Changchai Company, Limited
SEMI-Financial Report For the Year 2022
I Independent Auditor’s Report
Are these interim financial statements audited by an independent auditor?
□ Yes √ No
These interim financial statements have not been audited by an independent auditor.
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Changchai Company, Limited
30 June 2022
Unit: RMB
Item 30 June 2022 1 January 2022
Current assets:
Monetary assets 572,221,826.49 707,966,678.74
Settlement reserve
Interbank loans granted
Held-for-trading financial assets 403,981,913.88 404,053,261.57
Derivative financial assets
Notes receivable 481,963,539.81 334,311,236.78
Accounts receivable 915,456,685.20 375,209,126.48
Accounts receivable financing 109,896,100.86 497,388,826.02
Prepayments 9,181,800.63 8,197,418.39
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract
reserve
Other receivables 17,260,272.39 19,515,350.52
Including: Interest receivable
Dividends
receivable
Financial assets purchased under
resale agreements
Inventories 533,700,662.32 651,083,758.18
Contract assets
Assets held for sale
Current portion of non-current
assets
Other current assets 28,394,257.94 44,060,822.57
Total current assets 3,072,057,059.52 3,041,786,479.25
Non-current assets:
Loans and advances to
customers
Investments in debt obligations 37,898,226.39 37,898,226.39
Investments in other debt
obligations
Long-term receivables
Long-term equity investments
Investments in other equity
721,918,646.53 779,877,646.53
instruments
Other non-current financial
112,500,000.00 112,500,000.00
assets
Investment property 43,379,017.43 44,597,255.21
Fixed assets 710,380,148.39 402,915,521.65
Construction in progress 76,620,116.30 270,305,690.91
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 158,820,832.11 155,154,745.91
Development costs
Goodwill
Long-term prepaid expense 168,183.91 110,345.30
Deferred income tax assets 10,705,583.29 10,693,809.23
Other non-current assets 11,611,024.84 4,543,240.88
Total non-current assets 1,884,001,779.19 1,818,596,482.01
Total assets 4,956,058,838.71 4,860,382,961.26
Current liabilities:
Short-term borrowings 134,395,924.99 73,971,466.65
Borrowings from the central
bank
Interbank loans obtained
Held-for-trading financial
liabilities
Derivative financial liabilities
Notes payable 565,529,500.00 550,774,400.00
Accounts payable 716,529,188.78 666,186,668.82
Advances from customers 411,746.26 660,965.62
Contract liabilities 39,180,596.15 26,864,081.97
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 13,334,668.05 45,385,667.48
Taxes payable 9,362,552.01 5,306,378.82
Other payables 153,925,355.85 148,361,373.29
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 117,795,225.18 88,938,192.79
Total current liabilities 1,750,464,757.27 1,606,449,195.44
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 39,615,355.40 39,615,355.40
Deferred income tax liabilities 101,423,332.63 117,344,161.11
Other non-current liabilities
Total non-current liabilities 141,038,688.03 156,959,516.51
Total liabilities 1,891,503,445.30 1,763,408,711.95
Owners’ equity:
Share capital 705,692,507.00 705,692,507.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 640,133,963.01 640,676,218.40
Less: Treasury stock
Other comprehensive income 456,746,349.55 506,011,499.55
Specific reserve 18,812,950.04 18,812,950.04
Surplus reserves 334,144,488.46 334,144,488.46
General reserve
Retained earnings 839,272,254.93 872,212,354.88
Total equity attributable to owners
2,994,802,512.99 3,077,550,018.33
of the Company as the parent
Non-controlling interests 69,752,880.42 19,424,230.98
Total owners’ equity 3,064,555,393.41 3,096,974,249.31
Total liabilities and owners’ equity 4,956,058,838.71 4,860,382,961.26
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 30 June 2022 1 January 2022
Current assets:
Monetary assets 470,089,580.54 615,184,387.01
Held-for-trading financial assets 280,677,397.27 262,004,030.14
Derivative financial assets
Notes receivable 442,389,706.25 312,118,296.88
Accounts receivable 876,984,511.81 349,135,255.42
Accounts receivable financing 104,609,495.00 497,388,826.02
Prepayments 2,008,908.66 2,727,652.23
Other receivables 112,148,961.53 26,497,081.34
Including: Interest receivable
Dividends
receivable
Inventories 384,892,199.17 516,588,187.24
Contract assets
Assets held for sale
Current portion of non-current
assets
Other current assets 21,292,211.46
Total current assets 2,673,800,760.23 2,602,935,927.74
Non-current assets:
Investments in debt obligations 37,898,226.39 37,898,226.39
Investments in other debt
obligations
Long-term receivables
Long-term equity investments 569,273,530.03 535,752,730.03
Investments in other equity
721,918,646.53 779,877,646.53
instruments
Other non-current financial
112,500,000.00 112,500,000.00
assets
Investment property 43,379,017.43 44,597,255.21
Fixed assets 268,405,430.86 325,034,679.67
Construction in progress 14,527,817.41 15,557,418.76
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 64,495,178.59 66,621,426.26
Development costs
Goodwill
Long-term prepaid expense
Deferred income tax assets 9,613,375.32 9,613,375.32
Other non-current assets
Total non-current assets 1,842,011,222.56 1,927,452,758.17
Total assets 4,515,811,982.79 4,530,388,685.91
Current liabilities:
Short-term borrowings 127,395,924.99 58,971,466.65
Held-for-trading financial
liabilities
Derivative financial liabilities
Notes payable 555,529,500.00 544,444,400.00
Accounts payable 511,502,328.13 546,689,207.59
Advances from customers 361,746.26 660,965.62
Contract liabilities 33,230,278.78 24,730,270.44
Employee benefits payable 6,363,916.75 37,861,577.50
Taxes payable 5,136,642.12 2,955,053.82
Other payables 131,936,513.29 135,773,368.98
Including: Interest payable
Dividends payable 3,243,179.97 3,243,179.97
Liabilities directly associated
with assets held for sale
Current portion of non-current
liabilities
Other current liabilities 101,680,550.03 63,535,570.11
Total current liabilities 1,473,137,400.35 1,415,621,880.71
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 39,615,355.40 39,615,355.40
Deferred income tax liabilities 86,442,011.09 95,034,251.50
Other non-current liabilities
Total non-current liabilities 126,057,366.49 134,649,606.90
Total liabilities 1,599,194,766.84 1,550,271,487.61
Owners’ equity:
Share capital 705,692,507.00 705,692,507.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 659,418,700.67 659,418,700.67
Less: Treasury stock
Other comprehensive income 456,746,349.55 506,011,499.55
Specific reserve 18,812,950.04 18,812,950.04
Surplus reserves 334,144,488.46 334,144,488.46
Retained earnings 741,802,220.23 756,037,052.58
Total owners’ equity 2,916,617,215.95 2,980,117,198.30
Total liabilities and owners’ equity 4,515,811,982.79 4,530,388,685.91
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
3. Consolidated Income Statement
Unit: RMB
Item H1 2022 H1 2021
1. Revenue 1,178,222,492.04 1,497,170,455.80
Including: Operating revenue 1,178,222,492.04 1,497,170,455.80
Interest income
Insurance premium income
Handling charge and commission income
2. Costs and expenses 1,175,890,460.94 1,452,332,780.19
Including: Cost of sales 1,051,395,232.42 1,284,114,729.46
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 5,360,425.54 6,255,278.20
Selling expense 51,759,201.38 66,174,807.84
Administrative expense 40,216,534.11 48,008,480.48
R&D expense 40,159,787.47 45,136,853.96
Finance costs -13,000,719.98 2,642,630.25
Including: Interest expense 3,276,786.93 4,437,018.11
Interest income 6,634,812.22 4,502,088.58
Add: Other income 1,602,830.77 406,454.70
Return on investment (“-” for loss) 11,744,282.88 8,524,500.87
Including: Share of profit or loss of joint ventures
and associates
Income from the derecognition of financial assets
at amortized cost (“-” for loss)
Exchange gain (“-” for loss)
Net gain on exposure hedges (“-” for loss)
Gain on changes in fair value (“-” for loss) -30,488,388.88 122,554,092.00
Credit impairment loss (“-” for loss) -11,932,826.66 -12,495,432.28
Asset impairment loss (“-” for loss) 4,342,775.64 -5,950,895.20
Asset disposal income (“-” for loss) -361,395.36 -751,441.20
3. Operating profit (“-” for loss) -22,760,690.51 157,124,954.50
Add: Non-operating income 2,349,897.18 850,183.59
Less: Non-operating expense 392,257.24 333,307.72
4. Profit before tax (“-” for loss) -20,803,050.57 157,641,830.37
Less: Income tax expense -6,206,048.88 28,287,379.84
5. Net profit (“-” for net loss) -14,597,001.69 129,354,450.53
5.1 By operating continuity
5.1.1 Net profit from continuing operations (“-” for net
-14,597,001.69 129,354,450.53
loss)
5.1.2 Net profit from discontinued operations (“-” for net
loss)
5.2 By ownership
5.2.1 Net profit attributable to owners of the Company as
-14,595,269.61 129,189,065.60
the parent
5.2.1 Net profit attributable to non-controlling interests -1,732.08 165,384.93
6. Other comprehensive income, net of tax -49,265,150.00 106,633,979.81
Attributable to owners of the Company as the parent -49,265,150.00 106,633,979.81
6.1 Items that will not be reclassified to profit or loss -49,265,150.00 106,633,979.81
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
-49,265,150.00 106,633,979.81
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 -63,862,151.69 235,988,430.34
Attributable to owners of the Company as the parent -63,860,419.61 235,823,045.41
Attributable to non-controlling interests -1,732.08 165,384.93
8. Earnings per share
8.1 Basic earnings per share -0.0207 0.2301
8.2 Diluted earnings per share -0.0207 0.2301
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
4. Income Statement of the Company as the Parent
Unit: RMB
Item H1 2022 H1 2021
1. Operating revenue 1,078,301,529.20 1,410,448,746.19
Less: Cost of sales 970,973,105.63 1,208,764,033.69
Taxes and surcharges 3,155,384.25 4,635,318.65
Selling expense 46,868,501.97 61,699,594.15
Administrative expense 30,805,739.43 39,946,732.13
R&D expense 38,111,512.10 44,159,551.96
Finance costs -12,522,766.90 879,974.12
Including: Interest expense 2,512,056.83 3,961,226.02
Interest income 6,463,613.32 4,225,564.97
Add: Other income 1,591,699.00 324,000.00
Return on investment (“-” for loss) 11,181,384.11 8,191,724.76
Including: Share of profit or loss of joint
ventures and associates
Income from the derecognition of financial
assets at amortized cost (“-” for loss)
Net gain on exposure hedges (“-” for loss)
Gain on changes in fair value (“-” for loss) 677,397.27 33,750,000.00
Credit impairment loss (“-” for loss) -18,418,259.44 -12,089,483.86
Asset impairment loss (“-” for loss) 4,630,554.88 903,169.33
Asset disposal income (“-” for loss) 3,985,814.42 -751,441.20
2. Operating profit (“-” for loss) 4,558,642.96 80,691,510.52
Add: Non-operating income 106,436.47 155,765.48
Less: Non-operating expense 551,906.60 31,065.09
3. Profit before tax (“-” for loss) 4,113,172.83 80,816,210.91
Less: Income tax expense 0.00 5,162,965.63
4. Net profit (“-” for net loss) 4,113,172.83 75,653,245.28
4.1 Net profit from continuing operations (“-” for net
4,113,172.83 75,653,245.28
loss)
4.2 Net profit from discontinued operations (“-” for
net loss)
5. Other comprehensive income, net of tax -49,265,150.00 106,633,979.81
5.1 Items that will not be reclassified to profit or loss -49,265,150.00 106,633,979.81
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
-49,265,150.00 106,633,979.81
other 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 -45,151,977.17 182,287,225.09
7. Earnings per share
7.1 Basic earnings per share
7.2 Diluted earnings per share
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
5. Consolidated Cash Flow Statement
Unit: RMB
Item H1 2022 H1 2021
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 852,422,695.04 981,576,052.47
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 21,003,040.54 22,968,063.81
Cash generated from other operating activities 15,868,307.49 8,267,240.80
Subtotal of cash generated from operating activities 889,294,043.07 1,012,811,357.08
Payments for commodities and services 692,753,586.82 817,182,988.13
Net increase in loans and advances to customers
Net increase in deposits in the central bank and in interbank
loans granted
Payments for claims on original insurance contracts
Net increase in interbank loans granted
Interest, handling charges and commissions paid
Policy dividends paid
Cash paid to and for employees 171,587,076.85 182,319,842.94
Taxes paid 22,071,086.33 23,836,429.52
Cash used in other operating activities 77,182,794.19 82,026,216.55
Subtotal of cash used in operating activities 963,594,544.19 1,105,365,477.14
Net cash generated from/used in operating activities -74,300,501.12 -92,554,120.06
2. Cash flows from investing activities:
Proceeds from disinvestment 60,336,793.52 20,900,000.00
Return on investment 11,678,930.55 8,666,039.34
Net proceeds from the disposal of fixed assets, intangible assets
176.99 544,953.88
and other long-lived assets
Net proceeds from the disposal of subsidiaries and other
business units
Cash generated from other investing activities 169,856.31 220,217.55
Subtotal of cash generated from investing activities 72,185,757.37 30,331,210.77
Payments for the acquisition of fixed assets, intangible assets
32,486,960.27 89,253,071.04
and other long-lived assets
Payments for investments 126,279,631.00 49,250,000.00
Net increase in pledged loans granted
Net payments for the acquisition of subsidiaries and other
business units
Cash used in other investing activities 50,000.00
Subtotal of cash used in investing activities 158,766,591.27 138,553,071.04
Net cash generated from/used in investing activities -86,580,833.90 -108,221,860.27
3. Cash flows from financing activities:
Capital contributions received 634,999,996.40
Including: Capital contributions by non-controlling interests
to subsidiaries
Borrowings raised 7,000,000.00
Cash generated from other financing activities 49,395,924.99 1,391,000.00
Subtotal of cash generated from financing activities 49,395,924.99 643,390,996.40
Repayment of borrowings 12,000,000.00
Interest and dividends paid 18,895,164.72 585,750.44
Including: Dividends paid by subsidiaries to non-controlling
interests
Cash used in other financing activities 2,604,075.01 12,694,718.67
Subtotal of cash used in financing activities 21,499,239.73 25,280,469.11
Net cash generated from/used in financing activities 27,896,685.26 618,110,527.29
4. Effect of foreign exchange rates changes on cash and cash
equivalents
5. Net increase in cash and cash equivalents -132,984,649.76 417,334,546.96
Add: Cash and cash equivalents, beginning of the period 573,623,529.10 629,939,540.50
6. Cash and cash equivalents, end of the period 440,638,879.34 1,047,274,087.46
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item H1 2022 H1 2021
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 786,613,668.93 894,925,360.60
Tax rebates 15,030,607.99 17,264,845.63
Cash generated from other operating activities 11,394,587.24 6,892,535.60
Subtotal of cash generated from operating activities 813,038,864.16 919,082,741.83
Payments for commodities and services 656,683,755.72 781,316,544.81
Cash paid to and for employees 142,487,390.71 155,951,400.17
Taxes paid 17,126,241.78 17,244,260.55
Cash used in other operating activities 65,961,229.60 70,426,536.35
Subtotal of cash used in operating activities 882,258,617.81 1,024,938,741.88
Net cash generated from/used in operating activities -69,219,753.65 -105,856,000.05
2. Cash flows from investing activities:
Proceeds from disinvestment
Return on investment 11,181,384.11 8,191,724.76
Net proceeds from the disposal of fixed assets, intangible assets
43,495.14
and other long-lived assets
Net proceeds from the disposal of subsidiaries and other business
units
Cash generated from other investing activities
Subtotal of cash generated from investing activities 11,181,384.11 8,235,219.90
Payments for the acquisition of fixed assets, intangible assets and
3,984,411.73 4,226,730.46
other long-lived assets
Payments for investments 53,520,800.00 186,250,000.00
Net payments for the acquisition of subsidiaries and other
business units
Cash used in other investing activities
Subtotal of cash used in investing activities 57,505,211.73 190,476,730.46
Net cash generated from/used in investing activities -46,323,827.62 -182,241,510.56
3. Cash flows from financing activities:
Capital contributions received 634,999,996.40
Borrowings raised
Cash generated from other financing activities 49,395,924.99 1,391,000.00
Subtotal of cash generated from financing activities 49,395,924.99 636,390,996.40
Repayment of borrowings 5,000,000.00
Interest and dividends paid 18,348,005.18 109,958.35
Cash used in other financing activities 47,604,075.01 12,694,318.18
Subtotal of cash used in financing activities 65,952,080.19 17,804,276.53
Net cash generated from/used in financing activities -16,556,155.20 618,586,719.87
4. Effect of foreign exchange rates changes on cash and cash
equivalents
5. Net increase in cash and cash equivalents -132,099,736.47 330,489,209.26
Add: Cash and cash equivalents, beginning of the period 476,410,739.41 559,573,331.81
6. Cash and cash equivalents, end of the period 344,311,002.94 890,062,541.07
Legal representative: Shi Xinkun General Manager: Zhang Xin
Head of the accounting department: Jiang He
7. Consolidated Statements of Changes in Owners’ Equity
H1 2022
Unit: RMB
H1 2022
Equity attributable to owners of the Company as the parent
Other L
equity e
instruments s
s:
T G
P r en
Pr Non-cont Total
Item er e Other er
ef rolling owners’
Share pe Capital a compreh Specific Surplus al Retained Ot
er Subtotal
capital tu Ot reserves s ensive reserve reserves re earnings her interests equity
re
al he u income se
d
b r r rv
sh
o y e
ar
n st
es
ds o
c
k
1. Balance as at the end of the 705,692,5 640,676 506,011, 18,812, 334,144, 872,212, 3,077,55 19,424,23 3,096,974
period of prior year 07.00 ,218.40 499.55 950.04 488.46 354.88 0,018.33 0.98 ,249.31
Add: Adjustment for change in
accounting policy
Adjustment for correction of
previous error
Adjustment for business
combination under common
control
Other adjustments
2. Balance as at the beginning of 705,692,5 640,676 506,011, 18,812, 334,144, 872,212, 3,077,55 19,424,23 3,096,974
the Reporting Period 07.00 ,218.40 499.55 950.04 488.46 354.88 0,018.33 0.98 ,249.31
3. Increase/ decrease in the period -542,25 -49,265, -32,943,2 -82,750,6 50,331,82 -32,418,8
(“-” for decrease) 5.39 150.00 74.79 80.18 4.28 55.90
3.1 Total comprehensive -49,265, -14,595,2 -63,860,4 -63,862,1
-1,732.08
income 150.00 69.61 19.61 51.69
3.2 Capital increased and -542,25 -542,255. 50,333,55 49,791,30
reduced by owners 5.39 39 6.36 0.97
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
-542,25 -542,255. 50,333,55 49,791,30
3.2.4 Other
5.39 39 6.36 0.97
-18,348,0 -18,348,0 -18,348,0
3.3 Profit distribution
05.18 05.18 05.18
3.3.1 Appropriation to
surplus reserves
3.3.2 Appropriation to
general reserve
3.3.3 Appropriation to -18,348,0 -18,348,0 -18,348,0
owners (or shareholders) 05.18 05.18 05.18
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 transferred to
retained earnings
3.4.5 Other comprehensive
income transferred to retained
earnings
3.4.6 Other
3.5 Specific reserve
3.5.1 Increase in the period
3.5.2 Used in the period
3.6 Other
4. Balance as at the end of the 705,692,5 640,133 456,746, 18,812, 334,144, 839,269, 2,994,79 69,756,05 3,064,555
Reporting Period 07.00 ,963.01 349.55 950.04 488.46 080.09 9,338.15 5.26 ,393.41
H1 2021
Unit: RMB
H1 2021
Equity attributable to owners of the Company as the parent
Other L
equity e
instruments s
s:
P T G
er r en
Pr Non-cont Total
Item p e Other er
ef rolling owners’
Share et Capital a compreh Specific Surplus al Retained Ot
er Subtotal
capital u O reserves s ensive reserve reserves re earnings her interests equity
re
al th u income se
d
b er r rv
sh
o y e
ar
n st
es
d o
s c
k
1. Balance as at the end of the 561,374,3 164,328 425,482, 18,812, 325,451, 777,899, 2,273,34 19,498,58 2,292,847
period of prior year 26.00 ,665.43 758.24 986.55 531.14 079.66 9,347.02 9.15 ,936.17
Add: Adjustment for change in
accounting policy
Adjustment for correction of
previous error
Adjustment for business
combination under common
control
Other adjustments
2. Balance as at the beginning of 561,374,3 164,328 425,482, 18,812, 325,451, 777,899, 2,273,34 19,498,58 2,292,847
the Reporting Period 26.00 ,665.43 758.24 986.55 531.14 079.66 9,347.02 9.15 ,936.17
3. Increase/ decrease in the period 144,318,1 476,347 106,633, 129,189, 856,488, 165,384.9 856,654,1
(“-” for decrease) 81.00 ,552.97 979.81 065.60 779.38 3 64.31
3.1 Total comprehensive 106,633, 129,189, 235,823, 165,384.9 235,988,4
income 979.81 065.60 045.41 3 30.34
3.2 Capital increased and 144,318,1 476,347 620,665, 620,665,7
reduced by owners 81.00 ,552.97 733.97 33.97
3.2.1 Ordinary shares 144,318,1 476,347 620,665, 620,665,7
increased by owners 81.00 ,552.97 733.97 33.97
3.2.2 Capital increased by
holders of other equity
instruments
3.2.3 Share-based payments
included in owners’ equity
3.2.4 Other
3.3 Profit distribution
3.3.1 Appropriation to
surplus reserves
3.3.2 Appropriation to
general reserve
3.3.3 Appropriation to
owners (or shareholders)
3.3.4 Other
3.4 Transfers within owners’
equity
3.4.1 Increase in capital (or
share capital) from capital
reserves
3.4.2 Increase in capital (or
share capital) from surplus
reserves
3.4.3 Loss offset by surplus
reserves
3.4.4 Changes in defined
benefit schemes transferred to
retained earnings
3.4.5 Other comprehensive
income transferred to retained
earnings
3.4.6 Other
3.5 Specific reserve
3.5.1 Increase in the period
3.5.2 Used in the period
3.6 Other
4. Balance as at the end of the 705,692,5 640,676 532,116, 18,812, 325,451, 907,088, 3,129,83 19,663,97 3,149,502
Reporting Period 07.00 ,218.40 738.05 986.55 531.14 145.26 8,126.40 4.08 ,100.48
Legal representative: Shi Xinkun General Manager: Zhang Xin Head of the accounting department: Jiang He
8. Statements of Changes in Owners’ Equity of the Company as the Parent
H1 2022
Unit: RMB
H1 2022
Other equity
instruments
Le
Pe
ss:
rp Other
Pre Tre Ot Total
Item et Capital comprehen Specific Surplus Retained
Share capital fer Ot asu he owners’
ua reserves sive reserve reserves earnings
red he ry r equity
l income
sha r sto
bo
res ck
nd
s
1. Balance as at the end of the 705,692,507.0 659,418,70 506,011,49 18,812,950. 334,144,488. 756,037,052. 2,980,117,1
period of prior year 0 0.67 9.55 04 46 58 98.30
Add: Adjustment for change in
accounting policy
Adjustment for correction of
previous error
Other adjustments
2. Balance as at the beginning of 705,692,507.0 659,418,70 506,011,49 18,812,950. 334,144,488. 756,037,052. 2,980,117,1
the Reporting Period 0 0.67 9.55 04 46 58 98.30
3. Increase/ decrease in the period -49,265,15 -14,234,832.3 -63,499,982.
(“-” for decrease) 0.00 5 35
3.1 Total comprehensive -49,265,15 -45,151,977.
4,113,172.83
income 0.00 17
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
-18,348,005.1 -18,348,005.
3.3 Profit distribution
8 18
3.3.1 Appropriation to
surplus reserves
3.3.2 Appropriation to -18,348,005.1 -18,348,005.
owners (or shareholders) 8 18
3.3.3 Other
3.4 Transfers within owners’
equity
3.4.1 Increase in capital (or
share capital) from capital reserves
3.4.2 Increase in capital (or
share capital) from surplus
reserves
3.4.3 Loss offset by surplus
reserves
3.4.4 Changes in defined
benefit schemes transferred to
retained earnings
3.4.5 Other comprehensive
income transferred to retained
earnings
3.4.6 Other
3.5 Specific reserve
3.5.1 Increase in the period
3.5.2 Used in the period
3.6 Other
4. Balance as at the end of the 705,692,507.0 659,418,70 456,746,34 18,812,950. 334,144,488. 741,802,220. 2,916,617,2
Reporting Period 0 0.67 9.55 04 46 23 15.95
H1 2021
Unit: RMB
H1 2021
Other equity
instruments
Le
Pe
ss:
rp Other
Pre Tr O Total
Item et Capital comprehen Specific Surplus Retained
Share capital fer Ot eas th owners’
ua reserves sive reserve reserves earnings
red he ury er equity
l income
sha r sto
bo
res ck
nd
s
1. Balance as at the end of the 561,374,326.0 183,071,147 425,482,75 18,812,986. 325,451,531. 677,800,436. 2,191,993,18
period of prior year 0 .70 8.24 55 14 75 6.38
Add: Adjustment for change in
accounting policy
Adjustment for correction of
previous error
Other adjustments
2. Balance as at the beginning of 561,374,326.0 183,071,147 425,482,75 18,812,986. 325,451,531. 677,800,436. 2,191,993,18
the Reporting Period 0 .70 8.24 55 14 75 6.38
3. Increase/ decrease in the period 144,318,181.0 476,347,552 106,633,97 75,653,245.2 802,952,959.
(“-” for decrease) 0 .97 9.81 8 06
106,633,97 75,653,245.2 182,287,225.
3.1 Total comprehensive income
9.81 8 09
3.2 Capital increased and 144,318,181.0 476,347,552 620,665,733.
reduced by owners 0 .97 97
3.2.1 Ordinary shares 144,318,181.0 476,347,552 620,665,733.
increased by owners 0 .97 97
3.2.2 Capital increased by
holders of other equity instruments
3.2.3 Share-based payments
included in owners’ equity
3.2.4 Other
3.3 Profit distribution
3.3.1 Appropriation to surplus
reserves
3.3.2 Appropriation to owners
(or shareholders)
3.3.3 Other
3.4 Transfers within owners’
equity
3.4.1 Increase in capital (or
share capital) from capital reserves
3.4.2 Increase in capital (or
share capital) from surplus
reserves
3.4.3 Loss offset by surplus
reserves
3.4.4 Changes in defined
benefit schemes transferred to
retained earnings
3.4.5 Other comprehensive
income transferred to retained
earnings
3.4.6 Other
3.5 Specific reserve
3.5.1 Increase in the period
3.5.2 Used in the period
3.6 Other
4. Balance as at the end of the 705,692,507.0 659,418,700 532,116,73 18,812,986. 325,451,531. 753,453,682. 2,994,946,14
Reporting Period 0 .67 8.05 55 14 03 5.44
Legal representative: Shi Xinkun General Manager: Zhang Xin Head of the accounting department: Jiang He
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 2020,
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.
On 9 April 2020, the Company held the 24th Meeting of the 8th Board of Directors, where the 2020 Proposal on
Changchai Co., Ltd. Non-public Issuance was deliberated and adopted. The Company intended to make a
non-public issuance of domestic listed RMB ordinary shares to specific targets, which was approved by the
controlling shareholder Changzhou Investment Group Co., Ltd., and deliberated and adopted by the 2019 annual
general meeting. On 18 September 2020, the Company's Board of Directors deliberated and adopted the
amendments related to the non-public issuance of shares at an Extraordinary General Meeting. The Company
supplemented and improved the foregoing proposal in accordance with the relevant amendments, and compiled
the 2020 Proposal on Changchai Co., Ltd. Non-public Issuance (Amendment), which was deliberated and adopted
by the second Extraordinary General Meeting in 2020. The Company offered 144,318,181 RMB ordinary shares
(A shares) in a non-public manner. The issuing price was RMB4.40 per share, the total amount raised was
RMB634,999,936.40, and the net amount raised was RMB622,499,996.40. After the capital verification by
Gongzheng Tianye Accounting Firm (Special General Partnership), the Capital Verification Report of the Funds
Raised by the Non-public Issuance of Changchai Co., Ltd. (S.G.W [2021] B062) was issued. The new shares
issued in a non-public manner were listed on the Shenzhen Stock Exchange on 5 July 2021.
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 22 August 2022.
The consolidated scope of the Company of the Reporting Period includes the Company as the parent and 8
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.
Lifetime expected credit losses refer to those caused by possible defaults during the entire expected duration of a
financial instrument.
The expected credit losses in the next 12 months refers to those caused by the default events of the financial
instrument that may occur within 12 months (or the expected duration if the expected duration of the financial
instrument is less than 12 months) after the balance sheet date, and is part of the expected credit losses in the
entire duration.
On each balance sheet date, the Company respectively measured the expected credit losses of financial
instruments in different stages. If the credit risk of a financial instrument has had no significant increase since its
initial recognition, the instrument shall fall in the first stage, for which the Company would measure the loss
reserves according to the expected credit losses in the future 12 months. If the credit risk of a financial instrument
has had a significant increase since its initial recognition but no credit impairment has occurred, the instrument
shall fall in the second stage, for which the Company would measure the loss reserves according to the expected
credit losses in the entire duration of the instrument. If the credit impairment has occurred since its initial
recognition, the financial instrument shall fall in the third stage, for which the Company would measure the loss
reserves according to the expected credit losses in the entire duration of the instrument.
As for a financial instrument with low credit risks on the balance sheet date, the Company measured the loss
reserves according to the expected credit losses in the future 12 months, assuming that its credit risk has had no
significant increase since its initial recognition.
For financial instruments with low credit risks in stages 1 and 2, the Company calculated the interest income at the
effective interest rate and on the carrying amount of the instruments without deductions for provisions for asset
impairment. For financial instruments in stage 3, interest income was calculated at the effective interest rates and
on the amortized cost by reducing the provisions for asset impairment from the carrying amount.
For notes receivables, accounts receivables, and financing receivables, whether there was a significant financial
component or not, the Company measured the loss reserves based on the expected credit losses for the entire
duration.
A. Accounts receivable
For notes receivable, accounts receivable, other receivables and accounts receivable financing 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, other receivables, accounts receivable financing, contract assets and long-term
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 notes receivable, accounts receivable,
other receivables and accounts receivable financing into groups according to the characteristics of credit risk, and
calculates the expected credit loss based on receivable groups. The basis for recognizing groups is as follows:
Item Recognition basis Method of measuring expected credit losses
Group 1 of notes Consulting historical experience in credit losses,
All commercial bills
receivable combining current situation and prediction for future
Bank’s acceptance bills economic situation, the expected credit loss shall be
Group 2 of notes
with low credit rating accounted through exposure at default and the expected
receivable
credit loss rate over the entire life
Bank’s acceptance bills Consulting historical experience in credit losses,
with high credit rating combining current situation and prediction for future
Accounts receivable
economic situation, the expected credit loss shall be
financing
accounted through exposure at default and the expected
credit loss rate over the entire life
Prepare the comparative list between aging of accounts
receivable and expected credit loss rate over the entire
life and calculate the expected credit loss by consulting
Accounts Accounts receivable
historical experience in credit losses, combining current
receivable-credit risk portfolio with credit
situation and prediction for future economic situation.
characteristics group period
The Company takes aging as credit risk characteristics
groups and calculates the expected credit loss for
accounts receivable.
Accounts Consulting historical experience in credit losses,
receivable-intercourse combining current situation and prediction for future
Related party within the
funds among related economic situation, the expected credit loss shall be
consolidation scope
party group within the accounted through exposure at default and the expected
consolidation scope credit loss rate over the entire life
Basis for recognizing groups of other receivables is as follows:
Item Recognition basis Method of measuring expected credit losses
Consulting historical experience in credit losses,
Other receivables combining current situation and prediction for future
excluding those from economic situation, the expected credit loss shall be
Group 1 of other receivables
related parties-aging accounted through exposure at default and the expected
group credit loss rate within the next 12 months or over the
entire life
Related party within Consulting historical experience in credit losses,
Group 2 of other receivables
the consolidation combining current situation and prediction for future
scope economic situation, the expected credit loss shall be
accounted through exposure at default and the expected
credit loss rate within the next 12 months or over the
entire life
11. Accounts Receivable
See “10. Financial Instruments”.
12. Accounts Receivable Financing
See “10. Financial Instruments”.
13. Other Receivables
See “10. Financial Instruments”.
14. 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.
15. 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.11.
16. 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.
17. 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.
18. 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.
19. 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.
20. Fixed Assets
(1) Recognition Conditions
Fixed assets refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for
the sake of producing commodities, rendering labor service, renting or business management; and (b) their useful
life is in excess of one fiscal year. The fixed assets are only recognized when the relevant economic benefits
probably flow in the Company and its cost could be reliable measured.
(2) Depreciation Method
Category of fixed assets Method Useful life Annual deprecation
Housing and building Average method of
20-40 years 2.50%-5%
useful life
Machinery equipment Average method of
6-15 years 6.67%-16.67%
useful life
Transportation Average method of
5-10 years 10%-20%
equipment useful life
Average method of
Other equipment 5-10 years 10%-20%
useful life
(3) Recognition Basis, Pricing and Depreciation Method of Fixed Assets by Finance Lease
The Company recognizes those meet with the following one or certain standards as the fixed assets by finance
lease:
1) The leasing contract had agreed that (or made the reasonable judgment according to the relevant conditions on
the lease starting date) when the lease term expires, the ownership of leasing the fixed assets could be transferred
to the Company;
2) The Company owns the choosing right for purchasing and leasing the fixed assets, with the set purchase price
which is estimated far lower than the fair value of the fixed assets by finance lease when executing the choosing
right, so the Company could execute the choosing right reasonably on the lease starting date;
3) Even if the ownership of the fixed assets not be transferred, the lease period is of 75% or above of the useful
life of the lease fixed assets;
4) The current value of the minimum lease payment on the lease starting date of the Company is equal to 90% or
above of the fair value of the lease fixed assets on the lease starting date; the current value of the minimum lease
receipts on the lease starting date of the leaser is equal to 90% or above of the fair value of the lease fixed assets
on the lease starting date;
5) The nature of the lease assets is special that only the Company could use it if not execute large transformation.
The fixed assets by finance lease should take the lower one between the fair value of the leasing assets and the
current value of the minimum lease payment on the lease starting date as the entry value. As for the minimum
lease payment which be regarded as the entry value of the long-term accounts payable, its 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
21. 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.
22. 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.
23. 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.
24. 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.
25. 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.
26. 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.
27. 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.
28. Lease Liabilities
On the commencement date of the lease term, the Company recognizes the present value of unpaid lease payments
as lease liabilities. Lease payments include: fixed payment and substantial fixed payment, and the relevant amount
after the lease incentive (if any) is deducted; variable lease payments that depend on indexation or ratio, which are
determined according to the indexation or ratio on the commencement date of the lease term in the initial
measurement; exercise price of the purchased option, provided that the lessee reasonably determines that the
option will be exercised; the amount to be paid for the exercise of the lease termination options, provided that the
lease term reflects that the lessee will exercise the options to terminate the lease; and estimated payments due to
the guaranteed residual value provided by the lessee.
The Company uses the interest rate implicit in lease as the rate of discount when calculating the present value of
the lease payments. The incremental lending rate of the lessee will be used as the rate of discount, if the interest
rate implicit in lease cannot be determined. The Company calculates the interest charge of the lease liabilities in
each period of the lease term at a fixed periodic interest rate and includes it in the profit or loss of the current
period, unless such interest charge is stipulated to be included in the underlying asset costs. Variable lease
payments that are not included in the measurement of the lease liabilities should be included in the profit or loss of
the current period when they are actually incurred, unless such payments are stipulated to be included in the
underlying asset costs. The Company will re-calculate the lease liabilities using the present value of the changed
lease payments, if the substantial fixed payment, the estimated payments due to the guaranteed residual value, the
index or rate used to determine the lease payments, or the assessment result of the call option, the renewal option,
or the termination option, or the actual exercise changes, after the commencement date of the lease term.
29. 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.
30. 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.
Specific methods
The specific methods of the Company's revenue recognition are as follows:
The sale contract between the Company and its customers usually contains only the performance obligation for
the transfer of goods, which is satisfied at a point in time.
The following requirements must be met to confirm the revenue of domestic products: The Company has
delivered the goods to the customer in accordance with the contract and the customer has accepted the goods. The
payment has been recovered or the receipt voucher has been obtained, and the relevant economic benefits are
likely to flow in. The customer has obtained control of the relevant goods. The main risks and rewards of product
ownership have been transferred. The legal ownership of the goods has been transferred.
The following requirements must be met to confirm the revenue of export products: The Company has declared
the products in accordance with the contract, obtained the bills of lading, and received the payment or obtained the
receipt voucher and the related economic benefits are likely to flow in. The main risks and rewards of product
ownership have been transferred. The legal ownership of the goods has been transferred.
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.
31. 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.
32. 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.
33. Lease
The term "lease" refers to a contract whereby the lessor transfers the right of use regarding the leased asset(s) to
the lessee within a specified time in exchange for consideration. From the effective date of a contract, the
Company assesses whether the contract is a lease or includes any lease. If a party to the contract transferred the
right allowing the control over the use of one or more assets that have been identified within a certain period, in
exchange for a consideration, such contract is a lease or includes a lease. If a contract contains multiple single
leases at the same time, the Company will split the contract, and conduct accounting treatment of each single lease
respectively. If a contract contains both lease and non-lease parts at the same time, the lessee and lessor will split
the lease and non-lease parts.
(1) The Company as the lessee
See Note 28 (lease liabilities) for the general accounting treatment of the Company as the lessee.
For short-term leases with a lease term not exceeding 12 months and leases of low-value assets when single leased
assets are brand new assets, the Company chooses not to recognize right-of-use assets and lease liabilities, and
records relevant rental expenses into the profit or loss of the current period or the underlying asset costs on a
straight-line basis in each period within the lease term.
If a lease changes and meets the following conditions at the same time, the Company will account for the lease
change as a separate lease: the lease change expands the lease scope by increasing the right to use one or more
leased assets; the increased consideration is equivalent to the separate price of the expanded lease scope adjusted
according to the contract. Where the lease change is not accounted for as a separate lease, on the effective date of
the lease change, the Company will allocate the consideration of the changed contract and re-determine the
changed lease term. The present value determined based on the changed lease payments and the revised rate of
discount are used to remeasure the lease liabilities.
(2) The Company as the lessor
On the commencement date of the lease term, the Company classifies the leases that substantially transfer almost
all risks and rewards related to the ownership of the leased assets as finance leases, and leases other than finance
leases as operating leases.
1) Operating lease
The Company recognizes the lease payments receivable as rentals in each period within the lease term on a
straight-line basis. The Company capitalizes the initial direct costs related to operating leases upon incurrence
thereof and apportions and includes such costs in the profit or loss of the current period on the basis same as the
recognition of rentals. The received variable lease payments related to operating leases that are not included in the
lease payments receivable are included in profit or loss of the current period when they are actually incurred.
2) Financial lease
On the commencement date of the lease term, the Company recognizes the finance lease receivables on the basis
of net investment in the lease (the sum of the unguaranteed residual value and the present value of the lease
payments receivable not yet received on the commencement date of the lease term discounted at the interest rate
implicit in lease) and derecognizes the leased asset of the finance lease. The Company calculates and recognizes
interest income based on the interest rate implicit in lease in each period within the lease term. The received
variable lease payments that are not covered in the measurement of the net investment in the lease are included in
the profit or loss of the current period when actually incurred.
(3) Sale and leaseback
The Company assesses whether the asset transfer in a sale and leaseback transaction is a sale in accordance with
relevant provisions of the Accounting Standards for Business Enterprises No. 14 - Income.
1) The Company as the lessee
If the asset transfer in a sale and leaseback transaction is a sale, the Company measures the right-of-use assets
formed by the sale and leaseback based on the portion of the original asset's carrying value that is related to the
use right acquired by the leaseback, and recognizes related gains or losses only for the right transferred to the
lessor.
If the asset transfer in a sale and leaseback transaction is not a sale, the Company continues to recognize the
transferred asset and at the same time recognizes a financial liability equivalent to the transfer income, and
conducts corresponding accounting treatment for the financial liability in accordance with the Accounting
Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments.
2) The Company as the lessor
If the asset transfer in a sale and leaseback transaction is a sale, the Company applies other accounting standards
for business enterprises to the accounting treatment for asset purchase, and conducts corresponding accounting
treatment for asset lease in accordance with the Accounting Standard for Business Enterprises No. 21 - Leases.
If the asset transfer in a sale and leaseback transaction is not a sale, the Company does not recognize the
transferred asset, but recognizes a financial asset equivalent to the transfer income, and conducts corresponding
accounting treatment for the financial asset in accordance with the Accounting Standards for Business Enterprises
No. 22 - Recognition and Measurement of Financial Instruments.
34. Other Significant Accounting Policies and Accounting Estimates
The Company evaluates the important accounting estimates and key assumptions adopted on an ongoing basis,
based on historical experience and other factors, including reasonable expectations of future events. Important
accounting estimates and critical assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next fiscal year are listed as follows:
(1) Classification of financial assets
The significant judgments involved when the Company determines the classification of financial assets include
analysis of business models and contractual cash flow characteristics. The Company determines the business
model for managing financial assets at the level of the financial asset portfolio, taking into account factors such as
the approach of evaluating and reporting the performance of financial assets to key management personnel, the
risks affecting the performance of financial assets and the manner in which they are managed, and way in which
the relevant business management personnel are compensated.
The following main judgments exist in assessing whether the contractual cash flows of financial assets are
consistent with the basic lending arrangements:
Whether the time distribution or amount of the principal amount during the duration may change due to early
repayment or for other reasons; whether the interest includes only the time value of money, credit risk, other basic
lending risks and consideration against costs and profits. For example, whether the amount of early repayment
reflects only the outstanding principal and interest based on the outstanding principal, as well as reasonable
compensation paid for early termination of the contract.
(2) Measurement of expected credit losses of accounts receivable
The Company calculates the expected credit loss of accounts receivable using the exposure to default risk of
accounts receivable and the expected credit loss ratio, and determines the expected credit loss ratio based on the
probability of default and the default loss ratio. When determining the expected credit loss ratio, the Company
uses data such as internal historical credit loss experience and adjusts historical data to take into account current
conditions and forward-looking information. When considering forward-looking information, the Company uses
indicators such as the risk of economic downturn and changes in the external market environment, technological
environment and customer profile. The Company regularly monitors and reviews the assumptions related to the
calculation of expected credit losses.
(3) Inventory falling price reserves
The Company follows the inventory accounting policy and carries out measurement based on which is smaller
between the cost and the net realizable value. If the cost of inventories is higher than its net realizable value, then
the inventory falling prices reserves were implemented. The impairment of inventories to net realizable value is
based on an assessment of the marketability of the inventories and their net realizable value. The management
shall determine the impairment of inventories after obtaining reliable evidence while taking into account the
purpose of holding inventories, the effect of items after the balance sheet date, and other factors. Differences
between actual results and original estimates will affect the carrying value of inventories and the provision or
reversal of reverses for falling prices of inventories in the period in which the estimates are changed.
(4) Determination of fair value of unlisted equity investment
The fair value of unlisted equity investment is the expected future cash flows discounted at the current discount
rate for items with similar terms and risk characteristics. Such valuation requires the Company to estimate
expected future cash flows and discount rates and is therefore subject to uncertainty. Under limited circumstances,
if the information used to determine fair value is insufficient, or if the range of possible estimates of fair value is
wide and the cost represents the best estimate of fair value within that range, the cost may represent its appropriate
estimate of fair value within that range of distribution.
(5) Reserves for long-term assets impairment
The Company determines at the balance sheet date whether there is any indication that a non-current asset, other
than a financial asset, may be impaired. For intangible assets with an uncertain useful life, impairment tests shall
be conducted when there is an indication of impairment besides the annual impairment test. Other non-current
assets other than financial assets shall be tested for impairment when there is an indication that the carrying
amount is irrecoverable.
An impairment is indicated when the carrying amount of an asset or asset group is greater than the recoverable
amount, which is the higher of the fair value minus disposal expenses and the present value of estimated future
cash flows.
The net value of the fair value minus disposal expenses is determined by referring to the negotiable sale price or
observable market price of similar assets in a fair transaction and deducting incremental costs directly attributable
to the disposal of the asset.
Estimating the present value of future cash flows requires significant judgments with respect to the production
volume of the asset (or asset group), the selling price, the related operating costs and the discount rate used in
calculating the present value. The Company uses all available relevant information in estimating recoverable
amounts, including projections of volumes, selling prices and related operating costs based on reasonable and
supportable assumptions.
(6) Depreciation and amortization
The Company depreciates and amortizes investment properties, fixed assets and intangible assets on a straight-line
basis within their service lives after taking into account their residual values. The Company regularly reviews
service lives to determine the amount of depreciation and amortization expenses to be included in each reporting
period. The service life is determined by the Company based on past experience with similar assets and expected
technological updates. Depreciation and amortization expenses will be adjusted in the future period if there is a
significant change in previous estimates.
(7) Deferred income tax assets
To the extent that it is probable that sufficient taxable profit will be available to offset the losses, the Company
recognizes deferred income tax assets for all unused tax losses. This requires the Company's management to use
many judgments to estimate the timing and amount of future taxable profits, taking into account tax planning
strategies, so as to determine the amount of deferred income tax assets to be recognized.
(8) Income tax
In the normal operating activities of the Company, the ultimate tax treatment and calculation of certain
transactions are subject to certain uncertainties. Whether some items can be disbursed before tax requires the
approval of the tax authorities. If the final determination of these tax matters differs from the amounts initially
estimated, the difference will have an impact on current and deferred income taxes in the period in which they are
finally determined.
35. Changes in Main Accounting Policies and Estimates
(1) Change of Accounting Policies
√ Applicable □ Not applicable
Changes to the accounting policies and why Approval process Remark
The Ministry of Finance issued the Accounting Standards for Business On 22 August
Enterprises Interpretation No. 15 (Cai Kuai [2021] No. 35) on 30 2022, the 13th
December 2021 which gives a specification of following contents: Meeting of the 9th
“Accounting treatment for sales of products or by-products by enterprises Board of Directors
generated from fixed assets before reaching the intended state of and the 12th
availability or from the period of R&D”, “Judgment on onerous contracts”Meeting of the 9th
and “Presentation of centralized capital management”. Supervisory
In accordance with the Accounting Standards for Business Enterprises Committee were
Interpretation No. 15, the Company has implemented the provisions held by the
regarding the accounting treatment for sales of products or by-products by Company on
enterprises generated from fixed assets before reaching the intended state which the
of availability or from the period of R&D since 1 January 2022, the Proposal on
provisions regarding the presentation of centralized capital management Changes of
since 30 December 2021, and the provisions regarding judgment on Accounting
onerous contracts since 1 January 2022. Policies was
This change in accounting policies does not involve the retrospective approved.
adjustment of the Company in previous years, nor does it adjust the data
in the comparative financial statements of the previous period.
(2) Changes in Accounting Estimates
□ 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%、2.5%
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 Horizon Investment Co., Ltd. 25%
Changzhou Changchai Horizon 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. 2.5%
Zhenjiang Siyang Diesel Engine Manufacturing Co., Ltd. 25%
2. Tax Preference
On 30 November 2021, 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 2030 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 and Ministry of Finance Announcement
No. 23 [2020] Announcement of the Ministry of Finance, the State Administration of Taxation and the National
Development and Reform Commission on Continuing the Enterprise Income Tax Policy for the Great 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 subsidiary Changzhou Xingsheng Real Estate
Management Co., Ltd. is eligible small enterprise with low profits and shall pay the corporate income tax at tax
rate 2.5% 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 201,776.86 145,594.98
Bank deposits 447,927,242.99 561,746,767.12
Other monetary assets 124,092,806.64 146,074,316.64
Total 572,221,826.49 707,966,678.74
Total amount of
restriction in use by mortgage, 123,582,947.15 145,564,457.15
pledge or freeze
At the period-end, the restricted monetary assets of the Company was RMB123,582,947.15, of
which RMB125,778,577.60 was the cash deposit for bank acceptance bills, RMB2,993,220.00 was
cash deposit for L/G and RMB797,589.55 was cash deposit for environment.
2. Trading Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Financial assets at fair value
403,981,913.88 404,053,261.57
through profit or loss
Of which:
Stocks 104,304,516.61 121,940,343.76
Financial products 299,677,397.27 282,112,917.81
Of which:
Total 403,981,913.88 404,053,261.57
3. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
Item Ending balance Beginning balance
Bank acceptance bill 481,963,539.81 334,311,236.78
Total 481,963,539.81 334,311,236.78
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 247,086,575.81
Total 247,086,575.81
(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
Ending balance Beginning balance
Category Carrying Bad debt Carryi Carrying Bad debt Carryin
amount provision ng amount provision g value
Withd value Withd
Amou Propo Amou rawal Amou Propor Amou rawal
nt rtion nt propo nt tion nt propor
rtion tion
Accounts
receivable for
46,65 43,33 3,322, 50,43 44,054
which bad debt 92.88 87.34 6,383,0
6,944. 4.21% 4,335. 608.5 7,453. 9.10% ,367.1
provision % % 86.48
03 44 9 63 5
separately
accrued
Accounts
receivable for
1,060, 148,1 912,1 504,0 135,26
which bad debt 95.79 13.97 90.90 26.83 368,826
290,5 56,48 34,07 92,72 6,680.
provision % % % % ,040.00
61.35 4.74 6.61 0.08 08
accrued by
group
Of which:
Accounts
receivable for
which bad debt 1,060, 148,1 912,1 504,0 135,26
95.79 13.97 90.90 26.83 368,826
provision 290,5 56,48 34,07 92,72 6,680.
% % % % ,040.00
accrued by 61.35 4.74 6.61 0.08 08
credit risk
features group
1,106, 191,4 915,4 554,5 179,32
100.0 17.30 100.00 32.34 375,209
Total 947,5 90,82 56,68 30,17 1,047.
0% % % % ,126.48
05.38 0.18 5.20 3.71 23
Account receivables withdrawn bad debt provision separately with significant amount at the period end:
Unit: RMB
Ending balance
Name Withdrawal
Carrying amount Bad debt provision Reason of withdrawal
proportion
Customer1 1,470,110.64 1,470,110.64 100.00% Difficult to recover
Customer2 1,902,326.58 1,902,326.58 100.00% Difficult to recover
Customer3 6,215,662.64 6,215,662.64 100.00% Difficult to recover
Customer4 2,797,123.26 2,194,980.28 78.47% Expected to difficultly recover
Customer5 3,633,081.23 2,122,165.73 58.41% Expected to difficultly recover
Customer6 2,584,805.83 2,584,805.83 100.00% Difficult to recover
Customer7 1,523,110.59 1,523,110.59 100.00% Difficult to recover
Customer8 1,511,937.64 302,387.53 20.00% Expected to difficultly recover
Customer9 1,962,873.80 1,962,873.80 100.00% Difficult to recover
Customer10 2,790,920.00 2,790,920.00 100.00% Difficult to recover
Customer11 2,025,880.18 2,025,880.18 100.00% Difficult to recover
Customer12 2,589,892.74 2,589,892.74 100.00% Difficult to recover
Customer13 2,837,045.23 2,837,045.23 100.00% Difficult to recover
Customer14 5,972,101.90 5,972,101.90 100.00% Difficult to recover
Customer15 4,592,679.05 4,592,679.05 100.00% Difficult to recover
Total 44,409,551.31 41,086,942.72 -- --
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 902,418,413.99 18,048,368.28 2.00%
1 to 2 years 21,100,490.04 1,055,024.50 5.00%
2 to 3 years 5,388,349.99 808,252.50 15.00%
3 to 4 years 2,526,740.52 758,022.16 30.00%
4 to 5 years 3,424,373.75 2,054,624.25 60.00%
Over 5 years 125,590,924.31 125,432,193.06 100.00%
Total 1,060,449,292.60 148,156,484.74 --
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) 902,802,395.40
1 to 2 years 43,871,882.94
2 to 3 years 7,616,504.48
Over 3 years 152,656,722.56
3 to 4 years 4,476,490.08
4 to 5 years 5,960,663.50
Over 5 years 142,219,568.98
Total 1,106,947,505.38
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Information of bad debt provision withdrawn:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversal or Ending balance
balance Withdrawal Write-off
recovery
Bad debt
provision
44,054,367.15 720,031.71 43,334,335.44
withdrawn
separately
Bad debt
provision
135,266,680.08 12,889,804.66 148,156,484.74
withdrawn by
group
Total 179,321,047.23 12,889,804.66 720,031.71 191,490,820.18
Of which bad debt provision reversed or recovered with significant amount in the Reporting Period: No.
(3) There Were No Accounts Receivable with Actual Verification during the Reporting Period.
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to the Arrears Party
Unit: RMB
Proportion to total
Ending balance of Ending balance of bad
Name of the entity ending balance of
accounts receivable debt provision
accounts receivable
Customer1 567,626,334.55 51.28% 11,352,526.69
Customer2 57,715,364.53 5.21% 1,154,307.29
Customer3 18,252,915.05 1.65% 365,058.30
Customer4 18,121,707.37 1.64% 362,434.15
Customer5 16,876,870.97 1.52% 337,537.42
Total 678,593,192.47 61.30%
5. Accounts Receivable Financing
Unit: RMB
Item Ending balance Beginning balance
Bank acceptance bills 109,896,100.86 497,388,826.02
Total 109,896,100.86 497,388,826.02
Changes of accounts receivable financing and fair value thereof in the Reporting Period
□ Applicable √ Not applicable
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
financing.
□ Applicable √ Not applicable
Other notes:
The Company discounts and endorses a portion of its bank acceptances based on its routine fund management
needs, and the conditions for derecognition are met, so the bank acceptances are classified as financial assets
measured at fair value whose change is included in other comprehensive income.
On 30 June 2022, there was no bank acceptance for which bad debt provision accrued separately in the Company.
The Company measures the provision of bad debt provision on the basis of expected credit losses throughout the
duration. The Company believes that the credit risk characteristics of the bank acceptances it holds are similar,
and there was no bank acceptance for which bad debt provision accrued separately. In addition, there was no
significant credit risk in the bank acceptance, and no significant loss would be caused by bank defaults.
(1) Accounts receivable financing which had endorsed by the Company or had discounted but had not due at the
period-end
Amount of recognition Amount of not terminated
Item
termination at the period-end recognition at the period-end
Bank acceptance bill 54,899,008.45
Total 54,899,008.45
6. Prepayments
(1) List by Aging Analysis
Unit: RMB
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 7,585,000.47 82.61% 6,706,970.55 81.82%
1 to 2 years 155,683.67 1.70% 94,583.55 1.15%
2 to 3 years 254,994.24 2.78% 362,397.67 4.42%
Over 3 years 1 ,186,122.25 12.92% 1,033,466.62 12.61%
Total 9,181,800.63 8,197,418.39
There was no prepayment with significant amount aging over one year as of the period-end.
(2) Top 5 of the Ending Balance of the Prepayments Collected according to the Prepayment Target
At the period-end, the total top 5 of the ending balance of the prepayments collected according to the prepayment
target was RMB2,412,325.81 accounting for 26.27% of the total ending balance of prepayments.
7. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Other receivables 17,260,272.39 19,515,350.52
Total 17,260,272.39 19,515,350.52
(1) Other Receivables
1) Other Receivables Classified by Accounts Nature
Unit: RMB
Nature Ending carrying value Beginning carrying value
Margin and cash pledge 1,299,600.00 1,299,600.00
Intercourse funds 32,732,932.66 35,889,738.80
Petty cash and borrowings by
1,313,447.41 1,184,204.41
employees
Other 14,165,823.36 13,630,284.64
Total 49,511,803.43 52,003,827.85
2) Withdrawal of Bad Debt Provision
Unit: RMB
First stage Second stage Third stage
Expected loss in the Expected loss in the
Expected credit loss
Bad debt provision duration (credit duration (credit Total
of the next 12
impairment not impairment
months
occurred) occurred)
Balance of 1
287,609.45 26,486,676.97 5,714,190.91 32,488,477.33
January 2022
Balance of 1
January 2022 in the
Current Period
Withdrawal of the
Current Period
Reversal of the
236,946.29 236,946.29
Current Period
Balance of 30 June
50,663.16 26,486,676.97 5,714,190.91 32,251,531.04
2022
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) 13,682,698.23
1 to 2 years 2,165,331.51
2 to 3 years 766,470.37
Over 3 years 32,897,303.32
3 to 4 years 256,820.18
4 to 5 years 1,058,355.18
Over 5 years 31,582,127.96
Total 49,511,803.43
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
Beginning Ending
Category Reversal or Write-o
balance Withdrawal Other balance
recovery ff
Bad debt
provision for
5,714,190.91 5,714,190.91
which accrued
separately
Bad debt
provision for
26,774,286.42 236,946.29 26,537,340.13
which accrued by
group
Total 32,488,477.33 236,946.29 32,251,531.04
4) There Was No Particulars of the Actual Verification of Other Receivables during the Reporting Period
5) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to
Ending
ending balance
Name of the entity Nature Ending balance Aging balance of bad
of other
debt provision
receivables%
Changzhou Compressor Intercourse
2,940,000.00 Over 5 years 5.94% 2,940,000.00
Factory funds
Changchai Group Imp. & Intercourse
2,853,188.02 Over 5 years 5.76% 2,853,188.02
Exp. Co., Ltd. funds
Changzhou New District Intercourse
1,626,483.25 Over 5 years 3.29% 1,626,483.25
Accounting Center funds
Changchai Group Intercourse 1,140,722.16
1,140,722.16 Over 5 years 2.30%
Settlement Center funds
Changzhou Huadi
Engineerin
Engineering Guarantee 1,065,400.00 1 to 2 years 1.45% 53,270.00
g deposit
Co., Ltd.
Total 9,625,793.43 19.44% 8,613,663.43
8. 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 144,804,663. 137,740,614. 148,617,321. 141,356,757.
7,064,048.12 7,260,564.47
materials 02 90 85 38
Goods in 101,886,302. 13,185,471.7 88,700,830.5 119,354,374. 15,534,236.3 103,820,137.
process 27 6 1 14 5 79
Finished 303,224,440. 10,710,415.1 292,514,025. 403,855,588. 13,029,104.2 390,826,484.
goods 42 9 23 94 6 68
Materials
13,581,935.0 13,581,935.0 13,877,280.6 13,877,280.6
processed on 0.00
5 5 0 0
commission
Low priced
and easily 1,163,256.63 1,163,256.63 1,203,097.73 1,203,097.73
worn articles
564,660,597. 30,959,935.0 533,700,662. 686,907,663. 35,823,905.0 651,083,758.
Total
39 7 32 26 8 18
(2) Falling Price Reserves and impairment provision for contract performance costs
Unit: RMB
Increase Decrease
Beginning
Item Reversal or Ending balance
balance Withdrawal Other Other
write-off
Raw materials 7,260,564.47 65,235.32 261,751.67 7,064,048.12
Goods in
15,534,236.35 222,543.92 2,571,308.51 13,185,471.76
process
Finished goods 13,029,104.26 2,318,689.07 10,710,415.19
Total 35,823,905.08 287,779.24 5,151,749.25 30,959,935.07
(3) There Was No Capitalized Borrowing Expense in the Ending Balance of Inventories
9. Other Current Assets
Unit: RMB
Item Ending balance Beginning balance
The VAT tax credits 27,698,694.05 37,806,274.29
Prepaid corporate income tax 582,198.15 6,143,886.15
Prepaid expense 113,365.74 110,662.13
Total 28,394,257.94 44,060,822.57
10. Investments in Debt Obligations
Unit: RMB
Ending balance Beginning balance
Item Carrying Falling price Carrying Carrying Falling price Carrying
amount reserves value amount reserves value
Three-year
37,898,226.3 37,898,226.3 37,898,226.3 37,898,226.3
fixed term
9 9 9 9
deposit
37,898,226.3 37,898,226.3 37,898,226.3 37,898,226.3
Total
9 9 9 9
Significant investments in debt obligations
Unit: RMB
Ending balance Beginning balance
Actual Actual
Item Par Coupon Maturity Par Coupon Maturity
interest interest
value rate date value rate date
rate rate
Three-year fixed 37,000,0 26 April 37,000,0 26 April
3.80% 3.80%
term deposit 00.00 2024 00.00 2024
37,000,0 37,000,0
Total
00.00 00.00
Changes of carrying amount with significant amount changed of loss provision in the reporting period
□ Applicable √ Not applicable
11. 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
12. Other Equity Instrument Investment
Unit: RMB
Item Ending balance Beginning balance
Changzhou Synergetic Innovation Private Equity
146,375,646.53 146,375,646.53
Fund (Limited Partnership)
Other equity instrument investment measured by
575,543,000.00 633,502,000.00
fair value
Total 721,918,646.53 779,877,646.53
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
367,151,000.00
Ltd. investment
Non-trading equity
Bank of Jiangsu 9,360,000.00 123,822,000.00
investment
Changzhou
Synergetic
Innovation Non-trading equity
46,375,646.53
Private Equity investment
Fund (Limited
Partnership)
Other notes:
The corporate securities of accommodation business still on lending at the period-end: 4,535,000 shares of Foton
Motor Co., Ltd.
13. Other Non-current Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Jiangsu Horizon New Energy Technology Co.,
112,500,000.00 112,500,000.00
Ltd.
Total 112,500,000.00 112,500,000.00
14. 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 93,077,479.52 93,077,479.52
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 93,077,479.52 93,077,479.52
II. Accumulative depreciation and
accumulative amortization
1. Beginning balance 48,480,224.31 48,480,224.31
2. Increased amount of the period 1,218,237.78 1,218,237.78
(1) Withdrawal or amortization 1,218,237.78 1,218,237.78
(2) Transferred into
3. Decreased amount of the period
(1) Disposal
(2) Other transfer
4. Ending balance 49,698,462.09 49,698,462.09
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 43,379,017.43 43,379,017.43
2. Beginning carrying value 44,597,255.21 44,597,255.21
15. Fixed Assets
Unit: RMB
Item Ending balance Beginning balance
Fixed assets 710,380,148.39 402,915,521.65
Total 710,380,148.39 402,915,521.65
(1) List of Fixed Assets
Unit: RMB
Houses and Machinery Transportation Other
Item Total
buildings equipment equipment equipment
I. Original
carrying value
1. Beginning 1,012,550,535.1
457,375,409.96 15,509,653.38 41,354,836.97 1,526,790,435.43
balance 2
2. Increased
amount of the 203,847,078.49 136,107,529.11 3,431,027.22 5,374,982.88 348,760,617.70
period
(1) Purchase 106,424.78 28,522.13 134,946.91
(2) Transfer
from
183,680,924.37 128,757,743.93 2,808,764.69 4,971,498.04 320,218,931.03
construction in
progress
(3) Enterprise
combination 20,166,154.12 7,349,785.18 515,837.75 374,962.71 28,406,739.76
increase
3. Decreased
amount of the 15,246,966.71 117,705.14 15,364,671.85
period
(1) Disposal or
15,246,966.71 117,705.14 15,364,671.85
scrap
4. Ending 1,133,411,097.5
661,222,488.45 18,940,680.60 46,612,114.71 1,860,186,381.28
balance 2
II.
Accumulative
depreciation
1. Beginning
309,538,003.03 765,592,089.06 12,399,386.82 35,864,760.62 1,123,394,239.53
balance
2. Increased
amount of the 12,356,859.77 26,941,279.63 863,834.31 772,621.89 40,934,595.60
period
(1) Withdrawal 8,141,184.51 24,883,354.40 416,402.05 514,726.91 33,955,667.87
(2) Merge 4,215,675.26 2,057,925.23 447,432.26 257,894.98 6,978,927.73
3. Decreased
amount of the 0.00 14,886,037.53 0.00 117,238.96 15,003,276.49
period
(1) Disposal or
14,886,037.53 117,238.96 15,003,276.49
scrap
4. Ending
321,894,862.80 777,647,331.16 13,263,221.13 36,520,143.55 1,149,325,558.64
balance
III.Depreciation
reserves
1. Beginning
480,674.25 480,674.25
balance
2. Increased
amount of the
period
(1) Withdrawal
3. Decreased
amount of the
period
(1) Disposal or
scrap
4. Ending
480,674.25 480,674.25
balance
IV. Carrying
value
1. Ending
339,327,625.65 355,283,092.11 5,677,459.47 10,091,971.16 710,380,148.39
carrying value
2. Beginning
147,837,406.93 246,477,771.81 3,110,266.56 5,490,076.35 402,915,521.65
carrying value
(2) List of Temporarily Idle Fixed Assets
Original Accumulative Depreciation
Item Carrying value Note
carrying value depreciation reserves
Machinery
561,589.50 80,915.25 480,674.25
equipment
16. Construction in Progress
Unit: RMB
Item Ending balance Beginning balance
Construction in progress 75,687,504.60 268,417,880.66
Engineering materials 932,611.70 1,887,810.25
Total 76,620,116.30 270,305,690.91
(1) List of Construction in Progress
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciatio Carrying Carrying Depreciati Carrying
amount n reserves value amount on reserves value
Expansion
capacity of
multi-cylinde 1,097,435.90 1,097,435.90 1,097,435.90 1,097,435.90
r (The 2nd
Period)
Innovation
capacity
construction
4,092,290.16 4,092,290.16 3,714,601.76 3,714,601.76
of
technology
center
Relocation
project of 254,748,122.4 254,748,122.4
61,644,458.18 61,644,458.18
light engine 9 9
and casting
Equipment to
be installed
8,853,320.36 8,853,320.36 8,857,720.51 8,857,720.51
and payment
for projects
268,417,880.6 268,417,880.6
Total 75,687,504.60 75,687,504.60
6 6
(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 1,097 1,097 Unco
Self-r
cylin 0,000 ,435. ,435. mplet
aised
der .00 90 90 ed
(The
2nd
Perio
d)
Innov Self-r
87,33 3,714 4,092 Unco aised
ation 377,6 4.69
2,900 ,601. ,290. mplet and
capac 88.40 %
.00 76 16 ed raised
ity funds
constr
uctio
n of
techn
ology
center
Reloc
ation
proje
Self-r
ct of 474,7 254,7 115,3 308,4 61,64 Unco aised
77.97
light 06,00 48,12 84,74 88,40 4,458 mplet and
2.49 2.86 7.17 .18 % raised
engin 0.00 ed
funds
e and
castin
g
641,0 259,5 115,7 308,4 66,83
Total 38,90 60,16 62,43 88,40 4,184
0.00 0.15 1.26 7.17 .24
(3) Engineering Materials
Unit: RMB
Ending balance Beginning balance
Depreciati
Item Carrying Carrying Carrying Depreciation Carrying
on
amount value amount reserves value
reserves
Engineerin
932,611.70 932,611.70 1,887,810.25 1,887,810.25
g materials
Total 932,611.70 932,611.70 1,887,810.25 1,887,810.25
17. Intangible Assets
(1) List of Intangible Assets
Unit: RMB
Trademark use
Item Land use right Software License fee Total
right
I. Original carrying
value
1. Beginning balance 206,783,546.68 15,736,719.66 5,488,000.00 1,650,973.47 229,659,239.81
2. Increased amount of
7,356,480.86 176,723.98 50,000.00 7,583,204.84
the period
(1) Purchase
(2) Internal R&D
(3) Business
7,356,480.86 176,723.98 50,000.00 7,583,204.84
combination increase
3. Decreased amount of
the period
(1) Disposal
4. Ending balance 214,140,027.54 15,913,443.64 5,538,000.00 1,650,973.47 237,242,444.65
II. Accumulated
amortization
1. Beginning balance 58,805,643.96 12,856,960.12 2,652,533.14 189,356.68 74,504,493.90
2. Increased amount of
2,810,991.43 708,541.25 316,495.66 81,090.31 3,917,118.65
the period
(1) Withdrawal 2,129,983.97 595,634.26 273,995.66 81,090.31 3,080,704.20
(2) Combination
681,007.46 112,906.99 42,500.00 836,414.45
increase
3. Decreased amount of
the period
(1) Disposal
4. Ending balance 61,616,635.39 13,565,501.37 2,969,028.80 270,446.99 78,421,612.55
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
152,523,392.15 2,347,942.27 2,568,971.20 1,380,526.49 158,820,832.11
value
2. Beginning carrying
147,977,902.72 2,879,759.54 2,835,466.86 1,461,616.79 155,154,745.91
value
18. Long-term Prepaid Expenses
Unit: RMB
Item Beginning Increase Amortized Decrease Ending balance
balance amount
Trademark
110,345.30 59,794.67 1,956.06 168,183.91
renewal fee
Total 110,345.30 59,794.67 1,956.06 168,183.91
19. 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
Deductible loss 59,064,221.02 9,085,419.14 59,064,221.02 9,085,419.14
Bad debt provision 7,549,512.71 1,175,913.46 7,196,880.38 1,087,755.38
Inventory falling
2,153,192.30 372,149.55 2,990,223.81 448,533.57
price reserves
Impairment of fixed
480,674.25 72,101.14 480,674.25 72,101.14
assets
Total 69,247,600.28 10,705,583.29 69,731,999.46 10,693,809.23
(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
Assets evaluation
appreciation for
business
5,560,619.60 1,025,840.18 3,643,147.16 546,472.07
combination not
under the same
control
Changes in fair
value of other
537,348,646.53 80,602,296.98 595,307,646.53 89,296,146.98
equity instrument
investment
Changes in fair
value of other
36,250,000.00 5,437,500.00 36,250,000.00 5,437,500.00
non-current
financial assets
Changes in fair
value of trading 58,546,907.88 14,357,695.47 89,101,335.36 22,064,042.06
financial assets
Total 637,706,174.01 101,423,332.63 724,302,129.05 117,344,161.11
(3) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
Item Ending balance Beginning balance
Deductible loss 14,716,019.78 14,716,019.78
Bad debt provision 216,192,838.51 204,612,644.18
Falling price reserves of
28,806,742.77 32,833,681.27
inventories
Total 259,715,601.06 252,162,345.23
(4) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years
Unit: RMB
Years Ending amount Beginning amount Note
2022 434,000.66 434,000.66
2023 940,673.56 940,673.56
2024 6,538,363.99 6,538,363.99
2025 2,279,179.37 2,279,179.37
2026 4,523,802.20 4,523,802.20
Total 14,716,019.78 14,716,019.78
20. Other Non-current Assets
Unit: RMB
Ending balance Beginning balance
Depreciati Depreciati
Item Carrying Carrying
on Carrying value on Carrying value
amount amount
reserves reserves
Advances
payment of 11,611,024.84 11,611,024.84 4,543,240.88 4,543,240.88
equipments
Total 11,611,024.84 11,611,024.84 4,543,240.88 4,543,240.88
21. 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 5,000,000.00
Obligation to pay bills discounted
127,395,924.99 61,971,466.65
before maturity
Total 134,395,924.99 73,971,466.65
(2) There Was No Short-term Borrowings Overdue but Unpaid.
22. Notes Payable
Unit: RMB
Category Ending balance Beginning balance
Bank acceptance bill 565,529,500.00 550,774,400.00
Total 565,529,500.00 550,774,400.00
At the end of the current period, there were no notes payable due and not paid.
23. Accounts Payable
(1) List of Accounts Payable
Unit: RMB
Item Ending balance Beginning balance
Payment for goods 716,529,188.78 666,186,668.82
Total 716,529,188.78 666,186,668.82
(2) Significant Accounts Payable Aging over One Year
Item Ending balance Unpaid/ Un-carry-over reason
Supplier terminates cooperation,
Payment for goods 12,974,557.92
pending payment
Payment for equipment 1,845,062.03 Equipment warranty
Total 14,819,619.95
24. Advances from Customers
Unit: RMB
Item Ending balance Beginning balance
Payment for goods 411,746.26 660,965.62
Total 411,746.26 660,965.62
There were no significant advances from customers aging over one year at the end of the period.
25. Contract Liabilities
Unit: RMB
Item Ending balance Beginning balance
Contract liabilities 39,180,596.15 26,864,081.97
Total 39,180,596.15 26,864,081.97
There were no significant contract liabilities aging over one year at the end of the period.
26. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
I. Short-term salary 45,385,667.48 149,376,585.46 181,427,584.89 13,334,668.05
II.Post-employment
benefit-defined 18,443,542.01 18,443,542.01
contribution plans
Total 45,385,667.48 167,820,127.47 199,871,126.90 13,334,668.05
(2) List of Short-term Salary
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Salary, bonus,
37,375,772.77 124,330,031.39 156,774,557.85 4,931,246.31
allowance, subsidy
2.Employee welfare 1,592.74 1,154,031.03 1,154,031.03 1,592.74
3. Social insurance 10,884,539.06 10,884,539.06 0.00
Of which: Medical
insurance 8,993,646.85 8,993,646.85 0.00
premiums
Work-related injury
1,013,249.35 1,013,249.35 0.00
insurance
Maternity insurance 877,642.86 877,642.86 0.00
4. Housing fund 10,179,506.00 10,179,506.00 0.00
5.Labor union
budget and
8,008,301.97 2,828,477.98 2,434,950.95 8,401,829.00
employee education
budget
Total 45,385,667.48 149,376,585.46 181,427,584.89 13,334,668.05
(3) List of Defined Contribution Plans
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Basic pension
17,884,275.01 17,884,275.01
benefits
2. Unemployment
559,267.00 559,267.00
insurance
Total 18,443,542.01 18,443,542.01
27. Taxes Payable
Unit: RMB
Item Ending balance Beginning balance
VAT 5,196,069.28 372,401.11
Corporate income tax 206,196.36 470,363.07
Personal income tax 66,697.40 76,559.47
Urban maintenance and
790,823.73 957,520.42
construction tax
Property tax 1,041,554.72 1,160,865.33
Land use tax 793,050.50 1,026,217.69
Stamp duty 29,478.70 44,759.84
Education Surcharge 100,157.22 90,862.46
Comprehensive fees 1,075,134.76 1,075,134.76
Environmental protection tax 63,389.34 31,694.67
Total 9,362,552.01 5,306,378.82
28. Other Payables
Unit: RMB
Item Ending balance Beginning balance
Dividends payable 3,891,433.83 3,891,433.83
Other payables 150,033,922.02 144,469,939.46
Total 153,925,355.85 148,361,373.29
(1) Dividends Payable
Unit: RMB
Item Ending balance Beginning balance
Ordinary share dividends 3,243,179.97 3,243,179.97
Dividends for non-controlling
648,253.86 648,253.86
shareholders
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 5,005,246.58 5,045,246.58
Intercourse funds among units 5,020,885.02 8,364,769.41
Intercourse funds among
387,661.04 402,661.04
individuals
Sales discount and three
121,566,325.37 114,581,855.32
guarantees
Other 18,053,804.01 16,075,407.11
Total 150,033,922.02 144,469,939.46
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.
29. Other Current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Sale service fee 448,414.73 460,437.94
Transportation storage fee 766,870.71 870,397.06
Electric charge 3,784,957.96 3,131,920.88
Tax to be transferred 2,223,378.37 2,250,515.65
Estimated share value added tax 3,267,400.13 3,989,913.45
Obligation to pay bills transferred
101,680,550.03 72,391,302.15
before maturity
Other withholding expenses 5,623,653.25 5,843,705.66
Total 117,795,225.18 88,938,192.79
30. Deferred Income
Unit: RMB
Beginning Reason for
Item Increase Decrease Ending balance
balance formation
Government Government
39,615,355.40 39,615,355.40
grants appropriation
Total 39,615,355.40 39,615,355.40 --
Item involving government grants:
Unit: RMB
Amount
recorded Amount
Amou into recorded Amount Related
Beginni nt of non-oper into other offset Other Ending to
Item ng new ating income in cost in the chan balanc assets/re
balance subsid income in the Reporting ges e lated
y the Reporting Period income
Reporting Period
Period
National major
project special
13,040 Related
allocations- Flexible 13,040,
,367.0
processing production 367.00 to assets
0
line for cylinders of
diesel engines
Remove 18,513 Related
18,513,
,763.9
compensation 763.98 to assets
8
Research and
development and
industrialization
allocations of national 8,061,2 8,061, Related
III/IV standard 24.42 224.42 to assets
high-powered
efficient diesel engine
for agricultural use
31. Share Capital
Unit: RMB
Increase/decrease (+/-)
Beginning Bonus Ending
New shares Bonus
balance issue from Other Subtotal balance
issued shares
profit
The sum of 705,692,50 705,692,50
shares 7.00 7.00
32. Capital Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Capital premium
620,338,243.21 620,338,243.21
(premium on stock)
Other capital reserves 20,337,975.19 542,255.39 19,795,719.80
Total 640,676,218.40 542,255.39 640,133,963.01
33. Other Comprehensive Income
Unit: RMB
Item Beginning Reporting Period Endin
balance Less: g
Recorde balanc
Less: d in e
Recorded other
in other compreh
Attribut
comprehen ensive
Income able to Attribut
sive income
before Less: owners able to
income in in prior
taxation Income of the non-con
prior period
in the tax Compan trolling
period and and
Current expense y as the interests
transferred transferr
Period parent after tax
in profit or ed in
after tax
loss in the retained
Current earnings
Period in the
Current
Period
I. Other comprehensive -57,95 -49,26 456,7
506,011, -8,693,
income that will not be 9,000.0 5,150.0 46,34
499.55 850.00
reclassified to profit or loss 0 0 9.55
Changes in fair value of -57,95 -49,26 456,7
506,011, -8,693,
other equity instrument 9,000.0 5,150.0 46,34
499.55 850.00
investment 0 0 9.55
Total of other -57,95 -49,26 456,7
506,011, -8,693,
9,000.0 5,150.0 46,34
comprehensive income 499.55 850.00
0 0 9.55
34. Specific Reserve
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Safety production
18,812,986.55 18,812,950.04
cost
Total 18,812,986.55 18,812,950.04
35. Surplus Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Statutory surplus
320,987,630.56 320,987,630.56
reserves
Discretional surplus
13,156,857.90 13,156,857.90
reserves
Total 334,144,488.46 334,144,488.46
36. Retained Earnings
Unit: RMB
Item Reporting Period Same period of last year
Beginning balance of retained
872,212,354.88 777,899,079.66
earnings before adjustments
Beginning balance of retained
872,212,354.88 777,899,079.66
earnings after adjustments
Add: Net profit attributable to
owners of the Company as the -14,592,094.77 129,189,065.60
parent
Dividends of ordinary shares
18,348,005.18
payable
Ending retained earnings 839,272,254.93 907,088,145.26
List of adjustment of beginning retained earnings:
(1) RMB0.00 beginning retained earnings was affected by retrospective adjustment conducted according to the
Accounting Standards for Business Enterprises and relevant new regulations.
(2) RMB0.00 beginning retained earnings was affected by changes in accounting policies.
(3) RMB0.00 beginning retained earnings was affected by correction of significant accounting errors.
(4) RMB0.00 beginning retained earnings was affected by changes in combination scope arising from same
control.
(5) RMB0.00 beginning retained earnings was affected totally by other adjustments.
37. Operating Revenue and Cost of Sales
Unit: RMB
Reporting Period Same period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main operations 1,161,021,786.32 1,038,738,676.27 1,475,253,150.96 1,265,262,684.42
Other operations 17,200,705.72 12,656,556.15 21,917,304.84 18,852,045.04
Total 1,178,222,492.04 1,051,395,232.42 1,497,170,455.80 1,284,114,729.46
Relevant information of revenue:
Unit: RMB
Category of contracts Segment 1
Product Types
Of which:
Single-cylinder diesel engines 440,462,569.28
Multi-cylinder diesel engines 612,150,701.94
Other products 88,912,608.25
Fittings 36,696,612.57
Classified by business area
Of which:
Sales in domestic market 1,019,205,712.35
Export sales 159,016,779.69
Total 1,178,222,492.04
Information related to performance obligations: none
38. Taxes and Surtaxes
Unit: RMB
Item Reporting Period Same period of last year
Urban maintenance and
812,411.02 1,026,604.02
construction tax
Education surcharge 579,085.68 733,288.56
Property tax 1,817,465.17 1,887,353.62
Land use tax 1,586,101.00 1,817,778.95
Vehicle and vessel use tax 201,437.50 270,741.50
Stamp duty 207,601.82 402,556.65
Environment tax 102,066.70 60,179.21
Other 54,256.65 56,775.69
Total 5,360,425.54 6,255,278.20
39. Selling Expense
Unit: RMB
Item Reporting Period Same period of last year
Employee benefits 16,943,256.62 17,526,685.96
Office expenses 3,724,135.21 4,736,523.65
Sales promotional expense 3,274,025.90 6,212,342.60
Three guarantees 20,297,149.84 28,141,207.55
Other 7,520,633.81 9,558,048.08
Total 51,759,201.38 66,174,807.84
40. Administrative Expense
Unit: RMB
Item Reporting Period Same period of last year
Employee benefits 23,311,653.61 25,708,439.30
Office expenses 4,566,775.20 7,630,682.21
Depreciation and amortization 4,952,365.26 5,279,293.31
Repair charge 428,378.02 928,742.39
Other 6,957,362.02 8,461,323.27
Total 40,216,534.11 48,008,480.48
41. Development Costs
Unit: RMB
Item Reporting Period Same period of last year
Direct input expense 24,257,520.75 25,574,380.45
Employee benefits 11,798,332.91 11,406,908.14
Depreciation and amortization 2,981,055.64 1,944,857.24
Entrusted development charges 4,716,981.13
Other 1,122,878.17 1,493,727.00
Total 40,159,787.47 45,136,853.96
42. Finance Costs
Unit: RMB
Item Reporting Period Same period of last year
Interest expense 3,276,786.93 4,437,018.11
Less: Interest income 6,634,812.22 4,502,088.58
Net foreign exchange gains or
-7,111,099.45 1,608,275.04
losses
Other -2,531,595.24 1,099,425.68
Total -13,000,719.98 2,642,630.25
43. Other Income
Unit: RMB
Sources Reporting Period Same period of last year
Government grants directly
recorded into the current profit or 1,602,830.77 406,454.70
loss
44. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Investment income from disposal
364,131.30 250,514.11
of trading financial assets
Dividend income from holding of
9,360,000.00 8,191,724.76
other equity instrument investment
Income from refinancing
60,799.49
operations
Investment income from financial
4,297,768.75
products
Forward income from foreign
0.00 82,262.00
exchange settlement
Accounts receivable
financing-discount interest of bank -2,338,416.66
acceptance bills
Total 11,744,282.88 8,524,500.87
45. Gain on Changes in Fair Value
Unit: RMB
Sources Reporting Period Same period of last year
Held-for-trading financial assets -30,488,388.88 122,554,092.00
Total -30,488,388.88 122,554,092.00
46. Credit Impairment Loss
Unit: RMB
Item Reporting Period Same period of last year
Bad debt loss of other receivables 236,946.29 64,194.87
Bad debt loss of accounts
-12,169,772.95 -12,559,627.15
receivable
Total -11,932,826.66 -12,495,432.28
47. Asset Impairment Loss
Unit: RMB
Item Reporting Period Same period of last year
Loss on inventory valuation and
4,342,775.64 -5,950,895.20
contract performance cost
Total 4,342,775.64 -5,950,895.20
48. Asset Disposal Income
Unit: RMB
Sources Reporting Period Same period of last year
Disposal income of fixed assets -361,395.36 -751,441.20
49. 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 246,187.33
Negative goodwill from
combination of Zhenjiang
1,798,981.78 1,798,981.78
Siyang Diesel Engine
Manufacturing Co., Ltd.
Other 550,915.40 603,996.26 550,915.40
Total 2,349,897.18 850,183.59 2,349,897.18
50. 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
41,983.82
non-current assets
Other 392,257.24 291,323.90 392,257.24
Total 392,257.24 333,307.72 392,257.24
51. Income Tax Expense
(1) List of Income Tax Expense
Unit: RMB
Item Reporting Period Same period of last year
Current income tax expense 1,599,680.00 1,023,856.84
Add: Deferred income tax expense -7,805,728.88 27,263,523.00
Total -6,206,048.88 28,287,379.84
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
Item Reporting Period
Profit before taxation -20,803,050.57
Influence of applying different tax rates by
-6,206,048.88
subsidiaries
Tax preference from eligible expenditures -9,360,000.00
Income tax expense -6,206,048.88
52. Other Comprehensive Income
See Note 33 for details.
53. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Subsidy and appropriation 1,602,830.77 406,454.70
Other intercourses in cash 6,000,698.61 2,956,131.54
Interest income 7,872,212.72 4,502,088.58
Other 392,565.39 402,565.98
Total 15,868,307.49 8,267,240.80
(2) Cash Used in Other Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Selling and administrative expense
75,307,038.72 79,257,764.77
paid in cash
Handling charges 1,058,635.32 1,776,237.12
Other 749,863.50 896,524.70
Other transactions 67,256.65 95,689.96
Total 77,182,794.19 82,026,216.55
(3) Cash Generated from Other Investing Activities
Unit: RMB
Item Reporting Period Same period of last year
Deposit of construction unit 169,856.31 220,217.55
Total 169,856.31 220,217.55
(4) Cash Used in Other Investing Activities
Unit: RMB
Item Reporting Period Same period of last year
Project margin 50,000.00
Total 50,000.00
(5) Cash Generated from Other Financial Activities
Unit: RMB
Item Reporting Period Same period of last year
Subsidy for project loans 1,391,000.00
Discount of undue bank acceptance
49,395,924.99
bills with low credit rating
Total 49,395,924.99 1,391,000.00
(6) Cash Used in Other Financial Activities
Unit: RMB
Item Reporting Period Same period of last year
Intermediary agency fees for
12,694,718.67
private placement
Discount interest from bank
2,604,075.01
acceptance bills
Total 2,604,075.01 12,694,718.67
54. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Unit: RMB
Supplemental information Reporting Period Same period of last
year
1. Reconciliation of net profit to net cash flows generated from
operating activities
Net profit -14,597,001.69 129,354,450.53
Add: Provision for impairment of assets -8,871,223.50 18,446,327.48
Depreciation of fixed assets, of oil and gas assets, of productive
40,934,595.60 39,927,432.35
living assets
Depreciation of right-of-use assets
Amortization of intangible assets 3,076,523.63 3,142,009.67
Amortization of long-term deferred expenses 1,956.06 16,261.85
Losses on disposal of fixed assets, intangible assets and other
361,395.36 751,441.20
long-term assets (gains by “-”)
Losses on the scrapping of fixed assets (gains by “-”) 0.00 41,983.82
Losses on the changes in fair value (gains by “-”) 30,488,388.88 -122,554,092.00
Financial expenses (gains by “-”) -13,000,719.98 2,642,630.25
Investment losses (gains by “-”) -11,744,282.88 -824,500.87
Decrease in deferred income tax assets (increase by “-”) -11,774.06
Increase in deferred income tax liabilities (decrease by “-”) -15,920,828.48 45,768,261.14
Decrease in inventory (increase by “-”) 117,904,290.23 46,125,419.47
Decrease in accounts receivable from operating activities
-241,738,053.67 -382,207,027.61
(increase by “-”)
Increase in payables from operating activities (decrease by “-”) 55,684,539.07 145,278,539.35
Other -16,868,305.69 -18,463,256.69
Net cash flows generated from operating activities -74,300,501.12 -92,554,120.06
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 440,638,879.34 1,047,274,087.46
Less: Beginning balance of cash 573,623,529.10 629,939,540.50
Add: Ending balance of cash equivalents
Less: Beginning balance of cash equivalents
Net increase in cash and cash equivalents -132,984,649.76 417,334,546.96
(2) Net Cash Used in Acquisition of Subsidiaries in the Reporting Period
Unit: RMB
Amount
Cash or cash equivalents paid in the Reporting Period for
33,520,800.00
business combination occurring in the Reporting Period
Net cash used in acquisition of subsidiaries 33,520,800.00
(3) Cash and Cash Equivalents
Unit: RMB
Item Ending balance Beginning balance
I. Cash 440,638,879.34 573,623,529.10
Including: Cash on hand 201,776.86 145,594.98
Bank deposit on demand 439,927,242.99 561,746,767.12
Other monetary assets on demand 509,859.49 509,859.49
III. Ending balance of cash and cash
440,638,879.34 573,623,529.10
equivalents
55. Assets with Restricted Ownership or Right to Use
Unit: RMB
Item Ending carrying value Reason for restriction
As cash deposit for bank acceptance
Monetary assets 123,582,947.15
bill and for environment
Houses and buildings 1,634,418.39 Mortgaged for borrowings from banks
Land use right 885,605.70 Mortgaged for borrowings from banks
Machinery equipment 28,360,996.68 Mortgaged for borrowings from banks
Obligation to pay bills discounted
134,395,924.99
before maturity
Obligation to pay bills transferred
98,388,074.25
before maturity
Total 387,247,967.16
56. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Unit: RMB
Ending foreign currency Ending balance converted
Item Exchange rate
balance to RMB
Monetary assets
Of which: USD 14,872,369.02 6.7114 99,814,417.44
HKD 301,761.84 0.8552 258,066.73
SGD 54,427.95 4.817 262,179.44
Accounts receivable
Of which: USD 9,170,863.92 6.7114 61,549,336.11
GBP -67,212.27 8.1365 -546,872.63
Accounts payable
Of which: USD 302.60 6.7114 2,030.87
Contract liabilities
Of which: USD 784,613.15 6.7114 5,265,852.69
EUR 117,145.84 7.0084 821,004.91
(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
57. Government Grants
(1) Basic Information on Government Grants
Unit: RMB
Amount recorded in the
Category Amount Listed items
current profit or loss
Business development
102,800.00 Other income 102,800.00
fund
Municipal subsidy for
application of R&D 200,000.00 Other income 200,000.00
projects
Subsidy for stabilizing
521,460.00 Other income 521,460.00
posts
Export award from
agricultural machinery 250,000.00 Other income 250,000.00
industry association
Talents subsidies 50,000.00 Other income 50,000.00
Science and technology
60,000.00 Other income 60,000.00
awards
Subsidy for stabilizing
347,639.00 Other income 347,639.00
posts
Vehicle scrapping subsidy 59,800.00 Other income 59,800.00
Subsidy for stabilizing
11,131.77 Other income 11,131.77
posts
(2) Return of Government Grants
□ Applicable √ Not applicable
VIII. Changes of Consolidation Scope
1. Business Combination Not under the Same Control
(1) Business Combination Not under the Same Control in the Reporting Period
Unit: RMB
Income Net
of profits of
Recogniti
Time and acquiree acquiree
Cost of Proportio Way to on basis
Name of place of Purchase from the from the
gaining n of gain the of
acquiree gaining date purchase purchase
the equity equity equity purchase
the equity date to date to
date
period-en period-en
d d
On 16
May
2022, the
Board of
Directors
of
Zhenjiang
Siyang
was
reorganiz
ed and its
Articles
Zhenjiang
of
Siyang
Associati
Diesel 23
33,520,80 Acquisiti 31 May on were 4,813,008 206,678.9
Engine February 41.50%
0.00 on in cash 2022 amended, .16 6
Manufact 2022
after
uring Co.,
which
Ltd.
directors
appointed
by
Changcha
i
Company
account
for more
than half
of the
total
number
of
directors.
In May
2022,
Changcha
i
appointed
managers
to
participat
e in the
productio
n and
operation
managem
ent of
Zhenjiang
Siyang.
(2) Combination Cost and Goodwill
Unit: RMB
Combination cost
--Cash 33,520,800.00
--Fair value of non-cash assets
--Fair value of debts issued or undertaken
--Fair value of equity securities issued
--Fair value of contingent consideration
--Fair value of equities held before the purchase date on the purchase date
--Other
Total combination cost 33,520,800.00
Less: fair value of identifiable net assets acquired 35,319,781.78
The amount of goodwill/combined cost less than the fair value share of
-1,798,981.78
identifiable net assets obtained
Note to determination method of the fair value of the combination cost, consideration and changes:
Combination cost: According to the Confirmation of Transaction on the Transfer of 41.5% Equity Interest
(Corresponding to Capital Contribution of RMB830,000) in Zhenjiang Siyang Diesel Engine Manufacturing Co.,
Ltd. issued by Jiangsu Property Rights Exchange Co., Ltd. on 12 January 2022, the transaction price is
RMB33,520,800.00, and Changchai Company, Limited paid a one-time payment of RMB33,520,800.00 on 23
February 2022.
Determination method of fair value: Zhenjiang Siyang's base date of assets evaluation is 31 March 2021. The
evaluated value of assets of Zhenjiang Siyang on 31 March 2021 is used as the fair value. The fair value of
Zhenjiang Siyang continuously measured from 31 May 2022 is calculated, which is multiplied by the
shareholding ratio of Changchai Company, Limited to obtain the fair value share of the identifiable net assets
obtained by Changchai Company, Limited.
The main reasons for the formation of large-value goodwill: Not applicable
(3) The Identifiable Assets and Liabilities of Acquiree on Purchase Date
Unit: RMB
Zhenjiang Siyang Diesel Engine Manufacturing Co., Ltd.
Fair value on purchase date Carrying value on purchase date
Assets: 99,136,050.80 96,915,442.89
Monetary assets 19,400,123.61 19,400,123.61
Accounts receivable 24,790,090.34 24,790,090.34
Inventories 25,093,473.79 25,096,648.68
Fixed assets 21,864,448.97 21,427,812.03
Intangible assets 6,746,790.39 4,959,644.53
Liabilities: 14,028,142.91 13,472,197.21
Borrowings
Accounts payable 13,472,197.21 13,472,197.21
Deferred income tax liabilities 555,945.70
Net assets 85,107,907.89 83,443,245.68
Less: Non-controlling interests 49,788,126.12 48,814,298.72
Net assets acquired 35,319,781.78 34,628,946.96
The determination method of the fair value of identifiable assets and liabilities: Continuous measurement based on
assessment value
Contingent liabilities of acquirees undertaken in the business combination: None
(4) Gains or losses from Re-measurement of Equity Held before the Purchase Date at Fair Value
Whether there is a transaction that through multiple transaction step by step to realize business combination and
gaining the control during the Reporting Period
□ Yes √ No
(5) Notes to Reasonable Consideration or Fair Value of Identifiable Assets and Liabilities of the Acquiree
that Cannot Be Determined on the Acquisition Date or during the Period-end of the Merger
Not applicable
IX. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
Main Registrat Natur Holding percentage Way of
Name
operatin ion e of (%) gaining
g place place busin Indirectl
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 Horizon Investment Co., Changz Changzh Servi
100.00% Set-up
Ltd. hou ou ce
Changzhou Changchai Horizon Changz Changzh Indus
75.00% 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
Combination
Zhenjiang Siyang Diesel Engine Zhenjia Zhenjian Indus
41.50% not under the
Manufacturing Co., Ltd. ng g try
same control
(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% -122,639.26 19,843,847.11
Engine Co., Ltd.
Zhenjiang Siyang
Diesel Engine
58.50% 49,909,033.31 49,909,033.31
Manufacturing 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
Name Ending balance Beginning balance
Non- Non-
Non- Curre Non- Curre
Curre curre Total Curre curre Total
curre Total nt curre Total nt
nt nt liabili nt nt liabili
nt assets liabili nt assets liabili
assets liabili ties assets liabili ties
assets ties assets ties
ty ty
Chan
gchai
Wanz
hou 47,34 23,67 71,01 21,40 21,40 48,20 24,14 72,34 22,42 22,42
Diese 1,885 4,735 6,620 7,002 7,002 0,342 1,889 2,232 6,016 6,016
l .15 .21 .36 .62 .62 .77 .90 .67 .75 .75
Engin
e Co.,
Ltd.
Zhenj
iang
Siyan
g
Diese
l 70,17 27,04 97,22 13,34 13,34 65,19 27,82 93,02 11,54 11,54
Engin 5,371 6,382 1,753 2,095 2,095 5,270 6,516 1,787 8,769 8,769
e .13 .11 .24 .84 .84 .42 .89 .31 .99 .99
Manu
factur
ing
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 17,154,26 -306,598. -306,598. -3,005,98 30,436,07 487,938.4 487,938.4 -1,981,90
Diesel 9.32 18 18 1.47 9.88 6 6 1.87
Engine
Co., Ltd.
Zhenjian
g Siyang
Diesel
4,813,008 206,678.9 206,678.9 6,994,726
Engine 0.00 0.00 0.00 0.00
.16 6 6 .52
Manufact
uring
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
Ending fair value
Fair value Fair value Fair value
Item
measurement items measurement items measurement items Total
at level 1 at level 2 at level 3
I. Consistent fair
-- -- -- --
value measurement
(I) Trading financial
104,304,516.61 299,677,397.27 403,981,913.88
assets
1. Financial assets
at fair value through 104,304,516.61 299,677,397.27 403,981,913.88
profit or loss
(1) Debt instrument
investment
(2) Equity
instrument 104,304,516.61 104,304,516.61
investment
(3) Derivative
financial assets
(4)Wealth
management 299,677,397.27 299,677,397.27
investments
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
investments in debt
obligations
(III)Other equity
instrument 575,543,000.00 146,375,646.53 721,918,646.53
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
Accounts receivable
109,896,100.86 109,896,100.86
financing
Other non-current
112,500,000.00 112,500,000.00
financial assets
Total assets
consistently
679,847,516.61 299,677,397.27 368,771,747.39 1,348,296,661.27
measured 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 held-for-trading financial assets measured at fair value,
the closing market price on the balance sheet date 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 2
Wealth management and investment: The underlying assets of investment in wealth management products include
bond assets, deposit assets, fund assets, etc. The portfolio of investment assets should be dynamically managed.
The fair value of wealth management products should be adjusted according to the yield of similar products
provided by the counterparty.
4. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for
Consistent and Inconsistent Fair Value Measurement Items at Level 3
(1) Accounts receivable financing: Accounts receivable financing is a bank acceptance with high credit rating,
short maturity and low risk. The par amount is close to the fair value and is used as the fair value.
(2) Among the other non-current financial assets: for the investments in equity instrument of Jiangsu Horizon New
Energy Technology Co., Ltd., Jiangsu Horizon 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 2021,
and confirmed the premium rate of capital increase based on the appreciation rate of the equity value. The
company’s new investors signed the investment agreements respectively in June 2021 and December 2021.
Therefore, the fair value of the equity investment had been adjusted and confirmed accordingly based on the
premium rate of capital increase from new investors.
(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 Horizon 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.
5. Sensitiveness Analysis on Unobservable Parameters and Adjustment Information between Beginning and
Ending Carrying Value of Consistent Fair Value Measurement Items at Level 3
Not applicable
6. Explain the Reason for Conversion and the Governing Policy when the Conversion Happens if
Conversion Happens among Consistent Fair Value Measurement Items at Different Levels
Not applicable
7. Changes in the Valuation Technique in the Current Period and the Reason for Such Changes
Not applicable
8. Fair Value of Financial Assets and Liabilities Not Measured at Fair Value
The financial assets and liabilities measured at amortization cost mainly include notes receivable, accounts
receivable, other receivables, short-term borrowings, accounts payable, other payables, etc. The difference
between the carrying value and fair value for financial assets and liabilities not measured at fair value is small.
9. Other
During the year, there was no conversion between Level 1 and Level 2, nor was there any transfer to or from
Level 3 for the fair value measurement of the Company's financial assets and financial liabilities.
XII. Related Party and Related-party Transactions
1. Information Related to the Company as the Parent of the Company
Proportion of Proportion of
share held by voting rights
Registration Nature of Registered the Company as owned by the
Name
place business capital the parent Company as the
against the parent against
Company the Company
Investment and
operations of
state-owned
assets, assets
management
(excluding
Changzhou financial
Investment Changzhou business), RMB1.2 billion 32.26% 32.26%
Group Co., Ltd. investment
consulting
(excluding
consulting on
investment in
securities and
options), etc.
Notes: Information on the Company as the parent
The parent company of the Company is Changzhou Investment Group Co., Ltd. According to the guiding
principle of the Notice of Provincial Government on Issuing the Implementation Plan for Transferring Part of
State-owned Capital to Boost Social Security Fund in Jiangsu Province (SZF [2020] No. 27), the Notice on
Transferring Part of State-owned Capital to Cities and Counties to Boost Social Security Fund (SCGM [2020] No.
139) from the Department of Finance of Jiangsu Province and other five departments and the Notice on
Transferring Part of State-owned Capital at Urban (District) Level to Boost Social Security Fund (CCGM [2020]
No. 4) from Changzhou Finance Bureau and other four departments, the 10% state-owned equity of the
Investment Group held by Changzhou Municipal People's Government is transferred to the Department of Finance
of Jiangsu Province free of charge. After the share transfer, Changzhou People’s Government holds 90%
state-owned equity of the Investment Group and the Department of Finance of Jiangsu Province holds 10%
state-owned equity of the Investment Group. In accordance with Changzhou People’s Government Document
(CZF [2006] No. 62), Changzhou Investment Group Co., Ltd. is an enterprise which Changzhou People’s
Government authorizes Changzhou Government State-owned Assets Supervision and Administration Commission
to perform duties of investors. Thus, 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 VIII for details.
3. Information on Other Related Parties
Name Relationship with the Company
Changzhou Synergetic Innovation Private Equity Participated in establishing the industrial investment
Fund (Limited Partnership) fund
Jiangsu Horizon New Energy Technology Co., Ltd. Shareholding enterprise of the Company
Donghai Securities Co., Ltd. Controlled by the same Company as the parent
XIII. Commitments and Contingency
1. Significant Commitments
Significant commitments on balance sheet date
As of 30 June 2022, there was no significant commitment for the Company to disclose.
2. Contingency
(1) Significant Contingency on Balance Sheet Date
None
(2) In Despite of no Significant Contingency to Disclose, the Company Shall Also Make Relevant Statements
There was no significant contingency in the Company.
XIV. Events after Balance Sheet Date
1. Sales Return
None
2. Notes to Other Events after Balance Sheet Date
There was no other event after balance sheet date.
XV. Other Significant Events
1. Segment Information
(1) Determination Basis and Accounting Policies of Reportable Segment
Due to the operation scope of the Company and subsidiaries were similar, the Company conducts common
management, and did not divide business unit, so the Company only made single branch report.
2. Other Significant Transactions and Events with Influence on Investors’ Decision-making
None
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
23,72 20,40 3,322, 27,50 21,126
which bad debt 86.00 76.80 6,383,0
9,235. 2.38% 6,627. 608.5 9,745. 6.00% ,658.8
provision % % 86.48
73 14 9 33 5
separately
accrued
Of which:
Accounts
receivable for
973,7 100,0 873,6 430,7 88,019
which bad debt 97.62 10.28 94.00 20.43 342,752
36,10 74,19 61,90 71,91 ,743.0
provision % % % % ,168.94
1.52 8.30 3.22 2.03 9
accrued by
group
Of which:
Accounts
receivable for
which bad debt 973,7 100,0 873,6 430,7 88,019
97.62 10.28 94.00 20.43 342,752
provision 36,10 74,19 61,90 71,91 ,743.0
% % % % ,168.94
accrued by 1.52 8.30 3.22 2.03 9
credit risk
features group
997,4 120,4 876,9 458,2 109,14
100.0 12.08 100.00 23.82 349,135
Total 65,33 80,82 84,511 81,65 6,401.
0% % % % ,255.42
7.25 5.44 .81 7.36 94
Accounts receivable with significant single amount for which bad debt provision separately accrued at the end of
the period:
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion Withdrawal reason
Customer1 1,470,110.64 1,470,110.64 100.00% Difficult to recover
Customer2 1,902,326.58 1,902,326.58 100.00% Difficult to recover
Customer3 6,215,662.64 6,215,662.64 100.00% Difficult to recover
Expected to
Customer4 2,797,123.26 2,194,980.28 78.47%
difficultly recover
Expected to
Customer5 3,633,081.23 2,122,165.73 58.41%
difficultly recover
Customer6 2,584,805.83 2,584,805.83 100.00% Difficult to recover
Customer7 1,523,110.59 1,523,110.59 100.00% Difficult to recover
Customer8 1,511,937.64 302,387.53 20.00% Difficult to recover
Total 21,638,158.41 18,315,549.82
Accounts receivable for which bad debt provision accrued by credit risk features group
Unit: RMB
Ending balance
Carrying amount Bad debt provision Withdrawal proportion
Within 1 year 854,773,136.44 17,094,662.72 2.00%
1 to 2 years 20,989,671.22 1,049,483.56 5.00%
2 to 3 years 2,019,401.20 302,910.18 15.00%
3 to 4 years 1,068,018.76 320,405.63 30.00%
4 to 5 years 2,113,093.71 1,267,856.23 60.00%
Over 5 years 79,778,188.13 79,778,188.13 100.00%
Total 960,701,509.46 99,813,506.45
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) 872,090,950.76
1 to 2 years 20,989,671.22
2 to 3 years 4,107,290.29
Over 3 years 100,277,424.98
3 to 4 years 3,017,768.32
4 to 5 years 4,636,883.46
Over 5 years 92,622,773.20
Total 997,465,337.25
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversal or Ending balance
balance Withdrawal Write-off Other
recovery
Bad debt
provision
21,126,658.85 720,031.71 20,406,627.14
withdrawn
separately
Bad debt
provision 12,054,455.2
88,019,743.09 100,074,198.30
withdrawn 1
by group
12,054,455.2
Total 109,146,401.94 720,031.71 120,480,825.44
1
Of which bad debt provision reversed or recovered with significant amount in the Reporting Period: No.
(3) There were no accounts receivable with actual verification during the Reporting Period.
(4) Top 5 of the Ending Balance of Accounts Receivable Collected according to the Arrears Party
Unit: RMB
Name of the Ending balance of Proportion to total ending balance Ending balance of bad
entity accounts receivable of accounts receivable debt provision
Customer1 567,626,334.55 56.91% 11,352,526.69
Customer2 57,715,364.53 5.79% 1,154,307.29
Customer3 18,252,915.05 1.83% 365,058.30
Customer4 18,121,707.37 1.82% 362,434.15
Customer5 16,876,870.97 1.69% 337,537.42
Total 678,593,192.47 68.04%
2. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Other receivables 112,148,961.53 26,497,081.34
Total 112,148,961.53 26,497,081.34
(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 147,411,452.59 55,450,919.93
Petty cash and borrowings by
742,653.65 613,410.65
employees
Other 14,165,323.36 13,629,784.64
Total 162,323,629.60 69,698,315.22
2) Withdrawal of Bad Debt Provision
Unit: RMB
First stage Second stage Third stage
Expected loss in the Expected loss in the
Expected credit loss
Bad debt provision duration (credit duration (credit Total
of the next 12
impairment not impairment
months
occurred) occurred)
Balance of 1
209,613.53 23,809,010.58 19,182,609.77 43,201,233.88
January 2022
Balance of 1
January 2022 in the
Current Period
Withdrawal of the
6,962,340.36 132,636.76 7,094,977.12
Current Period
Reversal of the
11,141.18 11,141.18
Current Period
Balance of 30 June
7,160,812.71 23,941,647.34 19,182,609.77 50,285,069.82
2022
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) 130,104,060.37
1 to 2 years 2,133,744.72
2 to 3 years 58,410.29
Over 3 years 30,027,414.22
3 to 4 years 254,561.05
4 to 5 years 902,693.83
Over 5 years 28,870,159.34
Total 162,323,629.60
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Information of bad debt provision withdrawn:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversal or Write-of Ending balance
balance Withdrawal Other
recovery f
Bad debt
provision
19,182,609.77 5,231,176.29 24,413,786.06
withdrawn
separately
Bad debt
provision
24,018,624.11 1,863,800.83 11,141.18 25,871,283.76
withdrawn by
group
Total 43,201,233.88 7,094,977.12 11,141.18 50,285,069.82
4) Particulars of the Actual Verification of Other Receivables during the Reporting Period: None.
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
Interco
Jiangsu Changchai
urse 87,416,859.70 Within 1 year 53.85% 1,748,337.19
Machinery Co., Ltd.
funds
Within 1 year
Changzhou Changchai Interco with
RMB16,899,595.
Horizon Agricultural urse 18,699,595.15 11.59% 18,699,595.15
15, 1-2 years with
Equipment Co., Ltd. funds RMB1,800,000.0
0
Changzhou Changchai Interco
Benniu Diesel Engine urse 9,000,000.00 Within 1 year 5.54% 180,000.00
Fittings Co., Ltd. funds
Interco
Changzhou Compressors
urse 2,940,000.00 Over 5 years 1.81% 2,940,000.00
Factory
funds
Interco
Changchai Group Imp.
urse 2,853,188.02 Over 5 years 1.76% 2,853,188.02
& Exp. Co., Ltd.
funds
Total 120,909,642.87 74.55% 26,421,120.36
6) Derecognition of Other Receivables due to the Transfer of Financial Assets: none
7) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement of
Other Receivables: none
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 576,273,530. 569,273,530. 542,752,730. 535,752,730.
7,000,000.00 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
576,317,712. 569,273,530. 542,796,912. 535,752,730.
Total 7,044,182.50 7,044,182.50
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
Horizon 40,000,000 40,000,000
Investment .00 .00
Co., Ltd.
Changzhou
Changchai
Horizon 7,000,000.
Agricultural 00
Equipment
Co., Ltd.
Changzhou
Fuji
Changchai
47,286,230 47,286,230
Robin
.03 .03
Gasoline
Engine Co.,
Ltd.
Jiangsu
Changchai 300,000,00 300,000,00
Machinery 0.00 0.00
Co., Ltd.
Changzhou
Xingsheng
1,000,000. 1,000,000.
Property
00 00
Managemen
t Co., Ltd.
Zhenjiang
Siyang
Diesel 33,520,800 33,520,800
Engine .00 .00
Manufacturi
ng Co., Ltd.
535,752,73 33,520,800 569,273,53 7,000,000.
Total
0.03 .00 0.03 00
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
Increase/decrease
Endin
Begin Gains Adjust Cash Endin
Withd g
ning and ment bonus g
rawal balanc
balanc Additi Reduc losses of Chang or balanc
Invest of e of
e onal ed recogn other es of profits e
ee impair Other deprec
(carryi invest invest ized compr other annou (carryi
ment iation
ng ment ment under ehensi equity nced ng
provis reserv
value) the ve to value)
ion e
equity incom issue
metho 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 1,063,899,643.27 960,873,534.45 1,391,941,677.73 1,195,911,988.65
Other operations 14,401,885.93 10,099,571.18 18,507,068.46 12,852,045.04
Total 1,078,301,529.20 970,973,105.63 1,410,448,746.19 1,208,764,033.69
Information on revenue:
Unit: RMB
Category of contracts Segment 1
Product Types
Of which:
Single-cylinder diesel engines 440,462,569.28
Multi-cylinder diesel engines 612,150,701.94
Other products 10,248,725.00
Fittings 15,439,532.98
Classified by business area
Of which:
Sales in domestic market 974,096,235.13
Export sales 104,205,294.07
Total 1,078,301,529.20
Information related to performance obligations: none
5. Investment Income
Unit: RMB
Same period of last
Item Reporting Period
year
Investment income from disposal of held-for-trading
4,099,001.28
financial assets
Dividend income from holding of other equity
9,360,000.00 7,394,400.00
instrument investment
Income from refinancing operations 60,799.49 797,324.76
Accounts receivable financing-discount interest of
-2,338,416.66
bank acceptance bills
Total 11,181,384.11 8,191,724.76
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 -361,395.36
Government subsidies charged to current profit or loss
(exclusive of government subsidies given in the Company’s
1,602,830.77
ordinary course of business at fixed quotas or amounts as per
the government’s uniform standards)
Decrease in the fair value of the
Gain/loss from change of fair value of trading financial stocks of Jiangsu Liance
Electromechanical Technology
assets and liabilities, and investment gains from disposal of
Co., Ltd., Kailong High
trading financial assets and liabilities, and derivative Technology Co., Ltd. and Guilin
-19,744,106.00
financial assets and liabilities, and available-for-sale Stars Science and Technology Co.,
financial assets, other than valid hedging related to the
Ltd. held by the Company’s
wholly-owned subsidiary Horizon
Company’s common businesses Investment during the Reporting
Period
Other non-operating income and expenses other than the 1,957,639.94
above
Less: Income tax effects -7,756,677.28
Non-controlling interests effects -2,443.83
Total -8,785,909.54 --
Others that meets the definition of non-recurring gain/loss:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Explain the reasons if the Company classifies any extraordinary gain/loss item mentioned in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Non-recurring Gains and Losses as a recurrent gain/loss item
□ Applicable √ Not applicable
2. Return on Equity and Earnings Per Share
Weighted average ROE EPS (Yuan/share)
Profit as of Reporting Period
(%) EPS-basic EPS-diluted
Net profit attributable to ordinary
-0.48% -0.0207 -0.0207
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company after
-0.19% -0.0082 -0.0082
deduction of non-recurring profit
or loss
The Board of Directors
Changchai Company, Limited
24 August 2022
