items among the balance sheet of the foreign operation shall be translated at a spot
exchange rate on the balance sheet date. Among the owner’s equity items, except for the items as “undistributed
profits”, other items shall be translated at the spot exchange rate at the time when they are incurred. And the
revenues and expenses items among the balance sheet of the foreign operation shall be translated at the
approximate exchange rate of the transaction date. The difference caused from the above transaction of the foreign
currency statement should be listed in the other comprehensive income among the owners’ equities.
10. Financial Instruments
(1) Classification of Financial Instruments
The Company classifies the financial assets when initially recognized into the following three categories based on
the business model for financial assets management and characteristics of contractual cash flow of financial assets:
financial assets measured at amortized cost, financial assets at fair value through other comprehensive income
(debt instruments) and financial assets at fair value through profit or loss
Financial liabilities were classifies when initially recognized into financial liabilities at fair value through profit or
loss and financial liabilities measured at amortized cost.
(2) Recognition Basis and Measurement Method for Financial Instruments
① Financial assets measured at amortized cost
Financial assets at amortized cost include notes receivable, accounts receivable, other receivables, long-term
receivables, and investment in debt obligations which are initially measured at fair value and related transaction
cost shall be recorded into the initial recognized amount. For accounts receivable excluding significant financing
and accounts receivable that the Company decides not to consider financing components less than one year, the
initial measurement shall be made at the contract transaction price. The interest calculated with actual rates for the
holding period shall be recorded into the current profit or loss. When recovered or disposed, the difference
between the price obtained and the carrying value of the financial assets shall be recorded into the current profit or
loss.
② Financial assets at fair value through other comprehensive income (debt instruments)
Financial assets at fair value through other comprehensive income (debt instruments) include accounts receivable
financing and investment in other debt obligations which are initially measured at fair value and related
transaction cost shall be recorded into the initial recognized amount. The subsequent measurement of the financial
assets shall be at fair value and changes of fair value except for interest calculated with actual rates, impairment
losses or gains and exchange gains or losses shall be recorded into other comprehensive income. When
derecognized, the accumulated gains or losses originally recorded into other comprehensive income shall be
transferred into the current profit or loss.
③ Financial assets at fair value through other comprehensive income (equity instruments)
Financial assets at fair value through other comprehensive income (equity instruments) include investment in
other equity instruments, etc. which are initially measured at fair value and related transaction cost shall be
recorded into the initial recognized amount. The subsequent measurement of the financial assets shall be at fair
value and changes of fair value shall be recorded into other comprehensive income. The dividends obtained shall
be recorded into the current profit or loss. When derecognized, the accumulated gains or losses originally recorded
into other comprehensive income shall be transferred into retained earnings.
④ Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include held-for-trading financial assets, derivative financial
assets and other non-current financial assets which are initially measured at fair value and the related transaction
cost shall be recorded into the current profit or loss. The subsequent measurement of the financial assets shall be
at fair value and the changes of fair value shall be recorded into the current profit or loss.
⑤ Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include held-for-trading financial liabilities and derivative
financial liabilities which are initially measured at fair value and the related transaction cost shall be recorded into
the current profit or loss. The subsequent measurement of the financial liabilities shall be at fair value and the
changes of fair value shall be recorded into the current profit or loss. When derecognized, the difference between
the carrying value and the paid consideration shall be recorded into the current profit or loss.
⑥ Financial liabilities at amortized cost
Financial liabilities at amortized cost include short-term borrowings, notes payable, accounts payable, other
payables, long-term borrowings, bonds payable and long-term payables which are initially measured at fair value
and the related transaction cost shall be recorded into the initial recognized amount. The interest calculated with
actual rates for the holding period shall be recorded into the current profit or loss. When derecognized, the
difference between the paid consideration and the carrying value of the financial liabilities shall be recorded into
the current profit or loss.
(3) Recognition Basis and Measurement of Transfer of Financial Assets
Where the Company has transferred nearly all of the risks and rewards related to the ownership of the financial
asset to the transferee, it shall stop recognizing the financial asset and separately recognize the rights and
obligations generated retained from the transfer as assets or liabilities. If it retained nearly all of the risks and
rewards related to the ownership of the financial asset, it shall continue to recognize the transferred financial asset.
Where the Company does not transfer or retain nearly all of the risks and rewards related to the ownership of a
financial asset, it shall deal with it according to the circumstances as follows, respectively: (1) If it gives up its
control over the financial asset, it shall stop recognizing the financial asset and separately recognize the rights and
obligations generated retained from the transfer as assets or liabilities; (2) If it does not give up its control over the
financial asset, it shall, according to the extent of its continuous involvement in the transferred financial asset,
recognize the related financial asset and recognize the relevant liability accordingly.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between
the amounts of the following 2 items shall be recorded in the profits and losses of the current period: (1) The
carrying value of the transferred financial asset on the derecognition date; (2) The sum of consideration received
from the transfer of financial assets, and derecognition amount among the accumulative amount of the changes of
the fair value originally recorded in the other comprehensive income (the financial assets involve transfer are
investments in debt instruments at fair value through other comprehensive income. If the transfer of partial
financial asset satisfies the conditions to stop the recognition, the entire carrying value of the transferred financial
asset shall, between the portion whose recognition has been stopped and the portion whose recognition has not
been stopped, be apportioned according to their respective relative fair value on the transfer date, and the
difference between the amounts of the following two items shall be included into the profits and losses of the
current period: (1)The carrying value of the portion whose recognition has been stopped; (2)The sum of
consideration of the portion whose recognition has been stopped, and derecognition amount among the
accumulative amount of the changes of the fair value originally recorded in the other comprehensive income (the
financial assets involve transfer are investments in debt instruments at fair value through other comprehensive
income.
(4) Derecognition Basis of Financial Liabilities
A financial liability or part of it can be derecognized after its current obligation has been relieved in full or in part.
(5) Recognition of Fair Value of Financial Assets and Financial Liabilities
The fair value of financial instruments with an active market is determined by the quoted price in the active
market. For financial instruments without active market, the fair value is determined by valuation techniques. The
Company adopts the valuation techniques applicable to the current conditions which are supported by sufficient
data and other information for valuation, and selects the input values consistent with the characteristics of assets
or liabilities considered by market participants in asset or liability transactions, with priority to observable input
values. Unobservable input values are used only when relevant observable input values are not available or
practical.
(6) Impairment of financial instrument
① Impairment measurement and accounting handling of financial instrument
Based on expected credit loss, the Company conducts impairment handling and confirms credit impairment loss
for financial assets which is measured by amortized cost, debt instrument investment which is measured by fair
value and whose change is calculated into other comprehensive profits, financial guarantee contract.
Expected credit loss refers to weighted average of credit loss of financial instrument which takes the risk of
contract breach occurrence as the weight. Credit loss refers to the difference between all contract cash flow which
is converted into cash according to actual interest rate and receivable according to contract and all cash flow
which to be charged as expected, i.e. current value of all cash shortage. Among it, as for financial asset purchased
or original which has had credit impairment, it should be converted into cash according actual interest rate of this
financial asset after credit adjustment.
As for financial asset purchased or original which has had credit impairment, the Company only confirms
cumulative change of expected credit loss within the whole duration after initial confirmation on the balance sheet
date as loss reserve.
As for accounts receivable which don’t include major financing contents or the Company does not consider
financing contents in contract which is less than one year, the Company applies simplified measurement method,
and measures loss reserve according to amount of expected credit loss within the whole duration.
As for account receivable of rental and accounts receivable including major financing contents, the Company
applies simplified measurement method, and measure loss reserve according to amount of expected credit loss
within the whole duration.
As for financial asset beyond above mentioned measurement methods, the Company evaluates whether its credit
risk has increased obviously since the initial confirmation on each balance sheet date. In case credit risk has
increased obviously, the Company measures the loss reserve according to amount of expected credit loss within
the whole duration; in case the credit risk does not increase obviously, the Company measures loss reserve
according to the amount of expected credit loss in next 12 months.
By utilizing obtainable rational and well grounded information, including forward-looking information,
comparing the risk of contract breach on balance sheet date and risk of contract breach on initial confirmation date,
the Company confirms whether the credit risk of financial instrument has increased obviously from initial
confirmation.
On balance sheet date, in case the Company judges that the financial instrument just has relatively low credit risk,
then it will be assumed that credit risk of the financial instrument has not increased obviously.
Based on single financial instrument or financial portfolio, the Company evaluates expected credit risk and
measures expected credit loss. When based on financial instrument portfolio, the Company takes common risk
characteristics as the basis, and divides financial instruments into different portfolios.
The Company measures expected credit loss again on each balance sheet date, the increase of loss reserve or
amount which is transfer back generated by it is calculated into current profits and losses as impairment profits or
losses. As for financial asset which is measured by amortized cost, loss reserve offsets the carrying value of the
financial asset listed in the balance sheet; as for debt investment which is measured by fair value and whose
change is calculated into other comprehensive profits, the Company confirms its loss reserve in other
comprehensive profits and does not offset the carrying value of the financial asset.
② For notes receivable, accounts receivable, other receivables and long-term receivables with objective evidence
indicating impairment and those suitable for individual evaluation, the Company carries out impairment test
separately to confirm expected credit loss and prepare provision for impairment of single items. For notes
receivable, accounts receivable and other receivables without objective evidence of impairment, or a single
financial asset with expected credit loss impossible to be assessed at a reasonable cost, the Company divides the
receivables into groups according to the characteristics of credit risk, and calculates the expected credit loss based
on receivable groups.
Accounts receivable with expected credit losses measured by groups
Specific groups and method of measuring expected credit loss
Item Recognition basis Method of measuring expected credit losses
Bank’s acceptance bills Consulting historical experience in credit losses,
receivable Bill type combining current situation and prediction for
future economic situation, the expected credit
Trade acceptance bills loss shall be accounted through exposure at
receivable default and the expected credit loss rate over the
entire life
Accounts Aging group Prepare the comparative list between aging of
receivable-credit risk accounts receivable and expected credit loss rate
characteristics group over the entire life and calculate the expected
credit loss by consulting historical experience in
credit losses, combining current situation and
prediction for future economic situation
Consulting historical experience in credit losses,
Accounts
combining current situation and prediction for
receivable-intercourse
Related party within the future economic situation, the expected credit
funds among related party
consolidation scope loss shall be accounted through exposure at
group within the
default and the expected credit loss rate over the
consolidation scope
entire life
Accounts receivable-the comparative list between aging of credit risk characteristic group and expected credit loss
rate over the entire life
Aging Withdrawal
proportion
Within 1 year 2.00%
1 to 2 years 5.00%
2 to 3 years 15.00%
3 to 4 years 30.00%
4 to 5 years 60.00%
Over 5 years 100.00%
Other receivables with expected credit losses measured by groups
Specific groups and method of measuring expected credit loss
Item Recognition basis Method of measuring expected credit losses
Consulting historical experience in credit
losses, combining current situation and
prediction for future economic situation, the
Other receivables-aging
Aging group expected credit loss shall be accounted through
analysis group
exposure at default and the expected credit loss
rate within the next 12 months or over the
entire life
Consulting historical experience in credit
Other
losses, combining current situation and
receivables-intercourse Related party within
prediction for future economic situation, the
funds among related party the consolidation
expected credit loss shall be accounted through
group within the scope
exposure at default and the expected credit loss
consolidation scope
rate over the entire life
For the measurement of impairment loss of other receivables, refer to the aforesaid measurement of impairment
loss of accounts receivable.
11. Notes Receivable
See “10. Financial Instruments”.
12. Accounts Receivable
See “10. Financial Instruments”.
13. Inventory
(1) Category of Inventory
Inventory refers to the held-for-sale finished products or commodities, goods in process, materials consumed in
the production process or the process providing the labor service etc. Inventory is mainly including the raw
materials, low priced and easily worn articles, unfinished products, inventories and work in process–outsourced
etc.
(2) Pricing method
Purchasing and storage of the various inventories should be valued according to the planed cost and the dispatch
be calculated according to the weighted average method; carried forward the cost of the finished products
according to the actual cost of the current period and the sales cost according to the weighted average method.
(3) Determination basis of the net realizable value of inventory and withdrawal method of the provision for falling
price of inventory
At the balance sheet date, inventories are measured at the lower of the costs and net realizable value. When all the
inventories are checked roundly, for those which were destroyed, outdated in all or in part, sold at a loss, etc, the
Company shall estimate the irrecoverable part of its cost and withdrawal the inventory falling price reserve at the
year-end. Where the cost of the single inventory item is higher than the net realizable value, the inventory falling
price reserve shall be withdrawn and recorded into profits and losses of the current period. Of which: in the
normal production and operating process, as for the commodities inventory directly for sales such as the finished
products, commodities and the materials for sales, should recognize the net realizable value according to the
amount of the estimated selling price of the inventory minuses the estimated selling expenses and the relevant
taxes; as for the materials inventory needs to be processed in the normal production and operating process, should
recognize its net realizable value according to the amount of the estimated selling price of the finished products
minuses the cost predicts to be occur when the production completes and the estimated selling expenses as well as
the relevant taxes; on the balance sheet date, for the same inventory with one part agreed by the contract price
and other parts not by the contract price, should be respectively recognized the net realizable value. For items of
inventories relating to a product line that are produced and marketed in the same geographical area, have the same
or similar end users or purposes, and cannot be practicably evaluated separately from other items in that product
line provision for decline in value is determined on an aggregate basis; for large quantity and low value items of
inventories, provision for decline in value is made based on categories of inventories.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method of low-value consumables and packages
One time amortization method is adopted for low-value consumables and packages.
14. Contract Assets
Contract Assets means that the Company is endowed with the right to charge the consideration through
transferring any commodity or service to the client, and such right depends on other factors except the passing of
time. The Company’s unconditional right (only depending on the passing of time) of charging the consideration
from the client shall be separately presented as receivables.
The recognition method and accounting treatment method of the estimated credit loss of contract assets are
consistent with that specified in Notes V.12.
15. Contract Costs
(1) Costs from Acquiring Contract
If the incremental cost resulting from the Company’s acquiring of contract (namely costs merely resulting from
the acquiring of contract) is predicted to be retrieved, it shall be recognized as an assets, amortized by adopting
the same basis with the recognition of commodities or service revenues related to the assets and included into the
current profit and loss. If the assets’ amortization period does not exceed one year, it shall be immediately
included into the current profit and loss. Other expenses resulting from the Company’s acquiring of contract shall
also be included into the current profit and loss unless it is explicitly borne by the client.
(2) Costs from Executing Contract
The Company’s costs from executing contract is not covered by other ASBE except for Revenue Standards, and
when the following situations are met, such costs can be recognized as an assets: ① the costs are directly related
to a current or predicted contract; ② the costs increase the Company’s resources applied to fulfill performance
obligations in the future; ③ the costs are predicted to be retrieved. The recognized assets shall be amortized by
adopting the same basis with the recognition of commodities or service revenues related to the assets and included
into the current profit and loss.
If the book value of contract costs is higher than the difference of the following two items, corresponding
depreciation reserves shall be counted and withdrawn and it shall be recognized as the assets depreciation loss: ①
the residual consideration predicted to be acquired by transferring commodities related to the assets; ② the costs
predicted to occur due to the transfer of related commodities.
If the difference between ① and ② is higher than the book value of contract costs due to any change in various
factors causing depreciation in previous periods, it shall be restituted to the withdrawn assets depreciation reserves
and included in the current profit and loss. However, the book value of restituted contract costs shall not exceed
the book value of the assets on the day of restitution based on the hypothesis that depreciation reserves are not
counted and withdrawn.
16. Assets Held for Sale
The Company recognizes the components (or the non-current assets) which meet with the following conditions as
assets held for sale:
(1) The components must be immediately sold only according to the usual terms of selling this kind of
components under the current conditions;
(2) The Company had made solutions on disposing the components (or the non-current assets), for example, the
Company should gain the approval from the shareholders according to the regulations and had acquired the
approved from the Annual General Meeting or the relevant authority institutions;
(3) The Company had signed the irrevocable transformation agreement with the transferee;
(4) The transformation should be completed within 1 year.
17. Long-term Equity Investments
(1) Judgment standard of joint control and significant influences
Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement by the
Company and the relevant activities of the arrangement should be decided only after the participants which share
the control right make consensus. Significant influence refers to the power of the Company which could anticipate
in the finance and the operation polices of the investees, but could not control or jointly control the formulation of
the policies with the other parties.
(2) Recognition for initial investment cost
The initial investment cost of the long-term equity investment shall be recognized by adopting the following ways
in accordance with different methods of acquisition:
1) As for those forms under the same control of the enterprise combine, if the combine party takes the cash
payment, non-cash assets transformation, liabilities assumption or equity securities issuance as the combination
consideration, should take the shares of the book value by the ultimate control party in the consolidate financial
statement of the owners’ equities of the combiners acquired on the merger date as the initial investment cost. The
difference between the initial investment cost and the book value of the paid combination consideration or the
total amount of the issued shares of the long-term equity investment should be adjusted the capital reserve; If the
capital reserve is insufficient to dilute, the retained earnings shall be adjusted. To include each direct relevant
expense occurred when executing the enterprise merger into the current gains and losses; while the handling
charges and commission occurs from the issuing the equity securities or the bonds for the enterprise merger
should be included in the initial measurement amount of the shareholders’ equities or the liabilities.
2) As for long-term equity investment acquired through the merger of enterprises not under the same control, its
initial investment cost shall regard as the combination cost calculated by the fair value of the assets, equity
instrument issued and liabilities incurred or undertaken on the purchase date adding the direct cost related with the
acquisition. The identifiable assets of the combined party and the liabilities (including contingent liability)
undertaken on the combining date shall be measured at the fair value without considering the amount of minority
interest. The acquirer shall recognize the positive balance between the combination costs and the fair value of the
identifiable net assets it obtains from the acquiree as business reputation. The acquirer shall record the negative
balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree
into the consolidated income statement directly. The agent expense and other relevant management expenses such
as the audit, legal service and evaluation consultation occurs from the enterprise merger, should be included in the
current gains and losses when occur; while the handling charges and commission occurs from the issuing the
equity securities or the bonds for the enterprise merger should be included in the initial measurement amount of
the shareholders’ equities or the liabilities.
3) Long-term equity investment obtained by other means
The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost
which is actually paid.
The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair
value of the equity securities issued.
The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment
contract or agreement, the unfair value stipulated in the contract or agreement shall be measured at fair value.
As for long-term investment obtained by the exchange of non-monetary assets, where it is commercial in nature,
the fair value of the assets surrendered shall be recognized as the initial cost of the long-term equity investment
received; where it is not commercial in nature, the book value of the assets surrendered shall be recognized as the
initial cost of the long-term equity investment received.
The initial cost of a long-term equity investment obtained by recombination of liabilities shall be recognized at
fair value of long-term equity investment.
(3) Subsequent measurement and recognition of profits and losses
1) An investment in the subsidiary company shall be measured by employing the cost method
Where the Company hold, and is able to do equity investment with control over an invested entity, the invested
entity shall be its subsidiary company. Where the Company holds the shares of an entity over 50%, or, while the
Company holds the shares of an entity below 50%, but has a real control to the said entity, then the said entity
shall be its subsidiary company.
2) An investment in the joint enterprise or associated enterprise shall be measured by employing the equity
method
Where the Company hold, and is able to do equity investment with joint control with other parties over an
invested entity, the invested entity shall be its joint enterprise. Where the Company hold, and is able to have
equity investment with significant influences on an invested entity, the invested entity shall be its associated
entity.
After the Company acquired the long-term equity investment, should respectively recognize investment income
and other comprehensive income according to the net gains and losses as well as the portion of other
comprehensive income which should be enjoyed or be shared, and at the same time adjust the book value of the
long-term equity investment; corresponding reduce the book value of the long-term equity investment according
to profits which be declared to distribute by the investees or the portion of the calculation of cash dividends which
should be enjoyed; for the other changes except for the net gains and losses, other comprehensive income and the
owners’ equity except for the profits distribution of the investees, should adjust the book value of the long-term
equity investment as well as include in the owners’ equity .
The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity when
it obtains the investment, recognize the attributable share of the net profits and losses of the invested entity after it
adjusts the net profits of the invested entity.
If the accounting policy adopted by the investees is not accord with that of the Company, should be adjusted
according to the accounting policies of the Company and the financial statement of the investees during the
accounting period and according which to recognize the investment income as well as other comprehensive
income.
For the transaction happened between the Company and associated enterprises as well as joint ventures, if the
assets launched or sold not form into business, the portion of the unrealized gains and losses of the internal
transaction, which belongs to the Company according to the calculation of the enjoyed proportion, should
recognize the investment gains and losses on the basis. But the losses of the unrealized internal transaction
happened between the Company and the investees which belongs to the impairment losses of the transferred assets,
should not be neutralized.
The Company shall recognize the net losses of the invested enterprise according to the following sequence: first of
all, to write down the book value of the long-term equity investment. Secondly, if the book value of the long-term
equity investment is insufficient for written down, should be continued to recognized the investment losses limited
to the book value of other long-term equity which forms of the net investment of the investees and to written
down the book value of the long-term accounts receivable etc. Lastly, through the above handling, for those
should still undertake the additional obligations according to the investment contracts or the agreements, it shall
be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into
investment losses at current period. If the invested entity realizes any net profits later, the Company shall, after the
amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume
recognizing its attributable share of profits.
In the preparation for the financial statements, the balance existed between the long-term equity investment
increased by acquiring shares of minority interest and the attributable net assets on the subsidiary calculated by
the increased shares held since the purchase date (or combination date), the capital reserves shall be adjusted, if
the capital reserves are not sufficient to offset, the retained profits shall be adjusted; the Company disposed part of
the long-term equity investment on subsidiaries without losing its controlling right on them, the balance between
the disposed price and attributable net assets of subsidiaries by disposing the long-term equity investment shall be
recorded into owners’ equity.
For other ways on disposal of long-term equity investment, the balance between the book value of the disposed
equity and its actual payment gained shall be recorded into current profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained equity after disposal
still adopts the equity method for measurement, the other comprehensive income originally recorded into owners’
equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed
by the investees according to the corresponding proportion. The owners’ equity recognized owning to the changes
of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits
distribution of the investees, should be transferred into the current gains and losses according to the proportion.
For the long-term equity investment which adopts the cost method of measurement, if the remained equity still
adopt the cost method, the other comprehensive income recognized owning to adopting the equity method for
measurement or the recognition and measurement standards of financial instrument before acquiring the control of
the investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly
disposed by the investees and should be carried forward into the current gains and losses according to the
proportion; the changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by adopting the equity
method for measurement, should be carried forward into the current gains and losses according to the proportion.
For those the Company lost the control of the investees by disposing part of the equity investment as well as the
remained equity after disposal could execute joint control or significant influences on the investees, should change
to measure by equity method when compiling the individual financial statement and should adjust the
measurement of the remained equity to equity method as adopted since the time acquired; if the remained equity
after disposal could not execute joint control or significant influences on the investees, should change the
accounting disposal according to the relevant regulations of the recognition and measurement standards of
financial instrument, and its difference between the fair value and book value on the date lose the control right
should be included in the current gains and losses. For the other comprehensive income recognized by adopting
equity method for measurement or the recognition and measurement standards of financial instrument before the
Company acquired the control of the investees, should execute the accounting disposal by adopting the same basis
of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when lose the
control of them, while the changes of the other owners’ equity except for the net gains and losses, other
comprehensive income and the profits distribution among the net assets of the investees which recognized by
adopting the equity method for measurement, should be carried forward into the current gains and losses
according to the proportion. Of which, for the disposed remained equity which adopted the equity method for
measurement, the other comprehensive income and the other owners’ equity should be carried forward according
to the proportion; for the disposed remained equity which changed to execute the accounting disposal according to
the recognition and measurement standards of financial instrument, the other comprehensive income and the other
owners’ equity should be carried forward in full amount.
For those the Company lost the control of the investees by disposing part of the equity investment, the disposed
remained equity should change to calculate according to the recognition and measurement standards of financial
instrument, and difference between the fair value and book value on the date lose the control right should be
included in the current gains and losses. For the other comprehensive income recognized from the original equity
investment by adopting the equity method, should execute the accounting disposal by adopting the same basis of
the accounting disposal of the relevant assets or liabilities directly disposed by the investees when terminate the
equity method for measurement, while for the owners’ equity recognized owning to the changes of the other
owner’s equity except for the net gains and losses, other comprehensive income and the profits distribution of the
investees, should be transferred into the current investment income with full amount when terminate adopting the
equity method.
18. Investment Real Estate
Measurement mode of investment real estate:
Measurement of cost method
Depreciation or amortization method
The investment real estate shall be measured at its cost. Of which, the cost of an investment real estate by
acquisition consists of the acquisition price, relevant taxes, and other expense directly relegated to the asset; the
cost of a self-built investment real estate composes of the necessary expenses for building the asset to the hoped
condition for use. The investment real estate invested by investors shall be recorded at the value stipulated in the
investment contracts or agreements, but the unfair value appointed in the contract or agreement shall be entered
into the account book at the fair value.
As for withdrawal basis of provision for impairment of investment real estates, please refer to withdrawal method
for provision for impairment of fixed assets.
19. Fixed Assets
(1) Recognition Conditions
Fixed assets refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for
the sake of producing commodities, rendering labor service, renting or business management; and (b) their useful
life is in excess of one fiscal year. The fixed assets are only recognized when the relevant economic benefits
probably flow in the Company and its cost could be reliable measured.
(2) Depreciation Method
Category of fixed assets Method Useful life Annual deprecation
Housing and building Average method of useful life 20-40 2.50%-5%
Machinery equipment Average method of useful life 6-15 6.67%-16.67%
Transportation
Average method of useful life 5-10 10%-20%
equipment
Other equipment Average method of useful life 5-10 10%-20%
(3) Recognition Basis, Pricing and Depreciation Method of Fixed Assets by Finance Lease
The Company recognizes those meet with the following one or certain standards as the fixed assets by finance
lease:
1) The leasing contract had agreed that (or made the reasonable judgment according to the relevant conditions on
the lease starting date) when the lease term expires, the ownership of leasing the fixed assets could be transferred
to the Company;
2) The Company owns the choosing right for purchasing and leasing the fixed assets, with the set purchase price
which is estimated far lower than the fair value of the fixed assets by finance lease when executing the choosing
right, so the Company could execute the choosing right reasonably on the lease starting date;
3) Even if the ownership of the fixed assets not be transferred, the lease period is of 75% or above of the useful
life of the lease fixed assets;
4) The current value of the minimum lease payment on the lease starting date of the Company is equal to 90% or
above of the fair value of the lease fixed assets on the lease starting date; the current value of the minimum lease
receipts on the lease starting date of the leaser is equal to 90% or above of the fair value of the lease fixed assets
on the lease starting date;
5) The nature of the lease assets is special that only the Company could use it if not execute large transformation.
The fixed assets by finance lease should take the lower one between the fair value of the leasing assets and the
current value of the minimum lease payment on the lease starting date as the entry value. As for the minimum
lease payment which be regarded as the entry value of the long-term accounts payable, its difference should be
regarded as the unrecognized financing expense. For the initial direct expenses occur in the lease negotiations and
the signing process of the lease contracts that attribute to the handling expenses, counsel fees, travel expenses and
stamp taxes of the lease items, should be included in the charter-in assets value. The unrecognized financing
expenses should be amortized by adopting the actual interest rate during the period of the lease term.
The fixed assets by finance lease shall adopt the same depreciation policy for self-owned fixed assets. If it is
reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease term expires,
the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will
obtain the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully depreciated
over the shorter one of the lease term or its useful life
20. Construction in Progress
(1) Valuation of the progress in construction
Construction in progress shall be measured at actual cost. Self-operating projects shall be measured at direct
materials, direct wages and direct construction fees; construction contract shall be measured at project price
payable; project cost for plant engineering shall be recognized at value of equipments installed, cost of installation,
trail run of projects. Costs of construction in process also include borrowing costs and exchange gains and losses,
which should be capitalized.
(2) Standardization on construction in process transferred into fixed assets and time point
The construction in process, of which the fixed assets reach to the predicted condition for use, shall carry forward
fixed assets on schedule. The one that has not audited the final accounting shall recognize the cost and make
depreciation in line with valuation value. The construction in process shall adjust the original valuation value at its
historical cost but not adjust the depreciation that has been made after auditing the final accounting.
21. Borrowing Costs
(1) Recognition principle of capitalization of borrowing costs
The borrowing costs shall include the interest on borrowings, amortization of discounts or premiums on
borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. Where the borrowing
costs occurred belong to specifically borrowed loan or general borrowing used for the acquisition and construction
of investment real estates and inventories over one year (including one year) shall be capitalized, and record into
relevant assets cost. Other borrowing costs shall be recognized as expenses on the basis of the actual amount
incurred, and shall be recorded into the current profits and losses. The borrowing costs shall not be capitalized
unless they simultaneously meet the following three requirements: (1) The asset disbursements have already
incurred; (2) The borrowing costs have already incurred; and (3) The acquisition and construction or production
activities which are necessary to prepare the asset for its intended use or sale have already started.
(2) The period of capitalization of borrowing costs
The borrowing costs arising from acquisition and construction of fixed assets, investment real estates and
inventories, if they meet the above-mentioned capitalization conditions, the capitalization of the borrowing costs
shall be measured into asset cost before such assets reach to the intended use or sale, Where acquisition and
construction of fixed assets, investment real estates and inventories is interrupted abnormally and the interruption
period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended, and recorded
into the current expense, till the acquisition and construction of the assets restarts. When the qualified asset is
ready for the intended use or sale, the capitalization of the borrowing costs shall be ceased, the borrowing costs
occurred later shall be included into the financial expense directly at the current period.
(3) Measurement method of capitalization amount of borrowing costs
As for specifically borrowed loans for the acquisition and construction or production of assets eligible for
capitalization, the to-be-capitalized amount of interests shall be determined in light of the actual cost incurred of
the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing
loans as a deposit in the bank or as a temporary investment.
Where a general borrowing is used for the acquisition and construction or production of assets eligible for
capitalization, the enterprise shall calculate and determine the to-be-capitalized amount of interests on the general
borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset
disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The
capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general
borrowing.
22. Intangible Assets
(1) Pricing Method, Service Life, and Impairment Test
(1) Pricing method of intangible assets
Intangible assets purchased should take the actual payment and the relevant other expenses as the actual cost.
For the intangible assets invested by the investors should be recognized the actual cost according to the value of
the investment contracts or agreements, however, for the value of the contracts or agreements is not fair, the actual
cost should be recognized according to the fair value.
For the intangible assets acquires from the exchange of the non-currency assets, if own the commercial nature,
should be recorded according to the fair value of the swap-out assets; for those not own the commercial nature,
should be recorded according to the book value of the swap-out assets.
For the intangible assets acquires from the debts reorganization should be recognized by the fair value.
(2) Amortization method and term of intangible assets
As for the intangible assets with limited service life, which are amortized by straight-line method when it is
available for use within the service period, shall be recorded into the current profits and losses. The Company
shall, at least at the end of each year, check the service life and the amortization method of intangible assets with
limited service life. When the service life and the amortization method of intangible assets are different from those
before, the years and method of the amortization shall be changed.
Intangible assets with uncertain service life may not be amortized. However, the Company shall check the service
life of intangible assets with uncertain service life during each accounting period. Where there are evidences to
prove the intangible assets have limited service life, it shall be estimated of its service life, and be amortized
according to the above method mentioned.
The rights to use land of the Company shall be amortized according to the rest service life.
(2) Accounting Polices of Internal R & D Costs
The internal research and development projects of an enterprise shall be classified into research phase and
development phase: the term “research” refers to the creative and planned investigation to acquire and understand
new scientific or technological knowledge; the term “development” refers to the application of research
achievements and other knowledge to a certain plan or design, prior to the commercial production or use, so as to
produce any new material, device or product, or substantially improved material, device and product.
The Company collects the costs of the corresponding phases according to the above standard of classifying the
research phase and the development phase. The research expenditures for its internal research and development
projects of an enterprise shall be recorded into the profit or loss for the current period. The development costs for
its internal research and development projects of an enterprise may be capitalized when they satisfy the following
conditions simultaneously: it is feasible technically to finish intangible assets for use or sale; it is intended to
finish and use or sell the intangible assets; the usefulness of methods for intangible assets to generate economic
benefits shall be proved, including being able to prove that there is a potential market for the products
manufactured by applying the intangible assets or there is a potential market for the intangible assets itself or the
intangible assets will be used internally; it is able to finish the development of the intangible assets, and able to
use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources;
the development costs of the intangible assets can be reliably measured.
23. Impairment of Long-term Assets
For non-current financial Assets of fixed Assets, projects under construction, intangible Assets with limited
service life, investing real estate with cost model, long-term equity investment of subsidiaries, cooperative
enterprises and joint ventures, the Company should judge whether decrease in value exists on the date of balance
sheet. Recoverable amounts should be tested for decrease in value if it exists. Other intangible Assets of reputation
and uncertain service life and other non-accessible intangible assets should be tested for decrease in value no
matter whether it exists.
If the recoverable amount is less than book value in impairment test results, the provision for impairment of
differences should include in impairment loss. Recoverable amounts would be the higher of net value of asset fair
value deducting disposal charges or present value of predicted cash flow. Asset fair value should be determined
according to negotiated sales price of fair trade. If no sales agreement exists but with asset active market, fair
value should be determined according to the Buyer’s price of the asset. If no sales agreement or asset active
market exists, asset fair value could be acquired on the basis of best information available. Disposal expenses
include legal fees, taxes, cartage or other direct expenses of merchantable Assets related to asset disposal. Present
value of predicted asset cash flow should be determined by the proper discount rate according to Assets in service
and predicted cash flow of final disposal. Asset depreciation reserves should be calculated on the basis of single
Assets. If it is difficult to predict the recoverable amounts for single Assets, recoverable amounts should be
determined according to the belonging asset group. Asset group is the minimum asset combination producing cash
flow independently.
In impairment test, book value of the business reputation in financial report should be shared to beneficial asset
group and asset group combination in collaboration of business merger. It is shown in the test that if recoverable
amounts of shared business reputation asset group or asset group combination are lower than book value, it should
determine the impairment loss. Impairment loss amount should firstly be deducted and shared to the book value of
business reputation of asset group or asset group combination, then deduct book value of all assets according to
proportions of other book value of above assets in asset group or asset group combination except business
reputation.
After the asset impairment loss is determined, recoverable value amounts would not be returned in future.
24. Long-term Deferred Expenses
Long-term deferred expanses of the Company shall be recorded in light of the actual expenditure, and amortized
averagely within benefit period. In case of no benefit in the future accounting period, the amortized value of such
project that fails to be amortized shall be transferred into the profits and losses of the current period.
25. Contract Liabilities
Contract liabilities refer to the Company’s obligations in transferring commodities or services to the client for the
received or predicted consideration. Contract assets and contract liabilities under the same contract shall be
presented based on the net amount.
26. Employee Benefits
(1) Accounting Treatment of Short-term Compensation
Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services and
benefits, medical insurance premiums, birth insurance premium, industrial injury insurance premium, housing
fund, labor union expenditure and personnel education fund, non-monetary benefits etc. The short-term
compensation actually happened during the accounting period when the active staff offering the service for the
Company should be recognized as liabilities and is included in the current gains and losses or relevant assets cost.
Of which the non-monetary benefits should be measured according to the fair value.
(2) Accounting Treatment of the Welfare after Demission
The Company classifies the welfare plans after demission into defined contribution plans and defined benefit
plans. Welfare plans after demission refers to the agreement on the welfare after demission reaches between the
Company and the employees, or the regulations or methods formulated by the Company for providing the welfare
after demission for the employees. Of which, defined contribution plans refers to the welfare plans after demission
that the Company no more undertake the further payment obligations after the payment of the fixed expenses for
the independent funds; defined benefit plans, refers to the welfare plans after demission except for the defined
contribution plans.
Defined contribution plans
During the accounting period that the Company providing the service for the employees, the Company should
recognize the liabilities according to the deposited amount calculated by defined contribution plans, and should be
included in the current gains and losses or the relevant assets cost.
(3) Accounting Treatment of the Demission Welfare
The Company should recognize the payroll payment liabilities occur from the demission welfare according to the
earlier date between the following two conditions and include which in the current gains and losses when
providing the demission welfare for the employees: the Company could not unilaterally withdraw the demission
welfare owning to the relieve plans of the labor relationship or reduction; when the Company recognizing the
costs or expenses related to the reorganization involves with the demission welfare payments.
27. Provisions
(1) Criteria of provisions
Only if the obligation pertinent to a contingencies shall be recognized as an estimated debts when the following
conditions are satisfied simultaneously:
1) That obligation is a current obligation of the Company;
2) It is likely to cause any economic benefit to flow out of the Company as a result of performance of the
obligation;
3) The amount of the obligation can be measured in a reliable way.
(2) Measurement of provisions
The Company shall measure the provisions in accordance with the best estimate of the necessary expenses for the
performance of the current obligation.
The Company shall check the book value of the provisions on the Balance Sheet Date. If there is any conclusive
evidence proving that the said book value can’t truly reflect the current best estimate, the Company shall, subject
to change, make adjustment to carrying value to reflect the current best estimate.
28. Revenue
Accounting policies for recognition and measurement of revenue:
When the Company fulfills its due performance obligations (namely when the client obtains the control over
related commodities or services), revenues shall be recognized based on the obligation’s amortized transaction
price. Performance Obligation refers to the Company’s promise of transferring commodities or services that can
be clearly defined to the client. Transaction Price refers to the consideration amount duly charged by the Company
for transferring commodities or services to the client, excluding any amount charged by the third party and any
amount predicted to be returned to the client. Control Over Relevant Commodities means that the use of
commodities can be controlled and almost all economic interests can be obtained.
On the contract commencement day, the Company shall evaluate the contract, recognize individual performance
obligation and confirm that individual performance obligation is fulfilled in a certain period. When one of the
following conditions is met, such performance obligation shall be deemed as fulfilled in a certain period, and the
Company shall recognize it as revenue within a certain period according to the performance schedule: (1) the
client obtains and consumes the economic interests resulting from the Company’s performance of contract while
performing the contract; (2) the client is able to control the commodities under construction during the
performance; (3) commodities produced by the Company during the performance possess the irreplaceable
purpose, and the Company has the right to charge all finished parts during the contract period; otherwise, the
Company shall recognize the revenue when the client obtains the control over relevant commodities or services.
The Company shall adopt the Input Method to determine the Performance Schedule. Namely, the Performance
Schedule shall be determined according to the Company’s input for fulfilling performance obligations. When the
Performance Schedule cannot be reasonably determined and all resulting costs are predicted to be compensated,
the Company shall recognize the revenue based on the resulting cost amount till the Performance Schedule can be
reasonably determined.
When the contract involves two or more than two performance obligations, the transaction price shall be
amortized to each single performance obligation on the contract commencement day according to the relative
proportion of the independent selling price of commodities or services under each single performance obligation.
If any solid evidence proves that the contract discount or variable consideration only relates to one or more than
one (not all) performance obligation under the contract, the Company shall amortize the contract discount or
variable consideration to one or more than one related performance obligations. Independent selling price refers to
the price adopted by the Company to independently sell commodities or services to the client. However,
independent selling price cannot be directly observed. The Company shall estimate the independent selling price
by comprehensively considering all related information that can be reasonably obtained and maximally adopting
the observable input value.
Variable Consideration
If any variable consideration exists in the contract, the Company shall determine the optimal estimation of the
variable consideration based on the expected values or the most possible amount. The variable consideration’s
transaction price shall be included without exceeding the total revenue amount recognized without the risk of
significant restitution when all uncertainties are eliminated. On each balance sheet day, the Company shall
re-estimate the variable consideration amount to be included in the transaction price.
Consideration Payable to the Client
If any consideration payable to the client exists in the contract, the Company shall use such consideration to offset
the transaction price unless such consideration is paid for acquiring other clearly-defined commodities or services
from the client, and write down the current revenue at the later time between the time of recognizing relevant
revenues and the time of paying (or promising the payment) the consideration to the client.
Sales with the Quality Assurance
For sales with the Quality Assurance, if the Quality Assurance involves another separate service except for the
guarantee of all sold commodities or services meeting all established standards, the Quality Assurance shall
constitute a single Performance Obligation; otherwise, the Company shall make corresponding accounting
treatment to the Quality Assurance according to ASBE No.13--Contingency.
Main Responsibility Person/Agent
According to whether the control over commodities or services is obtained before they are transferred to the client,
the Company can judge whether it is Main Responsibility Person or Agent based on its status during the
transaction. If the Company can control commodities or services before they are transferred to the client, the
Company shall be Main Responsibility Person, and revenues shall be recognized according to the total
consideration amount received or to be received; otherwise, the Company shall be Agent, and revenues shall be
recognized according to the commission or service fees predicted to be duly charged. However, such amount shall
be determined based on the net amount after deducting other amounts payable to other related parties from the
total consideration received or to be duly received or the fixed commission amount or proportion.
Interest Revenue
Interest Revenue shall be determined according to the time of the Company’s use of monetary capital and the
actual interest rate.
Rental Income
The rental income from operating lease shall be recognized during each lease period according to the straight-line
method, and the contingent rent shall be included into the current profit and loss without delay.
29. Government Grants
(1) Type
A government grant means the monetary or non-monetary assets obtained free by an enterprise from the
government. Government grants consist of the government grants pertinent to assets and government grants
pertinent to income according to the relevant government documents.
For those the government documents not definite stipulate the assistance object, the judgment basis of the
Company classifies the government grants pertinent to assets and government subsidies pertinent to income is:
whether are used for purchasing or constructing or for forming the long-term assets by other methods.
(2) Recognition of Government Subsidies
The government subsidies should be recognized only when meet with the attached conditions of the government
grants as well as could be acquired.
If the government grants are the monetary assets, should be measured according to the received or receivable
amount; and for the government grants are the non-monetary assets, should be measured by fair value.
(3) Accounting Treatment
The government grants pertinent to assets shall be recognized as deferred income, and included in the current
gains and losses or offset the book value of related assets within the useful lives of the relevant assets with a
reasonable and systematic method. Government grants pertinent to income used to compensate the relevant costs,
expenses or losses of the Company in the subsequent period shall be recognized as deferred income, and shall be
included in the current profit and loss during the period of confirming the relevant costs, expenses or losses; those
used to compensate the relevant costs, expenses or losses of the Company already happened shall be included in
the current gains and losses or used to offset relevant costs directly.
For government grants that include both assets-related and income-related parts, they should be distinguished
separately for accounting treatment; for government subsidies that are difficult to be distinguished, they should be
classified as income-related.
Government grants related to the daily activities of the Company shall be included into other income or used to
offset relevant costs by the nature of economic business; those unrelated shall be included into non-operating
income.
The government grants recognized with relevant deferred income balance but need to return shall be used to offset
the book balance of relevant deferred income, the excessive part shall be included in the current gains and losses
or adjusting the book value of assets for the government grants assets-related that offset the book value of relevant
assets when they are initially recognized; those belong to other cases shall be directly included in the current gains
and losses.
30. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Basis of recognizing the deferred income tax assets
According to the difference between the book value of the assets and liabilities and their tax basis, a deferred tax
asset shall be measured in accord with the tax rates that are expected to apply to the period when the asset is
realized or the liability is settled.
The recognition of the deferred income tax assets is limited by the income tax payable that the Company probably
gains for deducting the deductible temporary differences. At the balance sheet date, where there is strong evidence
showing that sufficient taxable profit will be available against which the deductible temporary difference can be
utilized, the deferred tax asset unrecognized in prior period shall be recognized.
The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If it’s probable that
sufficient taxable profit will not be available against which the deductible temporary difference can be utilized, the
Company shall write down the carrying amount of deferred tax asset, or reverse the amount written down later
when it’s probable that sufficient taxable profit will be available.
(2) Basis of recognizing the deferred income tax liabilities
According to the difference between the book value of the assets and liabilities and their tax basis, A deferred tax
liability shall be measured in accord with the tax rates that are expected to apply to the period when the asset is
realized or the liability is settled.
31. Lease
(1) Accounting Treatment of Operating Lease
Lessee in an operating lease shall treat the lease payment under an operating lease as a relevant asset cost or the
current profit or loss on a straight-line basis over the lease term. The initial direct costs incurred shall be recognized
as the current profit or loss; Contingent rents shall be charged as expenses in the periods in which they are incurred.
Lessors in an operating lease shall be recognized as the current profit or loss on a straight-line basis over the lease
term; Initial direct costs incurred by lessors shall be recognized as the current profit or loss; the initial direct
expenses occur should be directly included in the current gains and losses except for those with larger amount and be
capitalized as well as be included in the gains and losses by stages. Contingent rents shall be charged as expenses in
the periods in which they are incurred.
(2) Accounting Treatments of Financial Lease
When the Company as the lessee, On the lease beginning date, the Company shall record the lower one of the fair
value of the leased asset and the present value of the minimum lease payments on the lease beginning date as the
entering value in an account, recognize the amount of the minimum lease payments as the entering value in an
account of long-term account payable, and treat the balance between the recorded amount of the leased asset and
the long-term account payable as unrecognized financing charges and the occurred initial direct expenses, should
be recorded in the lease assets value. During each lease period, should recognize the current financing expenses
by adopting the actual interest rate.
When the Company as the leasor and on the beginning date of the lease term, the Company shall recognize the
sum of the minimum lease receipts on the lease beginning date and the initial direct costs as the entering value in
an account of the financing lease values receivable, and record the unguaranteed residual value at the same time.
The balance between the sum of the minimum lease receipts, the initial direct costs and the unguaranteed residual
value and the sum of their present values shall be recognized as unrealized financing income. During each lease
period, should recognize the current financing revenues adopting the actual interest rate.
32. Changes in Main Accounting Policies and Estimates
(1) Change of Accounting Policies
√ Applicable □ Not applicable
Changes to the accounting policies and why Approval process Remark
On 28 April 2020, the
The Ministry of Finance issued the Notice on
Company held the 2nd Meeting
Revising and Printing the Accounting Standards for
of the 9th Board of Directors
Business Enterprises No.14-Revenue
and the 2nd Meeting of the 9th
(CK[2017]No.22) (hereinafter referred to as the
Supervisory Committee and
“New Standards governing Revenue”) in July 2017
approved the Proposal on
and required all domestically listed companies to
Changes of Some Accounting
implement it since 1 January 2020.
Policies
(1) Influence of Implementing the New Standards Governing Revenue
Affected items in the consolidated balance sheet and amount thereof:
Item 31 December 2019 Affected by classification and 1 January 2020
measurement
Advances from customers 31,789,001.78 -31,789,001.78
Contract liabilities 29,652,202.74 29,652,202.74
Other current liabilities 1,177,712.38 2,136,799.04 3,314,511.42
Affected items in the balance sheet of the Company as the parent and amount thereof:
Item 31 December 2019 Affected by classification and 1 January 2020
measurement
Advances from customers 28,673,664.87 -28,673,664.87
Contract liabilities 26,661,229.33 26,661,229.33
Other current liabilities 2,012,435.54 2,012,435.54
(2) Changes in Accounting Estimates
□ Applicable √ Not applicable
(3) Adjustments to the Financial Statements at the Beginning of the First Execution Year of any New
Standards Governing Revenue or Leases since 2020
Applicable
Consolidated Balance Sheet
Unit: RMB
Item 31 December 2019 1 January 2020 Adjusted
Current assets:
Monetary assets 638,589,260.09 638,589,260.09
Settlement reserve
Interbank loans granted
Held-for-trading financial
13,050,000.00 13,050,000.00
assets
Derivative financial assets
Notes receivable 606,283,023.05 606,283,023.05
Accounts receivable 419,302,056.87 419,302,056.87
Accounts receivable
financing
Prepayments 12,968,746.16 12,968,746.16
Premiums receivable
Reinsurance receivables
Receivable reinsurance
contract reserve
Other receivables 9,703,390.94 9,703,390.94
Including: Interest
receivable
Dividends
receivable
Financial assets purchased
under resale agreements
Inventories 473,359,168.90 473,359,168.90
Contract assets
Assets held for sale
Current portion of
non-current assets
Other current assets 6,421,275.47 6,421,275.47
Total current assets 2,179,676,921.48 2,179,676,921.48
Non-current assets:
Loans and advances to
customers
Investments in debt
obligations
Investments in other debt
obligations
Long-term receivables
Long-term equity
investments
Investments in other
532,886,000.00 532,886,000.00
equity instruments
Other non-current
77,952,101.63 77,952,101.63
financial assets
Investment property 48,447,666.83 48,447,666.83
Fixed assets 457,722,667.32 457,722,667.32
Construction in progress 91,358,156.24 91,358,156.24
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 99,699,450.26 99,699,450.26
Development costs
Goodwill
Long-term prepaid
53,497.80 53,497.80
expense
Deferred income tax
1,023,863.04 1,023,863.04
assets
Other non-current assets
Total non-current assets 1,309,143,403.12 1,309,143,403.12
Total assets 3,488,820,324.60 3,488,820,324.60
Current liabilities:
Short-term borrowings 22,000,000.00 22,000,000.00
Borrowings from the
central bank
Interbank loans obtained
Held-for-trading financial
liabilities
Derivative financial
liabilities
Notes payable 403,035,000.00 403,035,000.00
Accounts payable 525,625,016.89 525,625,016.89
Advances from customers 31,789,001.78 -31,789,001.78
Contract liabilities 29,652,202.74 29,652,202.74
Financial assets sold
under repurchase agreements
Customer deposits and
interbank deposits
Payables for acting
trading of securities
Payables for underwriting
of securities
Employee benefits
44,559,015.79 44,559,015.79
payable
Taxes payable 9,094,382.58 9,094,382.58
Other payables 205,064,145.10 205,064,145.10
Including: Interest
payable
Dividends
3,891,433.83 3,891,433.83
payable
Handling charges and
commissions payable
Reinsurance payables
Liabilities directly
associated with assets held
for sale
Current portion of
non-current liabilities
Other current liabilities 1,177,712.38 3,314,511.42 2,136,799.04
Total current liabilities 1,242,344,274.52 1,242,344,274.52
Non-current liabilities:
Insurance contract reserve
Long-term borrowings
Bonds payable
Including: Preferred
shares
Perpetual
bonds
Lease liabilities
Long-term payables
Long-term employee
benefits payable
Provisions
Deferred income 58,864,111.22 58,864,111.22
Deferred income tax
57,082,890.27 57,082,890.27
liabilities
Other non-current
liabilities
Total non-current liabilities 115,947,001.49 115,947,001.49
Total liabilities 1,358,291,276.01 1,358,291,276.01
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Including: Preferred
shares
Perpetual
bonds
Capital reserves 164,328,665.43 164,328,665.43
Less: Treasury stock
Other comprehensive
317,059,775.00 317,059,775.00
income
Specific reserve 17,560,202.07 17,560,202.07
Surplus reserves 322,228,533.72 322,228,533.72
General reserve
Retained earnings 728,341,265.36 728,341,265.36
Total equity attributable to
owners of the Company as 2,110,892,767.58 2,110,892,767.58
the parent
Non-controlling interests 19,636,281.01 19,636,281.01
Total owners’ equity 2,130,529,048.59 2,130,529,048.59
Total liabilities and owners’
3,488,820,324.60 3,488,820,324.60
equity
Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2019 1 January 2020 Adjusted
Current assets:
Monetary assets 584,957,678.96 584,957,678.96
Held-for-trading financial
assets
Derivative financial assets
Notes receivable 576,948,023.05 576,948,023.05
Accounts receivable 337,447,538.04 337,447,538.04
Accounts receivable
financing
Prepayments 6,386,284.14 6,386,284.14
Other receivables 22,741,542.22 22,741,542.22
Including: Interest
receivable
Dividends
receivable
Inventories 368,653,472.39 368,653,472.39
Contract assets
Assets held for sale
Current portion of
non-current assets
Other current assets 3,898,333.51 3,898,333.51
Total current assets 1,901,032,872.31 1,901,032,872.31
Non-current assets:
Investments in debt
obligations
Investments in other debt
obligations
Long-term receivables
Long-term equity
252,752,730.03 252,752,730.03
investments
Investments in other
532,886,000.00 532,886,000.00
equity instruments
Other non-current
50,000,000.00 50,000,000.00
financial assets
Investment property 48,447,666.83 48,447,666.83
Fixed assets 364,071,199.07 364,071,199.07
Construction in progress 89,330,161.60 89,330,161.60
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 70,169,770.91 70,169,770.91
Development costs
Goodwill
Long-term prepaid
expense
Deferred income tax
970,026.67 970,026.67
assets
Other non-current assets
Total non-current assets 1,408,627,555.11 1,408,627,555.11
Total assets 3,309,660,427.42 3,309,660,427.42
Current liabilities:
Short-term borrowings 5,000,000.00 5,000,000.00
Held-for-trading financial
liabilities
Derivative financial
liabilities
Notes payable 392,105,000.00 392,105,000.00
Accounts payable 481,854,210.18 481,854,210.18
Advances from customers 28,673,664.87 -28,673,664.87
Contract liabilities 26,661,229.33 26,661,229.33
Employee benefits
39,125,477.30 39,125,477.30
payable
Taxes payable 5,952,664.10 5,952,664.10
Other payables 192,046,130.29 192,046,130.29
Including: Interest
payable
Dividends
3,243,179.97 3,243,179.97
payable
Liabilities directly
associated with assets held
for sale
Current portion of
non-current liabilities
Other current liabilities 2,012,435.54 2,012,435.54
Total current liabilities 1,144,757,146.74 1,144,757,146.74
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred
shares
Perpetual
bonds
Lease liabilities
Long-term payables
Long-term employee
benefits payable
Provisions
Deferred income 58,864,111.22 58,864,111.22
Deferred income tax
55,951,725.00 55,951,725.00
liabilities
Other non-current
liabilities
Total non-current liabilities 114,815,836.22 114,815,836.22
Total liabilities 1,259,572,982.96 1,259,572,982.96
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Including: Preferred
shares
Perpetual
bonds
Capital reserves 183,071,147.70 183,071,147.70
Less: Treasury stock
Other comprehensive
317,059,775.00 317,059,775.00
income
Specific reserve 17,560,202.07 17,560,202.07
Surplus reserves 322,228,533.72 322,228,533.72
Retained earnings 648,793,459.97 648,793,459.97
Total owners’ equity 2,050,087,444.46 2,050,087,444.46
Total liabilities and owners’
3,309,660,427.42 3,309,660,427.42
equity
(4) Retroactive Adjustments to Comparative Data of Prior Years when First Execution of any New
Standards Governing Revenue or Leases since 2020
□ Applicable √ Not applicable
VI. Taxation
1. Main Taxes and Tax Rate
Category of taxes Tax basis Tax rate
VAT Payable to sales revenue 13%, 9%, 6%
Urban maintenance and Tax paid in accordance with the tax
Taxable turnover amount
construction tax regulations of tax units location
Enterprise income tax Taxable income 25%、15%、5%
Education surcharge Taxable turnover amount 5%
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
Name Income tax rate
Changchai Company, Limited 15%
Changchai Wanzhou Diesel Engine Co., Ltd. 15%
Changzhou Changchai Benniu Diesel Engine Fittings Co., Ltd. 25%
Changzhou Housheng Investment Co., Ltd. 25%
Changzhou Changchai Housheng Agricultural Equipment Co., Ltd. 25%
Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. 15%
Jiangsu Changchai Machinery Co., Ltd. 25%
Changzhou Xingsheng Real Estate Management Co., Ltd. 5%
2. Tax Preference
On 24 October 2018, the Company obtained the Certificates for High-tech Enterprises again, and it still enjoys
15-percent preferential rate for corporate income tax during the Reporting Period; the Company’s controlling
subsidiary-Changchai Wanzhou Diesel Engine Co., Ltd., the controlling subsidiary company, shall pay the
corporate income tax at tax rate 15% from 1 January 2011 to 31 December 2020 in accordance with the Notice of
the Ministry of Finance, the General Administration of Customs of PRC and the National Administration of
Taxation about the Preferential Tax Policies for the Western Development. On 2 December 2020, the
wholly-owned subsidiary Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. obtained the "High-tech
Enterprise Certificate" and enjoyed a 15% preferential corporate income tax rate during the Reporting Period; The
wholly-owned subsidiariy Changzhou Xingsheng Real Estate Management Co., Ltd. is eligible small enterprise
with low profits and shall pay the corporate income tax at tax rate 5% for small enterprises with low profits during
the Reporting Period.
VII. Notes to Major Items in the Consolidated Financial Statements of the Company
1. Monetary Assets
Unit: RMB
Item Ending balance Beginning balance
Cash on hand 287,505.91 181,115.21
Bank deposits 620,966,786.57 545,271,159.50
Other monetary assets 139,473,930.37 93,136,985.38
Total 760,728,222.85 638,589,260.09
Of which: Total amount
deposited overseas
At the period-end, the restricted monetary assets of the Company was RMB130,788,682.35, of which
RMB126,979,327.60 was the cash deposit for bank acceptance bills, RMB2,993,220.00 was cash deposit for L/G,
and RMB816,134.75 was cash deposit for environment.
2. Trading Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Financial assets at fair value
11,500,272.00 13,050,000.00
through profit or loss
Of which: Forward settlement 200,272.00
Financial products 11,300,000.00 13,050,000.00
Total 11,500,272.00 13,050,000.00
3. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
Item Ending balance Beginning balance
Bank acceptance bill 600,140,938.05 606,283,023.05
Total 600,140,938.05 606,283,023.05
If the bad debt provision for notes receivable was withdrawn in accordance with the general model of expected
credit losses, information related to bad debt provision shall be disclosed by reference to the disclosure method of
other receivables:
□ Applicable √ Not applicable
(2) There Were No Notes Receivable Pledged by the Company at the Period-end
(3) Notes Receivable which Had Endorsed by the Company or had Discounted but had not Due on the
Balance Sheet Date at the Period-end
Unit: RMB
Amount of recognition termination Amount of not terminated
Item
at the period-end recognition at the period-end
Bank acceptance bill 765,010,766.00
Total 765,010,766.00
(4) There Were No Notes Transferred to Accounts Receivable because Drawer of the Notes Failed to
Execute the Contract or Agreement at the Period-end
4. Accounts Receivable
(1) Accounts Receivable Classified by Category
Unit: RMB
Category Ending balance Beginning balance
Carrying Bad debt Carrying Bad debt
amount provision amount provision
Carryi
Withd Withd Carryin
ng
Amou Propo Amou rawal Amou Propor Amou rawal g value
value
nt rtion nt propo nt tion nt propor
rtion tion
Accounts
receivable for
33,70 31,80 1,895, 35,53 33,449
which bad debt 94.38 94.13 2,084,7
3,039. 5.98% 7,452. 586.8 4,574. 5.31% ,794.4
provision % % 80.14
72 89 3 55 1
separately
accrued
Of which:
Accounts
receivable with
significant
29,87 27,97 1,895, 30,64 28,557
amount for 93.65 2,084,7
0,525. 5.30% 4,938. 586.8 2,717. ,937.4 93.20
which bad debt % 4.58% 80.14
05 22 3 62 8 %
provision
separately
accrued
Accounts
receivable with
insignificant
3,832, 3,832, 4,891,
amount for 100.0 4,891, 100.0
514.6 0.68% 514.6 0.00 856.9 0.00
which bad debt 0% 0.73% 856.93 0%
7 7 3
provision
separately
accrued
Accounts
receivable for
529,4 134,2 395,2 633,0 215,84
which bad debt 94.02 25.35 94.69 417,217
86,38 27,95 58,42 62,36 5,088. 34.10
provision % % % ,276.73
2.09 2.43 9.66 5.04 31 %
accrued by
group
Of which:
Accounts
receivable for
which bad debt 529,4 134,2 395,2 633,0 215,84
94.02 25.35 417,217
provision 86,38 27,95 58,42 62,36 94.69 5,088. 34.10
% % ,276.73
accrued by 2.09 2.43 9.66 5.04 % 31 %
credit risk
features group
563,1 166,0 397,1 668,5 249,29
100.0 29.48 100.00 37.29 419,302
Total 89,42 35,40 54,01 96,93 4,882.
0% % % % ,056.87
1.81 5.32 6.49 9.59 72
Account receivables withdrawn bad debt provision separately with significant amount at the period end:
Unit: RMB
Ending balance
Name Withdrawal Reason of
Carrying amount Bad debt provision
proportion withdrawal
Customer 1 1,470,110.64 1,470,110.64 100.00% Difficult to recover
Customer 2 1,902,326.58 1,902,326.58 100.00% Difficult to recover
Customer 3 6,215,662.64 6,215,662.64 100.00% Difficult to recover
96.49% Expected to
Customer 4 2,254,860.60 2,175,814.38
difficultly recover
50.00% Expected to
Customer 5 3,633,081.23 1,816,540.62
difficultly recover
Customer 6 3,279,100.00 3,279,100.00 100.00% Difficult to recover
Customer 7 1,617,988.01 1,617,988.01 100.00% Difficult to recover
Customer 8 5,359,381.00 5,359,381.00 100.00% Difficult to recover
Customer 9 2,584,805.83 2,584,805.83 100.00% Difficult to recover
Customer 10 1,553,208.52 1,553,208.52 100.00% Difficult to recover
Total 29,870,525.05 27,974,938.22 -- --
Accounts receivable for which bad debt provision accrued by credit risk features group:
Unit: RMB
Ending balance
Aging
Carrying amount Bad debt provision Withdrawal proportion
Within 1 year 385,027,068.11 7,700,541.84 2.00%
1 to 2 years 10,151,185.00 507,559.25 5.00%
2 to 3 years 4,745,351.68 711,802.76 15.00%
3 to 4 years 5,193,053.09 1,557,915.93 30.00%
4 to 5 years 1,548,978.90 929,387.34 60.00%
Over 5 years 122,820,745.31 122,820,745.31 100.00%
Total 529,486,382.09 134,227,952.43 --
Notes of the basis of determining the group:
The accounts receivable was adopted the aging analysis based on the months when the accounts incurred actually,
among which the accounts incurred earlier will be priority to be settled in terms of the capital turnover.
Explanation of the input value and assumption adopted to determine the withdrawal amount of bad debt provision
on the Current Period: With reference to the experience of the historical credit loss, combining with the prediction
of the present status and future financial situation, the comparison table was prepared between the aging of the
accounts receivable and estimated credit loss rate in the duration and to calculate the estimated credit loss.
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if
adopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivable.
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Carrying amount
Within 1 year (including 1 year) 385,027,068.11
1 to 2 years 10,871,134.25
2 to 3 years 6,695,101.24
Over 3 years 160,596,118.21
3 to 4 years 7,729,342.84
4 to 5 years 4,161,559.72
Over 5 years 148,705,215.65
Total 563,189,421.81
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Information of bad debt provision withdrawn:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversal or Ending balance
balance Withdrawal Write-off
recovery
Bad debt
provision
33,449,794.41 159,597.80 1,801,939.32 31,807,452.89
withdrawn
separately
Bad debt
provision
215,845,088.31 766,429.39 4,361.56 82,379,203.71 134,227,952.43
withdrawn by
group
Total 249,294,882.72 926,027.19 1,806,300.88 82,379,203.71 166,035,405.32
Of which bad debt provision reversed or recovered with significant amount in the Reporting Period: No.
(3) Accounts Receivable with Actual Verification during the Reporting Period
Unit: RMB
Item Verified amount
Accounts receivable with actual verification 82,379,203.71
Of which the verification of significant accounts receivable:
Unit: RMB
Arising
from
Nature of the related-p
Name of the Reason for Verification
accounts Verified amount arty
entity verification procedures performed
receivable transacti
ons or
not
Customer 1 14,234,302.79 The aging of 1. The Company held
Customer 2 10,000,000.00 canceled the 3rd Meeting of the
Customer 3 Bad debt losses 7,583,232.65 receivables 9th Board of Directors Not
Customer 4 4,581,880.41 shall exceed 5 and the 3rd Meeting of
Customer 5 3,600,000.00 years and result the 9th Supervisory
Customer 6 2,752,840.00 from fruitless Committee on 28 June
Customer 7 2,450,966.67 collection, and 2020 and approved the
Customer 8 2,180,243.72 if any single Proposal on
Customer 9 1,976,282.47 client’s large Verification of Some
Customer 10 1,860,830.82 amount is Accounts Receivable.
Customer 11 1,758,686.48 involved 2. On 12 November
Customer 12 1,662,052.98 without any 2020, the bankruptcy
Customer 13 1,285,160.60 business liquidation procedures
Customer 14 1,236,225.30 transaction with of Shandong Hongli
Customer 15 1,235,170.95 the Company Group Co., Ltd. had
Customer 16 1,200,000.00 for over ten been implemented, and
years, the the repayment rate of
Customer 17 1,149,217.70
client’s the Company’s
Customer 18 848,158.92
qualification for outstanding payment
Customer 19 841,642.86
business was 0. On 29 January
Customer 20 830,000.00
operation shall 2021, the Company
Customer 21 800,000.00
be canceled or held the 7th Meeting
Customer 22 797,786.72
the insolvency of the 9th Board of
Customer 23 796,226.73
liquidation is Directors and
Customer 24 760,197.20
finished without approved the Proposal
Customer 25 728,666.36
any production on Verification of
Customer 26 677,250.00
and operation Accounts Receivable
Customer 27 551,305.36 activities. of Shandong Hongli
Customer 28 549,800.00 Group Co., Ltd..
Customer 29 537,698.10
Customer 30 12,343,782.28
Customer 31 520,892.51
Total -- 82,330,500.58 -- -- --
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to the Arrears Party
Unit: RMB
Proportion to total Ending
Ending balance of
Name of the entity ending balance of balance of bad
accounts receivable
accounts receivable debt provision
Customer 1 140,334,103.03 24.92% 2,806,682.06
Customer 2 36,991,841.04 6.57% 856,733.55
Customer 3 33,407,519.00 5.93% 668,150.38
Customer 4 22,051,755.53 3.92% 441,035.11
Customer 5 18,721,197.34 3.32% 374,423.95
Total 251,506,415.94 44.66%
5. Prepayments
(1) List by Aging Analysis
Unit: RMB
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 7,039,656.05 75.23% 10,857,776.65 83.72%
1 to 2 years 641,762.79 6.86% 993,030.99 7.66%
2 to 3 years 673,819.29 7.20% 115,335.90 0.89%
Over 3 years 1002602.62 10.71% 1,002,602.62 7.73%
Total 9,357,840.75 -- 12,968,746.16 --
As of the end of the Reporting Period, the Company had no prepayments with an aging of more than 1 year and a
significant amount.
(2) Top 5 of the Ending Balance of the Prepayments Collected according to the Prepayment Target
At the period-end, the total top 5 of the ending balance of the prepayments collected according to the prepayment
target was RMB5,537,493.47 accounting for 59.17% of the total ending balance of prepayments.
6. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Interest receivable 0.00 0.00
Dividend receivable 0.00 0.00
Other receivables 6,212,062.80 9,703,390.94
Total 6,212,062.80 9,703,390.94
(1) Other Receivables
1) Other Receivables Classified by Accounts Nature
Unit: RMB
Nature Ending carrying value Beginning carrying value
Margin and cash pledge 4,200.00 7,758.60
Intercourse funds 22,967,220.99 24,536,151.71
Petty cash and borrowings by employees 1,359,483.08 3,208,541.67
Other 13,806,779.19 15,374,916.41
Total 38,137,683.26 43,127,368.39
2) Withdrawal of Bad Debt Provision
Unit: RMB
First stage Second stage Third stage
Expected loss in the
Expected credit Expected loss in the
Bad debt provision duration (credit Total
loss of the next duration (credit
impairment not
12 months impairment occurred)
occurred)
Balance of 1
33,423,977.45 33,423,977.45
January 2020
Balance of 1
January 2020 in the
Current Period
--Transfer to
Second stage
-- Transfer to Third
stage
-- Reverse to
Second stage
-- Reverse to First
stage
Withdrawal of the
27,302.92 27,302.92
Current Period
Reversal of the
1,525,659.91 1,525,659.91
Current Period
Write-offs of the
Current Period
Verification of the
Current Period
Other changes
Balance of 31
31,925,620.46 31,925,620.46
December 2020
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 4,544,798.95
1 to 2 years 488,230.94
2 to 3 years 461,642.22
Over 3 years 32,643,011.15
3 to 4 years 1,168,912.97
4 to 5 years 208,579.74
Over 5 years 31,265,518.44
Total 38,137,683.26
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Information of withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Category Beginning balance Reversal or Write- Ending balance
Withdrawal Other
recovery off
Bad debt
provision for
5,042,448.58 3,080.17 5,039,368.41
which accrued
separately
Bad debt
provision for
28,381,528.87 27,302.92 1,522,579.74 26,886,252.05
which accrued by
group
Total 33,423,977.45 27,302.92 1,525,659.91 31,925,620.46
4) There Was No Particulars of the Actual Verification of Other Receivables during the Reporting Period
5) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to
Ending balance
ending balance
Name of the entity Nature Ending balance Aging of bad debt
of other
provision
receivables%
Changzhou Compressor Intercourse Over 5
2,940,000.00 7.71% 2,940,000.00
Factory funds years
Changchai Group Imp. Intercourse Over 5
2,853,188.02 7.48% 2,853,188.02
& Exp. Co., Ltd. funds years
Changzhou New
Intercourse Over 5
District Accounting 1,626,483.25 4.26% 1,626,483.25
funds years
Center
Changchai Group Intercourse Over 5
1,140,722.16 2.99% 1,140,722.16
Settlement Center funds years
Changzhou Huadi
Intercourse Within 1
Engineering Guarantee 1,065,400.00 2.79% 21,308.00
funds year
Co., Ltd.
Total -- 9,625,793.43 -- 25.23% 8,581,701.43
7. Inventory
Whether the Company needs to comply with the requirements of real estate industry
No
(1) Category of Inventory
Unit: RMB
Ending balance Beginning balance
Item Carrying Falling price Carrying Carrying Falling price Carrying
amount reserves value amount reserves value
Raw 134,712,519. 5,559,513.66 129,084,129. 125,757,856. 6,539,831.39 119,218,025.
materials 83 60 89 50
Materials 68,876.57 12,444,566.4 183,111.28 12,261,455.1
14,065,866.5 14,065,866.5
processed on 1 3
2 2
commission
Goods in 134,454,109. 18,512,449.0 115,941,660. 142,399,981. 26,985,350.1 115,414,631.
process 88 8 80 66 4 52
Finished 361,975,004. 15,261,416.1 346,713,588. 239,701,513. 15,404,153.2 224,297,359.
goods 89 7 72 09 9 80
Low priced 3,373,235.80 1,205,538.85 2,167,696.95
and easily 1,906,803.53 1,031,708.62 875,094.91
worn articles
Total 647,114,304. 40,433,964.1 606,680,340. 523,677,153. 50,317,984.9 473,359,168.
65 0 55 85 5 90
(2) Falling Price Reserves
Unit: RMB
Increase Decrease
Beginning
Item Reversal or Ending balance
balance Withdrawal Other Other
write-off
Raw materials 6,539,831.39 1,393,521.63 2,373,839.36 5,559,513.66
Materials
processed on 183,111.28 68,876.57 183,111.28 68,876.57
commission
Goods in
26,985,350.14 4,107,305.33 12,580,206.39 18,512,449.08
process
Finished goods 15,404,153.29 7,064,868.66 7,207,605.78 15,261,416.17
Low priced and
easily worn 1,205,538.85 1,031,708.62 1,205,538.85 1,031,708.62
articles
Total 50,317,984.95 13,666,280.81 23,550,301.66 40,433,964.10
(3) There Was No Capitalized Borrowing Expense in the Ending Balance of Inventories
8. Other Current Assets
Unit: RMB
Item Ending balance Beginning balance
The VAT tax credits 22,534,134.72 6,043,473.29
Private placement of intermediary
2,358,490.56
agency fees
Prepaid corporate income tax 2,240,396.88
Prepaid expense 80,070.32 98,856.26
Other 86,270.24 278,945.92
Total 27,299,362.72 6,421,275.47
9. Long-term Equity Investment
Unit: RMB
Increase/decrease
Gain Adjust Endin
Begin Cash Endin
or loss ment Withd g
ning bonus g
recogn of rawal balanc
balanc Additi Reduc Chang or balanc
Invest ized other of e of
e onal ed es in profit e
ees under compr deprec Other deprec
(carryi invest invest other annou (carryi
the ehensi iation iation
ng ment ment equity nced ng
equity ve reserv reserv
value) to value)
metho incom es es
issue
d e
II. Associated enterprises
Beijin
g
Tsingh
ua
Indust
rial 44,182
0.00 0.00
Invest .50
ment
Mana
gemen
t Co.,
Ltd.
Subtot 44,182
0.00 0.00
al .50
44,182
Total 0.00 0.00
.50
10. Other Equity Instrument Investment
Unit: RMB
Item Ending balance Beginning balance
Changzhou Synergetic Innovation Private Equity
102,198,950.87 100,000,000.00
Fund (Limited Partnership)
Other equity instrument investment measured by
582,939,000.00 432,886,000.00
fair value
Total 685,137,950.87 532,886,000.00
Non-trading equity instrument investment disclosed by category
Unit: RMB
Reason for
Amount of Reason for assigning
other
Accu other to measure by fair
Dividend comprehensi
Accumulative mulat comprehensiv value of which
Item income ve income
gains ive e transferred changes be included to
recognized transferred to
losses to retained other comprehensive
retained
earnings income
earnings
Foton Motor Co., Non-trading equity
192,185,000.00
Ltd. investment
Non-trading equity
Bank of Jiangsu 5,004,000.00 522,000.00
investment
Jiangsu Ninghu The stock
Non-trading equity
Expressway Co., 348,368.67 348,368.67 has been sold
investment
Ltd. this year
Changzhou
Synergetic
Innovation Non-trading equity
2,198,950.87
Private Equity investment
Fund (Limited
Partnership)
Total 5,004,000.00 195,254,319.54 348,368.67
Other notes:
Securities of the Company's securities refinancing business which was still on loan at the end of the period:
26,272,100 shares of Foton Motor Co., Ltd.
11. Other Non-current Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Jiangsu Liance Electromechanical Technology
7,200,000.00 7,200,000.00
Co., Ltd.
Kailong High Technology Co., Ltd. 38,282,105.00 20,001,268.00
Guizhou Weimen Pharmaceutical Co., Ltd. 200,104.80 200,104.80
Guizhou Anda Technology Energy Co., Ltd. 195,297.49 195,297.49
Henan Lantian Gas Co., Ltd. 160,744.76 160,744.76
Hebei Songhe Renewable Resources Co., Ltd. 104,699.44 104,699.44
Anhui Haofang Electromechanical Co., Ltd. 89,987.14 89,987.14
Jiangsu Hosun New Energy Technology Co.,
52,500,000.00 50,000,000.00
Ltd.
Total 98,732,938.63 77,952,101.63
12. Investment Property
(1) Investment Property Adopting the Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMB
Item Houses and buildings Total
I. Original carrying value
1.Beginning balance 87,632,571.14 87,632,571.14
2.Increased amount of the period
(1) Outsourcing
(2) Transfer from inventories/fixed
assets/construction in progress
(3) Enterprise combination increase
3.Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance 87,632,571.14 87,632,571.14
II. Accumulative depreciation and
accumulative amortization
1.Beginning balance 39,184,904.31 39,184,904.31
2.Increased amount of the period 2,208,340.80 2,208,340.80
(1) Withdrawal or amortization 2,208,340.80 2,208,340.80
3.Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance 41,393,245.11 41,393,245.11
III. Depreciation reserves
1.Beginning balance
2.Increased amount of the period
(1) Withdrawal
3.Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance
IV. Carrying value
1.Ending carrying value 46,239,326.03 46,239,326.03
2.Beginning carrying value 48,447,666.83 48,447,666.83
13. Fixed Assets
Unit: RMB
Item Ending balance Beginning balance
Fixed assets 454,181,555.68 457,722,667.32
Disposal of fixed assets
Total 454,181,555.68 457,722,667.32
(1) List of Fixed Assets
Unit: RMB
Houses and Machinery Transportation Other
Item Total
buildings equipment equipment equipment
I. Original
carrying value
1. Beginning
448,688,661.22 956,138,240.18 17,283,169.54 42,791,587.37 1,464,901,658.31
balance
2. Increased
amount of the 16,740,314.49 55,956,615.74 1,265,424.03 1,253,215.06 75,215,569.32
period
(1) Purchase 418,626.65 1,790,876.46 420,194.69 605,480.50 3,235,178.30
(2) Transfer
from
16,321,687.84 54,165,739.28 845,229.34 647,734.56 71,980,391.02
construction in
progress
(3) Enterprise
combination
increase
3. Decreased
amount of the 15,123,976.27 1,609,285.56 1,920,409.32 18,653,671.15
period
(1) Disposal or
15,123,976.27 1,609,285.56 1,920,409.32 18,653,671.15
scrap
4. Ending
465,428,975.71 996,970,879.65 16,939,308.01 42,124,393.11 1,521,463,556.48
balance
II.Accumulative
depreciation
1. Beginning
281,666,582.26 674,545,182.51 13,892,318.80 35,580,792.42 1,005,684,875.99
balance
2. Increased
amount of the 16,501,775.40 57,821,450.01 1,098,838.47 2,985,836.70 78,407,900.58
period
(1) Withdrawal 16,501,775.40 57,821,450.01 1,098,838.47 2,985,836.70 78,407,900.58
3. Decreased
amount of the 1,235.25 13,868,284.82 1,526,161.49 1,895,768.46 17,291,450.02
period
(1) Disposal or
1,235.25 13,868,284.82 1,526,161.49 1,895,768.46 17,291,450.02
scrap
4. Ending
298,167,122.41 718,498,347.70 13,464,995.78 36,670,860.66 1,066,801,326.55
balance
III.Depreciation
reserves
1. Beginning
1,494,115.00 1,494,115.00
balance
2. Increased
amount of the
period
(1) Withdrawal
3. Decreased
amount of the 1,013,440.75 1,013,440.75
period
(1) Disposal or
1,013,440.75 1,013,440.75
scrap
4. Ending
480,674.25 480,674.25
balance
IV. Carrying
value
1. Ending
167,261,853.30 277,991,857.70 3,474,312.23 5,453,532.45 454,181,555.68
carrying value
2. Beginning
167,022,078.96 280,098,942.67 3,390,850.74 7,210,794.95 457,722,667.32
carrying value
14. Construction in Progress
Unit: RMB
Item Ending balance Beginning balance
Construction in progress 44,844,896.77 63,216,445.03
Engineering materials 21,657,535.64 28,141,711.21
Total 66,502,432.41 91,358,156.24
(1) List of Construction in Progress
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciatio Carrying Carrying Depreciati Carrying
amount n reserves value amount on reserves value
Expansion
capacity of
multi-cylinde 1,128,887.90 1,128,887.90 11,375,531.74 11,375,531.74
r (The 2nd
Period)
Diesel
Engine
Cylinder
Body 38,266,788.31 38,266,788.31
Flexible
Manufacturin
g Line
35KV
1,321,959.41 1,321,959.41
Substation
Oily water
separating 340,800.00 340,800.00
equipment
Relocation
project of
40,307,243.35 40,307,243.35 1,687,194.64 1,687,194.64
light engine
and casting
Equipment to
be installed
3,408,765.52 3,408,765.52 10,224,170.93 10,224,170.93
and payment
for projects
Total 44,844,896.77 44,844,896.77 63,216,445.03 63,216,445.03
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
Propo Of
rtion which Capit
of Accu : alizati
accu mulat Amo on
mulat ed unt of rate
Trans Other
Begin Incre Endin ed amou capita of Capit
ferred decre Job
Budg ning ased g invest nt of lized intere al
Item in ased sched
et balan amou balan ment intere intere sts for resou
fixed amou ule
ce nt ce in st sts for the rces
assets nt
constr capita the Repor
uctio lizati Repor ting
ns to on ting Perio
budge Perio d
t d
Expa
nsion
capac
ity of
multi- 79,00 11,37 10,27 1,128 Unco
31,45 Self-f
cylin 0,000 5,531 8,095 ,887. mplet
2.00 unded
der .00 .74 .84 90 ed
(The
2nd
Perio
d)
Diese
l
Engin
e
Cylin
der 116,0 38,26 38,45
187,7 Self-f
Body 40,00 6,788 4,558 0.00
69.94 unded
Flexi 0.00 .31 .25
ble
Manu
factur
ing
Line
35KV 73,29 1,321 1,712
390,6 Self-f
Subst 0,000 ,959. ,635. 0.00
76.04 unded
ation .00 41 45
Reloc
ation
proje
ct of 474,7 1,687 38,62 40,30 Unco
8.49 Self-f
light 06,00 ,194. 0,048 0.00 7,243 mplet
% unded
engin 0.00 64 .71 .35 ed
e and
castin
g
52,65 39,22 50,44 41,43
Total —— 1,474 9,946 5,289 6,131 -- -- --
.10 .69 .54 .25
(3) Engineering Materials
Unit: RMB
Ending balance Beginning balance
Depreciati
Item Carrying Carrying Carrying Depreciation Carrying
on
amount value amount reserves value
reserves
Engineerin
21,657,535.64 21,657,535.64 28,141,711.21 28,141,711.21
g materials
Total 21,657,535.64 21,657,535.64 28,141,711.21 28,141,711.21
15. Intangible Assets
(1) List of Intangible Assets
Unit: RMB
Trademark use
Item Land use right Patent right License fee Total
right
I. Original carrying
value
1. Beginning balance 144,770,507.85 12,866,992.58 5,488,000.00 163,125,500.43
2. Increased amount of
62,013,038.83 1,200,922.58 1,087,042.79 64,301,004.20
the period
(1) Purchase 62,013,038.83 1,200,922.58 1,087,042.79 64,301,004.20
(2) Internal R&D
(3) Business
combination increase
3. Decreased amount of
the period
(1) Disposal
4. Ending balance 206,783,546.68 14,067,915.16 5,488,000.00 1,087,042.79 227,426,504.63
II. Accumulated
amortization
1. Beginning balance 51,100,000.82 10,771,116.13 1,554,933.22 63,426,050.17
2. Increased amount of
3,445,675.20 1,108,171.52 548,799.96 27,176.07 5,129,822.75
the period
(1) Withdrawal 3,445,675.20 1,108,171.52 548,799.96 27,176.07 5,129,822.75
3. Decreased amount of
the period
(1) Disposal
4. Ending balance 54,545,676.02 11,879,287.65 2,103,733.18 27,176.07 68,555,872.92
III. Depreciation
reserves
1. Beginning balance
2. Increased amount of
the period
(1) Withdrawal
3. Decreased amount of
the period
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying
152,237,870.66 2,188,627.51 3,384,266.82 1,059,866.72 158,870,631.71
value
2. Beginning carrying
93,670,507.03 2,095,876.45 3,933,066.78 0.00 99,699,450.26
value
16. Long-term Prepaid Expenses
Item Beginning Increase Amortized Decrease Ending balance
balance amount
Furniture of
employee 53,497.80 39,804.60 13,693.20
dormitory, etc.
Total 53,497.80 39,804.60 13,693.20
17. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets that Had not Been Off-set
Unit: RMB
Ending balance Beginning balance
Deductible Deductible
Item Deferred income Deferred income
temporary temporary
tax assets tax assets
difference difference
Bad debt provision 6,544,083.47 981,314.04 6,682,294.34 1,023,863.04
Deductible loss 21,670,394.08 3,250,559.11
Total 28,214,477.55 4,231,873.15 6,682,294.34 1,023,863.04
(2) Deferred Income Tax Liabilities Had Not Been Off-set
Unit: RMB
Ending balance Beginning balance
Item Taxable temporary Deferred income Taxable temporary Deferred income
difference tax liabilities difference tax liabilities
Changes in fair
value of other
500,567,950.87 75,085,192.63 373,011,500.00 55,951,725.00
equity instrument
investment
Changes in fair
value of trading 18,481,109.00 4,600,250.05
financial assets
Changes in fair
value of other
2,500,000.00 375,000.00
non-current
financial assets
Assets evaluation
appreciation for
business
4,074,374.26 611,156.14 4,524,661.07 1,131,165.27
combination not
under the same
control
Total 525,623,434.13 80,671,598.82 377,536,161.07 57,082,890.27
(3) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
Item Ending balance Beginning balance
Bad debt provision 191,416,942.31 276,036,565.83
Falling price reserves of
40,433,964.10 50,317,984.95
inventories
Total 231,850,906.41 326,354,550.78
18. Other Non-current Assets
Unit: RMB
Ending balance Beginning balance
Depreciati
Item Carrying Carrying Depreciation Carrying
on Carrying value
amount amount reserves value
reserves
Advances
payment of 19,971,006.56 19,971,006.56
equipments
Total 19,971,006.56 19,971,006.56
19. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Mortgage loans 7,000,000.00 7,000,000.00
Guaranteed loans 10,000,000.00 10,000,000.00
Credit loans 5,000,000.00 5,000,000.00
Total 22,000,000.00 22,000,000.00
(2) There Was No Short-term Borrowings Overdue but Unpaid.
20. Notes Payable
Unit: RMB
Category Ending balance Beginning balance
Bank acceptance bill 595,346,000.00 403,035,000.00
Total 595,346,000.00 403,035,000.00
At the end of the current period, the total amount of notes payable due and not paid was RMB0.
21. Accounts Payable
(1) List of Accounts Payable
Unit: RMB
Item Ending balance Beginning balance
Payment for goods 612,757,392.46 525,625,016.89
Total 612,757,392.46 525,625,016.89
(2) There Was No Significant Accounts Payable Aging over One Year
22. Deposit Received
Unit: RMB
Item Ending balance Beginning balance
Payment for goods 661,612.17
Total 661,612.17
Refer to “V Significant Accounting Policies, Estimates-32(1) Changes to Significant Accounting Policies” for the
difference between the beginning balance and ending balance of prior period (31 December 2019).
(2) There Was No Significant Accounts Payable Aging over One Year
23. Contract Liabilities
Unit: RMB
Item Ending balance Beginning balance
Contract liabilities 35,944,517.15 29,652,202.74
Total 35,944,517.15 29,652,202.74
Refer to “V Significant Accounting Policies, Estimates-32(1) Changes to Significant Accounting Policies” for the
difference between the beginning balance and ending balance of prior period (31 December 2019).
24. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
I. Short-term salary 44,559,015.79 277,676,314.10 272,108,168.42 50,127,161.47
II.Post-employment
benefit-defined 22,003,717.86 22,003,717.86
contribution plans
III. Termination
109,584.00 109,584.00
benefits
Total 44,559,015.79 299,789,615.96 294,221,470.28 50,127,161.47
(2) List of Short-term Salary
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Salary, bonus,
36,894,953.71 237,003,162.20 231,989,488.74 41,908,627.17
allowance, subsidy
2.Employee welfare 1,592.74 3,302,752.84 3,302,752.84 1,592.74
3. Social insurance 14,152,537.94 14,152,537.94
Of which: Medical
insurance 11,550,069.03 11,550,069.03
premiums
Work-related injury
1,128,043.94 1,128,043.94
insurance
Maternity insurance 1,474,424.97 1,474,424.97
4. Housing fund 18,592,725.00 18,592,725.00
5.Labor union
budget and
7,662,469.34 4,625,136.12 4,070,663.90 8,216,941.56
employee education
budget
6. Short-term
absence with salary
7. Short-term profit
sharing scheme
Total 44,559,015.79 277,676,314.10 272,108,168.42 50,127,161.47
(3) List of Defined Contribution Plans
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Basic pension
21,335,032.17 21,335,032.17
benefits
2. Unemployment
668,685.69 668,685.69
insurance
3. Enterprise
annuities
Total 22,003,717.86 22,003,717.86
25. Taxes Payable
Unit: RMB
Item Ending balance Beginning balance
VAT 461.22 1,290,060.47
Corporate income tax 531,557.38 5,090,781.18
Personal income tax 114,208.40 367,624.40
Urban maintenance and
879,346.31 970,067.92
construction tax
Property tax 94,863.50 94,257.20
Land use tax 100,135.19 100,135.19
Stamp duty 6,851.35 6,282.95
Education Surcharge 35,023.81 99,824.96
Comprehensive fees 1,075,134.76 1,075,134.76
Environmental protection tax 31,903.49 213.55
Total 2,869,485.41 9,094,382.58
26. Other Payables
Unit: RMB
Item Ending balance Beginning balance
Interest payable
Dividends payable 3,891,433.83 3,891,433.83
Other payables 193,653,642.25 201,172,711.27
Total 197,545,076.08 205,064,145.10
(1) Dividends Payable
Unit: RMB
Item Ending balance Beginning balance
Ordinary share dividends 3,243,179.97 3,243,179.97
Interest of preferred shares/
perpetual bond classified as equity
instrument
Dividends for non-controlling
648,253.86 648,253.86
shareholders
Other
Total 3,891,433.83 3,891,433.83
The reason for non-payment for over one year: Not gotten by shareholders yet.
(2) Other Payables
1) Other Payables Listed by Nature of Account
Unit: RMB
Item Ending balance Beginning balance
Margin & cash pledged 3,406,041.83 3,271,541.83
Intercourse funds among units 9,309,617.95 11,321,462.95
Intercourse funds among
1,256,848.49 430,612.05
individuals
Sales discount and three
147,739,746.71 143,497,522.22
guarantees
Other 31,941,387.27 42,651,572.22
Total 193,653,642.25 201,172,711.27
2) Significant Other Payables Aging over One Year
The significant other payables aging over one year at the period-end mainly referred to the unsettled temporary
credits and charges owned.
27. Other Current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Sale service fee 365,047.65 229,387.96
Transportation storage fee 260,055.33 132,551.86
Electric charge 1,972,314.61 815,772.56
Tax to be transferred 2,636,529.53 2,136,799.04
Total 5,233,947.12 3,314,511.42
Refer to “V Significant Accounting Policies, Estimates-32(1) Changes to Significant Accounting Policies” for the
difference between the beginning balance and ending balance of prior period (31 December 2019).
28. Deferred Income
Unit: RMB
Beginning Reason for
Item Increase Decrease Ending balance
balance formation
Government Government
58,864,111.22 1,914,373.62 56,949,737.60
grants appropriation
Total 58,864,111.22 1,914,373.62 56,949,737.60 --
Item involving government grants:
Unit: RMB
Amount
Amount
recorded
recorded Amount
into Related
into offset
Amount non-oper to
Beginning other cost in Other Ending
Item of new ating assets/rel
balance income the changes balance
subsidy income ated
in the Reportin
in the income
Reportin g Period
Reportin
g Period
g Period
Electric
control
of diesel
engine
research
and 248,400. Related
248,400.00
develop 000 to assets
ment and
industrial
ization
allocatio
ns
National
major
project 28,770,000. 28,770,000. Related
special 00 00 to assets
allocatio
ns
Remove
19,845,711. 665,973. 19,179,737. Related
compens
22 62 60 to assets
ation
Research
and
develop
ment and
industrial
ization
allocatio
ns of
national
10,000,000. 1,000,00 9,000,000.0 Related
III/IV
00 0.00 0 to assets
standard
high-po
wered
efficient
diesel
engine
for
agricultu
ral use
58,864,111. 1,914,37 56,949,737.
Total
22 3.62 60
29. Share Capital
单位：元
Increase/decrease (+/-)
Beginning Bonus Ending
New shares Bonus
balance issue from Other Subtotal balance
issued shares
profit
The sum of 561,374,32 561,374,32
shares 6.00 6.00
30. Capital Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Capital premium
143,990,690.24 143,990,690.24
(premium on stock)
Other capital reserves 20,337,975.19 20,337,975.19
Total 164,328,665.43 164,328,665.43
31. Other Comprehensive Income
Unit: RMB
Item Beginni Reporting Period Endin
ng Less: g
balance Record balan
Less: ed in ce
Recorded other
in other compre
comprehe hensiv Attribu
nsive e table to Attribu
Income
income in income owners table to
before Less:
prior in prior of the non-co
taxatio Income
period period Compa ntrollin
n in the tax
and and ny as g
Curren expens
transferre transfe the interest
t e
d in rred in parent s after
Period
profit or retaine after tax
loss in d tax
the earning
Current s in the
Period Curren
t
Period
I. Other comprehensive 127,96 108,42 425,4
317,059, 348,36 19,194,
income that will not be 6,296.3 2,983.2 82,75
775.00 8.67 944.45
reclassified to profit or loss 6 4 8.24
Of which: Changes caused
by re-measurements on
defined benefit pension
schemes
Share of other
comprehensive income of
investees that will not be
reclassified to profit or loss
under equity method
Changes in fair value of 127,96 108,42 425,4
317,059, 348,36 19,194,
other equity instrument 6,296.3 2,983.2 82,75
775.00 8.67 944.45
investment 6 4 8.24
Changes in fair value of
corporate credit risk
II. Other comprehensive
income that may
subsequently be
reclassified to profit or loss
Of which: Share of other
comprehensive income of
investees that will be
reclassified to profit or loss
under equity method
Changes in fair value of
investment in other debt
obligations
Amount of financial assets
reclassified to other
comprehensive income
Credit depreciation
reserves of investment in
other debt obligations
Reserves for cash flow
hedges
Differences arising from
translation of foreign
currency-denominated
financial statements
127,96 108,42 425,4
Total of other 317,059, 348,36 19,194,
6,296.3 2,983.2 82,75
comprehensive income 775.00 8.67 944.45
6 4 8.24
32. Specific Reserve
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Safety production
17,560,202.07 3,766,291.74 2,513,507.26 18,812,986.55
cost
Total 17,560,202.07 3,766,291.74 2,513,507.26 18,812,986.55
33. Surplus Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Statutory surplus 312,294,673.24
309,071,675.82
reserves 3,222,997.42
Discretional surplus 13,156,857.90
13,156,857.90
reserves
Total 322,228,533.72 3,222,997.42 325,451,531.14
34. Retained Earnings
Unit: RMB
Item Reporting Period Same period of last year
Beginning balance of retained earnings before 717,883,351.33
726,689,929.10
adjustments
Total retained earnings at the beginning of the 1,619,864.82
adjustment period (“+” means up, “-” means 1,651,336.26
down)
Beginning balance of retained earnings after 719,503,216.15
728,341,265.36
adjustments
Add: Net profit attributable to owners of the
52,432,443.05 24,966,526.85
Company as the parent
Less: Withdrawal of statutory surplus reserves 3,222,997.42 2,094,119.49
Withdrawal of discretional surplus
reserves
Withdrawal of general reserve
Dividend of ordinary shares payable 14,034,358.15
Dividends of ordinary shares transferred as
share capital
Recorded in other comprehensive income in
prior period and transferred in retained profits in 348,368.67
the Current Period
Ending retained earnings 777,899,079.66 728,341,265.36
Notes:
The retained earnings at the beginning of the adjustment period due to the accounting errors correction in previous
period: RMB1,651,336.26 at the period-beginning of 2020, and RMB1,619,864.82 at the period-beginning of
2019.
35. Operating Revenue and Cost of Sales
Unit: RMB
Reporting Period Same period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main operations 2,252,479,553.51 1,918,486,625.85 2,001,911,782.04 1,679,856,891.00
Other operations 43,985,157.73 32,087,365.42 43,909,019.06 34,676,976.50
Total 2,296,464,711.24 1,950,573,991.27 2,045,820,801.10 1,714,533,867.50
Information related to performance obligations: performing according to the contract offer
Information related to transaction value assigned to residual performance obligations:
The amount of revenue corresponding to performance obligations of contracts signed but not performed or not
fully performed yet was RMB0 at the period-end.
36. Taxes and Surtaxes
Unit: RMB
Item Reporting Period Same period of last year
Urban maintenance and
2,090,758.82 967,755.74
construction tax
Education surcharge 1,493,399.12 690,897.41
Property tax 4,573,282.78 4,692,583.81
Land use tax 3,752,947.49 3,813,015.72
Vehicle and vessel use tax 1,350.00 1,320.00
Stamp duty 698,047.82 541,541.14
Environment tax 221,775.24 238,068.00
Other 38,047.88 34,933.24
Total 12,869,609.15 10,980,115.06
37. Selling Expense
Unit: RMB
Item Reporting Period Same period of last year
Office expenses 15,665,504.29 15,164,256.65
Employee benefits 38,670,632.17 29,850,039.44
Sales promotional expense 6,859,494.25 5,260,765.63
Three guarantees 65,108,496.52 38,321,773.50
Transport charge 7,296,670.11
Other 2,068,151.39 1,191,611.72
Total 128,372,278.62 97,085,117.05
38. Administrative Expense
Unit: RMB
Item Reporting Period Same period of last year
Safety expenses 3,766,291.74 3,868,727.07
Office expenses 10,970,658.73 11,096,718.08
Other 7,389,204.00 22,624,149.85
Repair charge 788,498.70 391,744.51
Transport fees 2,035,060.15
Depreciation and amortization 10,255,597.50 11,166,156.58
Employee benefits 54,275,945.07 55,833,401.17
Total 87,446,195.74 107,015,957.41
39. Development Costs
Unit: RMB
Item Reporting Period Same period of last year
Direct input expense 43,808,908.87 39,929,867.41
Employee benefits 20,288,706.97 19,795,993.59
Depreciation and amortization 4,534,946.69 3,926,467.26
Entrusted development charges 430,000.00 26,000.00
Other 3,196,218.55 2,543,048.01
Total 72,258,781.08 66,221,376.27
40. Finance Costs
Unit: RMB
Item Reporting Period Same period of last year
Interest expense 7,302,086.80 5,722,554.43
Less: Interest income 5,467,634.76 6,733,183.88
Net foreign exchange gains or
14,491,248.00 -1,709,183.70
losses
Other -557,389.72 -1,716,760.21
Total 15,768,310.32 -4,436,573.36
41. Other Income
Unit: RMB
Sources Reporting Period Same period of last year
Government grants 7,763,215.65 5,312,295.51
Other 45,516.87 12,063.29
42. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Long-term equity investment income accounted by
equity method
Investment income from disposal of long-term
equity investment
Investment income from holding of trading
financial assets
Investment income from disposal of trading
-25,036.13
financial assets
Dividend income from holding of other equity
5,004,000.00 6,069,000.00
instrument investment
Investment income from holding of held-to
–maturity investment
Investment income from holding of
available-for-sale financial assets
Investment income from disposal of
available-for-sale financial assets
Investment income from disposal of held-to
–maturity investment
Income from re-measurement of residual stock
rights at fair value after losing control power
Interest income from holding of investment in debt
obligations
Interest income from holding of investment in
other debt obligations
Investment income from disposal of investment in
other debt obligations
Investment income from disposal of other
-18,685.03
non-current financial assets
Dividend income from holding of other
149,821.58 1,408,752.61
non-current financial assets
Other income from holding of other equity
433,925.05 137,814.50
instrument investments
Investment income from financial products 753,991.35 413,378.77
Forward income from foreign exchange settlement 229,125.00
Total 6,545,826.85 8,010,260.85
43. Gain on Changes in Fair Value
Unit: RMB
Sources Reporting Period Same period of last year
Transactional financial assets 200,272.00 -49,255.00
Other non-current financial assets 20,780,837.00
Total 20,981,109.00 -49,255.00
44. Credit Impairment Loss
Unit: RMB
Item Reporting Period Same period of last year
Bad debt loss of other receivables 1,498,356.99 -288,027.65
Bad debt loss of accounts
880,273.69 -4,637,783.63
receivable
Impairment loss of entrusted loan 4,000,000.00
Total 2,378,630.68 -925,811.28
45. Asset Impairment Loss
Unit: RMB
Item Reporting Period Same period of last year
I. Bad debt loss
II. Loss on inventory valuation and contract
-11,155,930.76 -42,371,202.17
performance cost
III. Impairment loss on long-term equity
investment
IV. Impairment loss on investment property
V. Impairment loss on fixed assets
VI. Impairment loss on engineering materials
VII. Impairment loss on construction in progress
VIII. Impairment loss on productive living assets
IX. Impairment loss on oil and gas assets
X. Impairment loss on intangible assets
XI. Impairment loss on goodwill
XII. Other
Total -11,155,930.76 -42,371,202.17
46. Asset Disposal Income
Unit: RMB
Sources Reporting Period Same period of last year
Disposal income of fixed assets 229,121.29 2,059,668.56
47. Non-operating Income
Unit: RMB
Amount recorded in the
Item Reporting Period Same period of last year current non-recurring
profit or loss
Income from penalty 267,439.00 373,200.44 267,439.00
No payment required 399,049.91 29,831.10 399,049.91
Other 380,625.30 59,319.94 380,625.30
Total 1,047,114.21 462,351.48 1,047,114.21
48. Non-operating Expense
Unit: RMB
Amount recorded in the
Item Reporting Period Same period of last year current non-recurring
profit or loss
Retirement loss of
34,356.44 158,128.44 34,356.44
non-current assets
Quality indemnity 2,085,438.03 2,085,438.03
Donation expenditure 250,000.00 250,000.00
Other 260,002.86 73,810.45 260,002.86
Total 2,629,797.33 231,938.89 2,629,797.33
49. Income Tax Expense
(1) List of Income Tax Expense
Unit: RMB
Item Reporting Period Same period of last year
Current income tax expense 838,369.52 1,939,568.19
Deferred income tax expense 1,247,230.81 -224,522.42
Total 2,085,600.33 1,715,045.77
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
Item Reporting Period
Profit before taxation 54,380,351.52
Current income tax expense accounted at statutory/applicable tax rate 8,157,052.73
Influence of applying different tax rates by subsidiaries 733,969.40
Influence of income tax before adjustment -728,340.92
Influence of non-taxable income -788,055.39
Influence of non-deductable costs, expenses and losses 456,287.08
Influence of deductable losses of unrecognized deferred income tax at the
-2,140,409.67
beginning of the Reporting Period
Influence of deductable temporary difference or deductable losses of
110,589.49
unrecognized deferred income tax assets in the Reporting Period
Tax preference generated from eligible expense -3,241,494.34
Changes in the balance of deferred income tax assets/liabilities at the
-473,998.05
beginning of the period due to tax rate adjustments
Income tax expense 2,085,600.33
50. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Subsidy and appropriation 5,857,679.00 4,247,921.89
Other intercourses in cash 5,144,619.79 176,497.69
Interest income 5,467,634.76 6,987,251.60
Other 507,167.41 378,925.22
Total 16,977,100.96 11,790,596.40
(2) Cash Used in Other Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Selling and administrative 120,086,467.93
120,289,403.78
expenses paid in cash
Handling charges 1,776,237.12 938,872.65
Other 777,383.09 317,407.08
Other transactions 690,007.30 143,724.20
Total 123,533,031.29 121,486,471.86
(3) Cash Generated from Other Investing Activities
Item Reporting Period Same period of last year
Deposit of construction unit 336,150.00
Total 336,150.00
(4) Cash Used in Other Investing Activities
Item Reporting Period Same period of last year
Product margin 4,141,850.71
Total 4,141,850.71
(5) Cash Used in Other Financial Activities
Item Reporting Period Same period of last year
Private placement of intermediary agency
2,500,000.00
fees
Total 2,500,000.00
51. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Unit: RMB
Same period of last
Supplemental information Reporting Period
year
1. Reconciliation of net profit to net cash flows generated
-- --
from operating activities
Net profit 52,294,751.19 24,984,327.75
Add: Provision for impairment of assets 8,777,300.08 43,297,013.45
Depreciation of fixed assets, of oil and gas assets, of
80,616,241.38 85,591,455.99
productive living assets
Depreciation of right-of-use assets
Amortization of intangible assets 5,129,822.75 4,826,730.02
Amortization of long-term deferred expenses 39,804.60 39,804.60
Losses on disposal of fixed assets, intangible assets and other
-229,121.29 -2,059,668.56
long-term assets (gains by “-”)
Losses on the scrapping of fixed assets (gains by “-”) 34,356.44 158,128.44
Losses on the changes in fair value (gains by “-”) -20,981,109.00 49,255.00
Financial expenses (gains by “-”) 16,911,546.38 5,007,157.46
Investment losses (gains by “-”) -6,545,826.85 -8,010,260.85
Decrease in deferred income tax assets (increase by “-”) -3,208,010.11 -43,732.33
Increase in deferred income tax liabilities (decrease by “-”) 4,455,240.92 -180,790.09
Decrease in inventory (increase by “-”) -144,477,102.41 42,238,508.04
Decrease in accounts receivable from operating activities
16,892,902.36 -138,877,379.35
(increase by “-”)
Increase in payables from operating activities (decrease by
278,992,494.07 -99,909,743.96
“-”)
Other -36,906,635.98 22,564,004.83
Net cash flows generated from operating activities 251,796,654.53 -20,325,189.56
2. Investing and financing activities that do not involving cash
-- --
receipts and payment:
Debt transferred as capital
Convertible corporate bond due within one year
Fixed assets from financing lease
3. Net increase in cash and cash equivalents -- --
Ending balance of cash 629,939,540.50 545,959,998.20
Less: Beginning balance of cash 545,959,998.20 691,266,373.34
Add: Ending balance of cash equivalents
Less: Beginning balance of cash equivalents
Net increase in cash and cash equivalents 83,979,542.30 -145,306,375.14
(2) Cash and Cash Equivalents
Unit: RMB
Item Ending balance Beginning balance
I. Cash 629,939,540.50 545,959,998.20
Including: Cash on hand 287,505.91 181,115.21
Bank deposit on demand 620,966,786.57 545,271,159.5
Other monetary assets on demand 8,685,248.02 507,723.49
Accounts deposited in the central bank
available for payment
Deposits in other banks
Accounts of interbank
II. Cash equivalents
Of which: Bond investment expired within
three months
III. Ending balance of cash and cash
629,939,540.50 545,959,998.20
equivalents
Of which: Cash and cash equivalents with
restriction in use for the Company as the
parent or subsidiaries of the Group
52. Assets with Restricted Ownership or Right to Use
Unit: RMB
Item Ending carrying value Reason for restriction
As cash deposit for bank acceptance bill
Monetary assets 130,788,682.35
and environment
Houses and buildings 2,012,894.88 Mortgaged for borrowings from banks
Land use right 962,953.87 Mortgaged for borrowings from banks
Machinery equipment 34,959,585.43 Mortgaged for borrowings from banks
Total 168,724,116.53 --
53. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Unit: RMB
Ending foreign currency Ending balance
Item Exchange rate
balance converted to RMB
Monetary assets -- -- 88,036,406.31
Of which: USD 22,205,667.87 6.5249 144,889,762.28
EUR
HKD 285,402.45 0.84164 240,206.12
SGD 54,427.95 4.9314 268,405.99
JPY 1.00 0.0632 0.06
Accounts receivable -- --
Of which: USD 7,621,884.47 6.5249 49,732,033.97
Accounts payable
Of which: USD 302.60 6.5249 1,974.43
(2) Notes to Overseas Entities Including: for Significant Oversea Entities, Main Operating Place, Recording
Currency and Selection Basis Shall Be Disclosed; if there Are Changes in Recording Currency, Relevant
Reasons Shall Be Disclosed.
□ Applicable √ Not applicable
54. Government Grants
(1) Basic Information on Government Grants
Unit: RMB
Amount recorded in the
Category Amount Listed items
current profit or loss
Industrial and information industry
150,000.00 Other income 150,000.00
transformation and upgrading subsidies
Trinity subsidy 615,000.00 Other income 615,000.00
Subsidy for stabilizing posts 3,147,000.03 Other income 3,147,000.03
Business development fund 10,600.00 Other income 10,600.00
Small and medium-sized enterprises
14,200.00 Other income 14,200.00
exploit capital
Export credit insurance subsidies 323,200.00 Other income 323,200.00
Relocation compensation 665,973.62 Other income 665,973.62
R & D and industrialization of off-road
248,400.00 Other income 248,400.00
diesel engine controlled by electricity
Tax contribution award 50,000.00 Other income 50,000.00
Funding for the first year of the
demonstration base for training 35,000.00 Other income 35,000.00
advanced skilled personnel
Subsidies for training by work 1,217,500.00 Other income 1,217,500.00
Epidemic subsidy 2,000.00 Other income 2,000.00
Development funds for science and
10,000.00 Other income 10,000.00
technology projects
Post-doctoral grants, outbound awards
50,000.00 Other income 50,000.00
and site establishment awards
The third batch of intellectual property
100,000.00 Other income 100,000.00
award funds in Changzhou
Financial center subsidy 50,460.00 Other income 50,460.00
Innovation-driven rewards 6,000.00 Other income 6,000.00
Subsidy fund of New District Finance
7,882.00 Other income 7,882.00
Bureau award
Subsidies for high-tech enterprises from
60,000.00 Other income 60,000.00
the New District Finance Bureau
Appropriation or research and
development and industrialization
allocations of national III/IV standard 1,000,000.00 Other income 1,000,000.00
high-powered efficient diesel engine for
agricultural use
Return of Government Grants
□ Applicable √ Not applicable
VIII. Changes of Consolidation Scope
None
IX. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
Natur Holding percentage
Main Registrat
e of (%) Way of
Name operatin ion
busin Indirectl gaining
g place place Directly
ess y
Changchai Wanzhou Diesel Engine Chongq Chongqi Indus
60.00% Set-up
Co., Ltd. ing ng try
Changzhou Changchai Benniu Diesel Changz Changzh Indus
99.00% 1.00% Set-up
Engine Fittings Co., Ltd. hou ou try
Changzhou Housheng Investment Changz Changzh Servi
100.00% Set-up
Co., Ltd. hou ou ce
Changzhou Changchai Housheng Changz Changzh Indus
70.00% 25.00% Set-up
Agricultural Equipment Co., Ltd. hou ou try
Combination
Changzhou Fuji Changchai Robin Changz Changzh Indus
100.00% not under the
Gasoline Engine Co., Ltd. hou ou try
same control
Jiangsu Changchai Machinery Co., Changz Changzh Indus
100.00% Set-up
Ltd. hou ou try
Changzhou Xingsheng Property Changz Changzh Servi
100.00% Set-up
Management Co., Ltd. hou ou ce
(2) Significant Non-wholly-owned Subsidiary
Unit: RMB
Declaring
Shareholding The profit or loss Balance of
dividends
proportion of attributable to the non-controlling
Name distributed to
non-controlling non-controlling interests at the
non-controlling
interests interests period-end
interests
Changchai
Wanzhou Diesel 40.00% 197,910.74 19,811,859.46
Engine Co., Ltd.
Changzhou
Changchai
Housheng
5.00% -335,602.60 -313,270.31
Agricultural
Equipment Co.,
Ltd.
Holding proportion of non-controlling interests in subsidiary different from voting proportion: Not applicable
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
Unit: RMB
Ending balance Beginning balance
Non- Non-
Non- Curre Non- Curre
Curre curre Total Curre curre Total
Name curre Total nt curre Total nt
nt nt liabili nt nt liabili
nt assets liabili nt assets liabili
assets liabili ties assets liabili ties
assets ties assets ties
ty ty
Chan
gchai
Wanz
hou 49,26 25,04 74,31 24,78 24,78 43,80 25,82 69,62 20,59 20,59
Diese 7,159 4,012 1,171 1,522 1,522 7,991 1,314 9,305 4,433 4,433
l .00 .17 .17 .52 .52 .71 .00 .71 .90 .90
Engin
e Co.,
Ltd.
Chan
gzhou
Chan
gchai
Hous
heng 26,35 26,77 33,04 33,04 28,57 29,08 28,64 28,64
423,4 514,6
Agric 6,205 9,698 5,105 5,105 3,892 8,562 1,916 1,916
93.77 69.94
ultura .03 .80 .00 .00 .12 .06 .23 .23
l
Equip
ment
Co.,
Ltd.
Unit: RMB
Reporting Period Same period of last year
Cash Cash
Total Total
flows flows
Name Operating comprehe Operating comprehe
Net profit from Net profit from
revenue nsive revenue nsive
operating operating
income income
activities activities
Changcha
i
Wanzhou 43,143,29 494,776.8 494,776.8 2,183,407 40,959,22 160,355.4 160,355.4 1,526,529
Diesel 6.52 4 4 .36 2.43 3 3 .99
Engine
Co., Ltd.
Changzh
ou
Changcha
i
Houshen
14,280,06 -6,712,05 -6,712,05 -171,680. 13,888,57 -926,825. -926,825. -419,750.
g
6.47 2.03 2.03 44 9.77 38 38 02
Agricultu
ral
Equipme
nt Co.,
Ltd.
2. Equity in the Structured Entity Excluded in the Scope of Consolidated Financial Statements
Notes to the structured entity excluded in the scope of consolidated financial statements:
In 2017, the Company set up Changzhou Xietong Private Equity Fund (Limited Partnership) together with
Synergetic Innovation Fund Management Co., Ltd. through joint investment. On 18 October 2018 and 3 December
2020, new partners were added. In line with the revised Partnership Agreement, the general partner is Synergetic
Innovation Fund Management Co., Ltd., and the limited partners are Changchai Company, Limited, Changzhou
Zhongyou Petroleum Sales Co., Ltd., Changzhou Fuel Co., Ltd., Tong Yinzhu, Tong Yinxin and Anhui Haiyunzhou
Equity Investment Partnership Enterprise (Limited). In accordance with the Partnership Agreement, the limited
partner does not execute the partnership affairs. Thus, the Company does not control Changzhou Xietong Private
Equity Fund (Limited Partnership) and did not include it into the scope of consolidated financial statements.
X. The Risk Related to Financial Instruments
The goal of the Company’s risk management was gaining the balance between the risk and income, and reduced
the negative impact to the operation performance of the Company in the lowest level and maximized the interests
of shareholders and other equity investors. Base on the risk management goal, the basis strategy of the Company’s
risk management was to recognized and analyze all kinds of risk that the Company faced, set up suitable risk
bottom line and conduct risk management, and supervised the risks timely and reliably and control the risk within
the limited scope.
The main risks of the Company due to financial instruments were credit risk, liquidity risk and market risk. The
management level had reviewed and approved the policies to manage the risks, which summarized as follows:
(I) Credit Risk
Credit risk was one party of the contract failed to fulfill the obligations and causes loss of financial assets of the
other party.
The credit of risk of the Company mainly was related to account receivable, in order to control the risk, the
Company conduct the following methods.
The Company only conducts related transaction with approved and reputable third party, in line with the policy of
the Company, the Company need to conduct credit-check for the clients adopting way of credit to conduct
transaction. In addition, the Company continuously monitors the balance of account receivable to ensure the
Company would not face the significant bad debt risk.
(II) Liquidity Risk
Liquidity risk is referred to the risk of incurring capital shortage when performing settlement obligation in the way
of cash payment or other financial assets. The policies of the Company are to ensure that there was sufficient cash
to pay the due liabilities.
The liquidity risk was centralized controlled by the financial department of the Company. The financial
departments through supervising the balance of the cash and securities can be convert to cash at any time and the
rolling prediction of cash flow in future 12 months to ensure the Company has sufficient cash to pay the liabilities
under the case of all reasonable prediction.
(III) Market Risk
Market risk is refer to risk of the fair value or future cash flow of financial instrument changed due to the change
of market price, including foreign exchange rate risk, interest rate risk.
1. Interest Rate Risk
Interest rate risk is refers to fluctuation risk of the fair value or future cash flow of financial instrument change due
to the change of market price.
2. Foreign Exchange Risk
Foreign exchange rate risk is referred to the risk incurred form the change of exchange rate. As for the Company’s
export business, customers will be given a certain credit term, if the RMB appreciates against the dollar, the
company's accounts receivable will incur foreign currency exchange loss.
XI. The Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMB
Item Ending fair value
Fair value
Fair value Fair value
measurement
measurement measurement Total
items at level
items at level 1 items at level 3
2
I. Consistent fair value
-- -- -- --
measurement
1. Trading financial assets 49,582,105.00 60,651,105.63 110,233,210.63
(I) Financial assets at fair value
49,582,105.00 60,651,105.63 110,233,210.63
through profit or loss
(1) Debt instrument investment
(2) Equity instrument investment 49,582,105.00 60,651,105.63 110,233,210.63
(3) Derivative financial assets
2. Financial assets designated to be
measured at fair value and the
changes included into the current
profit or loss
(1) Debt instrument investment
(2) Equity instrument investment
(II) Other bond investment
(III)Other equity instrument
582,939,000.00 102,198,950.87 685,137,950.87
investment
(2) Equity instrument investment
(IV) Investment property
1. Land use right for lease
2. Buildings leased out
3. Land use right held and planned
to be transferred once appreciating
(V) Living assets
1. Consumptive living assets
2. Productive living assets
Total assets consistently measured
632,521,105.00 162,850,056.50 795,371,161.50
by fair value
(VI) Trading financial liabilities
Of which: Issued trading bonds
Derivative financial
liabilities
Other
(VII) Financial liabilities designated
to be measured at fair value and the
changes recorded into the current
profit or loss
Total liabilities consistently
measured by fair value
II. Inconsistent fair value
-- -- -- --
measurement
(1) Assets held for sale
Total assets inconsistently measured
by fair value
Total liabilities inconsistently
measured by fair value
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level
1
For the listed company stocks held by the company in the investment of other equity instruments measured at fair
value, the closing price at the end of the period was the basis for the measurement of fair value.
3. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for
Consistent and Inconsistent Fair Value Measurement Items at Level 3
(1) Among the trading financial assets, the basic assets invested in financial products include bond assets, deposit
assets, fund assets, etc. The portfolio of investment is managed dynamically, and the change in the fair value of
financial products is difficult to measure, so the cost amount is adopted to confirm its fair value.
For the unsettled forward settlement contract at the end of the period, its fair value was measured based on the
valuation of the bank.
(2) Among the non-current financial assets, such as the equity investment in Jiangsu Liance Mechanical and
Electrical Technology Co., Ltd., which did not have active market transactions, the Company’s equity of the
investee was relatively low and had no significant impact, so it is not feasible to use the income method or market
method to estimate the value. Therefore, the investment cost was treated as reasonable estimation of fair value to
measure at the period-end.
In terms of shares of NEEQ unlisted public companies held by the Company, as for the equity instrument
investment with inactive market transactions, due to the market value of shares cannot be reflected by the market
transaction price with the low volume of holding, so the appraisement to the invested companies by income or
market approach was unfeasible. Therefore, the investment cost shall be treated as reasonable estimation of fair
value to measure at the period-end.
Jiangsu Housheng New Energy Technology Co., Ltd. entrusted an appraisal agency to evaluate the value of all its
shareholders’ equity due to the need for capital increase and share expansion in 2020, and confirmed the premium
rate of capital increase based on the appreciation rate of the equity value (on 30 December 2020, the company’s
investors signed an investment agreement). Therefore, at the end of the period, the fair value of the equity
investment had been adjusted and confirmed accordingly.
(3) Among other equity investment instruments, the total investment in Chengdu Changwan Diesel Engine
Distribution Co., Ltd., Chongqing Wanzhou Changwan Diesel Engine Parts Co., Ltd., Changzhou Economic and
Technological Development Company, Changzhou Tractor Company, Changzhou Economic Commission
Industrial Capital Mutual Aid Association, Beijing Engineering Machinery Agricultural Machinery Company was
RMB 1.21 million, and the fair value was RMB 0.00 due to the difficulty in recovering the investment.
Since its establishment in October 2017, Changzhou Synergetic Innovation Private Equity Fund (Limited
Partnership) has invested in Jiangsu Housheng New Energy Technology Co., Ltd., and the change in fair value of
the company's equity held by it had increased the equity of partners at the end of the year. In addition, the
company's business environment, operating conditions, and financial status had not undergone major changes.
Therefore, the company determined its fair value on the basis of the net book assets of the partnership at the end
of the period.
XII. Related Party and Related-party Transactions
1. Information Related to the Company as the Parent of the Company
Proportion of Proportion of
share held by voting rights
Registratio Registere the Company as owned by the
Name Nature of business
n place d capital the parent Company as the
against the parent against
Company the Company
Investment and operations
of state-owned assets,
assets management
Changzhou
(excluding financial RMB1.2
Investment Changzhou 30.43% 30.43%
business), investment billion
Group Co., Ltd.
consulting (excluding
consulting on investment in
securities and options), etc.
Notes: Information on the Company as the parent
The parent company of the enterprise is Changzhou Investment Group Co., Ltd., which is a wholly-owned
subsidiary of Changzhou Municipal People's Government. In accordance with Changzhou People’s Government
Document (CZF [2006] No. 62), both the Company and Changzhou Investment Group Co., Ltd. are enterprises
which Changzhou People’s Government authorizes Changzhou Government State-owned Assets Supervision and
Administration Commission to perform duties of investors. Thus, after the sharer transfer, Changzhou Investment
Group Co., Ltd. is the controlling shareholder of the Company and Changzhou Government State-owned Assets
Supervision and Administration Commission is still the actual controller of the Company. The final controller of
the Company is Changzhou Government State-owned Assets Supervision and Administration Commission.
2. Subsidiaries of the Company
Refer to Note IX for details.
3. Information on Other Related Parties
Name Relationship with the Company
Senior executives of the company used to serve as
Synergetic Innovation Fund Management Co., Ltd. directors of the Company (no longer as directors of
the Company on 16 April 2020)
Changzhou Synergetic Innovation Private Equity Participated in establishing the industrial investment
Fund (Limited Partnership) fund
Jiangsu Housheng New Energy Technology Co., Ltd. Shareholding enterprise of the Company
Donghai Securities Co., Ltd. Controlled by the same Company as the parent
4. Related-party Transactions
(1) Other Related-party Transaction
On 28 June 2020, the 3rd Meeting of the 9th Board of Directors approved the Proposal on Signature of Joint
Sponsorship Underwriting Agreement of the Private Placement of A shares and Related-party Transaction, which
allowed the Company signing the joint sponsorship underwriting agreement with Industrial Securities Co., Ltd.
(hereinafter referred to as “Industrial Securities”) and Donghai Securities Co., Ltd. (hereinafter referred to as
“Donghai Securities”), and appointing Industrial Securities and Donghai Securities as the co-sponsor underwriters
for the private placement of A shares of the Company with sponsor fee of RMB3 million to Industrial Securities
and Donghai Securities and the underwriting fee of no more than RMB11 million (inclusive of RMB11 million).
As of 31 December 2020, the Company has paid a sponsorship fee of RMB 750,000 to Donghai Securities.
XIII. Commitments and Contingency
1. Significant Commitments
Significant commitments on balance sheet date
As of 31 December 2020, there was no significant commitment for the Company to disclose.
2. Contingency
As of 31 December 2020, there was no contingencies for the Company to disclose.
XIV. Events after Balance Sheet Date
1. Profit Distribution
Unit: RMB
Profits or dividends to be distributed 0
2. Notes to Other Events after Balance Sheet Date
According to the Investment Agreement signed on 30 December 2020, the Company increased its capital to Jiangsu
Housheng New Energy Technology Co., Ltd. by RMB 26.25 million on 11 January 2021.
As of the approval issue date of financial statements, there was no other significant event after balance sheet date
that shall be disclosed.
XV. Other Significant Events
1. Correction of Previous Accounting Error
(1) Retrospective Restatement
Unit: RMB
Processing Affected financial statement line items of the Cumulative
Content
procedure comparative periods effects
Changzhou Consolidated Balance Sheet in 2019-Mnetary assets 1,375,254.03
Xingsheng Consolidated Balance Sheet in 2019-Trading
3,050,000.00
Property financial assets
Management The 4th Meeting Consolidated Balance Sheet in 2019-Accounts
6,391.36
Co., Ltd. that of the 9th Board receivable
was not of Directors held Consolidated Balance Sheet in 2019-Prepayment 38,200.00
included in on 29 July 2020 Consolidated Balance Sheet in 2019-Other
-893,682.24
the scope of reviewed and receivables
consolidated approved the Consolidated Balance Sheet in 2019-Inventories 7,158.32
statements Proposal on Consolidated Balance Sheet in 2019-Other current
67,355.14
before has Accounting assets
been Errors Correction Consolidated Balance Sheet in 2019-Total of current
4,632,342.79
conducted in Previous assets
accounting Period. Consolidated Balance Sheet in 2019-Fixed assets 140,153.19
treatment Consolidated Balance Sheet in 2019-Long-term
53,497.80
according to prepaid expenses
the Consolidated Balance Sheet in 2019-Deferred 6.52
provisions of income tax assets
the Consolidated Balance Sheet in 2019-Total of
193,657.51
accounting non-current assets
standards Consolidated Balance Sheet in 2019- Total assets 4,826,000.30
during the Consolidated Balance Sheet in 2019-Accounts
14,760.00
Reporting payable
Period. Consolidated Balance Sheet in 2019-Advances from
952,386.57
customers
Consolidated Balance Sheet in 2019-Other payables 1,224,017.91
Consolidated Balance Sheet in 2019-Total of current
2,191,164.48
liabilities
Consolidated Balance Sheet in 2019-Total liabilities 2,191,164.48
Consolidated Balance Sheet in 2019-Surplus
163,483.58
reserves
Consolidated Balance Sheet in 2019- Retained
1,471,352.24
earnings
Consolidated Balance Sheet in 2019- Total equity
2,634,835.82
attributable to owners of the Company as the parent
Consolidated Balance Sheet in 2019- Total owners’
2,634,835.82
equity
Consolidated Balance Sheet in 2019- Total liabilities
4,826,000.30
and owners’ equity
Consolidated Income Statement in 2019- Revenue 5,687,083.80
Consolidated Income Statement in 2019- Operating
5,687,083.80
revenue
Consolidated Income Statement in 2019-Operating
5,726,254.73
costs
Consolidated Income Statement in 2019- Cost of
4,884,089.75
sales
Consolidated Income Statement in 2019- Taxes and
21,043.17
surtaxes
Consolidated Income Statement in 2019-
832,824.01
Administrative expense
Consolidated Income Statement in 2019- Finance
-11,702.20
costs
Consolidated Income Statement in 2019-Interest
13,193.10
income
Consolidated Income Statement in 2019- Other
12,063.29
income
Consolidated Income Statement in 2019- Investment
58,549.24
income
Consolidated Income Statement in 2019-Credit
7,317.61
impairment loss
Consolidated Income Statement in 2019-Operating
38,759.21
profit
Consolidated Income Statement in 2019-
16,006.10
Non-operating income
Consolidated Income Statement in 2019-
12,597.35
Non-operating expense
Consolidated Income Statement in 2019- Profit
42,167.96
before taxation
Consolidated Income Statement in 2019- Income tax 10,227.22
Consolidated Income Statement in 2019-Net profit 31,940.74
Consolidated Income Statement in 2019- Net profit
31,940.74
from continuing operations
Consolidated Income Statement in 2019- Net profit
31,940.74
attributable to owners of the Company as the parent
Consolidated Income Statement in 2019-Total
31,940.74
comprehensive income
Consolidated Income Statement in 2019-
31,940.74
Attributable to owners of the Company as the parent
Consolidated Income Statement in 2019-Earnings
0.00005
per share
Consolidated Income Statement in 2019- Diluted
0.00005
earnings per share
Consolidated Cash Flow Statement in
2019-Proceeds from sale of commodities and 6,150,306.39
rendering of services
Consolidated Cash Flow Statement in 2019- Cash
110,627.50
generated from other operating activities
Consolidated Cash Flow Statement in 2019-Subtotal
6,260,933.89
of cash used in operating activities
Consolidated Cash Flow Statement in 2019-
4,051,587.11
Payments for commodities and services
Consolidated Cash Flow Statement in 2019- Cash
1,415,158.29
paid to and for employees
Consolidated Cash Flow Statement in 2019- Taxes
223,381.96
paid
Consolidated Cash Flow Statement in 2019- Cash
353,138.57
used in other operating activities
Consolidated Cash Flow Statement in 2019-
6,043,265.93
Subtotal of cash used in operating activities
Consolidated Cash Flow Statement in 2019- Net
217,667.96
cash generated from/used in operating activities
Consolidated Cash Flow Statement in
3,900,000.00
2019-Proceeds from disinvestments
Consolidated Cash Flow Statement in 2019-
58,549.24
Investment income
Consolidated Cash Flow Statement in 2019-
3,958,549.24
Subtotal of cash generated from investing activities
Consolidated Cash Flow Statement in
2019-Payments for acquisition of fixed assets, 37,696.92
intangible assets and other long-lived assets
Consolidated Cash Flow Statement in 2019-
6,950,000.00
Payments for investments
Consolidated Cash Flow Statement in 2019-
6,987,696.92
Subtotal of cash used in investing activities
Consolidated Cash Flow Statement in 2019- Net
-3,029,147.68
cash generated from/used in investing activities
Consolidated Cash Flow Statement in 2019- Net
-2,811,479.72
increase in cash and cash equivalents
2. Segment Information
(1) Determination Basis and Accounting Policies of Reportable Segment
Due to the operation scope of the Company and subsidiaries were similar, the Company conducts common
management, and did not divide business unit, so the Company only made single branch report.
3. Other Significant Transactions and Events with Influence on Investors’ Decision-making
No.
XVI. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts Receivable
(1) Accounts Receivable Classified by Category
Unit: RMB
Ending balance Beginning balance
Carrying Bad debt Carrying Bad debt
amount provision amount provision
Carryi
Category Withd Withd Carryin
ng
Amou Propo Amou rawal Amou Propor Amou rawal g value
value
nt rtion nt propo nt tion nt propor
rtion tion
Accounts
receivable for
33,54 31,64 1,895, 37,51 33,788
which bad debt 94.35 3,721,7
3,441. 7.29% 7,855. 586.8 0,056. 6.66% ,291.8 90.08
provision % 65.04
92 09 3 90 6 %
separately
accrued
Of which:
Accounts
receivable with
significant
29,87 27,97 1,895, 32,61 28,896
single amount 93.65 3,721,7
0,525. 4,938. 586.8 8,199. ,434.9 88.59
for which bad 6.50% % 5.79% 65.04
05 22 3 97 3 %
debt provision
separately
accrued
Accounts
receivable with
insignificant
3,672, 3,672, 4,891,
single amount 100.0 4,891, 100.0
916.8 916.8 856.9
for which bad 0.80% 0% 0.87% 856.93 0%
7 7 3
debt provision
separately
accrued
Accounts
receivable for
426,3 110,3 315,9 525,8 192,14
which bad debt 25.89 333,725
00,27 92.71 67,70 32,57 74,42 93.34 8,650. 36.54
provision % ,773.00
9.29 % 4.87 4.42 3.56 % 56 %
accrued by
group
Of which:
Accounts
receivable for
which bad debt 426,3 110,3 315,9 525,8 192,14
25.89 333,725
provision 00,27 92.71 67,70 32,57 74,42 93.34 8,650. 36.54
% ,773.00
accrued by 9.29 % 4.87 4.42 3.56 % 56 %
credit risk
features group
459,8 142,0 317,8 563,3 225,93
100.0 30.88 100.00 337,447
Total 43,72 15,55 28,16 84,48 6,942. 40.10
0% % % ,538.04
1.21 9.96 1.25 0.46 42 %
Accounts receivable with significant single amount for which bad debt provision separately accrued at the end of
the period:
Unit: RMB
Ending balance
Name Withdrawal
Carrying amount Bad debt provision Withdrawal reason
proportion
Customer 1 1,470,110.64 1,470,110.64 100.00% Difficult to recover
Customer 2 1,902,326.58 1,902,326.58 100.00% Difficult to recover
Customer 3 6,215,662.64 6,215,662.64 100.00% Difficult to recover
Expected to
Customer 4 2,254,860.60 2,175,814.38
96.49% difficultly recover
Expected to
Customer 5 3,633,081.23 1,816,540.62
50.00% difficultly recover
Customer 6 3,279,100.00 3,279,100.00 100.00% Difficult to recover
Customer 7 1,617,988.01 1,617,988.01 100.00% Difficult to recover
Customer 8 5,359,381.00 5,359,381.00 100.00% Difficult to recover
Customer 9 2,584,805.83 2,584,805.83 100.00% Difficult to recover
Customer 10 1,553,208.52 1,553,208.52 100.00% Difficult to recover
Total 29,870,525.05 27,974,938.22 -- --
Accounts receivable for which bad debt provision accrued by credit risk features group
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion
Within 1 year 309,661,916.82 6,193,238.34 2.00%
1 to 2 years 8,482,312.62 424,115.63 5.00%
2 to 3 years 1,236,457.38 185,468.61 15.00%
3 to 4 years 4,343,446.09 1,303,033.83 30.00%
4 to 5 years 785,744.81 471,446.89 60.00%
Over 5 years 101,790,401.57 101,790,401.57 100.00%
Total 426,300,279.29 110,367,704.87 --
Notes to the basis for the determination of the groups:
The accounts receivable was adopted the aging analysis based on the months when the accounts occurred actually,
among which the accounts occurred earlier will be priority to be settled in terms of the capital turnover.
Explanation of the input value and assumption adopted to determine the withdrawal amount of bad debt provision
on the Current Period: With reference to the experience of the historical credit loss, combining with the prediction
of the present status and future financial situation, the comparison table was prepared between the aging of the
accounts receivable and estimated credit loss rate in the duration and to calculate the estimated credit loss.
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if
adopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivable.
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Carrying amount
Within 1 year (including 1 year) 309,661,916.82
1 to 2 years 9,058,714.07
2 to 3 years 3,186,206.94
Over 3 years 137,936,883.38
3 to 4 years 6,867,235.84
4 to 5 years 3,394,775.63
Over 5 years 127,674,871.91
Total 459,843,721.21
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversal or Write-o Ending balance
balance Withdrawal Other
recovery ff
Bad debt
31,647
provision
33,788,291.86 2,140,436.77 ,855.0
withdrawn
9
separately
Bad debt
110,36
provision 82,379,
192,148,650.56 598,258.02 7,704.
withdrawn 203.71
87
by group
142,01
82,379,
Total 225,936,942.42 598,258.02 2,140,436.77 5,559.
203.71
96
Of which bad debt provision reversed or recovered with significant amount in the Reporting Period: No.
(3) There Was No Particulars of the Actual Verification of Accounts Receivable during the Reporting
Period
Unit: RMB
Item Amount
Actual verification of accounts receivable 82,379,203.71
Of which the verification of significant accounts receivable:
Unit: RMB
Whethe
r
generate
Name of the Amount Performance of verification d from
Nature Reason
entity verified procedures related-
party
transacti
on
Customer 1 14,234,302.79 The aging of 1. The Company held the 3rd
Customer 2 10,000,000.00 canceled receivables Meeting of the 9th Board of
Customer 3 7,583,232.65 shall exceed 5 years Directors and the 3rd Meeting
Customer 4 4,581,880.41 and result from of the 9th Supervisory
Bad
Customer 5 3,600,000.00 fruitless collection, Committee on 28 June 2020
debt Not
Customer 6 2,752,840.00 and if any single and approved the Proposal on
losses
Customer 7 2,450,966.67 client’s large amount Verification of Some Accounts
Customer 8 2,180,243.72 is involved without Receivable.
Customer 9 1,976,282.47 any business 2. On 12 November 2020, the
Customer 10 1,860,830.82 transaction with the bankruptcy liquidation
Customer 11 1,758,686.48 Company for over procedures of Shandong
Customer 12 1,662,052.98 ten years, the client’s Hongli Group Co., Ltd. had
Customer 13 1,285,160.60 qualification for been implemented, and the
Customer 14 1,236,225.30 business operation repayment rate of the
Customer 15 1,235,170.95 shall be canceled or Company’s outstanding
Customer 16 1,200,000.00 the insolvency payment was 0. On 29
Customer 17 1,149,217.70 liquidation is January 2021, the Company
Customer 18 848,158.92 finished without any held the 7th Meeting of the
Customer 19 841,642.86 production and 9th Board of Directors and
Customer 20 830,000.00 operation activities. approved the Proposal on
Customer 21 800,000.00 Verification of Accounts
Receivable of Shandong
Customer 22 797,786.72
Hongli Group Co., Ltd..
Customer 23 796,226.73
Customer 24 760,197.20
Customer 25 728,666.36
Customer 26 677,250.00
Customer 27 551,305.36
Customer 28 549,800.00
Customer 29 537,698.10
Customer 30 12,343,782.28
Customer 31 520,892.51
Total 82,330,500.58 -- -- --
(4) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to total ending
Ending balance of Ending balance of bad
Name of the entity balance of accounts
accounts receivable debt provision
receivable
Customer 1 140,334,103.03 30.52% 2,806,682.06
Customer 2 36,991,841.04 8.04% 856,733.55
Customer 3 33,407,519.00 7.26% 668,150.38
Customer 4 22,051,755.53 4.80% 441,035.11
Customer 5 18,721,197.34 4.07% 374,423.95
Total 251,506,415.94 54.69%
2. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Other receivables 24,327,355.36 22,741,542.22
Total 24,327,355.36 22,741,542.22
(1) Other Receivable
1) Other Receivables Classified by Account Nature
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Cash deposit and Margin 4,200.00 4,200.00
Intercourse funds among units 39,857,085.87 37,618,642.29
Petty cash and borrowings by
673,198.96 624,083.07
employees
Other 13,614,585.00 15,373,206.41
Total 54,149,069.83 53,620,131.77
2) Withdrawal of Bad Debt Provision
Unit: RMB
First stage Second stage Third stage
Expected loss in the
Expected credit Expected loss in the
Bad debt provision duration (credit Total
loss of the next duration (credit
impairment not
12 months impairment occurred)
occurred)
Balance of 1
30,878,589.55 30,878,589.55
January 2020
Balance of 1
January 2020 in the —— —— —— ——
Current Period
--Transfer to
Second stage
-- Transfer to Third
stage
-- Reverse to
Second stage
-- Reverse to First
stage
Withdrawal of the
Current Period
Reversal of the
1,056,875.08 1,056,875.08
Current Period
Write-offs of the
Current Period
Verification of the
Current Period
Other changes
Balance of 31
29,821,714.47 29,821,714.47
December 2020
Changes of carrying amount with significant amount changed of loss provision in the Current Period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Carrying amount
Within 1 year (including 1 year) 14,386,648.65
1 to 2 years 8,533,236.84
2 to 3 years 1,450,140.04
Over 3 years 29,779,044.30
3 to 4 years 1,151,162.51
4 to 5 years 208,579.74
Over 5 years 28,419,302.05
Total 54,149,069.83
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Information of bad debt provision withdrawn:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversal or Write-of Ending balance
balance Withdrawal Other
recovery f
Bad debt
provision
5,042,448.58 3,080.17 5,039,368.41
withdrawn
separately
Bad debt
provision
25,836,140.97 1,053,794.91 24,782,346.06
withdrawn by
group
Total 30,878,589.55 1,056,875.08 29,821,714.47
4) Particulars of the Actual Verification of Other Receivables during the Reporting Period: No.
5) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to
total ending Ending balance
Name of the entity Nature Ending balance Aging balance of of bad debt
other provision
receivables
Changzhou Changchai Interco
Benniu Diesel Engine urse 10,000,000.00 Within 1 year 18.47% 200,000.00
Fittings Co., Ltd. funds
Within 1 year
with RMB
Changzhou Changchai Interco 1,411,701.19, 1-2
Housheng Agricultural urse 10,522,177.72 years with RMB 19.43% 585,921.31
Equipment Co., Ltd. funds 8,088,841.90, 2-3
years with RMB
1,021,634.63
Interco
Changzhou Compressors
urse 2,940,000.00 Over 5 years 5.43% 2,940,000.00
Factory
funds
Interco
Changchai Group Imp.
urse 2,853,188.02 Over 5 years 5.27% 2,853,188.02
& Exp. Co., Ltd.
funds
Interco
Changchai New District
urse 1,626,483.25 Over 5 years 3.00% 1,626,483.25
Accounting Center
funds
Total -- 27,941,848.99 51.60% 8,205,592.58
3. Long-term Equity Investment
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciation Carrying Carrying Depreciation Carrying
amount reserves value amount reserves value
Investment to 382,752,730. 375,752,730. 252,752,730. 252,752,730.
7,000,000.00
subsidiaries 03 03 03 03
Investment to
joint ventures
and 44,182.50 44,182.50 44,182.50 44,182.50
associated
enterprises
382,796,912. 375,752,730. 252,796,912. 252,752,730.
Total 7,044,182.50 44,182.50
53 03 53 03
(1) Investment to Subsidiaries
Unit: RMB
Increase/decrease
Beginning Ending Ending
Withdrawa
balance balance balance of
Investee Additional Reduced l of
(carrying Other (carrying depreciatio
investment investment depreciatio
value) value) n reserve
n reserve
Changchai
Wanzhou
51,000,000 51,000,000
Diesel
.00 .00
Engine Co.,
Ltd.
Changzhou
Changchai
Benniu
96,466,500 96,466,500
Diesel
.00 .00
Engine
Fittings Co.,
Ltd.
Changzhou
Housheng 40,000,000 40,000,000
Investment .00 .00
Co., Ltd.
Changzhou
Changchai
Housheng 7,000,000. 7,000,000. 7,000,000.
Agricultural 00 00 00
Equipment
Co., Ltd.
Changzhou
Fuji
Changchai
47,286,230 47,286,230
Robin
.03 .03
Gasoline
Engine Co.,
Ltd.
Jiangsu
Changchai 10,000,000 130,000,00 140,000,00
Machinery .00 0.00 0.00
Co., Ltd.
Changzhou
Xingsheng
1,000,000. 1,000,000.
Property
00 00
Managemen
t Co., Ltd.
252,752,73 130,000,00 7,000,000. 375,752,73 7,000,000.
Total
0.03 0.00 00 0.03 00
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
Increase/decrease
Gains
Adjust Endin
Begin and Cash Endin
ment Withd g
ning losses bonus g
of rawal balanc
balanc Additi Reduc recogn Chang or balanc
Invest other of e of
e onal ed ized es of profits e
ee compr impair Other deprec
(carryi invest invest under other annou (carryi
ehensi ment iation
ng ment ment the equity nced ng
ve provis reserv
value) equity to value)
incom ion e
metho issue
e
d
II. Associated enterprises
Beijin
g
Tsingh
ua
Xingy
e
Indust 44,182
0.00 0.00
rial .50
Invest
ment
Mana
gemen
t Co.,
Ltd.
Subtot 44,182
0.00 0.00
al .50
44,182
Total 0.00 0.00
.50
4. Operating Revenue and Cost of Sales
Unit: RMB
Reporting Period Same period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main operations 2,086,035,553.15 1,794,202,913.98 1,829,511,302.64 1,547,250,831.33
Other operations 37,164,684.96 29,240,490.81 36,780,436.75 28,376,158.13
Total 2,123,200,238.11 1,823,443,404.79 1,866,291,739.39 1,575,626,989.46
Information related to performance obligations: performing according to the contract offer
Information related to transaction value assigned to residual performance obligations:
The amount of revenue corresponding to performance obligations of contracts signed but not performed or not
fully performed yet was RMB0 at the period-end.
5. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Dividend income from holding of other equity
5,004,000.00 6,069,000.00
instrument investment
Income from transferring to accommodation business 433,925.05 137,814.50
Total 5,437,925.05 6,206,814.50
XVII. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
√ Applicable □ Not applicable
Unit: RMB
Item Amount Note
Gain or loss on disposal of non-current assets 263,408.53
Government subsidies charged to current profit or loss
(exclusive of government subsidies given in the
7,763,215.65
Company’s ordinary course of business at fixed quotas or
amounts as per the government’s uniform standards)
Capital occupation charges on non-financial enterprises
344,842.86
that are recorded into current gains and losses
Gain/loss from change of fair value of trading financial
assets and liabilities, and derivative financial assets and
liabilities, and investment gains from disposal of trading
financial assets and liabilities, and derivative financial 27,526,935.85
assets and liabilities, and investment in other debt
obligations, other than valid hedging related to the
Company’s common businesses
Other non-operating income and expenses other than the
-1,571,453.49
above
Less: Income tax effects 7,122,148.63
Non-controlling interests effects 255,505.29
Total 26,949,295.48 --
Explain the reasons if the Company classifies an item as an non-recurring gain/loss according to the definition in
the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Non-recurring Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said
explanatory announcement as a recurrent gain/loss item.
□ Applicable √ Not applicable
2. Return on Equity and Earnings Per Share
EPS
Profit as of Reporting Period Weighted average ROE EPS-basic EPS-diluted(Yuan/s
(Yuan/share) hare)
Net profit attributable to ordinary
2.45% 0.0934 0.0934
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company after
1.19% 0.0454 0.0454
deduction of non-recurring profit
or loss
The Board of Directors
Changchai Company, Limited
15 April 2021
