The 2016 Annual Report of Changchai Company, Limited
CHANGCHAI COMPANY, LIMITED
ANNUAL REPORT 2016
April 2017
The 2016 Annual Report of Changchai Company, Limited
Table of Contents
Section I Important Statements, Contents and Definitions............................................................3
Section II Corporate Profile and Financial Results ........................................................................5
Section III Business Profile ...............................................................................................................8
Section IV Performance Discussion and Analysis.........................................................................10
Section V Significant Events ...........................................................................................................21
Section VI Share Changes and Shareholders’ Profile...................................................................33
Section VII Preference Shares ........................................................................................................37
Section VIII Directors, Supervisors, Executive Officers and Staff..............................................38
Section IX Corporate Governance .................................................................................................47
Section X Corporate Bonds.............................................................................................................53
Section XI Financial Report............................................................................................................54
Section XII Documents Available for Reference .........................................................................158
Changchai Company, Limited Annual Report 2016
Section I Important Statements, Contents and Definitions
The board of directors (the “Board”), the supervisory board (the “Supervisory Board”), as well
as the directors, supervisors and executive officers of Changchai Company, Limited (the
“Company”) hereby guarantee the factuality, accuracy and completeness of the contents of this
Report, and shall be jointly and severally liable for any false representation, misleading statements
or material omissions in this Report.
Shi Xinkun, head of the Company, Zhang Xin, accounting head for this Report, and Jiang He,
head of the accounting department (head of accounting), hereby guarantee that the Financial Report
carried in this Report is factual, accurate and complete.
All directors attended the board meeting for the review of this Report.
Any plans for the future and other forward-looking statements mentioned in this Report shall
NOT be considered as virtual promises of the Company to investors. Therefore, investors are kindly
reminded to pay attention to possible investment risks.
The Company has described in detail the risks it might face in “IX 4. Possible risks in the
future” under “Section IV Performance Discussion and Analysis” in this Report.
The Board has considered and approved the following proposal for profit distribution: Based
on the total shares of 561,374,326, a cash dividend of RMB0.3 (tax inclusive) per 10 shares will be
distributed to all shareholders of the Company. No bonus shares will be granted, nor will any capital
reserve be converted into share capital.
This Annual Report and its abstract have been prepared in both Chinese and English. Should
there be any discrepancies or misunderstandings between the two versions, the Chinese version
shall prevail.
Changchai Company, Limited Annual Report 2016
Definitions
Term Refers to Definition
Company, the Company, Changchai Refers to Changchai Company, Limited
Chuangzhou Changchai Benniu Diesel Engine Fittings Co.,
Changchai Benniu Refers to
Ltd.
Changchai Wanzhou Refers to Changchai Wanzhou Diesel Engine Co., Ltd.
Housheng Investment Refers to Changzhou Housheng Investment Co., Ltd.
Changzhou Changchai Housheng Agricultural Equipment
Housheng Agricultural Equipment Refers to
Co., Ltd.
Changchai Robin Refers to Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd.
RMB, RMB’0,000 Refers to RMB, RMB Ten thousand
Reporting Period Refers to January 1, 2016-December 31, 2016
Changchai Company, Limited Annual Report 2016
Section II Corporate Profile and Financial Results
I Corporate information
Stock name Changchai A, Changchai B Stock code 000570, 200570
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 常柴股份有限公司
Abbr. 苏常柴
Company name in English CHANGCHAI COMPANY, LIMITED
Abbr. CHANGCHAI CO., LTD.
Legal representative Shi Xinkun
Registered address 123 Huaide Middle Road, Changzhou, Jiangsu, China
Zip code
Office address 123 Huaide Middle Road, Changzhou, Jiangsu, China
Zip code
Company website http://www.changchai.com.cn
Email cctqm@public.cz.js.cn
II Contact information
Board Secretary Securities Representative
Name He Jianjiang
Address 123 Huaide Middle Road, Changzhou, Jiangsu, China
Tel. (86)519-68683155
Fax (86)519-86630954
E-mail cchjj@changchai.com
III Information disclosure and place where this Report is kept
Newspapers designated by the Company for information disclosure Securities Times, Ta Kung Pao (HK)
Website designated by the China Securities Regulatory Commission
http://www.cninfo.com.cn
(CSRC) for the publication of this Report
Board Secretariat of the Company and
Place where this Report is kept
the Shenzhen Stock Exchange
Changchai Company, Limited Annual Report 2016
IV Company registration and alteration
Credibility code 91320400134792410W
Changes in main business activities of the Company after going public No changes
Changes of controlling shareholder No changes
V Other information
The CPAs firm hired by the Company
Name Jiangsu Gongzheng Tianye Certified Public Accountants LLP
Office address 10/F, Yingtong Commerce Building, Changzhou, Jiangsu, China
Accountants writing signatures Dai Weizhong, He Taifeng
VI Accounting and financial results
2016 2015 +/-%
Operating revenues (RMB) 2,283,028,855.52 2,519,799,547.29 -9.40% 2,489,792,063.33
Net profit attributable to
shareholders of the Company 62,539,896.17 71,102,792.49 -12.04% 64,202,144.29
(RMB)
Net profit attributable to
shareholders of the Company
56,835,566.28 61,588,462.29 -7.72% 58,685,034.57
before exceptional profit and
loss (RMB)
Net cash flows from operating
99,473,944.04 127,926,882.95 -22.24% -51,507,355.52
activities (RMB)
Basic earnings per share
0.11 0.13 -15.38% 0.11
(RMB/share)
Diluted earnings per share
0.11 0.13 -15.38% 0.11
(RMB/share)
Weighted average return on
3.00% 3.53% -0.53% 3.28%
equity (%)
December 31, 2016 December 31, 2015 +/-% December 31, 2014
Total assets (RMB) 3,724,857,266.71 3,232,406,102.20 15.23% 3,166,783,758.18
Net assets attributable to
shareholders of the Company 2,323,712,892.92 2,002,910,311.01 16.02% 1,936,936,835.27
(RMB)
Changchai Company, Limited Annual Report 2016
VII Differences in accounting data under domestic and foreign accounting standards
The net profit and net assets of this Reporting Period under China’s accounting standards are the same with
those under the international or any applicable foreign accounting standards.
VIII Financial results by quarter
Unit: RMB
1Q 2Q 3Q 4Q
Operating revenues 654,517,225.08 509,143,496.61 605,182,860.65 514,185,273.18
Net profit attributable to shareholders of the Company 24,282,056.99 10,736,085.37 20,090,608.28 7,431,145.53
Net profit attributable to shareholders of the Company
24,946,954.15 3,563,547.46 19,718,706.88 8,606,357.79
before exceptional profit and loss
Net cash flows from operating activities -5,947,696.22 123,983,609.51 -46,874,591.45 28,312,622.20
IX Exceptional profit/loss
Unit: RMB
Item 2016 2015
Profit/loss on disposal of non-current assets (including offset
6,254,028.26 211,929.61 118,901.99
asset impairment provisions)
Government subsidies charged to the profit/loss for this
Reporting Period (except for the government grants closely
related to the business of the Company and given at a fixed 7,948,135.65 11,903,636.62 10,344,073.62
quota or amount in accordance with the State’s uniform
standards)
Capital occupation charges on non-financial enterprises that are
1,340,364.82 1,523,155.52 1,505,666.68
charged to the profit/loss for this Reporting Period
Profit/loss on fair value changes of transactional financial
assets and liabilities & investment income from disposal of
transactional financial assets and liabilities as well as financial 1,058,569.81 1,793,021.58 572,812.70
assets available for sale, except for effective hedges related to
routine operations of the Company
Impairment provision reversal for accounts receivable on
which the impairment test is carried out separately
Non-operating income and expense other than the above -9,328,953.27 -4,109,778.32 -6,029,012.72
Less: Corporate income tax 1,294,119.50 1,747,894.80 995,341.14
Minority interests (after tax) 273,695.88 59,740.01 -8.59
Total 5,704,329.89 9,514,330.20 5,517,109.72
Changchai Company, Limited Annual Report 2016
Section III Business Profile
I Main business scope for this Reporting Period
As a manufacturer, we specialize in the manufacture and sale of diesel engines, diesel engine fittings and
castings, gasoline engines, gasoline engine fittings, cereal harvesting machinery, rotovators, walking tractors, molds
and jigs as well as the assembly and sale of diesel engine and gasoline engine supporting sets.
We mainly manufacture and sell small and medium-sized single-cylinder and multi-cylinder diesel engines
under the brand of “Changchai”, which are often used in tractors, combine-harvesters, light commercial vehicles,
agriculture equipment, small-sized engineering machinery, generator sets, ship machines, etc.
II Significant changes in main assets
Main assets Reason for any significant change
The closing amount stood at RMB820,072,500.00, up 63.04% from the
opening amount, mainly because the Bank of Jiangsu, where the
Available-for-sale financial assets Company holds shares, went public during this Reporting Period, and
the cost method which had been adopted in the measurement of these
shares changed to the fair value method.
The closing amount stood at RMB39,669,983.12, down 34.22% from
Other current assets the opening amount, mainly because some wealth management products
became due in this Reporting Period.
III. Core competitiveness analysis
1. Brand advantage
Changchai is a national industrial enterprise with a history of over one hundred years. It is one of the earliest
professional manufacturers of internal combustion engines in China. The brand \"Changchai\" is the earliest domestic
trademark of production goods known as China's well-known trademarks. The diesel engine of \"Changchai\" brand is
China's brand-name product. The enterprise has been certified by ISO9000 quality system, ISO14001 environmental
management system, ISO/TS16949 automotive product quality management system, and accessed to the national
export-free enterprise qualification. Changchai was honorably ranked among “the Top One Hundred Chinese
Enterprises in Engineering Industry” and “China Pacesetter Enterprise of Industrial Industry” for several times, and
was awarded the honorary title of “State-level Enterprise of Observing Contracts and Keeping Promise”, “China's
Agricultural Machinery Parts and Components Leading Enterprises”, “China's Agricultural Machinery AAA Credit
Enterprise”, “Jiangsu Independent Industries Brand Top 50”, “Quality Management Excellence Award of Jiangsu
Province”, “Mayor Quality Award of Changzhou City”, also our company won as the 10 users most satisfied leading
brands in “Jing Geng” competition in the last five years. In 2016, Changchai was entitled honors of \"My Favorite
Jiangsu Trademark in 2016\" awarded the Administration for Industry and Commerce of Jiangsu Provincial, \"China
Agricultural Machinery Parts and Components Leading Enterprises\" awarded by China Agricultural Machinery
Industry Association, and “Most Influential Brand of China Agricultural Machinery Industry in 2016\" awarded
jointly by China Agricultural Machinery Industry Association, China Agricultural Mechanization Association, and
China Agricultural Machinery Circulation Association. For the past many years, in the process of achieving steady
Changchai Company, Limited Annual Report 2016
economic development of the enterprise, we developed in a sound manner and cultivated the “Changchai” brand, a
famous small diesel engine brand of China with independent intellectual property rights
2. Technology advantage
Changchai has a state-level technology center and post-doctoral research station, and a research center of small
and medium-power internal combustion engine engineering and technology in Jiangsu Province. Currently,
Changchai is mainly engaged in production of small and medium-power single-cylinder and multi-cylinder diesel
engine. It has a complete product range, a wide power level coverage, a high reputation and intellectual property
rights for its main products. Changchai’s product research and development and scientific research projects have
won the second prize of National Machinery Industry Science and Technology Progress Award, the second prize of
Science and Technology Award of Jiangsu Province, and the first prize of Science and Technology Progress Award
of Changzhou City etc. So far, we have obtained 130 patents granted home and abroad in total, including 6 invention
patents.
3. Sales advantage
Changchai has built up a sales service network covering the whole country, with 11 sales business units, 31
sales service centers, over 400 service stations and 600 designated maintenance stations. With a perfect diesel sales
service network system, our company is able to provide high quality, efficient and timely services for our customers.
Changchai Company, Limited Annual Report 2016
Section IV Performance Discussion and Analysis
I. Summary
In the year 2016, facing difficulties such as the continuous downward trend of the macro-economy, stricter
emission laws and regulations, and the enormous pressure from safety and environmental protection requirements,
we took core competitiveness improvement as the most important measure, by speeding product upgrades,
optimizing the product structure, improving product quality, continuously promoting important technological
transformation projects, making full use of the resource advantage, seizing opportunities in domestic and overseas
markets, and expanding the advantages of superior products and business segments. As a result, we managed to
maintain a stable and orderly development.
In 2016, we sold about 724,400 engines and engine units, of which about 116,600 were multi-cylinder engines,
and about 607,800 are single-cylinder engines. We exported about 124,600 engines and engine units; and we
achieved sales revenue of RMB2.283 billion, a yearly decline of 9.4%. The net profit attributable to shareholders of
the Company was RMB62.5714 million, a yearly decline of 12.00%. Under the grim overall situation of the national
small diesel engine industry, although our company's total sales of products went down from last year, our overall
market share was stable, maintaining a leading position in the industry.
In terms of single-cylinder engines, our company adapted to new changes in the market, stabilize the main
supporting enterprise market share, integrate A dealer team and continuously promote the secondary network
construction. At the same time, we also accelerated the pace of product and market structure optimization, increased
the proportion of superior products, and fully involved in bidding projects and the development of key customers.
Concerning multi-cylinder engines, on the one hand, our company stabilized the existing supporting system to
enhance the supporting market share, speed up the agricultural market support of 4G33 and 4L88 series of middle
and high ranking new products, as well as the promotion of resources of national standard III. Our company also
accelerated the support of end products such as light engines and rice transplanters, but the supporting sales of
commercial vehicles decreased significantly.
Facing a more severe situation of foreign trade market in the past two years, our company's export business
maintained stable and rapid development. Both export volume and export income of our company increased.
As for market service, we focused on national standard III training for product upgrades and service station
optimization, and continuously improved the service capacity of national standard III products. We made full use of
the Internet, visualization and other means to improve the terminal market service capabilities by following-up and
teamwork.
To sum up, in 2016, our company correctly grasped the industry trends, implemented targeted product structure
adjustment, and did a lot to positively and effectively promote product upgrades. On the one hand, the upgrade of
single multi-cylinder products to national standard III was basically completed. The technical route was recognized
by the market and got an advantage in the development of the industry. On the other hand, the product structure
adjustment achieved initial success. New key profitable products increased significantly, making good preparation
for the new development of the company.
II. Main business analysis
1. Summary
See “I. Summary” in “Discussion & Analysis by the Management”.
Changchai Company, Limited Annual Report 2016
2. Revenues and costs
(1) Breakdown of operating revenues
Unit: RMB
2016
In total operating In total operating +/-%
Amount Amount
revenues revenues
Total of the
2,283,028,855.52 100% 2,519,799,547.29 100% -9.40%
operating income
Classified by industries
Internal
combustion 2,258,400,410.51 98.92% 2,495,248,411.83 99.03% -9.49%
engine industry
Other 24,628,445.01 1.08% 24,551,135.46 0.97% 0.31%
Classified by products
Diesel engines 2,258,400,410.51 98.92% 2,495,248,411.83 99.03% -9.49%
Other 24,628,445.01 1.08% 24,551,135.46 0.97% 0.31%
Classified by regions
Domestic 1,974,994,464.83 86.51% 2,288,815,564.77 90.83% -13.71%
Overseas 308,034,390.69 13.49% 230,983,982.52 9.17% 33.36%
(2) Industries, products or areas contributing over 10% of operating revenues or profit
Unit: RMB
Operating
Operating Gross profit
Gross profit revenue:
Operating revenue Operating cost cost: +/-% margin: +/-%
margin +/-% from
from last year from last year
last year
Classified by industries
Internal
combustion
2,258,400,410.51 1,849,826,031.76 18.09% -9.49% -11.68% 2.03%
engine
industry
Classified by products
Diesel
2,258,400,410.51 1,849,826,031.76 18.09% -9.49% -11.68% 2.03%
engines
Classified by regions
Domestic 1,950,366,019.82 1,551,802,758.77 20.44% -13.86% -17.02% 3.03%
Overseas 308,034,390.69 298,023,272.99 3.25% 33.36% 32.86% 0.36%
Changchai Company, Limited Annual Report 2016
(3) Are the Company’s goods selling revenue higher than the service revenue?
Classified by
Item Unit 2016 2015 YoY +/-
industries
Sales volume Piece 724,452 907,715 -20.19%
Diesel engines Output Piece 745,941 870,754 -14.33%
Stock Piece 85,003 63,514 33.83%
Reasons of yearly change up to 30% of relevant data
√ Applicable □Not applicable
At the end of the Reporting Period, product inventories increased by 33.83% over the same period last year,
mainly because the company increased the product inventory in order to cope with the peak season in early 2017 at
the end of the Reporting Period.
(4) Breakdown of operating costs
Unit: RMB
2016
Ratio to
Classified by Ratio to the
Item the YoY +/-
products Amount Amount operating
operating
cost
cost
Diesel engines Raw materials 1,504,920,345.33 80.62% 1,771,572,695.44 83.95% -15.05%
Diesel engines Wages 227,952,039.91 12.21% 200,838,801.68 9.52% 13.50%
Diesel engines Depreciation 81,531,657.35 4.37% 77,956,874.68 3.69% 4.59%
Diesel engines Energy 28,880,577.08 1.55% 30,561,457.15 1.45% -5.50%
(5) List of the major trade debtors and major supplier
List of the major trade debtors of the Company
Total sales to the top 5 customers (RMB) 1,186,220,609.01
Ratio of the total sales to the top 5 customers to the annual total sales 51.96%
Ratio of the related party sales to the top 5 customers to the annual total sales 0.00%
Information of the top 5 customers of the Company
SN Name of customer Sales amount (RMB) Proportion in annual total sales
1 Customer 1 497,881,915.34 21.81%
2 Customer 2 260,523,748.85 11.41%
3 Customer 3 213,112,753.56 9.33%
4 Customer 4 107,843,322.26 4.72%
5 Customer 5 106,858,869.00 4.68%
Total -- 1,186,220,609.01 51.96%
Changchai Company, Limited Annual Report 2016
List of the major suppliers of the Company
Total purchase to the top 5 suppliers (RMB) 215,630,764.22
Ratio of the total purchase to the top 5 suppliers to the annual total purchase 13.15%
Ratio of the related party purchase to the top 5 suppliers to the annual total purchase 0.00%
Information of the top 5 suppliers of the Company
SN. Name of supplier Purchase amount (RMB) Ratio to the annual purchase amount
1 Customer 1 60,796,149.82 3.71%
2 Customer 2 43,635,538.44 2.66%
3 Customer 3 41,255,451.77 2.52%
4 Customer 4 36,363,571.19 2.22%
5 Customer 5 33,580,053.00 2.05%
Total -- 215,630,764.22 13.15%
3. Expenses
Unit: RMB
2016 2015 YoY +/- Notes of the significant changes
Sales expenses 103,969,577.79 98,122,345.71 5.96%
Management expenses 207,582,213.98 197,678,915.43 5.01%
Mainly due to the decrease of
interest income of the company
Financial expenses -11,542,165.08 -15,723,785.00
during the Reporting Period and
supplier's discounted bills.
4. R&D investment
The Company has been paying attention on the R&D of the new products and new technology and regards the
market as the orientation to constantly promote the technology upgrade, to make great efforts to enhance the R&D
ability of the Company’s technology and the self-innovation ability as well as to improve the added value of the
products for constantly strengthening the market competitiveness of the Company.
List of the R&D investment of the Company
2016 2015 Varied ratio
Number of the R&D personnel (person) 365 363 0.55%
Ratio to the R&D personnel 10.55% 10.12% 0.43%
Investment amount of the R&D (RMB10,000’) 78,811,840.43 77,961,271.34 1.09%
Ratio of the R&D investment to the operating income 3.45% 3.09% 0.36%
Amount of the capitalized R&D investment (RMB) 0.00 0.00 0.00%
Ratio of the capitalized R&D investment to the R&D investment 0.00% 0.00% 0.00%
Changchai Company, Limited Annual Report 2016
5. Cash flow
Unit: RMB
Item 2016 2015 YoY +/-
Subtotal of cash inflows from operating activities 2,505,758,062.18 2,686,973,788.27 -6.74%
Subtotal of cash outflows from operating activities 2,406,284,118.14 2,559,046,905.32 -5.97%
Net cash flows from operating activities 99,473,944.04 127,926,882.95 -22.24%
Subtotal of cash inflows from investing activities 45,132,445.41 17,469,925.84 158.34%
Subtotal of cash outflows from investing activities 67,310,667.45 68,003,567.09 -1.02%
Net cash flows from investing activities -22,178,222.04 -50,533,641.25
Subtotal of cash inflows from financing activities 15,000,000.00 17,000,000.00 -11.76%
Subtotal of cash outflows from financing activities 35,733,831.12 32,438,823.99 10.16%
Net cash flows from financing activities -20,733,831.12 -15,438,823.99
Net increase in cash and cash equivalents 56,561,890.88 61,954,417.71 -8.70%
Notes of the major effects on the YoY significant changes occurred of the data above
√ Applicable □ Not applicable
The increase in cash inflow from investing activities was mainly due to the withdrawal of funds from bank
financial products during the Reporting Period.
III. Analysis of the non-core business
□Applicable√ Not applicable
IV. List of the assets and liabilities
1. List of the significant changes of the assets form
Unit: RMB
As at 31 Dec. 2016 As at 31 Dec. 2015
Proportion Explain any major
Proportion in Proportion in
Amount Amount change change
total assets total assets
Monetary funds 670,703,802.02 18.01% 601,312,715.62 18.60% -0.59%
Accounts receivable 359,279,821.69 9.65% 308,596,920.50 9.55% 0.10%
Inventories 494,046,458.44 13.26% 397,290,012.36 12.29% 0.97%
Investing real estate 55,072,689.23 1.48% 57,281,030.03 1.77% -0.29%
Long-term equity investment 21,006,230.03 0.56% 20,769,304.76 0.64% -0.08%
Fixed assets 553,678,938.87 14.86% 554,601,893.23 17.16% -2.30%
Construction in progress 89,781,047.21 2.41% 108,198,455.01 3.35% -0.94%
Short-term loans 10,000,000.00 0.27% 17,000,000.00 0.53% -0.26%
Long-term loans 670,703,802.02 18.01% 601,312,715.62 18.60% -0.59%
Changchai Company, Limited Annual Report 2016
2. Assets and liabilities measured at fair value
Unit: RMB
Gain/loss on Cumulative Impairment Purchased Sold
fair value fair value provisions amount in amount
Opening Closing
Item change in the change in the the in the
amount amount
Reporting recorded into Reporting Reporting Reporting
Period equity Period Period Period
Financial assets
Financial assets
measured at fair
value and whose
changes are
recorded into 0.00 0.00
current gains and
losses (excluding
derivative
financial assets)
Available-for-sale
495,780,000.00 317,092,500.00 623,048,300.00 812,872,500.00
financial assets
Subtotal of
495,780,000.00 317,092,500.00 623,048,300.00 812,872,500.00
financial assets
Total of the
495,780,000.00 317,092,500.00 623,048,300.00 812,872,500.00
above
Financial
0.00 0.00
liabilities
3. Restricted asset rights at the end of the Reporting Period
Item Book Value at the Ending Period Reasons
Monetary funds 87,425,672.93 Security deposits for bank acceptance bills
Buildings 6,973,427.38 Collaterals for loan
Land use right 19,469,465.00 Collaterals for loan
Total 113,868,565.31
V. List of the investment
1. Overall condition
□ Applicable √ Not applicable
2. List of the significant equity investment acquired from the Reporting Period
□ Applicable √ Not applicable
3. List of the significant non-equity investment has been executing during the Reporting Period
□ Applicable √ Not applicable
Changchai Company, Limited Annual Report 2016
4. Investment on the financial assets
(1) List of the securities investment
No such situation of the Company during the Reporting Period.
(2) List of the derivative investment
No such situation of the Company during the Reporting Period.
5. Use of raised funds
No such situation of the Company during the Reporting Period.
VI. Selling of the significant assets and the equities
No such cases in this Reporting Period.
VII. Analysis of the major controlling and stock-participating companies
Unit: RMB
Main Registered Operating
Name Type Total assets Net assets Operating profit Net profit
services capital revenues
Production
Changchai of diesel
Subsidiary 55,063,000.00 176,044,790.50 100,757,978.77 150,718,980.23 -1,993,860.72 -5,610,886.94
Benniu engine
fittings
Assembling
Changchai of diesel
Subsidiary 85,000,000.00 132,841,434.23 113,595,088.53 66,035,872.53 2,426,480.84 2,686,324.49
Wanzhou engine
fittings
External
investment
Housheng
Subsidiary and 30,000,000.00 35,536,468.30 34,875,699.59 1,340,364.82 1,195,513.64 916,890.70
Investment
consulting
service
Agricultural
machinery
Housheng
product of
Agricultural Subsidiary 10,000,000.00 30,116,033.68 7,365,580.04 20,425,666.48 2,025,915.66 2,059,175.66
rice
Equipment
transplanter
etc.
Joint Assembling
Changchai
stock of gasoline 37,250,000.00 80,218,115.74 63,655,243.17 154,944,857.08 3,183,020.39 1,315,524.51
Robin
company engines
VIII. List of the structured main bodies controlled by the Company
Changchai Company, Limited Annual Report 2016
□ Applicable √ Not applicable
IX. Outlook of the Company’s future development
1. Industry competition structure and development tendency
At present, the development trend and market situation of the industry are mainly as follows: firstly, the
demand for agricultural machinery and commercial vehicles slows down, bringing further competition of the
industry; secondly, the rising cost of product emission upgrade is difficult for the market to accept; thirdly, users are
very concerned about reliability, vibration, noise and appearance quality of diesel engines, and expectation of \"Three
Guarantees\" extension increased significantly in the market. Overall, the diesel market competition is fierce. The
industry will further reshuffle, and there will be better market prospects for diesel engines with high-performance in
energy saving and environmental protection.
2. Company development strategies:
To base on the farm machinery, do stronger in the power, develop the fields and develop scientifically.
The current products market structure of the Company mainly distributed in fields and export market such as
the farm equipment such as the walking, small four-wheeler, big small and medium-sized wheeled tractors,
gardening tractors and combine harvesters; agricultural small construction machinery, three rounds and low-speed
vehicles; light trucks, pickups automobile industry; generator and water pump, small ship auxiliary machinery. The
Company would take the market and users’ demands as the orientation to seize the main line of the products and to
improve the quality and increase the efficiency as well as to do better in the power and to constantly enhance the
market competitiveness.
As for the matched power of the wheeled tractors, the Company maintains the advantages of the power section
about 50 horsepower. As for the mating field of the combine-harvester, the Company will form a stable brand. As
for the terminal end, the Company realizes the production cut-over of the rice transplanters and will soon step into
the mass production. And the phenomenon “lack of heavy-duty and light-duty trucks” had been improved. The
multi-cylinder machine products series under 30 horsepower needs to be improved in the future and to develop the
over-80-horsepower roller tractors and diesel engines for engineering and non-road vehicles with small-lot
production into the market. The Company will further innovate the new management mechanism and to create
marketing mode as well as to reduce the cost expenses that to promote the sustainable and stable and healthy
development of the Company.
3. Operation Plan for the Year 2017:
We will perfect single-cylinder engines and strengthen multi-cylinder engines; further quality standard, and
develop both home and abroad markets. The sales income achieves RMB 2.3 billion and sales of new products
exceed 80,000 sets are expected in 2017. The above operation plan does not represent the profit forecast of Y2017
by the listed company, and whether can be realized depends on various factors on the changes of market conditions
and the effort level of the management team. There is a lot of uncertainty, and investors should pay special attention
on it.
4. Possible risks and countermeasures:
(1) Market risk:
With fierce competition, over-capacity of some products and the total available market of the single cylinder
engine were in a decline tendency as well as the demand from the industry was insufficient. And the profitability of
the enterprises faced with rather great pressure.
Countermeasures:
Changchai Company, Limited Annual Report 2016
Firstly is to strengthen the production and sales management, to determine the production by the sales and to
reasonably control the inventories.
Secondly is to make use of the leading position and brand advantages of the Company in the single-cylinder
diesel engine market and expand the sales of air-cooled single-cylinder diesel engines and the high-power diesel
engines.
Thirdly is to improve the R&D level of the Company, lean to medium-and high-class multi-cylinder diesel
engines in product development and vigorously develop high-power diesel engines with high added value for
non-road vehicles.
Fourthly is to strengthen the quality management, constantly enhance the customers’ satisfaction and the brand
value as well as to enhance the products quality.
Fifthly is to update the service and management ideas, optimize the resources and to further enhance the
after-sales service ability.
(2) Policy risk:
The macro-economic environment is complex and changeable, economic growth is slowing down and the
policy on the diesel engine emissions is becoming stricter and stricter, which increased the operating difficulties and
the pressure. As such, the market demands for some products of the Company will be affected to some extent.
Countermeasures: The Company will pay close attention to the government’s economic macro-control policies
and market developments. To promote the work such as “promote the products upgrade and quality enhancing”, to
embrace the upgrading of the engine emission standards, to accelerate the forging of the new “Standard V” platform,
and to execute the necessary products resources reserves in advance.
(3) Talent risk:
With escalation of national environmental policy and fierce competition in the market, the social and customer
requirements of product quality, performance and other aspects are getting higher and higher, meanwhile our
company’s needs of high-ranking talents are also growing as our resources in research and development increased.
Solutions: introduce all kinds of high-ranking talents through varieties of channels and strengthen personnel
training.
X. List of the received researches, visits and interviews
Way of
Time of reception Visitor type Index of the researches basic information
reception
26 Dec. 2016 Other Individual List of the 8th new directors
23 Dec. 2016 Other Individual List of the shareholders’ number
16 Dec. 2016 Other Individual List of the controlling shareholders of the Company
8 Dec. 2016 Other Individual List of the state-owned enterprise reform
8 Dec. 2016 Other Individual Production and operation of the Company
1 Dec. 2016 Other Individual Suggestion of the future development of the Company
30 Nov. 2016 Other Individual Share price of secondary market of the Company
29 Nov. 2016 Other Individual List of the state-owned enterprise reform
18 Nov. 2016 Other Individual List of the state-owned enterprise reform
17 Nov. 2016 Other Individual List of the state-owned enterprise reform
Changchai Company, Limited Annual Report 2016
12 Oct. 2016 Other Individual Impact of Jiangsu Bank listing on the Company
29 Sep. 2016 Other Individual List of the shareholders’ number
28 Sep. 2016 Other Individual List of the shareholders’ number
28 Sep. 2016 Other Individual Whether the Company has the organization intention
27 Sep. 2016 Other Individual List of the shareholders’ number
22 Sep. 2016 Other Individual List of the shareholders’ number
16 Sep. 2016 Other Individual List of the shareholders’ number
3 Sep. 2016 Other Individual List of the shareholders’ number
26 Aug. 2016 Other Individual Operation of the Company
13 Jul. 2016 Other Individual List of the shareholders’ number
18 Jun. 2016 Other Individual List of the shares of Jiangsu Bank held by the Company
Shareholding increase or decrease plan of the major
13 Jun. 2016 Other Individual
shareholders
6 Jun. 2016 Other Individual List of the shareholders’ number
List of the planning of the power industrial park of the
25 May 2016 Other Individual
Company
25 May 2016 Other Individual Whether the Company has the organization intention
19 May 2016 Other Individual List of the shareholders’ number
19 May 2016 Other Individual List of the Company’s stock
13 May 2016 Other Individual Operation of the Company
28 Apr. 2016 Other Individual Products of the Company
27 Apr. 2016 Other Individual List of the agricultural informatization
26 Apr. 2016 Other Individual List of the shareholders’ number
22 Apr. 2016 Other Individual List of the operation of the Changchai Benniu
22 Apr. 2016 Other Individual Operation of the Company
22 Apr. 2016 List of the construction of technological transformation
Other Individual
project
22 Apr. 2016 Other Individual List of the external cooperation of the Company
22 Apr. 2016 Other Individual List of the operation of the Housheng Investment
22 Apr. 2016 Other Individual List of the future development of the Company
Development orientation of the future technology products
21 Apr. 2016 Other Individual
of the Company
5 Apr. 2016 Other Individual List of the products development
31 Mar. 2016 Other Individual List of the future development of the Company
28 Mar. 2016 Other Individual List of the refinancing business participated by the
Changchai Company, Limited Annual Report 2016
Company
List of the refinancing business participated by the
28 Mar. 2016 Other Individual
Company
15 Mar. 2016 Other Individual List of the Company’s stock
10 Mar. 2016 Other Individual List of the shareholders’ number
1 Mar. 2016 Other Individual Operation of the Company
List of the Tsinghua Industrial Company participated by
23 Feb. 2016 Other Individual
the Company
23 Feb. 2016 Other Individual List of the shareholders’ number
List of the operation of the Housheng Agricultural
22 Feb. 2016 Other Individual
Equipment
10 Mar. 2016 Other Individual List of the shareholders’ number
1 Mar. 2016 Other Individual Operation of the Company
23 Feb. 2016 List of the Tsinghua Industrial Company participated by
Other Individual
the Company
23 Feb. 2016 Other Individual List of the shareholders’ number
22 Feb. 2016 List of the operation of the Housheng Agricultural
Other Individual
Equipment
6 Jan. 2016 Other Individual List of the Company’s stock
6 Jan. 2016 Other Individual Suggestion of the future development of the Company
6 Jan. 2016 Other Individual Operation of the Company
6 Jan. 2016 Other Individual List of the Company’s stock
5 Jan. 2016 Other Individual List of the Company’s stock
Reception times
Number of reception institutions
Number of reception person
Number of receipting other targets
Whether disclose, reveal or let out
No
unpublished significant information
Changchai Company, Limited Annual Report 2016
Section V Significant Events
I. List of the profits distribution of the common shares and turning capital reserve into share
capital of the Company
In Articles of Association, which had confirmed the specific profits distribution and cleared out the conditions,
standards and proportion of the cash bonus, stipulated the decision-making progress of the formulation and
alternation of the profits distribution policies and the chapters as well as the regulations fully ensure the
opportunities for the medium and small shareholders to exert the functions and to provide advices as well as appeals.
The cash bonus of recent 3 years of the Company met with the regulations of the Articles of Association and during
the decision-making process of the profits distribution proposal, the Independent Directors stated the independent
advices and fully respected the advices from the medium and small shareholders. The profits distribution preplan
and the turning capital reserve into share capital preplan of the Company were both met with the relevant regulations
of the Articles of Association and so no.
Special explanation of cash dividend policy
Whether conformed with the regulations of the Articles of association or the requirements
Yes
of the resolutions of the shareholders’ meeting:
Whether the dividend standard and the proportion were definite and clear: Yes
Whether the relevant decision-making process and the system were complete: Yes
Whether the independent director acted dutifully and exerted the proper function: Yes
Whether the medium and small shareholders had the chances to fully express their
Yes
suggestions and appeals, of which their legal interest had gained fully protection:
Whether the conditions and the process met the regulations and was transparent of the
Yes
adjustment or altered of the cash dividend policy:
List of the dividend distribution proposal (preplan) of the common shares and the proposal (preplan) of turning
capital reserve into share capital of the Company of the recent 3 years
Dividend Profits distribution proposal Turning capital reserve into Execution
year share capital proposal
2016 Distributed RMB0.30 of every 10 No Still needed to submit to the
shares (taxes including) Annual General Meeting
2015 Distributed RMB0.23 of every 10 No Finished the execution
shares (taxes including)
2014 Distributed RMB0.20 of every 10 No Finished the execution
shares (taxes including)
Cash dividend distribution of the common shares of the Company of the recent 3 years (including the Reporting
Period)
Unit: RMB
Amount of cash Net profit The ratio Amount of the Ratio of the cash
Dividend year dividend belonging to accounting in net cash dividend by dividend by other
(including tax) shareholders of profit which other methods methods
Changchai Company, Limited Annual Report 2016
the listed company belongs to
in consolidated shareholders of
statement of the listed company
dividend year in consolidated
statement
2016 16,841,229.78 62,539,896.17 26.93% 0.00 0.00%
2015 12,911,609.50 71,102,792.49 18.16% 0.00 0.00%
2014 11,227,486.52 64,202,144.29 17.49% 0.00 0.00%
II. Pre-plan for profit allocation and turning capital reserve into share capital for the Reporting
Period
Bonus shares for every 10 shares (share)
Dividend for every 10 shares (RMB) (tax included) 0.30
Turning capital reserve into share capital for every 10 shares (share)
Total shares as the basis for the allocation preplan (share) 561,374,326
Total cash dividends (RMB) (tax included) 16,841,229.78
Distributable profit (RMB) 603,375,714.13
Percentage of the cash bonus of the total profits dividends 100%
Cash dividend situation
Other
Details about the profit allocation or turning capital reserve into share capital
The preplan of the profits distribution reviewed and approved by the Board of Directors of the Company was: based
on the total share capital of the Company on 31 Dec. 2016, the Company distributed the cash bonus of RMB0.30
(tax included) of every 10 shares for the whole shareholders. There was no bonus share and no turn from capital
reserve to share capital of 2016.
III. Performance of commitments
Commit
Reason for Commitm Commit
Commitmen Commitments ments
commitme ents ments Performance
t maker comments period of
nts type date
time
Other
commitme
nts for
minority
State-owned Increasing 1. Changzhou People’s July 10, In the Changzhou People’s
shareholde
Assets shares Government State-owned 2015 next six Government State-owned
rs of
Supervision Asset Supervision and months Asset Supervision and
company
and Administration Commission from Administration
Administrati would not unload the July 10, Commission
on holding-share “Su Changchai 2015. accumulatively increased 22
Commission A” in the next six months 2347500 shares of
Changchai Company, Limited Annual Report 2016
of from July 10, 2015. company by the bid
Changzhou 2. Changzhou People’s trading system of
Municipal Government State-owned Shenzhen Stock
People’s Asset Supervision and Exchange, accounting for
Government Administration Commission 0.42% of the company
ssion would increase the share “Su total shares, and the
Changchai A” by 20 million. investment amount was
20 million. The
commitment of
increasing shares has
beed fulfilled.
Rewards Plan for
Shareholders in Next Three
Years(2014-2016)
Under the premise of positive
distributive profit(remaining
after-tax profits after making
up for the loss and extracting
for the common reserves) in
this year or half year and
abundant money flow and no
influence on the In the
Changchai
following-up going concern May 14, year of Under implement in a
Company, bonus
after cash bonus, the profits 2015 2014-20 normal way
Limited
allocated by cash every year 16
shouldn’t be lower than 10%
of the allocable profits from
parent compan. Meanwhile,
the accumulated allocable
profits by cash in the
arbitrary continuous three
accounting years should not
be lower than 30% of the
annual average allocable
profits in those three years.
Whether
deliver
Yes
commitme
nts on time
IV. Occupation of the Company’s capital by the controlling shareholder or its related parties
for non-operating purposes
No such situation of the Company during the Reporting Period.
V. Explanation by the Board of Directors and the Supervisory Committee about the
“non-standard audit report” issued by the CPAs firm for the Reporting Period
□ Applicable √ Not applicable
Changchai Company, Limited Annual Report 2016
VI. Explanation of the changes of the accounting policy, the accounting estimates and the
accounting methods compared to the last financial report
No such cases in the Reporting Period.
VII. Explain retrospective restatement due to correction of significant accounting errors in the
Reporting Period
No such cases in the Reporting Period.
VIII. Explain change of the consolidation scope as compared with the financial reporting of last
year
No such cases in the Reporting Period.
IX. Particulars about engagement and disengagement of CPAs firm
CPAs firm engaged at present
Name of domestic CPAs firm Jiangsu Gongzheng Tianye Certified Public Accountants LLP
Remuneration for domestic CPAs firm for
the Reporting Period (RMB’0,000)
Consecutive years of the audit services
provided by domestic CPAs firm
Name of domestic CPAs firm Dai Weizhong, He Taifeng
Particulars on engaging the audit firm for the internal control, financial adviser or sponsor
During Reporting Period, the Company hired Jiangsu Gongzheng Tianye Certified Public Accountants LLP as
the internal control auditor at the cost of RMB150,000.
X. Particulars about trading suspension and termination faced after the disclosure of annual
report
□ Applicable √ Not applicable
XI. Bankruptcy and reorganization
No such cases in the Reporting Period.
XII. Significant lawsuit or arbitrations
Amount Progress of the Execution Index to
Basic situation of the litigation Disclosure
involved in litigation situation on the
(arbitration) date
the (arbitration) the judgment disclosed
Changchai Company, Limited Annual Report 2016
litigation of the
(arbitration) litigation
(RMB’0,00 (arbitration)
0)
About the lawsuit case of Shandong
Under the
Hongli Group Co., Ltd., the accused
compulsory
company owed accumulatively RMB
execution by
14.36 million to the Company. The
Judged for the the court and
Company sued to Changzhou 1,436
second trial in the process
Intermediate People’s Court in 2001 and
of liquidation
sued for compulsory execution in April,
and
2002. Currently, the defendant has started
bankruptcy
the bankruptcy procedure.
About the lawsuit case of Beijing Baic
Changsheng Automobile Co., Ltd., the
accused company owed accumulatively
RMB 8.0636 million to the Company.
According to the paper of civil mediation
Up the end of
issued by the people's court of Beijing http//www.
the Reporting
Shunyi on 31 Oct. 2013, the Company August 30, cninfo.com
Period, Baic
will amortize the arrears of RMB8.0636 2013 .cn.
806.36 Changsheng Finished
million. If Baic Changsheng failed to November Announce
had fully paid
execute the reconciliation agreement on 6, 2013 ment No.:
the debt to the
time, the Company should applied for the 2013-015,
company.
compulsory execution of the whole
unpaid accounts at one time and the Baic
Changsheng should pay for the otherwise
liquidated damages of RMB40,000 and
the interests of the overdue payment.
XIII. Punishment and rectification
No such cases in the Reporting Period.
XIV. The honesty situations of the Company and its controlling shareholders and actual
controller
□ Applicable √ Not applicable
XV. The actual implementation of the stock incentive plan, ESOP, or other Staff incentives
No such cases in the Reporting Period.
Changchai Company, Limited Annual Report 2016
XVI. Significant related-party transactions
XVI. Significant related-party transactions
1. Related-party transactions relevant to routine operation
No such cases in Reporting Period.
2. Related-party transactions incurred by assets or equity purchase
No such cases in the Reporting Period.
3. Related-party transactions common external investment
No such cases in the Reporting Period.
4. Credits and liabilities with related parties
No such cases in the Reporting Period.
(5) Other significant related-party transactions
No such cases in the Reporting Period.
XVII. Significant contracts and their execution
1. Trusteeship, contracting and leasing
(1) Trusteeship
No such cases in the Reporting Period.
(2) Contract
No such cases in the Reporting Period.
(3) Lease
No such cases in the Reporting Period.
2. Significant guarantees
(1) Guarantees provided by the Company
Unit: RMB’0,000
Changchai Company, Limited Annual Report 2016
Guarantees provided by the Company for external parties (excluding those for subsidiaries)
Disclosur
e date of Actual Guarant
the occurrence Actual ee for a
Line of Type of Term of Due or
Guaranteed party guarantee date (date of guarantee related
guarantee guarantee guarantee not
line agreement amount party or
announce signing) not
ment
Guarantees provided by the Company for its subsidiaries
Disclosur
e date of Actual Guarant
the occurrence Actual ee for a
Line of Type of Term of Due or
Guaranteed party guarantee date (date of guarantee related
guarantee guarantee guarantee not
line agreement amount party or
announce signing) not
ment
Changzhou
Changchai
Housheng Decembe December 2, Joint
2,000 2,000 1 year No No
Agricultural r 2, 2016 2016 liability
Equipment Co.,
Ltd.
Total actual occurred
Total guarantee line approved amount of guarantee for
for the subsidiaries during the 2,000 the subsidiaries during 2,000
Reporting Period (B1) the Reporting Period
(B2)
Total actual guarantee
Total guarantee line that has
balance for the
been approved for the
2,000 subsidiaries at the end 2,000
subsidiaries at the end of the
of the Reporting Period
Reporting Period (B3)
(B4)
Guarantees provided by the subsidiaries of the Company for subsidiaries
Disclosur
e date of Actual Guarant
the occurrence Actual ee for a
Line of Type of Term of Due or
Guaranteed party guarantee date (date of guarantee related
guarantee guarantee guarantee not
line agreement amount party or
announce signing) not
ment
Changchai Company, Limited Annual Report 2016
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total actual occurred
Total guarantee line approved
amount of guarantee
during the Reporting Period 2,000 2,000
during the Reporting
(A1+B1+C1)
Period (A2+B2+C2)
Total guarantee line that has Total actual guarantee
been approved at the end of balance at the end of
2,000 2,000
the Reporting Period the Reporting Period
(A3+B3+C3) (A4+B4+C4)
Proportion of total actual guarantee amount
0.86%
（A4+B4+C4）in the net assets of the Company
Of which:
Guarantee amount provided for shareholders, actual controllers and its related
parties(D)
Amount of debt guarantee provided for the guaranteed party whose asset-liability
ratio is not less than 70% directly or indirectly（E）
Part of the amount of the total guarantee over 50% of net assets （F）
Total amount of the above three guarantees （D+E+F）
Explanation on possibility to bear joint liability due to undue guarantees (if any) Not applicable
Explanation on the external guarantees in violation of stipulated procedures (if
Not applicable
any)
(2) Illegal external guarantee
No such case during Reporting Period
3. Cash assets management entrustment
(1) Wealth management entrustment
Unit: RMB’0,000
Amoun Actua
Rel Principal
Withdraw t of l
ated Remunera amount
n actual withdr
tran tion actually Estim
Name of Amoun Initial Ended impairme profits aw of
sact Type determinat received ate
the trustee t date Date nt or profits
ion ion in profit
provision losses or
or method Reportin
( if any) in losses
not g Period
Reporti in
Changchai Company, Limited Annual Report 2016
ng Repor
Period ting
Period
Break-even
One-time
floating
Bank of August February confirmati
No proceeds 1,000 1000 17.95 17.95 17.95
Jiangshu 26, 2015 24, 2016 on when
financial
expired
products
Break-even
One-time
floating
Bank of Novembe May 4, confirmati
No proceeds 1,000 1000 18.45 18.45 18.45
Jiangshu r 3, 2015 2016 on when
financial
expired
products
Not break-even
One-time
floating
Donghai October January confirmati
No proceeds 300 300 4.19 4.19 4.19
Securities 20, 2015 1, 2016 on when
financial
expired
products
Not break-even
One-time
floating Decembe
Donghai February confirmati
No proceeds 500 r 20, 500 7.84 7.84 7.84
Securities 29, 2016 on when
financial
expired
products
Not break-even
One-time
floating Septembe
Zhongxin March confirmati
No proceeds 300 r 21, 300 9.27 9.27 9.27
Securities 16, 2016 on when
financial
expired
products
Not break-even
One-time
floating Septembe
Zhongxin March confirmati
No proceeds 100 r 30, 100 2.58 2.58 2.58
Securities 30, 2016 on when
financial
expired
products
Not break-even
One-time
floating
Donghai February May 24, confirmati
No proceeds 300 300 4.19 4.19 4.19
Securities 23, 2016 2016 on when
financial
expired
products
Not break-even
One-time
floating
Donghai March Septembe confirmati
No proceeds 300 300 8.58 8.58 8.58
Securities 23, 2016 r19, 2016 on when
financial
expired
products
Changchai Company, Limited Annual Report 2016
Not break-even
One-time
floating
Donghai June 1, Novembe confirmati
No proceeds 300 300 8.14 8.14 8.14
Securities 2016 r29, 2016 on when
financial
expired
products
Not break-even
One-time
floating
Donghai August 9, Novembe confirmati
No proceeds 300 300 3.81 3.81 3.81
Securities 2016 r9, 2016 on when
financial
expired
products
Not break-even
One-time
floating
Zhongxin March July 6, confirmati
No proceeds 300 300 4.62 4.62 4.62
Securities 18, 2016 2016 on when
financial
expired
products
Shanghai
Yi Dezhen
Equity
Not break-even
Investment
floating Quarterly
Manageme March Septembe
No proceeds 200 confirmati 200 7.80 7.80 7.80
nt 24, 2016 r28, 2016
financial on
Center(Li
products
mited
Partnership
)
Shanghai
Yi Dezhen
Equity
Not break-even
Investment
floating Quarterly
Manageme May 13, Novembe
No proceeds 100 confirmati 100 3.68 3.68 3.68
nt 2016 r23, 2016
financial on
Center(Li
products
mited
Partnership
)
Not break-even
One-time
floating
Donghai Novembe February confirmati
No proceeds 300 0 3.90
Securities r1, 2016 8, 2017 on when
financial
expired
products
Changchai Company, Limited Annual Report 2016
Not break-even
One-time
floating
Donghai Novembe May 20, confirmati
No proceeds 300 0 7.80
Securities r16, 2016 2017 on when
financial
expired
products
Shanghai
Yi Dezhen
Equity
Not break-even
Investment
floating Novembe Quarterly
Manageme May 5,
No proceeds 200 r 1, confirmati 0 7.30
nt
financial 2016 on
Center(Li
products
mited
Partnership
)
120.1
Total 5,800 -- -- -- 5,000 101.10 --
Capital resources Self-own idle fund
Cumulative amount of principal and earnings maturity that fail to recover
Involved in lawsuit Not applicable
Disclosure date of announcement on wealth management entrustment
January 13, 2015
reviewed and approved by the Board of Directors
Disclosure date of announcement on wealth management entrustment
Not applicable
reviewed and approved by the Board of Shareholders
Whether there is wealth management entrustment plan in future or not? Yes
（2）Entrustment loans
No such case during Reporting Period
(4) Other significant contracts
No such case during Reporting Period
XVIII. Other significant events
No such case during Reporting Period
Changchai Company, Limited Annual Report 2016
XIX. Significant events of subsidiaries
□ Applicable √ Not applicable
XX. Social responsibilities
□ Applicable √ Not applicable
XXI. Corporation bonds
The Company has no corporate bonds publicly offered and listed on the stock exchange, which were undue
before the approval date of this Report or were due but could not be redeemed in full.
Changchai Company, Limited Annual Report 2016
Section VI. Change in Shares & Shareholders
I. Changes in shares
Unit: share
Before the change Increase/decrease (+/-) After the change
Bonu Capitalizat
Newly
Proportio s ion of Subtota Proportio
Amount issue Other Amount
n share public l n
share s reserves
I. Restricted shares 0 0.00% 0 0.00%
1.Shares held by the state 0 0.00% 0 0.00%
2. Shares held by
0 0.00% 0 0.00%
state-own Legal-person
3. Shares held by other
0 0.00% 0 0.00%
domestic investors
Among which: shares
held by domestic legal 0 0.00% 0 0.00%
person
Shares held by
0 0.00% 0 0.00%
domestic natural person
4.Oversea shareholdings 0 0.00% 0 0.00%
Among which: shares
held by oversea legal 0 0.00% 0 0.00%
person
Shares held by
0 0.00% 0 0.00%
oversea natural person
II. Shares not subject to 561,374,3
561,374,326 100.00% 100.00%
trading moratorium
411,374,3
1. RMB ordinary shares 411,374,326 73.28% 73.28%
2. Domestically listed 150,000,0
150,000,000 26.72% 26.72%
foreign shares
3. Oversea listed foreign
0 0.00% 0 0.00%
shares
4. Other 0 0.00% 0 0.00%
561,374,3
III. Total shares 561,374,326 100.00% 100.00%
Changchai Company, Limited Annual Report 2016
II. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholding
Unit: share
Total number of
Total number of Total number of
preference
Total number common preference
shareholders with
of common shareholders at the shareholders with
49,929 50,464 0 resumed voting rights 0
shareholders at prior month-end resumed voting rights
at the prior month-end
the period-end before the disclosure at the period-end (if
before the disclosure
of this Report any)
of this Report (if any)
5% or greater shareholders or the top 10 shareholders
Increase/d Pledged or
Shareholdin Number of
Total shares ecrease Number of frozen shares
Nature of g restricted
Name of shareholder held at the during this non-restricte
shareholder percentage shares Numb
period-end Reporting d shares held Status
(%) held er
Period
State-owned Assets Supervision and
On behalf of
Administration Commission of
the 30.43% 170,845,236 170,845,236
Changzhou Municipal People’s
government
Government
Bosera Value Growth Fund Other 2.49% 14,000,000 14,000,000
Galaxy Futures Co., Ltd.-Galaxy
Futures Shengshi No. 2 Asset Other 1.05% 5,915,274 5,915,274
Management Plan
China Construction Bank-Bosera
Other 0.96% 5,400,000 5,400,000
Value Growth No. 1 Fund
Foreign
KGI Asia Limited 0.59% 3,324,845 3,324,845
corporation
Rongtong Capital-Industrial
Bank-Rongtong Capital Rongteng No. Other 0.56% 3,121,200 3,121,200
11 Asset Management Plan
Bank of Communications-Everbright
Pramerica State-owned Enterprise Other 0.53% 2,950,000 2,950,000
Reform Theme Stock Fund
Zhong Ou Asset Management-Bank
of China-Ping An Life Insurance-
Zhong Ou Asset Management - Ping
Other 0.34% 1,899,930 1,899,930
An Life Insurance Entrusted
Investment No. 1 Asset Management
Plan
Domestic
Li Liang 0.33% 1,827,445 1,827,445
individual
Changchai Company, Limited Annual Report 2016
Vanguard Total International Stock Foreign
0.29% 1,626,592 1,626,592
Index Fund corporation
Strategic investors or general corporations becoming
N/A
top-ten shareholders due to placing of new shares
It is unknown whether there is among the top 10 tradable shareholders and the top
Related or acting-in-concert parties among the 10 non-restrictedly tradable shareholders any related parties or acting-in-concert
shareholders above parties as defined in the Administrative Measures for Information Regarding
Shareholding Alteration.
Shareholdings of the top ten non-restricted shareholders
Number of non-restricted Type of shares
Name of shareholder shares held at the
Type Number
period-end
State-owned Assets Supervision and Administration Commission of
170,845,236 RMB ordinary shares 170,845,236
Changzhou Municipal People’s Government
Bosera Value Growth Fund 14,000,000 RMB ordinary shares 14,000,000
Galaxy Futures Co., Ltd.-Galaxy Futures Shengshi No. 2 Asset
5,915,274 RMB ordinary shares 5,915,274
Management Plan
China Construction Bank-Bosera Value Growth No. 1 Fund 5,400,000 RMB ordinary shares 5,400,000
Domestically listed
KGI Asia Limited 3,324,845 3,324,845
foreign shares
Rongtong Capital-Industrial Bank-Rongtong Capital Rongteng No. 11
3,121,200 RMB ordinary shares 3,121,200
Asset Management Plan
Bank of Communications-Everbright Pramerica State-owned
2,950,000 RMB ordinary shares 2,950,000
Enterprise Reform Theme Stock Fund
Zhong Ou Asset Management-Bank of China-Ping An Life Insurance-
Zhong Ou Asset Management - Ping An Life Insurance Entrusted 1,899,930 RMB ordinary shares 1,899,930
Investment No. 1 Asset Management Plan
Li Liang 1,827,445 RMB ordinary shares 1,827,445
Domestically listed
Vanguard Total International Stock Index Fund 1,626,592 1,626,592
foreign shares
It is unknown whether there is among the top 10 tradable
Related or acting-in-concert parties among the top ten non-restrictedly shareholders and the top 10 non-restrictedly tradable shareholders
tradable share holders and between the top ten non-restrictedly any related parties or acting-in-concert parties as defined in the
tradable share holders and the top ten shareholders Administrative Measures for Information Regarding Shareholding
Alteration.
Shareholder Li Liang held a total of 1,827,445 shares in the
Company, representing a stake of 0.33%, through the client
Top ten common shareholders conducting securities margin trading
account of collateral securities for margin trading of Ping An
Securities Co., Limited.
There was no shareholder of a company conduct the transaction of repurchase under the agreement during the
Reporting Period.
Changchai Company, Limited Annual Report 2016
2. Particulars about the controlling shareholder
Nature of controlling shareholder: Local state-controlled
Type of controlling shareholder: legal person
Legal
Name of controlling representative / Date of
Organization code Business scope
shareholder company establishment
principal
State-owned Assets
Supervision and
Administration
Lu Qiang 01411025-1 Not applicable
Commission of
Changzhou Municipal
People’s Government
Shares held by the
controlling shareholder in
other listed companies by
Not applicable
holding or shareholding
during the Reporting
Period
The controlling shareholder did not change during the Reporting Period
3. Particulars about actual controller
Nature of actual controllers: Local state-owned assets management institutions
Type of actual controller: legal person
Legal
Name of the actual representative / Date of
Organization code Business scope
controller company establishment
principal
State-owned Assets
Supervision and
Administration
Lu Qiang 01411025-1 Not applicable
Commission of
Changzhou Municipal
People’s Government
Equity of shareholding and
participating shares of
actual controllers in other
Not applicable
domestic and foreign listed
company during the
Reporting Period
Changchai Company, Limited Annual Report 2016
The actual controller did not change during the Reporting Period
The ownership and controlling relationship between the actual controller of the Company and the Company is
detailed as follows:
STATE-OWNED ASSETS SUPERVISION AND ADMINISTRATION
COMMISSION OF CHANGZHOU MUNICIPAL PEOPLE’S GOVERNMENT
30.43%
CHANGCHAI COMPANY, LIMITED
The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Not applicable
4. Particulars about other corporate shareholders with shareholding proportion over 10%
□ Applicable √ Not applicable
5. Particulars about restriction of reducing holding-shares of controlling shareholders, actual controller,
restructuring parties and other commitment entities
□ Applicable √ Not applicable
Section VII. Preference Shares
□ Applicable √ Not applicable
There was no preferred stock during Reporting Period.
Changchai Company, Limited Annual Report 2016
Section VIII. Directors, Supervisors, Senior Management Staff &
Employees
I. Changes in shareholding of directors, supervisors and senior management staff
Number of shares
Current/f Gende Beginning date of Ending date of held at
Name Position Age
ormer r office term office term period-end
(share)
Shi Chairman of the
Current Male 53 October 18, 2016 October 17, 2019
Board
Xinkun
He
Vice Chairman of
Jianguan Current Male 53 October 18, 2016 October 17, 2019
the Board
g
Zhang Director,
Current Male 51 October 18, 2016 October 17, 2019
Xin General Manager
Director,
Shi
Vice-general Current Male 55 October 18, 2016 October 17, 2019
Jianchun
Manager
Femal
Xu Qian Director Current 54 October 18, 2016 October 17, 2019
e
Zhang Femal
Director Current 59 October 18, 2016 October 17, 2019
e
Qiong
Li Independent
Current Male 43 October 18, 2016 October 17, 2019
Minghui director
Independent
Jia Bin Current Male 39 October 18, 2016 October 17, 2019
director
Feng Independent
Current Male 60 October 18, 2016 October 17, 2019
Genfu director
Yin Vice-general
Current Male 53 October 18, 2016 October 17, 2019
Lihou Manager
Changchai Company, Limited Annual Report 2016
Vice-general
Xu Yi Current Male 53 October 18, 2016 October 17, 2019
Manager
Liu Vice-general
Current Male 55 October 18, 2016 October 17, 2019
Xiaoyun Manager
Wei Vice-general
Current Male 54 October 18, 2016 October 17, 2019
Jinxiang Manager
Ni
Chairman of the
Minglian Current Male 50 October 18, 2016 October 17, 2019
Supervisor
g
Zhu Min Supervisor Current Male 53 October 18, 2016 October 17, 2019
Xie
Guozhon Supervisor Current Male 48 October 18, 2016 October 17, 2019
g
Lu
Zhonggu Supervisor Current Male 50 October 18, 2016 October 17, 2019
i
Liu Yi Supervisor Current Male 48 October 18, 2016 October 17, 2019
He Secretary of the
Current Male 38 October 18, 2016 October 17, 2019
Jianjiang Board
Xue Chairman of the
Former Male 54 June 26, 2013 October 18, 2016
Guojun Board
Xu
Director Former Male 60 June 26, 2013 October 18, 2016
Zhenping
Zhuang
Director Former Male 73 June 26, 2013 October 18, 2016
Rongfa
Shen Independent
Former Male 75 June 26, 2013 October 18, 2016
Ningwu director
Zhong
Supervisor Former Male 48 June 26, 2013 October 18, 2016
Lei
Total -- -- -- -- -- --
Changchai Company, Limited Annual Report 2016
II. Particulars about changes of Directors, Supervisors and Senior Executives
Name Position Type Date Reason
General
He Jianguang Current October 18, 2016 Change of the term
Manager
Vice-general
Zhang Xin Current October 18, 2016 Change of the term
Manager
Chairman of the
Xue Guojun Former October 18, 2016 Expiration of the term
Board
Xu Zhenping Director Former October 18, 2016 Expiration of the term
Zhuang Rongfa Director Former October 18, 2016 Expiration of the term
Independent
Shen Ningwu Former October 18, 2016 Expiration of the term
director
Zhong lei Supervisor Former October 18, 2016 Expiration of the term
III. Resumes of important personnel
Major background, main working experiences and responsibilities of current directors, supervisors and senior
management staff
Shi Xinkun: He acted as vice-president of Changzhou Investment Group Co., Ltd. Now, he is the Chairman of the
Board in our company.
He Jianguang: He successively acted as General Manager, Director, and Chief Engineer in our company. Now, he is
the vice Chairman of the Board of our company.
Zhang Xin: He successively took the posts of Sales Manager, General Manager Assistant, and vice-general manager
in our company. Now, he acts as Director and General Manager of our company.
Shi Jianchun: He successively acted as Party Secretary, Director, Vice-general Manager and Secretary of the Board
of the Company. Now he is the Party Secretary, Director, Vice-general Manager and Chairman of the Board of
Housheng Investment Co., Ltd.
Xu Qian: She successively worked as Clerk of Commerce of Changzhou Bureau of Finance, section member of
Commercial Office, Deputy Principal Staff Member, Deputy Principal Staff Member, Deputy Section Chief of
State-owned office of Changzhou Bureau of Finance and Section Chief of Changzhou SASAC Property Rights and
Profits Management. Now, she is Deputy Researcher of Changzhou SASAC.
Zhang Qiong: She successively acted as Lecturer and Associate Professor in Department of Law of Anhui
University, Deputy Director of Intellectual Property Office and Director of Legal Affairs Office in Shenzhen Huawei
Technologies Co., Ltd, Senior Manager, Assistant Secretary General of Shenzhen Innovation Investment Group Ltd,
Director, General Manager, and consultant of Anhui Hongtu Venture Capital Co., Ltd. Now, she works as Partner,
Changchai Company, Limited Annual Report 2016
General Manager of Board, and Secretary General of Xie Tong Funds Management Limited.
Feng Genfu: he held the post of Dean of Institute of Economics and Finance in Xi’an Jiaotong University. Now, he
is Professor and Doctoral Advisor of Institute of Economics and Finance in Xi’an Jiaotong University, Independent
Director of Tianmao Industry Group Co., Ltd, Xi’an Baode Automation Co., Ltd, and DatangInternational Power
Generation Co., Ltd.
Li Minghui: He acted as Lecturer and Associate Professor of School of Accounting in Xiamen University, Associate
Professor and Professor of School of Accounting in Nanjing University Business School. Now he is the Doctoral
Supervisor of School of Accounting in Nanjing University Business School, independent director of Jiangsu
DayBright Intelligent Electric Co., Ltd, Baosheng Science & Technology Innovation Co., Ltd, Nanjing Securities
Co., Ltd, and Jiangsu Fasten Co., Ltd.
Jia Bin: He successively acted as the Deputy Director of No.1 Research office in Tianjin Research Institute of
Internal Combustion Engine, now he acts as the Director of No.1 Research office in Tianjin Research Institute of
Internal Combustion Engine and Secretary-general of CICEIA Small Gasoline Engine Branch.
Yin Lihou: He worked as Minister of Human Resources Department and General Manager Assitant. Now he acts as
Deputy General Manager of the Company, and the Chairman of the Board of Changwan Co., Ltd.
Xu Yi: He successively took the posts of Director of Technical Center and General Manager Assitant. Now he is
Vice-general Manager of the Company.
Liu Xiaoyun: He successively acted as Multi-cylinder Engine Factory Director, Minister of Purchase Department,
and General Manager Assitant in the Company. Now he acts as Deputy General Manager of the Company.
Wei Jinxiang: He successively held the posts of Department Director of Quality Assurance Department, General
Manager Assistant of the Company. Now he acts as Deputy General Manager of the Company.
Ni Mingliang: Now he acts as Deputy Party Secretary, Secretary of Comission, Chairman of Labor Union and
Chairman of the Supervisory.
Zhu Min: Now he acts as Deputy Section Chief and Principal Staff Member of Changzhou SASAC Property Rights,
and Section Supervisor of Supervisory.
Xie Guozhong: Now he acts as General Manager Assitant, Secretary of Party General Branch of the Sales Company,
General Manager and Supervisor of the Company and Director of Housheng Agriculture Equipment.
Lu Zhonggui: Now he acts as Minister of political Department, Office Director, Secretary of Organ Party General
Branch as well as supervisor of the Company.
Liu Yi: He successively took the posts of Assistant Minister of Enterprise Management Department. Now he acts as
Deputy Director of Finance Department and Supervisor of the Company and Supervisor of Changwan Company.
He Jianjiang: He successively acted as Assistant Minister, Vice Minister of Investment and Development
Department in our Company. Now he is secretary of the board and Minister of Investment and Development
Department in our Company.
Changchai Company, Limited Annual Report 2016
Post-holding in shareholder units
Name of
the person
holding Receives
Name of the shareholder Position in the Beginning date of Ending date of
any post in payment from the
unit shareholder unit office term office term
any shareholder unit?
shareholde
r unit
State-owned Assets
Supervision and
Administration
Xu Qian Deputy Researcher July 1, 2014 Yes
Commission of
Changzhou Municipal
People’s Government
State-owned Assets
Supervision and
Administration Section Supervisor of
Zhu Min June 1, 2016 Yes
Commission of Supervisory
Changzhou Municipal
People’s Government
Post-holding in other units
Name of the
person
Receives
holding any Position in the other Beginning date of Ending date
Name of the other unit payment from
post in any unit office term of office term
other units?
shareholder
unit
Partner, General
Zhang Xie Tong Funds
Manager of Board, Yes
Qiong Management Limited
and Secretary General
Nanjing University
Li Minghui Doctoral Supervisor April 1, 2012 Yes
Jiangsu DayBright
Intelligent Electric Co., Independent Director November 25, 2014
Ltd
Baosheng Science & Independent Director December 3, 2014
Technology Innovation
Changchai Company, Limited Annual Report 2016
Co., Ltd
Nanjing Securities Co., Independent Director
May 12, 2016
Ltd
Jiangsu Fasten Co., Ltd Independent Director April 20, 2015
Tianjin Research
the Director of No.1
Institute of Internal March 1, 2009
Research office
Combustion Engine
Jia Bin Secretary-general of Yes
China Internal
CICEIA Small
Combustion Engine November 1, 2011
Gasoline Engine
Industry Association
Branch.
Institute of Economics
Professor and
and Finance in Xi’an March 1, 2016
Doctoral Advisor
Jiaotong University
Tianmao Industry
Independent Director May 4, 2016
Feng Genfu Group Co., Ltd
Yes
Xi’an Baode
Independent Director August 3, 2015
Automation Co., Ltd
DatangInternational
Power Generation Co., Independent Director June 30, 2016
Ltd.
IV. Remuneration for directors, supervisors and senior management
Decision-making procedure, determining basis and actual payment for the remuneration of directors,
supervisors and senior management
In 2016, the monthly salaries of directors, supervisors and senior executives in the Company were in line with
the stipulations of relevant salary management and grade standards, and the benefits of the Company and assessment
results. The Director Xu Qian, Supervisor Zhu Min obtained salaries in shareholders' entities.
Remuneration of the directors, supervisors and senior management of the Company during the Reporting
Period is as follows:
Unit: RMB’0,000
Total Whether gained
before-tax remuneration
Current/for
Name Position Gender Age remuneration from the related
mer
gained from parties of the
the Company Company
Changchai Company, Limited Annual Report 2016
Shi Xinkun Chairman of the Board Male 53 Current 11.82 No
He Jianguang Vice Chairman of the Board Male 53 Current 47.3 No
Director,
Zhang Xin Male 51 Current 43.75 No
General Manager
Director,
Shi Jianchun Male 55 Current 47.3 No
Vice-general Manager
Xu Qian Director Female 54 Current 0 Yes
Zhang Qiong Director Female 59 Current 0 No
Li Minghui Independent director Male 43 Current 5 No
Jia Bin Independent director Male 39 Current 5 No
Feng Genfu Independent director Male 60 Current 1.25 No
Yin Lihou Vice-general Manager Male 53 Current 41.15 No
Xu Yi Vice-general Manager Male 53 Current 42.57 No
Liu Xiaoyun Vice-general Manager Male 55 Current 41.15 No
Wei Jinxiang Vice-general Manager Male 54 Current 39.26 No
Ni Mingliang Chairman of the Supervisor Male 50 Current 37.84 No
Zhu Min Supervisor Male 53 Current 0 Yes
Xie Guozhong Supervisor Male 48 Current 30.95 No
Lu Zhonggui Supervisor Male 50 Current 16.75 No
Liu Yi Supervisor Male 48 Current 16.36 No
He Jianjiang Secretary of the Board Male 38 Current 22.33 No
Xue Guojun Chairman of the Board Male 54 Former 39.41 No
Xu Zhenping Director Male 60 Former 42 No
Zhuang Rongfa Director Male 73 Former 0 No
Shen Ningwu Independent director Male 75 Former 2 No
Zhong lei Supervisor Male 48 Former 0 Yes
Total -- -- -- -- 533.19 --
Situations of equity incentives awarded to the directors, supervisors and senior management of the Company during
the Reporting Period
□ Applicable √ Not applicable
Changchai Company, Limited Annual Report 2016
V Employees
1. Number, functions and educational backgrounds of employees
Number of in-service employees of the Company 2,884
Number of in-service employees of main subsidiaries
Total number of in-service employees 3,460
Total number of employees with remuneration in this Reporting
3,460
Period
Number of retirees to whom the Company or its main subsidiaries
need to pay retirement pension
Functions
Function Number of employees
Production
Sales
Technical
Financial
Administrative
Other
Total
Educational backgrounds
Educational background Number of employees
Junior high school graduates and below 1,549
High school graduates 1,062
College graduates and technical secondary school graduates
Bachelors
Masters above
Total 3,460
2. Employee remuneration policy
The Company always adhered to the principle of tilting the remuneration incentive mechanism towards
excellent talents, so as to display the roles of various professional technicians, management staffs and skilled
backbones. Besides, it adhered to the principle of increasing the employee’s income integrated with increasing
labor production efficiency and production & operation efficiency, so as to perfect the salary structure and further
increase employees’ income steadily.
Changchai Company, Limited Annual Report 2016
3. Employee training plans
The Company established the Management Rules on the Education & Training for Employees, aiming to
enhance employees’ quality and try its best to cultivate a team of faithful and highly professional talents. Besides,
it innovated the training mechanism, optimized the training environment, and reinforced to encourage employees to
attend various training, so as to inspire the employees’ potential to the maximum extent and further promote the
sustainable development of the Company.
4. Labor outsourcing
□ Applicable √ Not applicable
Changchai Company, Limited Annual Report 2016
Section IX Corporate Governance
I Basic situation of corporate governance
In the Reporting Period, the Company was strictly in line with laws, statutes such as Company Law, Securities
Laws, Code of Corporate Governance of Listed Companies, Guide Opinion on Establishment of Independent
Director System by Listed Companies and Guidelines on Internal Controls of Listed Companies and so on,
continuously perfected corporate governance, established and accomplished internal management and control system,
consistently and deeply put forward corporate governance activities, so as to further normalized operation of the
Company, raising corporate governance level, laying a guard for steady and healthy development of the Company,
protect legal rights and interests of the Company and all shareholders.
The Company promulgated or revised a series of internal control system through all aspects of normal operation
and management activities in accordance with each national laws and regulations, characteristics of the industry,
operation and self-managing business, and improved it continuously, and finally formed a normative management
system. And formulated a series of management system, process and standard covered each operation link and
level of the financial assets control, human resources management, quality environment management and internal
audit supervisor etc., which ensured all the work had rules to follow.
Was there any material incompliance with the regulatory documents issued by the CSRC governing the
governance of listed companies?
No.
II Independence of businesses, personnel, asset, organizations and finance which are separate
from the controlling shareholder
The Company was totally independent from the controlling shareholder State-owned Assets Supervision and
Administration Commission of Changzhou Municipal People’s Government in terms of assets, business, personnel,
organization and financing, with independent & complete business and capability to operate independently.
III Horizontal competition
□ Applicable √ Not applicable
IV Annual and special meetings of shareholders convened during this Reporting Period
1. Meetings of shareholders convened during this Reporting Period
Investor Index to
Meeting Type participation Convened date Disclosure date disclosed
ratio information
2015 Annual Meeting of
Annual 0.05% 05/26/2016 05/27/2016 2016-011
Shareholders
The 1st Special Meeting of
Special 0.04% 10/18/2016 10/19/2016 2016-021
Shareholders in 2016
Changchai Company, Limited Annual Report 2016
2. Special meetings of shareholders convened at the request of preference shareholders with resumed voting
rights
□ Applicable √ Not applicable
V Performance of independent directors in this Reporting Period
1. Attendance of independent directors in board meetings and meetings of shareholders
Attendance of independent directors in board meetings
Due presence
Presence by Presence
Independent in this Presence on Absence Absent for two
telecommunic through a
director Reporting site (times) (times) consecutive times
ation (times) proxy (times)
Period (times)
Shen Ningwu 10 2 8 0 0 No
Feng Genfu 2 1 1 0 0 No
Li Minghui 12 2 9 1 0 No
Jia Bin 12 3 9 0 0 No
Attendance of independent
directors in meetings of
shareholders as non-voting
delegates (times)
2. Objections raised by independent directors on issues of the Company
Did any independent directors raised any objections on issues of the Company?
No such cases in this Reporting Period.
3. Other details about the performance of duties by independent directors
The independent directors of the Company in line with the law, rules, normative documents and obligations
given by the Company of the Company law, Article of Associations and Independent Directors Work Rules,
comprehensively focused on the development and operation of the Company, actively attended the general meeting
of shareholder and meeting of board of directors, and given independent opinions for the significant events of the
Company, and effectively maintained the profits of the Company and all the shareholders. The Company actively
listened to the suggestions from the independent directors upon the significant events and adopted them.
Changchai Company, Limited Annual Report 2016
VI Performance of duties by specialized committees under the Board during this Reporting
Period
1. Summary Report on Responsibility Performance of the Audit Committee under the Board of Directors:
During the Reporting Period, the Audit Committee under the Board of Directors performed its duty according to the
diligent and responsible principle, based on relevant regulations such as the Company Law, the Guidelines for
Corporate Governance of Listed Companies, the Articles of Association as well as provisions in the Enforcement
Regulation of the Audit Committee under the Board of Director of the Company.
(1) Major work of Audit Committee in Reporting Period:
1) Periodically examined the working plan and execution of inner control of the Company;
2) Communicated fully with the CPAs firm on plan and content of audit;
3) Urged the CPAs firm to summit report as scheduled;
4) The Audit Committee reviewed the financial statements of the Company before the audit and after the
issuance of preliminary opinion by the CPAs firm. After it communicated with the CPAs firm on some important
items as well as major accounting estimation items, audit adjustment items and important accounting policies which
were likely to have potential influence on the financial statements, it considered that the financial statements
reflected the overall situation of the Company authentically, accurately and completely.
5) Submitted the summary report on annual audit of the Company conducted by the CPAs firm to the Board of
Directors;
6) Advised to continue the appointment of Jiangsu Gongzheng Certified Public Accountants Co., Ltd as the
audit institution of the Company in 2016.
(2) Written opinions on financial statements of the Company issued by the Audit Committee
1) On March 21, 2017, the Audit Committee the Audit Committee examined the financial statements of the
Company after the certified public accountants had issued the preliminary opinion on the statements, and issued a
written opinion as follows: The financial statements of the Company were prepared in accordance with the New
Accounting Standards for Enterprises and relevant financial rules of the Company, and faithfully reflected the
financial position of the Company as at December 31, 2016, as well as the business results and cash flows in 2016 in
all material aspects.
2) With regard to the audited financial statements 2016, on April 11, 2017, the Audit Committee made the
following resolution: the Audit Committee reviewed the financial statements 2016 audited by auditors, and believed
that the said financial statements faithfully reflected the financial position of the Company as at December 31, 2016,
as well as the business results and cash flows in 2016 in all material aspects. It agreed to submit the statements to the
Board of Directors for examination and approval.
(3) Summary report on the audit work conducted by the CPAs firm in 2016:
Changchai Company, Limited Annual Report 2016
According to the annual audit plan jointly formulated by the Audit Committee and Jiangsu Gongzheng Tianye
Certified Public Accountants Co., Ltd, auditors communicated fully with the management personnel of the Company
and members of the Audit Committee on the consolidation of financial statements, accounting adjustment,
accounting policy and other accounting work needed to be improved, which helped both parties acquire a deeper
understanding about the operation, financial process and implementation of the New Accounting Standards for
Business Enterprises in the Company. With such understanding, the annual audit accountants would make more
mature judgment to issue a fair audit conclusion.
The Audit Committee held that the CPAs firm conducted the audit strictly in accordance with provisions
stipulated in the Independent Auditing Standards for CPAs of the PRC. The time of audit was sufficient, and the
auditors with excellent ability to practice were deployed reasonably. The issued auditor’s report fully reflected the
financial position of the Company as at December 31, 2016, as well as the business results and cash flows in 2016,
and the audit conclusion was in line with the actual situation of the Company.
(4) Resolution letter on renewing the employment of the CPAs firm:
The Audit Committee convened a meeting on April 11, 2017 to review the matter concerning the employment
of a CPAs firm for the audit in 2017, and the review opinion was as follows:
Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd had accomplished the audit of the Company
2016, and the auditor’s report reflected the actual financial status of the Company in 2016 objectively and fairly.
The Audit Committee was satisfied with the audit conducted by Jiangsu Gongzheng Tianye Certified Public
Accountants Co., Ltd and decided to continue to engage it as the audit institution of the Company in 2017.
The said proposal was agreed to be submitted to the 4th Session of the 8th Board of Directors for review.
2. Summary Report on Responsibility Performance of Remuneration & Appraisal Committee under the Board of
Directors:
The Remuneration & Appraisal Committee under the Board of Directors was composed of three Directors,
including 2 Independent Directors and 1 Inner Director. And one of the Independent Directors assumed the position
of Chairman of the Committee.
In the Reporting Period, the Remuneration & Appraisal Committee raised the proposal on implementing the
appraisal of senior executives in 2016, based on the fulfillment of the main financial indicators and operation targets
in 2016, which were determined in the Contract for Appraisal of Senior Executives in 2016.
In the Reporting Period, based on relevant regulations and rules, the Remuneration & Appraisal Committee
examined the remuneration of the Company’s senior executives in 2016 and issued opinions as follows:
The Remuneration & Appraisal Committee held that, the remuneration of the Company’s senior executives in
2016 was in accordance with provisions in the Contract for Appraisal of Senior Executives in 2016, as well as the
laws, regulations and rules of the Company.
Changchai Company, Limited Annual Report 2016
VII Performance of duties by the Supervisory Board
The Supervisory Board raised no objections in this Reporting Period.
VIII Appraisal and incentive for executive officers
The Company has established a fair and objective performance appraisal and incentive restraint mechanism for
senior management staffs. The annual remuneration of senior management staffs consisted of the basic annual salary
and performance appraisal bonus, and the basic annual salary was distributed monthly with a certain proportion,
while the performance appraisal bonus was distributed after being appraised according to the appraisal scheme for
senior management staffs signed between the Board of Directors and the managers for each year.
IX Internal control
1. Serious internal control defects found in this Reporting Period
□ Yes √ No
2. Internal control self-evaluation report
Disclosure date of the internal
04/13/2017
control self-evaluation report
Index to the disclosed internal
2017-005
control self-evaluation report
Total assets of the evaluated entities
as a percentage in the consolidated 100.00%
total assets
Operating revenues of the evaluated
entities as a percentage in the 100.00%
consolidated operating revenues
Defect identification standards
Type Financial-report related Non-financial-report related
The Company classified the defects as Defects with the following random
serious defect, important defect and characteristics should be
general defect according to the recognized as serious defect:
influence degree from the internal 1) Seriously violated the national
control: laws and administrative regulations
(1) Serious defect: refers to one or and the normative documents;
Nature standard
multiple groups with control defect 2) “three significant one great”
which may lead the enterprise event had not been through the
seriously deviates the control target; collective decision-making
(2) Important defect: refers to one or process;
multiple groups with control defect 3) the significant events involved
with the severity and the economic with the production and operation
Changchai Company, Limited Annual Report 2016
results lower than the great defect but of the Company lacked of
may still lead the enterprise seriously systematic control or the
deviates the control target; institutional system was invalid;
(3) General defect: refers to other 4) the internal control of the
defect except for the great defect and information disclosure was invalid,
significant defect. which led the Company be open
Nature standards: condemned by the supervision
defects with the following random department;
characteristics should be recognized 5) the serious defect from the
as serious defect: assessment results of the internal
1) the defect involves with the control had not been revised.
malpractice of the Directors,
Supervisors and Senior Executives;
2) revised the disclosed financial
report;
3) CPAs discovered the great
misstatement among the current
financial statement while which could
not be found during the operating
process of the internal control;
4) the supervision from the Audit
Committee and the internal audit
institution of the enterprise was
invalid.
Refer to the quantitative criteria of
Quantitative standards:
the internal control defect of the
The quantitative standards of
financial report, to recognize the
recognizing the significant degree of
quantitative criteria of the
the misstatement (including the false
significant degree of the internal
negatives) of the consolidated
control defect of the non-financial
financial report of the Company based
report of the Company as:
on the data from the 2016
Serious defect: possibly caused
Quantitative standard consolidated statements was as:
directly losses≥0.1% of the net
Serious defect: misstatement≥5% of
assets
the annual profits
Important defect: 0.05% of the net
Important defect: 2.5% of the annual
assets≤possibly caused directly
profits≤misstatement ＜ 5% of the
losses＜0.1% of the net assets
annual profits
General defect: possibly caused
General defect＜2.5% of the annual
directly losses＜0.05% of the net
profits
assets
Number of serious
financial-report-related defects
Number of serious
non-financial-report-related defects
Number of important
financial-report-related defects
Number of important
non-financial-report-related defects
Changchai Company, Limited Annual Report 2016
X Auditor’s report on internal control
Opinion paragraph in the auditor’s report on internal control
We believed that Changchai Company, Limited maintained effective internal control of the financial report in
significant aspects according to the Basic Norms of Internal Control and relevant regulations on December 31,
2016.
Auditor’s report on internal control
Disclosed
disclosed or not
Disclosure date 04/13/2017
Index to the disclosed auditor’s
2017-005
report on internal control
Type of the auditor’s opinion Standard unqualified opinion
Serious
None
non-financial-report-related defects
Indicate by tick mark whether any modified opinions are expressed by the CPAs firm in its auditor’s report on the
Company’s internal control.
□ Yes √ No
Indicate by tick mark whether the auditor’s report on the Company’s internal control issued by the CPAs firm is
consistent with the self-evaluation report of the Board.
√ Yes □ No
Section X Corporate Bonds
The Company has no corporate bonds publicly offered and listed on the stock exchange, which were undue
before the approval date of this Report or were due but could not be redeemed in full.
Changchai Company, Limited Annual Report 2016
Section XI Financial Report
I Auditor’s report
Type of auditor’s opinion Standard unqualified opinion
Date of signing the auditor’s report 04/11/2017
Jiangsu Gongzheng Tianye Certified Public
Name of the auditor
Accountants LLP
No. of the auditor’s report SGW [2017] No. A467
Name of CPA Dai weizhong, He Taifeng
Text of the Auditor’s Report
All shareholders of Changchai Company, Limited,
We have audited the accompanying financial statements of Changchai Company, Limited (the “Company”),
which comprise the Company’s and consolidated balance sheets as at December 31, 2016, the Company’s and
consolidated income statements, the Company’s and consolidated cash flow statements, the Company’s and
consolidated statements of changes in shareholders’ equity for the year then ended, as well as the notes to the
financial statements.
1. The management’s responsibility for the financial statements
The management of the Company is responsible for the preparation of these financial statements as per the
Accounting Standards for Business Enterprises. Such a responsibility includes: (1) designing, implementing and
maintaining internal control relevant to the preparation of financial statements that are free from material
misstatement, whether due to fraud or error; (2) selecting and adopting appropriate accounting policies; and (3)
making rational accounting estimations.
2. Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We have conducted
our audit in accordance with the Audit Standards for Chinese Registered Accountants, which require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risks
assessments, the auditor considers the internal control related to the preparation of the financial statements so as to
design proper audit procedures. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by the management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate, which provides a basis for us
to express auditing opinion.
3. Auditor’s opinion
In our opinion, the financial statements of the Company have been prepared according to the Accounting
Standards for Business Enterprises in all material aspects, which give a fair view of the Company’s and consolidated
financial positions as at December 31, 2016 and the Company’s and consolidated operating results and cash flows
for the year then ended.
Jiangsu Gongzheng Tianye Certified Public Accountants LLP Chinese CPA: Dai Weizhong
Wuxi China Chinese CPA: He Taifeng
April 11, 2017
Changchai Company, Limited Annual Report 2016
II Financial statements
Currency unit for the financial statements: RMB
1. Consolidated balance sheet
Prepared by Changchai Company, Limited
Unit: RMB
Item December 31, 2016 December 31, 2015
Current assets:
Monetary funds 670,703,802.02 601,312,715.62
Settlement reserve
Interbank lendings
Financial assets at fair value through profit/loss
Derivative financial assets
Notes receivable 501,070,279.01 498,502,274.42
Accounts receivable 359,279,821.69 308,596,920.50
Accounts paid in advance 15,483,475.43 12,882,271.70
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract reserve
Interest receivable
Dividends receivable
Other accounts receivable 4,165,674.62 5,622,539.81
Financial assets purchased under agreements to resell
Inventories 494,046,458.44 397,290,012.36
Assets held for sale
Non-current assets due within one year
Other current assets 39,669,983.12 60,304,691.41
Total current assets 2,084,419,494.33 1,884,511,425.82
Non-current assets:
Loans and advances to customers
Available-for-sale financial assets 820,072,500.00 502,980,000.00
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investments 21,006,230.03 20,769,304.76
Investment property 55,072,689.23 57,281,030.03
Fixed assets 553,678,938.87 554,601,893.23
Changchai Company, Limited Annual Report 2016
Construction in progress 89,781,047.21 108,198,455.01
Engineering materials
Disposal of fixed assets
Productive living assets
Oil-gas assets
Intangible assets 99,915,137.62 103,101,462.47
R&D expenses
Goodwill
Long-term deferred expenses
Deferred tax assets 911,229.42 962,530.88
Other non-current assets
Total non-current assets 1,640,437,772.38 1,347,894,676.38
Total assets 3,724,857,266.71 3,232,406,102.20
Current liabilities:
Short-term borrowings 10,000,000.00 17,000,000.00
Borrowings from the Central Bank
Money deposits accepted and inter-bank deposits
Interbank borrowings
Financial liabilities at fair value through profit/loss
Derivative financial liabilities
Notes payable 276,090,000.00 238,200,000.00
Accounts payable 605,424,726.65 535,978,470.07
Accounts received in advance 40,890,620.69 26,665,671.38
Financial assets sold for repurchase
Fees and commissions payable
Payroll payable 58,549,908.90 60,309,349.29
Taxes payable 9,622,332.76 10,798,062.93
Interest payable
Dividends payable 3,891,433.83 3,891,433.83
Other accounts payable 204,446,810.56 201,151,632.46
Reinsurance premiums payable
Insurance contract reserve
Payables for acting trading of securities
Payables for acting underwriting of securities
Liabilities held for sale
Changchai Company, Limited Annual Report 2016
Non-current liabilities due within one year
Other current liabilities 2,454,381.75 2,403,287.06
Total current liabilities 1,211,370,215.14 1,096,397,907.02
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: Preference shares
Perpetual bonds
Long-term accounts payable
Long-term payroll payable
Special payables
Provisions
Deferred income 61,057,232.08 53,121,605.70
Deferred tax liabilities 109,949,700.00 62,385,825.00
Other non-current liabilities
Total non-current liabilities 171,006,932.08 115,507,430.70
Total liabilities 1,382,377,147.22 1,211,905,337.72
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Of which: Preference shares
Perpetual bonds
Capital reserve 164,328,665.43 164,328,665.43
Less: Treasury shares
Other comprehensive income 623,048,300.00 353,519,675.00
Special reserve 11,715,417.22 10,069,746.98
Surplus reserve 311,880,248.88 305,758,285.91
Provisions for general risks
Retained earnings 651,365,935.39 607,859,611.69
Equity attributable to owners of the Company 2,323,712,892.92 2,002,910,311.01
Minority interests 18,767,226.57 17,590,453.47
Total owners’ equity 2,342,480,119.49 2,020,500,764.48
Total liabilities and owners’ equity 3,724,857,266.71 3,232,406,102.20
Legal representative: Shi Xinkun Accounting head for this Report: Zhang Xin
Head of the accounting department: Jiang He
Changchai Company, Limited Annual Report 2016
2. Balance sheet of the Company
Unit: RMB
Item December 31, 2016 December 31, 2015
Current assets:
Monetary funds 637,109,762.94 572,530,396.20
Financial assets at fair value through profit/loss
Derivative financial assets
Notes receivable 500,870,279.01 490,777,874.42
Accounts receivable 308,800,670.90 263,878,166.23
Accounts paid in advance 9,845,904.32 6,512,574.55
Interest receivable
Dividends receivable
Other accounts receivable 3,694,673.93 4,885,363.01
Inventories 430,345,089.36 348,179,430.41
Assets held for sale
Non-current assets due within one year
Other current assets 24,225,031.87 41,403,182.61
Total current assets 1,914,891,412.33 1,728,166,987.43
Non-current assets:
Available-for-sale financial assets 812,872,500.00 495,780,000.00
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investments 205,472,730.03 205,235,804.76
Investment property 55,072,689.23 57,281,030.03
Fixed assets 450,042,747.40 445,343,167.61
Construction in progress 89,781,047.21 108,198,455.01
Engineering materials
Disposal of fixed assets
Productive living assets
Oil-gas assets
Intangible assets 78,558,644.37 81,159,855.82
R&D expenses
Goodwill
Long-term deferred expenses
Deferred tax assets 911,229.42 962,530.88
Changchai Company, Limited Annual Report 2016
Other non-current assets
Total non-current assets 1,692,711,587.66 1,393,960,844.11
Total assets 3,607,602,999.99 3,122,127,831.54
Current liabilities:
Short-term borrowings
Financial liabilities at fair value through profit/loss
Derivative financial liabilities
Notes payable 251,220,000.00 218,200,000.00
Accounts payable 596,734,009.07 527,416,373.82
Accounts received in advance 37,250,941.51 24,537,940.90
Payroll payable 52,498,428.10 55,068,743.12
Taxes payable 6,587,374.37 8,521,233.87
Interest payable
Dividends payable 3,243,179.97 3,243,179.97
Other accounts payable 194,596,980.96 194,650,090.70
Liabilities held for sale
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 1,142,130,913.98 1,031,637,562.38
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: Preference shares
Perpetual bonds
Long-term payables
Long-term payroll payable
Special payables
Provisions
Deferred income 61,057,232.08 53,121,605.70
Deferred tax liabilities 109,949,700.00 62,385,825.00
Other non-current liabilities
Total non-current liabilities 171,006,932.08 115,507,430.70
Total liabilities 1,313,137,846.06 1,147,144,993.08
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Changchai Company, Limited Annual Report 2016
Other equity instruments
Of which: Preference shares
Perpetual bonds
Capital reserve 183,071,147.70 183,071,147.70
Less: Treasury shares
Other comprehensive income 623,048,300.00 353,519,675.00
Special reserve 11,715,417.22 10,069,746.98
Surplus reserve 311,880,248.88 305,758,285.91
Retained earnings 603,375,714.13 561,189,656.87
Total owners’ equity 2,294,465,153.93 1,974,982,838.46
Total liabilities and owners’ equity 3,607,602,999.99 3,122,127,831.54
Legal representative: Shi Xinkun Accounting head for this Report: Zhang Xin
Head of the accounting department: Jiang He
Changchai Company, Limited Annual Report 2016
3. Consolidated income statement
Unit: RMB
Item 2016
1. Operating revenues 2,283,028,855.52 2,519,799,547.29
Including: Sales income 2,283,028,855.52 2,519,799,547.29
Interest income
Premium income
Fee and commission income
2. Operating costs 2,217,112,902.09 2,445,178,600.59
Including: Cost of sales 1,866,617,336.37 2,110,216,135.62
Interest expenses
Fee and commission expenses
Surrenders
Net claims paid
Net amount provided as insurance contract reserve
Expenditure on policy dividends
Reinsurance premium
Taxes and surtaxes 13,005,243.59 7,632,813.49
Selling expenses 103,969,577.79 98,122,345.71
Administrative expenses 207,582,213.98 197,678,915.43
Finance costs -11,542,165.08 -15,723,785.00
Asset impairment loss 37,480,695.44 47,252,175.34
Add: Profit on fair value changes (“-” means loss) -109,642.19
Investment income (“-” means loss) 4,128,745.08 9,120,105.94
Including: Share of profit/loss of associates and joint ventures 236,925.27 670,328.77
Exchange gains (“-” means loss)
3. Operating profit (“-” means loss) 70,044,698.51 83,631,410.45
Add: Non-operating income 15,602,392.47 14,048,268.56
Including: Profit on disposal of non-current assets 6,445,469.06 298,236.45
Less: Non-operating expense 10,729,181.83 8,510,877.99
Including: Loss on disposal of non-current assets 191,440.80 86,306.84
4. Total profit (“-” means loss) 74,917,909.15 89,168,801.02
Less: Corporate income tax 11,201,239.88 16,684,465.13
5. Net profit (“-” means loss) 63,716,669.27 72,484,335.89
Changchai Company, Limited Annual Report 2016
Net profit attributable to owners of the Company 62,539,896.17 71,102,792.49
Minority interests’ income 1,176,773.10 1,381,543.40
6. Other comprehensive income net of tax 269,528,625.00 4,360,500.00
Other comprehensive income net of tax attributable to owners of
269,528,625.00 4,360,500.00
the Company
6.1 Other comprehensive income that will not be reclassified
into profit/loss
6.1.1 Changes in net liabilities or assets with a defined
benefit plan upon re-measurement
6.1.2 Share of other comprehensive income of investees
that cannot be reclassified into profit/loss under the equity method
6.2 Other comprehensive income to be subsequently
269,528,625.00 4,360,500.00
reclassified into profit/loss
6.2.1 Share of other comprehensive income of investees
that will be reclassified into profit/loss under the equity method
6.2.2 Profit/loss on fair value changes of available-for-sale
269,528,625.00 4,360,500.00
financial assets
6.2.3 Profit/loss on reclassifying held-to-maturity
investments into available-for-sale financial assets
6.2.4 Effective profit/loss on cash flow hedges
6.2.5 Currency translation differences
6.2.6 Other
Other comprehensive income net of tax attributable to minority
interests
7. Total comprehensive income 333,245,294.27 76,844,835.89
Attributable to owners of the Company 332,068,521.17 75,463,292.49
Attributable to minority interests 1,176,773.10 1,381,543.40
8. Earnings per share
8.1 Basic earnings per share 0.11 0.13
8.2 Diluted earnings per share 0.11 0.13
Legal representative: Shi Xinkun Accounting head for this Report: Zhang Xin
Head of the accounting department: Jiang He
Changchai Company, Limited Annual Report 2016
4. Income statement of the Company
Unit: RMB
Item 2016
1. Operating revenues 2,261,424,064.06 2,516,865,611.28
Less: Operating costs 1,872,397,292.00 2,129,587,480.88
Taxes and surtaxes 11,368,257.55 7,167,609.31
Selling expenses 97,391,154.08 92,215,078.66
Administrative expenses 192,068,868.64 182,609,958.75
Finance costs -12,744,187.93 -17,089,993.07
Asset impairment loss 36,296,470.30 42,554,499.55
Add: profit on fair value changes (“-” means loss)
Investment income (“-” means loss) 3,274,175.27 7,808,397.71
Including: Share of profit/loss of associates and joint ventures 236,925.27 670,328.77
2. Operating profit (“-” means loss) 67,920,384.69 87,629,374.91
Add: Non-operating income 14,298,854.08 12,294,626.92
Including: Profit on disposal of non-current assets 6,445,439.34 82,621.37
Less: Non-operating expense 10,617,280.45 8,218,111.06
Including: Loss on disposal of non-current assets 179,739.42 53,999.76
3. Total profit (“-” means loss) 71,601,958.32 91,705,890.77
Less: Corporate income tax 10,382,328.59 15,640,001.29
4. Net profit (“-” means loss) 61,219,629.73 76,065,889.48
5. Other comprehensive income net of tax 269,528,625.00 4,360,500.00
5.1 Other comprehensive income that will not be reclassified into
profit and loss
5.1.1 Changes in net liabilities or assets with a defined benefit
plan upon re-measurement
5.1.2 Share of other comprehensive income of investees that
cannot be reclassified into profit/loss under the equity method
5.2 Other comprehensive income to be subsequently reclassified
269,528,625.00 4,360,500.00
into profit/loss
5.2.1 Share of other comprehensive income of investees that will
be reclassified into profit/loss under the equity method
5.2.2 Profit/loss on fair value changes of available-for-sale
269,528,625.00 4,360,500.00
financial assets
5.2.3 Profit/loss on reclassifying held-to-maturity investments
into available-for-sale financial assets
5.2.4 Effective profit/loss on cash flow hedges
Changchai Company, Limited Annual Report 2016
5.2.5 Currency translation differences
5.2.6 Other
6. Total comprehensive income 330,748,254.73 80,426,389.48
7. Earnings per share
7.1 Basic earnings per share
7.2 Diluted earnings per share
Legal representative: Shi Xinkun Accounting head for this Report: Zhang Xin
Head of the accounting department: Jiang He
Changchai Company, Limited Annual Report 2016
5. Consolidated cash flow statement
Unit: RMB
Item 2016
1. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 2,449,124,878.50 2,636,363,557.61
Net increase in money deposits from customers and interbank
placements
Net increase in loans from the Central Bank
Net increase in funds borrowed from other financial institutions
Cash received from premium of original insurance contracts
Net cash received from reinsurance business
Net increase in deposits of policy holders and investment fund
Net increase in disposal of financial assets at fair value through
profit/loss
Interest, fees and commissions received
Net increase in interbank borrowings
Net increase in funds in repurchase business
Tax refunds received 41,561,022.48 28,895,174.42
Cash received from other operating activities 15,072,161.20 21,715,056.24
Subtotal of cash inflows from operating activities 2,505,758,062.18 2,686,973,788.27
Cash paid for goods and services 1,900,783,453.31 2,072,255,235.99
Net increase in loans and advances to customers
Net increase in funds deposited in the Central Bank and interbank
placements
Cash paid for claims of original insurance contracts
Interest, fees and commissions paid
Cash paid as policy dividends
Cash paid to and for employees 340,494,353.98 311,707,299.43
Taxes paid 64,165,805.35 86,777,245.36
Cash paid for other operating activities 100,840,505.50 88,307,124.54
Subtotal of cash outflows due to operating activities 2,406,284,118.14 2,559,046,905.32
Net cash flows from operating activities 99,473,944.04 127,926,882.95
2. Cash flows from investing activities:
Cash received from retraction of investments 32,000,000.00 2,000,000.00
Cash received as investment income 3,891,819.81 8,810,777.17
Changchai Company, Limited Annual Report 2016
Net cash received from disposal of fixed assets, intangible assets
240,625.60 6,659,148.67
and other long-term assets
Net cash received from disposal of subsidiaries or other business
units
Cash received from other investing activities 9,000,000.00
Subtotal of cash inflows from investing activities 45,132,445.41 17,469,925.84
Cash paid to acquire fixed assets, intangible assets and other
59,310,667.45 36,003,567.09
long-term assets
Cash paid for investment 8,000,000.00 32,000,000.00
Net increase in pledged loans
Net cash paid to acquire subsidiaries and other business units
Cash paid for other investing activities
Subtotal of cash outflows due to investing activities 67,310,667.45 68,003,567.09
Net cash flows from investing activities -22,178,222.04 -50,533,641.25
3. Cash flows from financing activities:
Cash received from capital contributions
Including: Cash received from minority shareholder investments
by subsidiaries
Cash received as borrowings 15,000,000.00 17,000,000.00
Cash received from issuance of bonds
Cash received from other financing activities
Subtotal of cash inflows from financing activities 15,000,000.00 17,000,000.00
Repayment of borrowings 22,000,000.00 20,000,000.00
Cash paid for interest expenses and distribution of dividends or
13,715,123.57 12,410,748.99
profit
Including: dividends or profit paid by subsidiaries to minority
interests
Cash paid for other financing activities 18,707.55 28,075.00
Sub-total of cash outflows due to financing activities 35,733,831.12 32,438,823.99
Net cash flows from financing activities -20,733,831.12 -15,438,823.99
4. Effect of foreign exchange rate changes on cash and cash
equivalents
5. Net increase in cash and cash equivalents 56,561,890.88 61,954,417.71
Add: Opening balance of cash and cash equivalents 526,716,238.21 464,761,820.50
6. Closing balance of cash and cash equivalents 583,278,129.09 526,716,238.21
Legal representative: Shi Xinkun Accounting head for this Report: Zhang Xin
Head of the accounting department: Jiang He
Changchai Company, Limited Annual Report 2016
6. Cash flow statement of the Company
Unit: RMB
Item 2016
1. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 2,508,387,008.21 2,709,527,428.26
Tax refunds received 41,561,022.48 28,895,174.42
Cash received from other operating activities 11,890,841.69 18,196,561.87
Subtotal of cash inflows from operating activities 2,561,838,872.38 2,756,619,164.55
Cash paid for goods and services 2,020,333,070.85 2,197,759,847.18
Cash paid to and for employees 301,052,336.85 276,172,157.36
Taxes paid 56,155,882.63 79,691,910.58
Cash paid for other operating activities 93,256,112.12 80,587,740.62
Subtotal of cash outflows due to operating activities 2,470,797,402.45 2,634,211,655.74
Net cash flows from operating activities 91,041,469.93 122,407,508.81
2. Cash flows from investing activities:
Cash received from retraction of investments 20,000,000.00
Cash received as investment income 3,037,250.00 7,499,068.94
Net cash received from disposal of fixed assets, intangible assets
240,625.60 6,440,518.67
and other long-term assets
Net cash received from disposal of subsidiaries or other business
units
Cash received from other investing activities 9,000,000.00 4,000,000.00
Subtotal of cash inflows from investing activities 32,277,875.60 17,939,587.61
Cash paid to acquire fixed assets, intangible assets and other
56,182,564.81 31,944,367.09
long-term assets
Cash paid for investment 20,000,000.00
Net cash paid to acquire subsidiaries and other business units
Cash paid for other investing activities 4,000,000.00
Subtotal of cash outflows due to investing activities 56,182,564.81 55,944,367.09
Net cash flows from investing activities -23,904,689.21 -38,004,779.48
3. Cash flows from financing activities:
Cash received from capital contributions
Cash received as borrowings
Cash received from issuance of bonds
Cash received from other financing activities
Changchai Company, Limited Annual Report 2016
Subtotal of cash inflows from financing activities
Repayment of borrowings
Cash paid for interest expenses and distribution of dividends or
12,911,609.50 11,227,486.52
profit
Cash paid for other financing activities
Sub-total of cash outflows due to financing activities 12,911,609.50 11,227,486.52
Net cash flows from financing activities -12,911,609.50 -11,227,486.52
4. Effect of foreign exchange rate changes on cash and cash
equivalents
5. Net increase in cash and cash equivalents 54,225,171.22 73,175,242.81
Add: Opening balance of cash and cash equivalents 503,933,918.79 430,758,675.98
6. Closing balance of cash and cash equivalents 558,159,090.01 503,933,918.79
Legal representative: Shi Xinkun Accounting head for this Report: Zhang Xin
Head of the accounting department: Jiang He
7. Consolidated statement of changes in owners’ equity
Unit: RMB
Equity attributable to owners of the Company
Other equity instruments
Item Less: Other General Minority Total owners’
Perpet Special Retained
Share capital Preference Capital reserve Treasur comprehensive Surplus reserve risk interests equity
ual Other reserve earnings
shares y shares income reserve
bonds
1. Balance at the end of 10,069,746.9
561,374,326.00 164,328,665.43 353,519,675.00 305,758,285.91 607,859,611.69 17,590,453.47 2,020,500,764.48
the prior year
Add: Changes in
accounting policies
Correction of
errors in prior periods
Business mergers
under the same control
Other
2. Balance at the 10,069,746.9
561,374,326.00 164,328,665.43 353,519,675.00 305,758,285.91 607,859,611.69 17,590,453.47 2,020,500,764.48
beginning of the year
3. Increase/ decrease in
the period (“-” means 269,528,625.00 1,645,670.24 6,121,962.97 43,506,323.70 1,176,773.10 321,979,355.01
decrease)
3.1 Total
269,528,625.00 62,539,896.17 1,176,773.10 333,245,294.27
comprehensive income
3.2 Capital increased
and reduced by owners
3.2.1 Ordinary
shares increased by
shareholders
3.2.2 Capital
increased by holders of
other equity
instruments
3.2.3 Amounts of
share-based payments
charged to owners’
equity
3.2.4 Other
3.3 Profit distribution 6,121,962.97 -19,033,572.47 -12,911,609.50
3.3.1
Appropriation to 6,121,962.97 -6,121,962.97
surplus reserve
3.3.2
Appropriation to
general risk provisions
3.3.3
Appropriation to
-12,911,609.50 -12,911,609.50
owners (or
shareholders)
3.3.4 Other
3.4 Internal
carry-forward of
owners’ equity
3.4.1 New increase
of capital (or share
capital) from capital
reserve
3.4.2 New increase
of capital (or share
capital) from surplus
reserve
3.4.3 Surplus
reserve for making up
loss
3.4.4 Other
3.5 Special reserve 1,645,670.24 1,645,670.24
3.5.1 Withdrawn
4,416,865.61 4,416,865.61
for the period
3.5.2 Used in the
2,771,195.37 2,771,195.37
period
3.6 Other
11,715,417.2
4. Closing balance 561,374,326.00 164,328,665.43 623,048,300.00 311,880,248.88 651,365,935.39 18,767,226.57 2,342,480,119.49
Unit: RMB
Equity attributable to owners of the Company
Other equity instruments
Item Less: Other General Minority Total owners’
Perpet Specific Retained
Share capital Preference Capital reserve Treasury comprehensive Surplus reserve risk interests equity
ual Other reserve earnings
shares shares income reserve
bonds
1. Balance at the end of
561,374,326.00 164,328,665.43 349,159,175.00 8,332,077.21 298,151,696.96 555,590,894.67 16,208,910.07 1,953,145,745.34
the prior year
Add: Changes in
accounting policies
Correction of
errors in prior periods
Business mergers
under the same control
Other
2. Balance at the
561,374,326.00 164,328,665.43 349,159,175.00 8,332,077.21 298,151,696.96 555,590,894.67 16,208,910.07 1,953,145,745.34
beginning of the year
3. Increase/ decrease in
the period (“-” means 4,360,500.00 1,737,669.77 7,606,588.95 52,268,717.02 1,381,543.40 67,355,019.14
decrease)
3.1 Total
4,360,500.00 71,102,792.49 1,381,543.40 76,844,835.89
comprehensive income
3.2 Capital increased
and reduced by owners
3.2.1 Ordinary
shares increased by
shareholders
3.2.2 Capital
increased by holders of
other equity
instruments
3.2.3 Amounts of
share-based payments
charged to owners’
equity
3.2.4 Other
3.3 Profit distribution 7,606,588.95 -18,834,075.47 -11,227,486.52
3.3.1
Appropriation to 7,606,588.95 -7,606,588.95
surplus reserve
3.3.2
Appropriation to
general risk provisions
3.3.3
Appropriation to
owners (or
shareholders)
3.3.4 Other -11,227,486.52 -11,227,486.52
3.4 Internal
carry-forward of
owners’ equity
3.4.1 New increase
of capital (or share
capital) from capital
reserve
3.4.2 New increase
of capital (or share
capital) from surplus
reserve
3.4.3 Surplus
reserve for making up
loss
3.4.4 Other
3.5 Special reserve 1,737,669.77 1,737,669.77
3.5.1 Withdrawn
4,394,339.56 4,394,339.56
for the period
3.5.2 Used in the
2,656,669.79 2,656,669.79
period
3.6 Other
10,069,746.9
4. Closing balance 561,374,326.00 164,328,665.43 353,519,675.00 305,758,285.91 607,859,611.69 17,590,453.47 2,020,500,764.48
Legal representative: Shi Xinkun Accounting head for this Report: Zhang Xin Head of the accounting department: Jiang He
8. Statement of changes in owners’ equity of the Company
Unit: RMB
Other equity instruments Less: Other
Item Total owners’
Share capital Preference Perpetual Capital reserve Treasury comprehensive Special reserve Surplus reserve Retained earnings
Other equity
shares bonds shares income
1. Balance at the end of
561,374,326.00 183,071,147.70 353,519,675.00 10,069,746.98 305,758,285.91 561,189,656.87 1,974,982,838.46
the prior year
Add: Changes in
accounting policies
Correction of
errors in prior periods
Other
2. Balance at the
561,374,326.00 183,071,147.70 353,519,675.00 10,069,746.98 305,758,285.91 561,189,656.87 1,974,982,838.46
beginning of the year
3. Increase/ decrease in
the period (“-” means 269,528,625.00 1,645,670.24 6,121,962.97 42,186,057.26 319,482,315.47
decrease)
3.1 Total
269,528,625.00 61,219,629.73 330,748,254.73
comprehensive income
3.2 Capital increased
and reduced by owners
3.2.1 Ordinary
shares increased by
shareholders
3.2.2 Capital
increased by holders of
other equity
instruments
3.2.3 Amounts of
share-based payments
charged to owners’
equity
3.2.4 Other
3.3 Profit distribution 6,121,962.97 -19,033,572.47 -12,911,609.50
3.3.1
Appropriation to 6,121,962.97 -6,121,962.97
surplus reserve
3.3.2
Appropriation to
-12,911,609.50 -12,911,609.50
owners (or
shareholders)
3.3.3 Other
3.4 Internal
carry-forward of
owners’ equity
3.4.1 New increase
of capital (or share
capital) from capital
reserve
3.4.2 New increase
of capital (or share
capital) from surplus
reserve
3.4.3 Surplus
reserve for making up
loss
3.4.4 Other
3.5 Special reserve 1,645,670.24 1,645,670.24
3.5.1 Withdrawn
4,416,865.61 4,416,865.61
for the period
3.5.2 Used in the
2,771,195.37 2,771,195.37
period
3.6 Other
4. Closing balance 561,374,326.00 183,071,147.70 623,048,300.00 11,715,417.22 311,880,248.88 603,375,714.13 2,294,465,153.93
2015
Unit: RMB
Other equity instruments Less: Other
Item Total owners’
Share capital Preferen Perpetua Capital reserve Treasury comprehensive Special reserve Surplus reserve Retained earnings
Other equity
ce shares l bonds shares income
1. Balance at the end of the
561,374,326.00 183,071,147.70 349,159,175.00 8,332,077.21 298,151,696.96 503,957,842.86 1,904,046,265.73
prior year
Add: Changes in accounting
policies
Correction of errors in
prior periods
Other
2. Balance at the beginning of
561,374,326.00 183,071,147.70 349,159,175.00 8,332,077.21 298,151,696.96 503,957,842.86 1,904,046,265.73
the year
3. Increase/ decrease in the
4,360,500.00 1,737,669.77 7,606,588.95 57,231,814.01 70,936,572.73
period (“-” means decrease)
3.1 Total comprehensive
4,360,500.00 76,065,889.48 80,426,389.48
income
3.2 Capital increased and
reduced by owners
3.2.1 Ordinary shares
increased by shareholders
3.2.2 Capital increased by
holders of other equity
instruments
3.2.3 Amounts of
share-based payments charged
to owners’ equity
3.2.4 Other
3.3 Profit distribution 7,606,588.95 -18,834,075.47 -11,227,486.52
3.3.1 Appropriation to
7,606,588.95 -7,606,588.95
surplus reserve
3.3.2 Appropriation to
-11,227,486.52 -11,227,486.52
owners (or shareholders)
3.3.3 Other
3.4 Internal carry-forward of
owners’ equity
3.4.1 New increase of
capital (or share capital) from
capital reserve
3.4.2 New increase of
capital (or share capital) from
surplus reserve
3.4.3 Surplus reserve for
making up loss
3.4.4 Other
3.5 Special reserve 1,737,669.77 1,737,669.77
3.5.1 Withdrawn for the
4,394,339.56 4,394,339.56
period
3.5.2 Used in the period 2,656,669.79 2,656,669.79
3.6 Other
4. Closing balance 561,374,326.00 183,071,147.70 353,519,675.00 10,069,746.98 305,758,285.91 561,189,656.87 1,974,982,838.46
Legal representative: Shi Xinkun Accounting head for this Report: 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 Jan. 1993 by way of
public offering of shares. With the approved of the People’s Government of Jiangsu Province SZF [1993] No. 67, as
well as reexamined and approved by China Securities Regulatory Commission (“CSRC”) through document ZJFSZ
(1994) No. 9, the Company initially issued A shares to the public from 15 Mar. 1994 to 30 Mar. 1994. As approved
by the Shenzhen Stock Exchange through document SZSFZ (1994) No. 15, such tradable shares of the public got
listing on 1 Jul. 1994 at Shenzhen Stock Exchange with “Su Changchai A” for short of stock, as well as “0570” as
stock code (present stock code is “000570”).
In 1996, with the recommendation of the Office of the People’s Government of Jiangsu Province SZBH [1996]
No. 13, as well as first review by Shenzhen Municipal Securities Administration Office through SZBZ [1996] No. 24,
and approval of the State Council Securities Commission ZWF [1996] No. 27, the Company issued 100 million B
shares to qualified investors on 27 Aug. 1996 to 30 Aug. 1996, getting listed on 13 Sep. 1996.
On 9 Jun. 2006, the Company held a shareholders’ general meeting related to A shares market to examine and
approve share merger reform plan, and performed the share merger reform on 19 Jun. 2006.
As examined and approved at the 2009 2nd Extraordinary Shareholders’ General Meeting in Sep. 2009, based
on the total share capital of 374,249,551 shares as at 30 Jun. 2009, the Company implemented the profit distribution
plan, i.e. to distribute 5 bonus shares and cash of RMB0.8 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 Dec. 2015, the total
share capital of the Company is 561,374,326.00 shares, as well as registered capital of RMB561,374,326.00, which
verified by Jiangsu Gongzheng Tianye Certified Public Accountants Company Limited with issuing Capital
Verification Report SGC [2010] No. B002. And the unified social credit code of the enterprise business license of the
Company is 91320400134792410W.
The Company’s registered address is situated at No. 123 Huaide Middle Road, Changzhou, Jiangsu, as well as
its head office located at No. 123 Huaide Middle Road, Changzhou, Jiangsu.
The Company belongs to manufacturing with business scope including manufacturing and sale of diesel engine,
diesel engines part and casting, grain harvesting machine, rotary cultivators, walking tractor, mould and fixtures,
assembling and sale of diesel generating set and pumping unit. The Company mainly engaged in the production and
sales of small and medium-sized single cylinders and multi-cylinder diesel engine with the label of Changchai Brand.
The diesel engine produced and sold by the Company were mainly used in tractors, combine harvest models, light
commercial vehicle, farm equipment, small-sized construction machinery, generating sets and shipborne machinery
and equipment, etc. The Company’s main business remained unchanged in the Reporting Period.
The Company established the Shareholders’ General Meeting, the Board of Directors and the Board of
Supervisors ， Corporate office, Financial Department, Political Department, Investment and Development
Department, Enterprise Management Department, Human Recourses Department, Production Department,
Procurement Department, Sales Company, Market Department, Chief Engineer Office, Technology Center, QA
Department, Foundry Branch, Machine Processing Branch, Single-cylinder Engine branch, Multi-cylinder Engine
Branch and Overseas Business Department in the Company.
The financial report has been approved to be issued by the Board of Directors on 11 Apr. 2017.
The consolidated scope of the Company of the Reporting Period including the parent company and 4
subsidiaries, which of no change when compared with the last period. 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 issued by the Ministry of Finance with Decree No. 33 and revised with Decree No. 76,
the 41 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
Feb. 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 polices 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 polices and accounting
estimations, which mainly reflected in the withdrawal method of the bad debt provision of the accounts receivable
(Notes III, 11), the measurement of the inventory (Notes III, 12) and the depreciation of the fixed assets (Notes III,
16) etc. As for the details of the significant accounting judgment and the estimations made by the management layer,
please refer to Notes III, 30 “Important accounting judgment and estimations”.
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 Jan. 1 to Dec. 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 lose 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) Category of financial instruments
The Company classifies the financial assets into four kinds such as trading financial assets, available-for-sale
financial assets, accounts receivable and held-to-maturity investment according to the investment purpose and the
economy nature.
The Company classifies the financial liabilities into two kinds such as the financial liabilities measured by fair
value with the changes included in the current gains and losses and the other financial liabilities measured by
amortized cost according to the economy nature.
(2) Recognition basis and measurement methods of financial instruments
The trading financial assets should be measured by fair value with the changes of fair value included in the
current gains and losses; the available-for-sale financial assets should be measured by fair value with the changes of
fair value included in the owners’ equities; and the accounts receivable and the held-to-maturity investment should
be measured by amortized cost.
(3) Recognition basis and measurement methods of financial instruments transformation
The Company transfers or delivers a financial asset to a party other than the issuer of the financial asset and the
transformation of the financial assets could be whole of the financial assets or a part of it, which including two
methods:
The enterprise transfers the right to another party for receiving the cash flow of the financial asset;
The enterprise transfers the financial asset to another party, but maintains the right to receive the cash flow of the
financial asset and undertakes the obligation to pay the cash flow it receives to the final recipient.
Where the Company has transferred a part or 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 the difference between the
consideration received and the book value of the transferred financial assets should be recognized as gains and losses
and at the same time transfers the accumulative gains or losses from the recognized financial assets among the
original owners’ equities in the gains and losses; if it retained nearly all of the risks and rewards related to the
ownership of the financial asset, it shall continue to recognize the whole or part of the financial assets and the
consideration received be recognized as financial liabilities.
Where the Company neither transfers nor retains nearly all of the risks and rewards related to the ownership of
a financial asset, and it does not cease its control on the said financial asset, it recognizes the relevant financial asset
and liability accordingly according to the extent of its continuous involvement in the transferred financial asset.
(4) De-recognition conditions of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of
the financial liability be terminated in all or partly.
(5) Recognition methods of the fair value of main financial assets and financial liabilities
As for the financial assets held by the Company or the financial liabilities plans to undertake, if there exists
active market, should adopt the current offering price in the active market, and as for the financial assets plans to be
purchased by the Company or the financial liabilities undertook, should adopt the current offering in the active
market, and if there is no current offering price or asking price, should adopt the market quotation of the recent
transactions or the adjusted market quotation of the recent transactions, except for there is definite evidence indicate
the market quotation is not the fair value.
Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal
techniques, including the prices adopted by the parties, who are familiar with the condition, in the latest market
transaction upon their own free will, the current fair value obtained by referring to other financial instruments of the
same essential nature etc.
(6) Impairment test method and withdrawal methods of impairment provision of financial assets (excluding accounts
receivable)
The Company shall carry out an inspection, on the balance sheet day, on the carrying amount of the financial
assets other than those measured at their fair values and of which the variation is recorded into the profits and losses
of the current period. Where there is any objective evidence proving that such financial asset has been impaired, an
impairment provision shall be made. For the financial assets with significant single amount, if there is objective
evidence indicates the occurred impairment, should recognize the impairment losses and should include which in the
current gains and losses. As for the financial assets with insignificant single amount but not occur impairment, the
Company should execute the impairment test by credit groups according to the credit degree of the customers and
the actual situation of the happen of the bad debts over the years for recognizing the impairment losses.
The expression “objective evidence proving that the financial asset has been impaired” refers to the actually
incurred events which, after the financial asset is initially recognized, have an impact on the predicted future cash
flow of the said financial asset that can be reliably measured by the enterprise.
The objective evidences that can prove the impairment of a financial asset shall include:
A serious financial difficulty occurs to the issuer or debtor;
The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of
interests or the principal, etc.;
The creditor makes any concession to the debtor who is in financial difficulties due to economic or legal factors,
etc.;
The debtor will probably become bankrupt or carry out other financial reorganizations;
The financial asset can no longer continue to be traded in the active market due to serious financial difficulties
of the issuer;
It is impossible to identify whether the cash flow of a certain asset within a certain combination of financial
assets has decreased or not. But after making an overall appraisal according to the public data available, it is found
that the predicted future cash flow of the said combination of financial assets has indeed decreased since it was
initially recognized and such decrease can be measured, for example, the ability of the debtor of the said
combination of financial assets worsens gradually, the unemployment rate of the country or region where the debtor
is situated increases, the prices of the region where the guaranty is situated are obviously dropping, or the industrial
sector concerned is in slump, etc.;
Any seriously disadvantageous change has occurred to technical, market, economic or legal environment, etc.
wherein the debtor operates its business, which makes the investor of an equity instrument unable to take back its
investment;
Where the fair value of the equity instrument investment drops significantly or not contemporarily;
Other objective evidences showing the impairment of the financial asset.
Where a financial asset measured on the basis of post-amortization costs is impaired, the carrying amount of the
said financial asset shall be calculated by the difference between the book value and the current value of the
predicted future cash flow of the impairment losses.
Where any financial asset measured on the basis of post-amortization costs is recognized as having suffered
from any impairment loss, if there is any objective evidence proving that the value of the said financial asset has
been restored, and it is objectively related to the events that occur after such loss is recognized, the
impairment-related losses as originally recognized shall be reversed and be recorded into the profits and losses of the
current period.
Where a sellable financial asset is impaired, even if the recognition of the financial asset has not been
terminated, the accumulative losses arising from the decrease of the fair value of the owner’s equity which is directly
included shall be transferred out and recorded into the profits and losses of the current period.. The accumulative
losses are the initial cost after deducting the principal, the amortization amount, fair value of current period and
balance after originally recorded into impairment loss of profits or losses. After the recognition of impairment losses,
if there is any objective evidence indicated that the value of financial assets is resumed and objectively related to the
events after the recognition of impairment losses, transfer the impairment losses originally recognized, transfer the
impairment losses of available for sale equity instrument investment and recognized as other comprehensive income,
and transfer the impairment losses of available for sale liability instruments and record into current profits or losses.
11. Receivables
(1) Accounts receivable with significant single amount for which the bad debt provision is made individually
significant single amounts refers to the accounts
receivable of the single amount more than RMB 1
Recognition criteria of accounts receivable with
million (RMB 1 million include) (including accounts
individual and significant amount
receivable and other accounts receivable)
The Company makes an independent impairment
test on the accounts receivable with significant single
amount, and provision for bad debts shall withdrawn on
the basis of the balance between the current values of the
Withdrawal method of the bad debt provision of the
predicted future cash flow lower than book value. Upon
accounts receivable with significant single amounts
independent impairment test, the accounts receivable
with significant single amounts has not been impaired, it
shall be withdrawn bad debt provision based on ending
balance by adopting aging analysis method.
（2）Withdrawing the bad debt provision of the accounts receivable according to groups of credit ris
Name of Groups Withdrawal method of the bad debt provision
the age of the accounts receivable is divided by the
aging analysis method
groups of credit risk
Withdrawing the bad debt provision by adopting aging analysis method among those groups:
Withdrawal proportion of accounts Withdrawal proportion of other
Aging
receivable accounts receivable
Within 1 year(1 year included) 2% 2%
1 to 2 years 5% 5%
2 to 3 years 15% 15%
3 to 4 years 30% 30%
4 to 5 years 60% 60%
Over 5 years 100% 100%
（3）Receivables with insignificant amount but being individually withdrawn the provision for bad debts
insignificant single amounts refers to the accounts receivable of
the single amount lower than RMB 1 million (RMB 1 million not
The reason for the bad debt provision of
include) (including accounts receivable and other accounts
the accounts receivable
receivable).
As for an account receivable with an insignificant single amount
and which can not show its risk feature when withdrawing a bad-bet
provision for it on the group basis, the bad-debt provision for the
account receivable shall be withdrawn based on the difference of the
expected present value of the future cash flows of the account
The withdrawal method of the bad debt
receivable that less than its carrying amount. The Company shall
provision of the accounts receivable
withdraw the bad-debt provision for such an account receivable by
combining the aging method and individual judgment based on the
debtor entity’s actual financial position, cash flows and other relevant
information.
12. 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 cchengpinost 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.
13. Divided as 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.
14. 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 Group 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 polices adopted by the investees is not accord with that of the Group, should be adjusted
according to the accounting policies of the Group 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 Group 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 Group 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 Group 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.
15. Investment real estates
Measurement mode of investment real estates:
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 estates invested by investors shall be recorded at the value stipulated in the
investment contracts or agreements, but the unfair value appointed in the contract or agreement shall be entered into
the account book at the fair value.
As for withdrawal basis of provision for impairment of investment real estates, please refer to withdrawal
method for provision for impairment of fixed assets.
16. Fixed assets
(1) Conditions for recognition
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 Annual deprecation
Depreciation method Useful life Residual value(%)
assets (%)
Houses and buildings Average method of 20-40
2.50-5
useful life
Machine equipment Average method of 6-15
6.67-16.67
useful life
Transportation Average method of
5-10 10-20
equipment useful life
Average method of
Electronic equipment
useful life
Average method of
Other equipment 5-10 10-20
useful life
(3) Recognition basis, pricing and depreciation method of fixed assets by finance lease
The Company recognizes those meet with the following one or certain standards as the fixed assets by finance lease:
① The leasing contract had agreed that (or made the reasonable judgment according to the relevant conditions on
the lease starting date) when the lease term expires, the ownership of leasing the fixed assets could be transferred to
the Company; ② The Company owns the choosing right for purchasing and leasing the fixed assets, with the set
purchase price which is estimated far lower than the fair value of the fixed assets by finance lease when executing
the choosing right, so the Company could execute the choosing right reasonably on the lease starting date; ③ Even
if the ownership of the fixed assets not be transferred, the lease period is of 75% or above of the useful life of the
lease fixed assets; ④ The current value of the minimum lease payment on the lease starting date of the Company is
equal to 90% or above of the fair value of the lease fixed assets on the lease starting date; the current value of the
minimum lease receipts on the lease starting date of the leaser is equal to 90% or above of the fair value of the lease
fixed assets on the lease starting date; ⑤ The nature of the lease assets is special that only the Company could use
it if not execute large transformation.
The fixed assets by finance lease should take the lower one between the fair value of the leasing assets and the
current value of the minimum lease payment on the lease starting date as the entry value. As for the minimum lease
payment which be regarded as the entry value of the long-term accounts payable, its 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
17. Construction in process
(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 hasn’t audit the final accounting shall recognize the cost and make
depreciation in line with valuation value. The construction in process shall adjust the original valuation value at its
historical cost but not adjust the depreciation that has been made after auditing the final accounting.
18. 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.
19. 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 expenses
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 expenses 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
expenditures 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 expenditures of the intangible assets can be reliably measured.
20. 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 Group 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.
21. Amortization method of 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.
22. Payroll
(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 Group 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.
23. Estimated liabilities
(1) Criteria of estimated liabilities
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;
and
③ The amount of the obligation can be measured in a reliable way.
(2) Measurement of estimated liabilities
The Company shall measure the estimated debts in accordance with the best estimate of the necessary expenses
for the performance of the current obligation.
The Company shall check the book value of the estimated debts on the Balance Sheet Date. If there is any
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.
24. Revenue
(1) Recognition of revenue from sale of goods: the revenue from selling shall be recognized by the following
conditions: The significant risks and rewards of ownership of the goods have been transferred to the buyer by the
Company; the Company retains neither continuous management right that usually keeps relation with the ownership
nor effective control over the sold goods; the relevant amount of revenue can be measured in a reliable way; the
relevant revenue and costs of selling goods can be measured in a reliable way. The amount of the revenue from
selling shall ascertain the revenue incurred by selling goods in accordance with the received or receivable price
stipulated in the contract or agreement signed between the enterprise and the buyer, unless the received or receivable
amount as stipulated in the contract or agreement is unfair.
(2) Recognition of revenue from providing labor services: When the total revenue and costs from providing labor
can be measured in a reliable way; the relevant economic benefits are likely to flow into the enterprise; the schedule
of completion under the transaction can be measured in a reliable way, the revenue from providing labor shall be
recognized. If the Company can reliably estimate the outcome of a transaction concerning the labor services it
provides, it shall recognize the revenue from providing services employing the percentage-of-completion method on
the date of the balance sheet, otherwise the revenue from the providing of labor services shall be recognized in
accordance with the amount of the cost of labor services incurred and expected to be compensated. The Company
recognized the completion process of the transaction concerning the labor services according to the proportion of the
occurred cost of the estimated total cost. The total amount of the revenue from providing services should be
recognized according to the contract price received or receivable from the accepting of the labor services or the
agreement price except for those unfair prices.
(3) Recognition of the revenue from transferring use rights of assets: When the relevant economic benefits are likely
to flow into the enterprises and the amount of revenues can be measured in a reliable way, the revenue from
abalienating the right to use assets shall be recognized. The amount of interest revenue should be measured and
confirmed in accordance with the length of time for which the enterprise's cash is used by others and the actual
interest rate；the amount of royalty revenue should be measured and confirmed in accordance with the period and
method of charging as stipulated in the relevant contract or agreement；as for the rental revenue: the amount of the
rental revenue from the operation lease should be recognized according to the straight-line method during each
period of the lease term or accrued into the current gains and losses if rental actual occurred.
25. Government subsidies
(1) Category
A government subsidy means the monetary or non-monetary assets obtained free by an enterprise from the
government. Government subsidies consist of the government subsidies pertinent to assets and government subsidies
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 subsidies 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 the government subsidies
The government subsidies should be recognized only when meet with the attached conditions of the
government subsidies as well as could be acquired.
If the government subsidies are the monetary assets, should be measured according to the received or receivable
amount; and for the government subsidies are the non-monetary assets, should be measured by fair value.
(3) Accounting treatments
The government subsidies pertinent to assets shall be recognized as deferred income, equally distributed within
the useful lives of the relevant assets, and included in the current profits and losses. The government subsidies
pertinent to incomes shall be treated respectively in accordance with the circumstances as follows: those subsidies
used for compensating the related future expenses or losses of the enterprise shall be recognized as deferred income
and shall included in the current profits and losses during the period when the relevant expenses are recognized; or
those subsidies used for compensating the related expenses or losses incurred to the enterprise shall be directly
included in the current profits and losses.
26. Deferred income tax assets and 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 assets 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 liabilities 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.
27. Lease
(1) Accounting treatment of operating lease
Lessee in an operating lease shall treat the lease payment under an operating lease as a relevant asset cost or the
current profit or loss on a straight-line basis over the lease term. The initial direct costs incurred shall be recognized
as the current profit or loss; Contingent rents shall be charged as expenses in the periods in which they are incurred.
Lessors in an operating lease shall be recognized as the current profit or loss on a straight-line basis over the
lease term; Initial direct costs incurred by lessors shall be recognized as the current profit or loss; the initial direct
expenses occur should be directly included in the current gains and losses except for those with larger amount and be
capitalized as well as be included in the gains and losses by stages. Contingent rents shall be charged as expenses in
the periods in which they are incurred.
(2) Accounting treatments of financial lease
When the Company as the lessee, On the lease beginning date, the Company shall record the lower one of the
fair value of the leased asset and the present value of the minimum lease payments on the lease beginning date as the
entering value in an account, recognize the amount of the minimum lease payments as the entering value in an
account of long-term account payable, and treat the balance between the recorded amount of the leased asset and the
long-term account payable as unrecognized financing charges and the occurred initial direct expenses, should be
recorded in the lease assets value. During each lease period, should recognize the current financing expenses by
adopting the actual interest rate.
When the Company as the leasor and on the beginning date of the lease term, the Company shall recognize the
sum of the minimum lease receipts on the lease beginning date and the initial direct costs as the entering value in an
account of the financing lease values receivable, and record the unguaranteed residual value at the same time. The
balance between the sum of the minimum lease receipts, the initial direct costs and the unguaranteed residual value
and the sum of their present values shall be recognized as unrealized financing income. During each lease period,
should recognize the current financing revenues adopting the actual interest rate.
28. Other significant accounting policies and estimates
(1) Operation termination
Operation termination refers to the compose part that meet with one of the following conditions which had been
disposed by the Group or be classified to held-to-sold as well as could be individually distinguished in operating and
compiling the financial statement:
① The compose part represents an individual main business or a main operation area;
② The compose part is a part intends to dispose and plan an individual main business or a main operation area;
③ The compose part is a subsidiary which be acquired only for resold.
(2) Hedging accounting
The term “hedging” refers to one or more hedging instruments which are designated by an enterprise for
avoiding the risks of foreign exchange, interest rate, commodity price, stock price, credit and etc., and which is
expected to make the changes in fair value or cash flow of hedging instrument(s) to offset all or part of the changes
in the fair value or cash flow of the hedged item.
The term “hedging instrument” shall refer to a derivative instrument which is designated by an enterprise for
hedging and by which it is expected that changes in its fair value or cash flow can offset the changes in fair value or
cash flow of the hedged item. For a hedging of foreign exchange risk, a non-derivative financial asset or
non-derivative financial liability may be used as a hedging instrument.
The “hedged item” shall refer to the following items which make an enterprise faced to changes in fair value or
cash flow and are designated as the hedged objectives.
The hedging should be executed by the hedging accounting methods when satisfying the following conditions
at the same time:
① At the commencement of the hedging, the enterprise shall specify the hedging relationship formally (namely the
relationship between the hedging instrument and the hedged item) and prepare a formal written document on the
hedging relationship, risk management objectives and the strategies of hedging.
② The hedging expectation is highly efficient and meets the risk management strategy, which is confirmed for the
hedging relationship by enterprise at the very beginning.
③ For a cash flow hedging of forecast transaction, the forecast transaction shall be likely to occur and shall make
the enterprise faced to the risk of changes in cash flow, which will ultimately affect the profits and losses.
④ The effectiveness of hedging can be reliably measured.
⑤ The hedging is highly effective in accounting period in which the hedging relationship is specified.
29. Changes in main accounting policies and estimates
(1) Change of main accounting policies
□ Applicable √ Inapplicable
(2) Change of main accounting estimates
□ Applicable √ Inapplicable
30. Critical accounting judgments and estimates
Due to the inside uncertainty of operating activity, the Group needed to make judgments, estimates and
assumption on the book value of the accounts without accurate measurement during the employment of accounting
policies. And these judgments, estimates and assumption were made basing on the prior experience of the senior
executives of the Group, as well as in consideration of other factors. These judgments, estimates and assumption
would also affect the report amount of income, costs, assets and liabilities, as well as the disclosure of contingent
liabilities on balance sheet date. However, the uncertainty of these estimates was likely to cause significant
adjustment on the book value of the affected assets and liabilities.
The Group would check periodically the above judgments, estimates and assumption on the basis of continuing
operation. For the changes in accounting estimates only affected on the current period, the influence should be
recognized at the period of change occurred; for the changes in accounting estimates affected the current period and
also the future period, the influence should be recognized at the period of change occurred and future period.
On the balance sheet date, the Group needed to make judgments, estimates and assumption on the accounts in
the following important items:
(1) Provision for bad debts
In accordance with the accounting policies of accounts receivable, the Group measured the losses for bad debts
by adopting allowance method. The impairment of accounts receivable was based on the appraisal of the
recoverability of accounts receivable. The impairment of accounts receivable was dependent on the judgment and
estimates. The actual amount and the difference of previous estimates would affect the book value of accounts
receivable and the withdrawal and reversal on provision for bad debts of accounts receivable during the period of
estimates being changed.
(2) Provision for falling price of inventories
In accordance with the accounting policies of inventories, for the inventories that the costs were more than the
net realizable value as well as out-of-date and dull-sale inventories, the Group withdrawn the provision for falling
price of inventories on the lower one between costs and net realizable value. Evaluating the falling price of
inventories needed the management level gain the valid evidence and take full consideration of the purpose of
inventories, influence of events after balance sheet date and other factors, and then made relevant judgments and
estimates. The actual amount and the difference of previous estimates would affect the book value of inventories and
the withdrawal and reversal on provision for bad debts of inventories during the period of estimates being changed.
(3) Held-to-maturity investment
The Company classifies the non-derivative financial assets which meet with conditions with fixed or
confirmable repayment amount and fixed maturity date as well as the Company owns definite intention and ability to
hold until mature as the held-to-maturity investment. To execute the classification needs large judgment. In the
process of executing the judgment, the Company would assess the intention and ability of the investment which hold
until the due date. Except for the particular situation (for example, selling the investment with insignificant amount
when approaching the due date), if the Company fails to hold the investment until the due date, should re-classify the
investment to the available-for-sale financial assets and would no more be classified as the held-to-maturity
investment in the current fiscal year as well as the afterward two complete fiscal years. If there exits such situation,
that would probably cause significant influences on the value of the relevant financial assets presented on the
financial statement and may influence the risks management strategies of the financial instruments of the Company.
(4) Held-to-maturity investment impairment
The Company confirms whether the held-to-maturity investment has impairment depends on the judgment from
the management layer to a large extent. The objective evidences of the impairments including the issuers which
occur serious financial difficulties that lead the financial assets could not continue to trade in the active market and
to execute the contracts regulations (for example, to return the interests or the principal violates a treaty) etc. In the
process of executing judgment, the Company needs to evaluate the influences of the objective evidences of the
impairment on the estimated future cash flow.
(5) The impairment of financial assets available for sale
The Group judged whether the financial assets available for sale were impaired relying heavily on the judgment
and assumption of the management team, so as to decide whether recognized the impairment losses in the income
statement. During the process of making the judgment and assumption, the Group needed to appraise the balance of
the cost of the investment exceeding its fair value and the continuous period, the financial status and business
forecast in a short period, including the industrial situation, technical reform, credit level, default rate and risk of
counterparty.
(6) Provision for impairment of non-financial non-current assets
The Group made a judgment on the non-current assets other than financial assets whether they had any
indication of impairment on the balance sheet date. For the intangible assets without finite service life, other than the
annual impairment test, they should be subject to the impairment test when there was any indication of impairment.
For other non-current non-financial assets, which should be subjected to impairment test when there was indication
of impairment indicated that the book value can’t be recoverable.
When the book value of the assets or assets portfolio was more than the recoverable amount, which was the
higher one between the net amount of fair value after deducting the disposal expenses and the discounted amount of
the estimated future cash flow, it means impairment incurred.
The net amount of fair value after deducting the disposal expenses should be fixed the price in the sale
agreement for similar assets in the fair transaction minus the increased costs directly attributable to the assets
disposal.
When estimated the discounted value of future cash flow, the Group needed to make important judgment on the
output, selling price, relevant costs and the discount rate for calculating the discounted amount, etc. When estimated
the recoverable amount, the Group would adopt all the available documents, including the prediction for relevant
output, selling price and relevant operating costs arising from reasonable and supportive assumptions.
The Group made the impairment test on goodwill at least one time per year, which required to predict the
discounted amount of the future cash flow of the assets or assets portfolio with the distributed good will, for which,
the Group needed to predict the future cash flow of the assets or assets portfolio, and adopt the property discounted
rate to decide the discounted amount of future cash flow.
(7) Depreciation and amortization
For the investment real estate, fixed assets and intangible assets, the Group withdrew the depreciation and
amortization by adopting the straight-line method during the service life after full consideration of the salvage value.
The Group checked the service life periodically so as to decide the amount of depreciation and amortization at each
Reporting Period. The service life was fixed by the Group in accordance with the previous experience of the similar
assets and the expected technical update. If there was any significant change on the previous estimates, the
depreciation and amortization expenses should be adjusted.
(8) Income tax
During the routine operating activities, there were some uncertainty in the ultimate tax treatment and
calculation for parts of transactions. Some accounts of such transaction could be listed as pre-tax expenditures only
after the approval of taxation authorities. If there were any differences between the ultimate result of recognition for
these taxation maters and their initial estimates, the differences would affect the current income tax and deferred
income tax at the period of ultimate recognition.
VI. Taxation
1. Main taxes and tax rate
Type of tax Taxation basis Tax rates
VAT Payable to sales revenue 13%, 17%
Business tax Taxable operating revenue 5%
Urban maintenance and Tax paid in accordance with the tax
Taxable turnover amount
construction tax regulations of tax units location
Corporate income tax Taxable income 25% or 15%
Education surcharge Taxable turnover amount 5%
2. Tax preference
In 2015, the Company has been identified as High-tech Enterprises, therefore, it enjoys 15-percent preferential
rate for corporate income tax; 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 Jan. 2011 to 31 Dec.
2020 in accordance with the Notice of the Ministry of Finance, the General Administration of Customs of PRC and
the National Administration of Taxation about the Preferential Tax Policies for the Western Development.
VII. Notes on major items in consolidated financial statements of the Company (The unit was
RMB, if there was no special illustration)
1. Monetary funds
Unit: RMB
Item Closing balance Opening balance
Cash on hand 314,905.29 252,373.65
Bank deposits 582,963,123.80 526,463,864.56
Other monetary funds 87,425,772.93 74,596,477.41
Total 670,703,802.02 601,312,715.62
At the period-end, the restricted monetary fund was of RMB 87,425,672.93 in total, of which the bank
acceptance deposit was of RMB 87,425,672.93.
3. Notes receivable
(1) Notes receivable listed by category
Unit: RMB
Item Closing balance Opening balance
Bank acceptance bill 501,070,279.01 498,502,274.42
Total 501,070,279.01 498,502,274.42
(2) Notes receivable pledged by the Company at the period-end
N/A
(3) Notes receivable which had endorsed by the Company or had discounted and had not due on the balance
sheet date at the period-end
Unit: RMB
Amount of recognition termination at the Amount of not terminated recognition at the
Item
period-end period-end
Bank acceptance bill 376,560,093.54
Total 376,560,093.54
(4) There was no notes transferred to accounts receivable because drawer of the notes fails to executed the
contract or agreement.
4. Accounts receivable
(1) Accounts receivable disclosed by category
Unit: RMB
Closing balance Opening balance
Bad debt Bad debt
Book balance Book balance
provision provision
Category Withdra Book Withdra Book
Proporti wal value Amoun Proporti wal value
Amount Amount Amount
on (%) proporti t on (%) proporti
on (%) on (%)
Accounts
receivable with
significant single 27,508, 25,391, 2,117,539 32,966, 28,743,5 4,223,004
4.62 92.30 6.03% 87.19%
amount for which 638.82 099.21 .61 572.81 68.09 .72
bad debt provision
separately accrued
Accounts
receivable
withdrawn bad 511,83
567,673 210,511 357,162,2 207,464, 304,373,9
debt provision 95.33 37.08 8,003.0 93.66% 40.53%
,711.72 ,429.64 82.08 087.27 15.78
according to credit
risks
characteristics
Accounts
receivable with
insignificant
276,298 276,298 1,686,7 1,686,71 100.00
single amount for 0.05 100.00 0.31%
.29 .29 16.39 6.39 %
which bad debt
provision
separately accrued
Total 546,49
595,458 236,178 359,279,8 100.00 237,894, 308,596,9
100.00 39.66 1,292.2 43.53%
,648.83 ,827.14 21.69 % 371.75 20.50
Accounts receivable with significant single amount for which bad debt provision separately accrued at period end:
Unit: RMB
Closing balance
Account
Withdrawal
receivable(by unit) Account receivable Bad debt provision Withdrawal reason
proportion (%)
Customer 1 1,902,326.58 1,902,326.58 100.00 Difficult to recovered
Customer 2 6,215,662.64 6,202,854.45 99.79 Difficult to recovered
Customer 3 4,319,339.17 2,214,607.75 51.27 Estimated difficult to recover
Customer 4 3,279,100.00 3,279,100.00 100.00 Estimated difficult to recover
Customer 5 2,133,377.01 2,133,377.01 100.00 Estimated difficult to recover
Customer 6 5,359,381.00 5,359,381.00 100.00 Difficult to recovered
Customer 7 2,584,805.83 2,584,805.83 100.00 Difficult to recovered
Customer 8 1,714,646.59 1,714,646.59 100.00 Difficult to recovered
Total 27,508,638.82 25,391,099.21
In the groups, accounts receivable adopting aging analysis method to accrue bad debt provision:
Unit: RMB
Closing balance
Aging
Accounts receivable Bad debt provision Withdrawal proportion (%)
Within 1 year 357,020,701.75 7,140,414.51 2.00
1 to 2 years 3,080,848.05 154,042.40 5.00
2 to 3 years 1,820,092.27 273,013.85 15.00
3 to 4 years 527,790.44 158,337.13 30.00
4 to 5 years 6,096,643.65 3,657,986.19 60.00
Over 5 years 199,127,635.56 199,127,635.56 100.00
Total 567,673,711.72 210,511,429.64
(2) Accounts receivable withdraw, reversed or collected during the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB5,408,351.39; the
amount of the reversed or collected part during the Reporting Period was of RMB 6,666,742.43.
(3) The actual write-off accounts receivable
Unit: RMB
Item Write-off account
Changge Shiying Machinery Co., Ltd 457,153.57
(4) Top 5 of the closing balance of the accounts receivable collected according to the arrears party
At the period-end, the total amount of top 5 of the closing balance of the accounts receivable collected
according to the arrears party was RMB 192,749,341.51, which was 32.37% of the closing balance of the accounts
receivable and the relevant closing balance of bad debt provision was RMB 20,942,174.47.
5. Prepayment
(1) List by aging analysis:
Unit: RMB
Aging Closing balance Opening balance
Amount Proportion (%) Amount Proportion (%)
Within 1 year 13,981,887.79 90.30 11,891,116.78 92.30
1 to 2 years 515,122.72 3.33 7,418.00 0.06
2 to 3 years 7,418.00 0.05 114,790.79 0.89
3 to 4 years 110,100.79 0.71
4 to 5 years
Over 5 years 868,946.13 5.61 868,946.13 6.75
Total 15,483,475.43 100.00 12,882,271.70 100.00
(2) Top 5 of the closing balance of the prepayment collected according to the prepayment target
At the period-end, the total amount of top 5 of the closing balance of the prepayment collected according to the
prepayment target was RMB 13,130,359.44, which was 84.80% of the closing balance of the accounts receivable.
6. Other accounts receivable
(1) Other accounts receivable disclosed by category
Unit: RMB
Closing balance Opening balance
Bad debt Bad debt
Book balance Book balance
provision provision
Category Withdra Book Withdra Book
Proporti wal value Amou Proporti wal value
Amount Amount Amount
on (%) proporti nt on (%) proporti
on (%) on (%)
Other accounts
receivable with
significant single 2,853,1 2,853,1 2,853, 2,853,18 100.00
7.82 100.00 7.66%
amount for which 88.02 88.02 188.02 8.02 %
bad debt provision
separately accrued
Other accounts
receivable
withdrawn bad 32,431
30,950, 26,785, 4,165,674 26,808,6 5,622,539.
debt provision 84.83 86.54 ,210.5 87.10% 82.66%
737.22 062.60 .62 70.76
according to credit
risks
characteristics
Other accounts
receivable with
insignificant
2,679,8 2,679,8 1,952, 1,952,62 100.00
single amount for 7.35 100.00 5.24%
01.13 01.13 628.15 8.15 %
which bad debt
provision
separately accrued
Total 37,237
36,483, 32,318, 4,165,674 100.00 31,614,4 5,622,539.
100.00 88.58 ,026.7 84.90%
726.37 051.75 .62 % 86.93
Other accounts receivable with significant single amount for which bad debt provision separately accrued at
period end:
Unit: RMB
Closing balance
Other account
Other account Withdrawal
receivable(by unit) Bad debt provision Withdrawal reason
receivable proportion (%)
Changchai Group
Import & Export 2,853,188.02 2,853,188.02 100 Difficult to recover
Company
Total 2,853,188.02 2,853,188.02
In the groups, other accounts receivable adopting aging analysis method to accrue bad debt provision:
Unit: RMB
Closing balance
Aging
Other accounts receivable Bad debt provision Withdrawal proportion (%)
Within 1 year 3,630,055.73 72,601.12 2.00
1 to 2 years 120,076.86 6,003.84 5.00
2 to 3 years 61,989.57 9,298.44 15.00
3 to 4 years 621,279.82 186,383.95 30.00
4 to 5 years 16,399.95 9,839.97 60.00
Over 5 years 26,500,935.29 26,500,935.29 100.00
Total 30,950,737.22 26,785,062.60
(2) Accounts receivable withdraw, reversed or collected during the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB 706,757.69; the
amount of the reversed or collected part during the Reporting Period was of RMB 3,192.87.
(3) The actual write-off other accounts receivable
N/A
(4) Other accounts receivable classified by the nature of accounts
Unit: RMB
Nature Closing book balance Opening book balance
Margin and cash pledge 4,200.00 4,200.00
Unit current amount 19,305,341.92 20,433,624.06
Employee loan 1,819,817.62 2,011,484.92
Other 15,354,366.83 14,787,717.76
Total 36,483,726.37 37,237,026.74
(5) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party
Unit: RMB
Proportion of Closing
the total year balance of bad
end balance of debt provision
Name of units Nature Closing balance Aging
the accounts
receivable (%)
Changzhou Compressor Co., Over 5 years
Current 2,940,000.00 8.06 2,940,000.00
Ltd.
Import and Export Company of
Current 2,853,188.02 Over 5 years 7.82 2,853,188.02
Changchai Group
Changzhou New District Over 5 years
Current 1,626,483.25 4.46 1,626,483.25
Accounting Center
OEM Group Settlement Center Current 1,140,722.16 Over 5 years 3.13 1,140,722.16
Changzhou Xingsheng
Current 496,450.56 Within 1 year 1.35 9,929.01
Property Management Co., Ltd
Total 9,056,843.99 24.82 8,570,322.44
7. Inventory
(1) Category of inventory
Unit: RMB
Closing balance Opening balance
Item Falling price Falling price
Book balance Book value Book balance Book value
reserves reserves
105,129,601.5 4,315,935.29 100,813,666. 2,587,305.60
Raw material
8 29 111,288,103.55 108,700,797.95
Goods in 127,378,644.5 21,803,781.1 105,574,863. 23,144,279.29
process 0 8 32 110,165,018.34 87,020,739.05
Inventory 280,847,238.3 20,174,913.3 260,672,325. 20,277,368.92
goods 5 4 01 208,519,567.29 188,242,198.37
Materials 597,808.75
processed on 24,728,465.0 12,310,710.53
commission 25,326,273.77 2 12,310,710.53
Low-value 1,300,787.34 1,300,787.34
consumables 3,557,926.14 2,257,138.80 2,316,353.80 1,015,566.46
542,239,684.3 48,193,225.9 494,046,458.
Total 397,290,012.36
4 0 44 444,599,753.51 47,309,741.15
(2) Falling price reserves of inventory
Unit: RMB
Increased amount Decreased amount
Opening
Item Reverse or Closing balance
balance Withdrawal Other Other
write-off
Raw material 2,587,305.60 1,774,322.02 45,692.33 4,315,935.29
Materials
processed on 597,808.75 597,808.75
commission
Finished
20,277,368.92 14,296,707.22 14,399,162.80 20,174,913.34
products
Goods in
23,144,279.29 21,366,683.67 22,707,181.78 21,803,781.18
process
Low-value
1,300,787.34 1,300,787.34
consumables
Total 47,309,741.15 38,035,521.66 37,152,036.91 48,193,225.90
8. Other Current Assets
Unit: RMB
Item Closing balance Opening balance
The VAT tax credits 31,669,983.12 28,304,691.41
Bank financing product 20,000,000.00
Securities company financing product 6,000,000.00 12,000,000.00
Ju pai financing product 2,000,000.00
Total 39,669,983.12 60,304,691.41
9. Available-for-sale financial assets
(1) List of available-for-sale financial assets
Unit: RMB
Closing balance Opening balance
Item Book Depreciation Depreciation
Book value Book balance Book value
balance reserves reserves
Available-for-sale 821,282,500. 820,072,500. 504,190,000. 502,980,000.0
1,210,000.00 1,210,000.00
equity instruments: 00 00 00
Measured by fair value 812,872,500. 812,872,500. 457,780,000. 457,780,000.0
00 00 00
Measured by cost 46,410,000.0
8,410,000.00 1,210,000.00 7,200,000.00 1,210,000.00 45,200,000.00
method
Total 821,282,500. 820,072,500. 504,190,000. 502,980,000.0
1,210,000.00 1,210,000.00
00 00 00
（2）Available-for-sale financial assets measured by fair value at the period-end
Unit: RMB
Available-for-sale Available-for-sale
Category Total
equity instruments debt instruments
Cost of equity instruments/ amortized cost of debt
instruments 79,874,500.00 79,874,500.00
Fair value 812,872,500.00 812,872,500.00
Changes of fair value accumulated recorded into other
comprehensive income 623,048,300.00 623,048,300.00
(3) Available-for-sale financial assets measured by cost at the period-end
Unit: RMB
Book balance Depreciation reserves
Share
holding Cash
proportio bonus of
Investees Period-b Period-e Period-b Period-e n among the
Increase Decrease Increase Decrease
egin nd egin nd the Reportin
investees g Period
(%)
Jiangsu 38,000,0 38,000,0
Bank 00.00 00.00
Qidong
Liantong
7,200,00 7,200,00 160,000.
Dynamo 3.2
0.00 0.00
meter
Co., Ltd.
1,210,00 1,210,00 1,210,00 1,210,00
Others
0.00 0.00 0.00 0.00
46,410,0 38,000,0 8,410,00 1,210,00 1,210,00 160,000.
Total
00.00 00.00 0.00 0.00 0.00
①Jiangsu Bank was listed in A share on August 2016, and the investment was measured by fair value after that
period.
②Others: RMB510,000 in Chengdu Changwan Diesel Engine Marketing Corp., and RMB290,000 in Wanzhou
Changwan Diesel Engine Fitting Corp. and RMB20,000 in Changzhou Economic and Technological
Development Co., Ltd., RMB100,000 in Changzhou Tractors Co., Ltd., RMB200,000 in the Industrial Financing
Mutual Benefit Association of Changzhou Economic and Information Technology Commission and RMB90,000
in Beijing Engineering and Agricultural Machinery Co., Ltd.. Due to difficulty in recovery, full-amount
impairment provisions were made for the aforesaid accounts.
(4) Changes of the impairment of the available-for-sale financial assets during the Reporting Period
Unit: RMB
Available-for-sale equity Available-for-sale debt
Category Total
instruments instruments
Balance of the withdrawn impairment
1,210,000.00 1,210,000.00
at the period-begin
Balance of the withdrawn impairment
1,210,000.00 1,210,000.00
at the period-end
（5）The reason for an increase of 63.04% of closing balance than opening balance is that our company
measured holding Jiangsu Bank by fair value in current period, so the closing market value increased
dramatically.
10. Long-term equity investment
Unit: RMB
Increase/decrease
Gains and Adjustme Closing
Withdraw
Additiona losses nt of Cash bonus balance of
Opening Reduced Changes al of Closing
Investees l recognize other or profits impairme
balance investmen of other impairme Other balance
investmen d under comprehe announced nt
t equity nt
t the equity nsive to issue provision
provision
method income
Joint Ventures
Associated enterprises
Changzho
u Fuji
Changcha
20,769,30 236,925.2 21,006,23
i Robin
4.76 7 0.03
Gasoline
Engine
Co., Ltd.
Beijing
Tsinghua 44,182.50
Industrial
Investme
nt
Managem
ent Co.,
Ltd.
20,769,30 236,925.2 21,006,23
Subtotal 44,182.50
4.76 7 0.03
20,769,30 236,925.2 21,006,23
Total 44,182.50
4.76 7 0.03
11. Investment property
(1) Investment property adopted the cost measurement mode
Unit: RMB
construction in
Item Houses and buildings Land use right Total
progress
I. Original book value
1. Opening
87,632,571.14 87,632,571.14
balance
2. Increased
amount of the period
(1) Outsourcing
(2) Transfer of
inventory\fixed
assets\project under
construction
（3）Enterprises
merger increase
3. Decreased amount
of the period
(1) Disposal
(2) Other transfer
4.Closing balance
II. The accumulative
depreciation and
accumulative
amortization
1. Opening 30,351,541.11 30,351,541.11
balance
2. Increased 2,208,340.80 2,208,340.80
amount of the period
(1) The 2,208,340.80 2,208,340.80
depreciation or
amortization
3. Decreased amount
of the period
(1) Disposal
(2) Other transfer
4.Closing balance 32,559,881.91 32,559,881.91
III. Impairment
provision
1. Opening
balance
2. Increased
amount of the period
(1) Disposal
3. Decreased amount
of the period
(1) Disposal
(2) Other transfer
4.Closing balance
IV. Book value
1.Closing book value 55,072,689.23 55,072,689.23
2.Opening book 57,281,030.03 57,281,030.03
value
12. Fixed assets
(1) List of fixed assets
Unit: RMB
Houses and Machinery Electronic Transportation
Item Other
buildings equipment equipment equipment
I. Original book
value
1. Opening
balance 419,409,924.25 802,789,176.38 23,547,415.98 34,971,574.20 1,280,718,090.81
2. Increased
amount of the
period 3,660,199.12 71,564,557.24 124,854.70 4,310,645.03 79,660,256.09
(1) Purchase 870,000.00 3,601,601.02 206,897.44 4,678,498.46
(2) Construction
project transfer 2,790,199.12 67,962,956.22 124,854.70 4,103,747.59 74,981,757.63
（3）Enterprises
merger increase
3. Decreased
amount of the
period 4,061,877.00 20,694,427.98 665,092.08 3,702,963.39 29,124,360.45
(1) Disposal or
Scrap 4,061,877.00 20,694,427.98 665,092.08 3,702,963.39 29,124,360.45
4. Closing
balance 419,008,246.37 853,659,305.64 23,007,178.60 35,579,255.84 1,331,253,986.45
II. The accumulative
depreciation
1. Opening
balance 212,091,873.84 468,192,248.83 15,368,212.09 26,845,593.79 722,497,928.55
2. Increased
amount of the
period 15,676,994.07 59,250,366.26 2,029,207.41 2,661,353.43 79,617,921.17
(1) Withdrawal 15,676,994.07 59,250,366.26 2,029,207.41 2,661,353.43 79,617,921.17
(2) Enterprise
combination and
increase
3. Decreased
amount of the
period 3,641,066.64 19,088,432.01 635,312.44 3,700,128.41 27,064,939.50
(1) Disposal or
Scrap 3,641,066.64 19,088,432.01 635,312.44 3,700,128.41 27,064,939.50
4. Closing
balance 224,127,801.27 508,354,183.08 16,762,107.06 25,806,818.81 775,050,910.22
III. Impairment
provision
1. Opening
balance 3,618,269.03 3,618,269.03
2. Increased
amount of the
period
(1) Withdrawal
3. Decreased
amount of the
period 1,094,131.67 1,094,131.67
(1) Disposal or
Scrap 1,094,131.67 1,094,131.67
4. Closing balance 2,524,137.36 2,524,137.36
IV. Book value
1.Closing book
value 194,880,445.10 342,780,985.20 6,245,071.54 9,772,437.03 553,678,938.87
2.Opening book
value 207,318,050.41 330,978,658.52 8,179,203.89 8,125,980.41 554,601,893.23
The accumulative depreciation in Reporting Period was RMB79,617,921.17; the original value of construction
in progress transfer into fix assets was RMB74,981,757.63.
13. Construction in progress
(1) List of construction in progress
Unit: RMB
Closing amount Opening amount
Book balance Impairment Book value Book balance Impairme Book value
Item
provision nt
provision
Trial production
workshop project 4,233,919.80 4,233,919.80 22,960,533.29 22,960,533.29
technology center
Casting
396,000.00 396,000.00 396,000.00 396,000.00
renovation project
Expansion
capacity of
57,529,623.42 57,529,623.42 40,050,712.95 40,050,712.95
multi-cylinder
(The 2nd Period)
Base of land in
33,550.53 33,550.53
Hehai Road
Diesel Engine
Cylinder Body
Flexible 15,110,073.95 15,110,073.95 1,851,752.13 1,851,752.13
Manufacturing
Line
Equipment to be
installed and
12,511,430.04 12,511,430.04 42,905,906.11 42,905,906.11
payment for
projects
Total 89,781,047.21 89,781,047.21 108,198,455.01 108,198,455.01
(2) Changes of significant construction in progress
Unit: RMB
Amount that Other
Increased
Opening transferred to decreased Capital
Name o f item amount of the Closing balance
balance fixed assets of amount of resources
period
the period the period
Trial production
Self
workshop project 22,960,533.29 1,993,135.80 20,719,749.29 4,233,919.80
-raised
technology center
Casting renovation Self
396,000.00 396,000.00
project -raised
Expansion capacity
Self
of multi-cylinder 40,050,712.95 17,616,848.99 137,938.52 57,529,623.42
-raised
(The 2nd Period)
Base of land in Self
33,550.53 388,800.00 422,350.53
Hehai Road -raised
Diesel Engine
Cylinder Body Self
1,851,752.13 13,258,321.82 15,110,073.95
Flexible -raised
Manufacturing Line
Total 65,292,548.90 33,257,106.61 21,280,038.34 77,269,617.17 --
14. Intangible assets
（1）Particulars about Intangible assets
Unit: RMB
Item Land use right Software Other Total
I. Original book value
1. Opening balance 137,782,945.30 7,039,691.42 144,822,636.72
2. Increased amount of the
period 1,756,140.17 1,756,140.17
(1) Purchase 1,756,140.17 1,756,140.17
(2) Internal research and
development
(2) Enterprises merger increase
3. Decreased amount of the period
(1) Withdrawal
4. Closing balance 137,782,945.30 8,795,831.59 146,578,776.89
II. Accumulated amortization
1. Opening balance 38,511,304.87 3,209,869.38 41,721,174.25
2. Increased amount of the
period 2,792,049.12 2,150,415.90 4,942,465.02
(1) Withdrawal 2,792,049.12 2,150,415.90 4,942,465.02
3. Decreased amount of the period
(1) Disposal
4. Closing balance 41,303,353.99 5,360,285.28 46,663,639.27
III. Impairment provision
1. Opening balance
2. Increased amount of the
period
(1) Withdrawal
3. Decreased amount of the period
(1) Disposal
4. Closing balance
IV. Book value
1.Closing book value 96,479,591.31 3,435,546.31 99,915,137.62
2.Opening book value 99,271,640.43 3,829,822.04 103,101,462.47
15. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets had not been off-set
Unit: RMB
Closing balance Opening balance
Deductible
Item Deferred income tax Deductible temporary Deferred income tax
temporary
assets difference assets
difference
Assets impairment
6,074,862.83 911,229.42 6,416,872.53 962,530.88
provision
Total 6,074,862.83 911,229.42 6,416,872.53 962,530.88
(2) Deferred income tax liabilities had not been off-set
Unit: RMB
Closing balance Opening balance
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
difference assets difference assets
Assets impairment
732,998,000.00 109,949,700.00 415,905,500.00 62,385,825.00
provision
Total 732,998,000.00 109,949,700.00 415,905,500.00 62,385,825.00
(3) List of unrecognized deferred income tax assets
Unit: RMB
Item Closing amount Opening amount
Bad debt provision 262,422,016.06 263,091,986.15
Inventory falling price reserves 48,193,225.90 47,309,741.15
Total 310,615,241.96 310,401,727.30
16. Other non-current assets
Unit: RMB
Item Opening
Closing impairment
Closing balance Opening balance impairment
provision
provision
Entrust loans 14,000,000.00 14,000,000.00 14,000,000.00 14,000,000.00
Total 14,000,000.00 14,000,000.00 14,000,000.00 14,000,000.00
17. Short-term loans
(1) Category of short-term loans
Unit: RMB
Item Closing balance Opening balance
Mortgage loan 5,000,000.00 12,000,000.00
Guaranteed loan 5,000,000.00 5,000,000.00
Total 10,000,000.00 17,000,000.00
(2) List of the short-term loans overdue but not return
(3)The reason for a decrease of 41.18% of closing balance than opening balance is that the loans of our
subsidiary Changwan decreased in current period.
18. Notes payable
Unit: RMB
Category Closing balance Opening balance
Bank acceptance bill 276,090,000.00 238,200,000.00
Total 276,090,000.00 238,200,000.00
There was no due but not pay notes payable at the period-end.
19. Accounts payable
(1) List of accounts payable
Unit: RMB
Item Closing balance Opening balance
Payment for goods 605,424,726.65 535,978,470.07
Total 605,424,726.65 535,978,470.07
(2) There was no notes of the accounts payable aging over one year
20. Advance from customers
(1) List of advance from customers
Unit: RMB
Item Closing balance Opening balance
Payment for goods 40,890,620.69 26,665,671.38
Total 40,890,620.69 26,665,671.38
(2) There was no significant advance from customers aging over one year
(3) The reason for a increase of 53.35% of closing balance than opening balance is mainly that the stock in
sales season added advance from some customers.
21. Payroll payable
(1) List of Payroll payable
Unit: RMB
Item Opening balance Increase Decrease Closing balance
I. Short-term salary 60,309,349.29 300,948,673.13 302,708,113.52 58,549,908.90
II. welfare after departure-
37,719,070.46 37,719,070.46
defined contribution plan
III. Termination benefits 67,170.00 67,170.00
Total 60,309,349.29 338,734,913.59 340,494,353.98 58,549,908.90
(2) List of Short-term salary
Unit: RMB
Item Opening balance Increase Decrease Closing balance
1. Salary, bonus, allowance,
53,805,049.80 253,931,739.68 257,015,862.87 50,720,926.61
subsidy
2. Employee welfare 6,539,596.50 6,539,596.50
3. Social insurance 18,329,613.92 18,329,613.92
Including: Medical insurance
14,830,115.83 14,830,115.83
premiums
Work-related injury insurance 2,577,353.37 2,577,353.37
Maternity insurance 922,144.72 922,144.72
4. Housing fund 17,230,006.28 17,230,006.28
5. Labor union budget and
6,504,299.49 4,917,716.75 3,593,033.95 7,828,982.29
employee education budget
6. Other short-term
60,309,349.29 300,948,673.13 302,708,113.52 58,549,908.90
compensation
(3) List of drawing scheme
Unit: RMB
Item Opening balance Increase Decrease Closing balance
1. Basic endowment
35,678,708.54 35,678,708.54
insurance
2. Unemployment
2,040,361.92 2,040,361.92
insurance expense
Total 37,719,070.46 37,719,070.46
22. Taxes payable
Unit: RMB
Item Closing balance Opening balance
VAT 972,104.89 467,010.50
Business tax 2,900.00
Corporate income tax 5,537,211.23 5,923,463.67
Personal income tax 940,612.41 49,924.16
Urban maintenance and construction
902,501.60 1,996,316.42
tax
Property tax 143,204.51 143,204.50
Education Surcharge 51,563.36 840,517.28
The comprehensive fee 1,075,134.76 1,374,726.40
Total 9,622,332.76 10,798,062.93
23. Dividends payable
Unit: RMB
Item Closing balance Opening balance
Common stock dividends 3,243,179.97 3,243,179.97
Minority shareholder dividends 648,253.86 648,253.86
Total 3,891,433.83 3,891,433.83
Reason for unpaid dividends payable over one year: the shareholder has not get.
24. Other accounts payable
(1) Other accounts payable listed by nature of the account
Unit: RMB
Item Closing balance Opening balance
Margin and deposit 2,700,853.59 3,149,353.59
Unit current amount 11,420,825.32 15,550,754.25
Personal amount payable 1,067,429.96 955,910.51
Sales discount and three guarantees 151,408,043.35 146,392,031.63
Other 37,849,658.34 35,103,582.48
Total 204,446,810.56 201,151,632.46
(2) Other significant accounts payable with aging over one year
Other significant accounts payable with aging over one year mainly was temporarily closed and owe payment
unsettled.
25. Other current-liabilities
Unit: RMB
Item Closing balance Opening balance
Sewage charge 200,000.00 200,000.00
Electric charge 2,254,381.75 1,795,289.06
Other 407,998.00
Total 2,454,381.75 2,403,287.06
26. Deferred income
Unit: RMB
Formation
Item Opening balance Increase Decrease Closing balance
reasons
Government Government
53,121,605.70 9,000,000.00 1,064,373.62 61,057,232.08
subsidies allocations
Total 53,121,605.70 9,000,000.00 1,064,373.62 61,057,232.08 --
Items involved in government subsidies:
Unit: RMB
Amount
Opening Amount of accrued in Closing Related to the
Item Other changes
balance newly subsidy non-business balance assets/ income
income
Electric control
of diesel
engine
research and Related to the
1,842,000.00 398,400.00 1,443,600.00
development assets
and
industrializatio
n allocations
National major
Related to the
project special 28,770,000.00 28,770,000.00
assets
allocations
Remove Related to the
22,509,605.70 665,973.62 21,843,632.08
compensation assets
Research and
development
and
industrializatio
n allocations of
Related to the
national III/IV 9,000,000.00 9,000,000.00
assets
standard
high-powered
efficient diesel
engine for
agricultural use
Total 53,121,605.70 --
27. Share capital
Unit: RMB
Increase/decrease (+/-)
Opening Capitalization
Newly issue Bonus Closing balance
balance of public Other Subtotal
share shares
reserves
The sum
561,374,326.00 561,374,326.00
of shares
28. Capital reserves
Unit: RMB
Item Opening balance Increase Decrease Closing balance
Capital premium 143,990,690.24 143,990,690.24
Other capital reserves 20,337,975.19 20,337,975.19
Total 164,328,665.43 164,328,665.43
29. Other comprehensive income
Unit: RMB
Reporting Period
Less:
Amount
transferred
into profit
Amount and loss in Less: After-tax After-tax
Opening Closing
Item incurred the current income attribute to attribute to
balance balance
before period that tax the parent minority
income tax recognized expense company shareholder
into other
comprehensi
ve income in
prior period
Other 353,519,675. 317,092,500. 47,563,87 269,528,62 623,048,300.0
comprehensive 00 00 5.00 5.00
reclassified into
profits or losses
Profits or losses
of change in fair
353,519,675. 317,092,500. 47,563,87 269,528,62 623,048,300.0
value of
00 00 5.00 5.00
available-for-sale
financial assets
353,519,675. 317,092,500. 47,563,87 269,528,62 623,048,300.0
Total
00 00 5.00 5.00
30. Special reserves
Unit: RMB
Item Opening balance Increase Decrease Closing balance
Safety production
10,069,746.98 4,416,865.61 2,771,195.37 11,715,417.22
cost
Total 10,069,746.98 4,416,865.61 2,771,195.37 11,715,417.22
31. Surplus reserves
Unit: RMB
Item Opening balance Increase Decrease Closing balance
Statutory surplus
292,601,428.01 6,121,962.97 298,723,390.98
reserves
Discretional surplus
13,156,857.90 13,156,857.90
reserves
Total 305,758,285.91 6,121,962.97 311,880,248.88
32. Retained profits
Unit: RMB
Item 2016
Opening balance of retained profits before
607,859,611.69 555,590,894.67
adjustments
Opening balance of retained profits after
607,859,611.69 555,590,894.67
adjustments
Add: Net profit attributable to owners of
62,539,896.17 71,102,792.49
the Company
Less: Withdrawal of statutory surplus
6,121,962.97 7,606,588.95
reserves
Dividend of common stock payable 12,911,609.50 11,227,486.52
Closing retained profits 651,365,935.39 607,859,611.69
33. Revenues and operating costs
Unit: RMB
Reporting Period Same period of last year
Item
Revenue Operating costs Revenue Operating costs
Main operations 2,258,400,410.51 1,849,826,031.76 2,495,248,411.83 2,094,368,998.80
Other operations 24,628,445.01 16,791,304.61 24,551,135.46 15,847,136.82
Total 2,283,028,855.52 1,866,617,336.37 2,519,799,547.29 2,110,216,135.62
34. Business tax and surcharges
Unit: RMB
Item Reporting Period Same period of last year
Business tax 7,500.00 22,650.00
Urban maintenance and construction
2,649,728.73 4,424,215.49
tax
Education Surcharge 1,892,413.41 3,185,948.00
House property tax 4,169,245.49
Land use tax 2,976,381.90
Stamp tax 894,177.60
Vehicle and vessel tax 2,280.00
Other taxes 413,516.46
Total 13,005,243.59 7,632,813.49
According to “Notice of ‘VAT Accounting Treatment’ Issued by Ministry of Finance” (Finance and
Accounting[2016] No.22), after full trial for changing business tax to VAT, the name of “business tax and
surcharges” was changed to “tax and surcharges”, which was for calculating consumption tax, urban maintenance
and construction tax, and resources tax, education surcharge, house property tax, land use tax, vehicle and vessel tax
and stamp tax, and other related taxes in enterprise’s business activities.
35. Sales expenses
Unit: RMB
Item Reporting Period Same period of last year
Office expenses 18,933,214.19 21,201,667.69
Employee’s remuneration 28,799,684.22 28,684,358.57
Sales promotional expense 9,370,719.41 9,218,580.00
Three guarantees 39,799,196.44 30,238,223.49
Transport fees 6,837,099.50 8,414,005.85
Other 229,664.03 365,510.11
Total 103,969,577.79 98,122,345.71
36. Administrative expenses
Unit: RMB
Item Reporting Period Same period of last year
Office expenses 17,890,984.51 19,693,941.37
Employee’s remuneration 97,316,215.78 89,702,808.14
Depreciation and amortization 15,942,006.73 20,448,433.20
Research and development expense 53,319,103.98 37,769,695.87
Transport fees 2,966,033.22 2,948,275.12
Repair charge 4,796,798.73 5,269,797.93
Taxes 8,605,279.72
Safety expenses 1,645,670.24 1,737,669.77
Other 13,705,400.79 11,503,014.31
Total 207,582,213.98 197,678,915.43
37. Financial expenses
Unit: RMB
Item Reporting Period Same period of last year
Interest expenses 1,220,678.60 1,183,262.47
Less: Interest income 5,446,142.49 7,372,960.51
Exchange net profit or loss -6,491,112.12 -6,135,135.67
Other -825,589.07 -3,398,951.29
Total -11,542,165.08 -15,723,785.00
38. Asset impairment loss
Unit: RMB
Item Reporting Period Same period of last year
I. Bad debt loss -554,826.22 6,001,727.18
II. Inventory falling price loss 38,035,521.66 41,250,448.16
Total 37,480,695.44 47,252,175.34
39. Gains on the changes in the fair value
Unit: RMB
Item Reporting Period Same period of last year
Financial assets measured by fair value and the
changes be included in the current profits and -109,642.19 -109,642.19
losses
Total -109,642.19 -109,642.19
40. Investment income
Unit: RMB
Item Reporting Period Same period of last year
Long-term equity investment income accounted
236,925.27 670,328.77
by equity method
Investment income received from disposal of
financial assets measured by fair value and the
294,760.70 594,434.83
changes be included in the current profits and
losses during holding period
Investment income received from holding of
2,833,250.00 6,547,113.40
available-for-sale financial assets
Investment income from disposal of bank
364,000.00 468,547.94
financial products
Investment income received from disposal of
399,809.11
securities financial products
Financing security gains 839,681.00
Total 4,128,745.08 9,120,105.94
Current accruals reduce by 54.73% compared with the previous period, mainly are dividends of Jiangsu Bank
of the previous period. Current accruals have not been allocated.
41. Non-operating gains
Unit: RMB
Item Reporting Period Same period of last Recorded in the
year amount of the
non-recurring gains
and losses
Total gains from disposal of non-current
6,445,469.06 298,236.45 6,445,469.06
assets
Including: Gains from disposal of fixed
6,445,469.06 298,236.45 6,445,469.06
assets
Insurance compensation 7,948,135.65 11,903,636.62 7,948,135.65
Penalty income 357,156.87 1,133,046.55 357,156.87
Government subsidies 157,649.63 163,851.65 157,649.63
Income from disposal of current assets 264,992.00 539,523.00 264,992.00
Other 428,989.26 9,974.29 428,989.26
Total 15,602,392.47 14,048,268.56 15,602,392.47
Lists of government subsidies
Unit: RMB
Item Reporting Period Same period of last Related to the
year assets/ income
The central budget investment plans Related to the
2,000,000.00 3,000,000.00 income
Special fund for industrial development Related to the
500,000.00 income
Special fund for Promoting the
Related to the
transformation of industrial economy steady
income
growth 1,250,000.00 6,510,000.00
The mayor quality award Related to the
500,000.00 income
Stabilization subsidy Related to the
1,928,234.75 income
Science and Technology Progress Award Related to the
30,000.00 income
Talent development funds Related to the
80,000.00 184,000.00 income
Other science and technology project Related to the
allocations 130,000.00 income
Related to the
Other incentives and subsidies 615,527.28 485,263.00 income
Compensation for demolition 665,973.62 665,973.62 Related to the assets
Famous brand subsidy Related to the
300,000.00 income
R & D and industrialization of electric
Related to the assets
non-road diesel engine 398,400.00 398,400.00
Industry-university-institute cooperation Related to the
subsidy 150,000.00 income
Association subsidy Related to the
60,000.00 income
Total 7,948,135.65 11,903,636.62
42. Non-operating expenses
Unit:
RMB
Item Reporting Period Same period of last Recorded in the
year amount of the
non-recurring gains
and losses
Loss on disposal of non-current assets 191,440.80 86,306.84 191,440.80
Including: Loss on disposal of fixed assets 191,440.80 86,306.84 191,440.80
Donation 310,000.00 260,000.00 310,000.00
The flood control security fund 2,468,397.34
Loss on disposal of current assets 9,640,304.91 4,489,449.93 9,640,304.91
Other 587,436.12 1,206,723.88 587,436.12
Total 10,729,181.83 8,510,877.99 10,729,181.83
43. Income tax expense
(1) Lists of income tax expense
Unit: RMB
Item Reporting Period Same period of last year
Current income taxes 11,149,938.42 16,562,132.69
Deferred income taxes 51,301.46 122,332.44
Total 11,201,239.88 16,684,465.13
(2) Adjustment process of accounting profit and income tax expense
Unit: RMB
Item Reporting Period
Total profits 74,917,909.15
Current income tax expense accounted by tax and
11,237,686.38
relevant regulations
Influence of different tax rate suitable to subsidiary -281,919.26
Influence of non-taxable income -440,987.50
Influence of not deductable costs, expenses and losses 3,521,373.78
Influence of deductable losses of deferred income tax
-514,793.92
assets derecognized used in previous period
Influence of deductible temporary difference or
deductible losses of deferred income tax assets 494,592.90
derecognized in Reporting Period.
Tax preference incurred from qualified expense -2,814,712.50
Income tax expense 11,201,239.88
44. Supplementary information to cash flow statement
(1) Other cash received relevant to operating activities
Unit: RMB
Item Reporting Period Same period of last year
Subsidies and grants 6,883,762.03 10,839,263.00
Cash received from other current account 2,742,256.68 3,502,832.73
Interest income 5,446,142.49 7,372,960.51
Total 15,072,161.20 21,715,056.24
(2) Other cash paid relevant to operating activities
Unit: RMB
Item Reporting Period Same period of last year
Sale expense paid into cash 50,525,203.20 46,608,291.02
Management expense paid into cash 48,853,500.64 39,027,007.46
Commission Expenses 585,735.15 701,704.94
Other 876,066.51 1,970,121.12
Total 100,840,505.50 88,307,124.54
45. Supplementary information to cash flow statement
(1) Information of net profit to net cash flows generated from operating activities
Unit: RMB
Supplementary materials Reporting Period Last period
1. Reconciliation of net profit to net cash flows generated from
-- --
operating activities
Net profit 63,716,669.27 72,484,335.89
Add: Provision for impairment of assets 37,480,695.44 47,252,175.34
Depreciation of fixed assets, of oil-gas assets, of productive biological
81,826,261.97 85,201,281.00
assets
Amortization of intangible assets 4,942,465.02 4,216,562.60
Losses on disposal of fixed assets, intangible assets and other long-term
-6,254,028.26 -211,929.61
assets (gains by \"-\")
Losses from variation of fair value (gains by \"-\") 109,642.19
Financial expenses (gains by \"-\") 1,220,678.60 1,211,337.47
Investment losses (gains by \"-\") -4,128,745.08 -9,120,105.94
Decrease in deferred income tax assets (increase by \"-\") 51,301.46 122,332.44
Decrease in inventory (increase by \"-\") -134,791,967.74 59,048,257.34
Decrease in accounts receivable from operating activities (increase by
-70,568,271.81 -142,246,349.15
\"-\")
Increase in payables from operating activities (decrease by \"-\") 138,226,784.07 16,574,597.23
Other -12,247,898.90 -6,715,253.85
Net cash flows generated from operating activities 99,473,944.04 127,926,882.95
2. Investing and financing activities that do not involving cash receipts
-- --
and payment:
3. Net increase in cash and cash equivalents -- --
Closing balance of cash 583,278,129.09 526,716,238.21
Less: Opening balance of cash 526,716,238.21 464,761,820.50
Net increase in cash and cash equivalents 56,561,890.88 61,954,417.71
(2) Cash and cash equivalents
Unit: RMB
Item Closing balance Opening balance
I. Cash 583,278,129.09 526,716,238.21
Including: Cash on hand 314,905.29 252,373.65
Bank deposit on demand 582,963,123.80 526,463,864.56
Other monetary funds on demand 100.00
II. Closing balance of cash and cash equivalents 583,278,129.09 526,716,238.21
46. The assets with the ownership or use right restricted
Unit: RMB
Item Closing book value Restricted reason
Monetary capital 87,425,672.93 Bank acceptance draft deposited in the margin
Houses and buildings 6,973,427.38 Pledge for bank loan
Land use right 19,469,465.00 Pledge for bank loan
Total 113,868,565.31
47. Foreign currency monetary items
Unit: RMB
Item Closing foreign currency balance Exchange rate Closing convert to RMB balance
Monetary capital
Including: USD 13,601,122.55 6.937 94,350,987.13
HKD 162,384.51 0.8945 145,252.94
SGD 54,427.95 4.7995 261,226.95
Account receivable
Including: USD 5,052,495.61 6.937 35,049,162.08
VIII. Changes of merge scope
N/A
IX. Equity in other entities
1. Equity in subsidiary
(1) The structure of the enterprise group
Main Holding percentage (%)
Registration Nature of Way of
Name of the subsidiary operating Directly Indirectly
place business gaining
place
Changchai Wanzhou Diesel
Chongqing Chongqing Industry 60.00% Set-up
Engine Co., Ltd.
Changzhou Changchai
Changzhou Changzhou
Benniu Diesel Engine Industry 99.00% 1.00% Set-up
City City
Fittings Co., Ltd.
Changzhou Housheng Changzhou Changzhou
Service 100.00% Set-up
Investment Co., Ltd. City City
Changzhou Changchai
Changzhou Changzhou
Housheng Agricultural Industry 70.00% 25.00% Set-up
City City
Equipment Co., Ltd.
(2) Significant not wholly owned subsidiary
Unit: RMB
Name of the subsidiary Shareholding The profits and Declaring Balance of
proportion of losses arbitrate to dividends minority
minority the minority distribute to shareholder at
shareholder shareholders minority closing period
shareholder
Changchai Wanzhou Diesel Engine
40.00% 1,073,814.32 18,398,947.57
Co., Ltd.
Changzhou Changchai Housheng
5.00% 102,958.78 368,279.00
Agricultural Equipment Co., Ltd.
(3) The main financial information of significant not wholly owned subsidiary
Unit: RMB Thousand Yuan
Name Closing balance Opening balance
of the current Non-curr Total Current Non-cur Total current Non-curr Total Current Non-cur Total
subsidia assets ent assets assets liabilities rent liabilities assets ent assets assets liabilities rent liabilities
ry liability liability
Changc
hai
Wanzho
43,462,83 27,671,59 71,134,43 25,137,06 25,137,06 41,770,95 28,631,83 70,402,78 27,089,95 27,089,95
u Diesel
6.42 7.38 3.80 4.88 4.88 3.46 0.17 3.63 0.52 0.52
Engine
Co.,
Ltd.
Changz
hou
Changc
hai
Houshe
29,743,16 372,868.7 30,116,03 22,750,45 22,750,45 16,619,12 440,565.9 17,059,69 11,753,28 11,753,28
ng
4.98 0 3.68 3.64 3.64 7.25 6 3.21 8.83 8.83
Agricult
ural
Equipm
ent Co.,
Ltd.
Unit: RMB Thousand Yuan
Reporting Period Same period of last year
Name of the Total Total
Operation Operating Operation Operating
subsidiary Net profit comprehensive Net profit comprehensive
revenue cash flow revenue cash flow
income income
Changchai
Wanzhou
Diesel 66,035,872.53 2,684,535.81 2,684,535.81 5,461,701.22 99,618,978.42 3,763,210.92 3,763,210.92 6,750,035.77
Engine Co.,
Ltd.
Changzhou
Changchai
Housheng
20,425,666.48 2,059,175.66 2,059,175.66 1,114,872.81 5,594,781.07 -2,474,819.32 -2,474,819.32 -5,350,193.17
Agricultural
Equipment
Co., Ltd.
2. Equity in joint venture or associated enterprise
(1) Significant joint venture arrangement or associated enterprise
Proportion Accounting
Directly Indirectly treatment of
the
Main Nature
Registration investment
Name operating of
place of joint
place business
venture or
associated
enterprise
Changzhou Fuji Changchai Changzhou Changzhou Equity
Industry 33.00%
Robin Gasoline Engine Co., Ltd. City City method
(2) Main financial information of significant associated enterprise
Unit: RMB
Item Changzhou Fuji Changchai Robin Gasoline Engine Co.,
Ltd.
Closing balance/ Reporting Opening balance /last period
Period
Current assets 70,478,877.04 70,218,388.26
Non-current assets 9,739,238.70 11,465,367.78
Total assets 80,218,115.74 81,683,756.04
Current liabilities 16,562,872.57 11,746,468.25
Non-current liability 7,000,000.00
Total liabilities 16,562,872.57 18,746,468.25
Equity attributable to owners of the Company 63,655,243.17 62,937,287.79
Portion of net assets calculated according to
21,006,230.03 20,769,304.76
proportion of shareholdings
Book value of investment to associated enterprise 21,006,230.03 20,769,304.76
Operation revenue 154,944,857.08 139,148,868.35
Net profit 1,315,524.51 2,138,273.61
Total comprehensive income 1,315,524.51 2,138,273.61
Equity received from associated enterprises in
361,000.00
Reporting Period
X. The risk related 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 analyse 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 was referred to their risk of incurring capital shortage when performing settlement obligation in
the way of cash payment or other financial assets. The policies of the Company were 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
department 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 have 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 was referred to risk of the fair value or future cash flow of financial instrument changed due to
the change of market interest risk.
2. Foreign exchange risk
Foreign exchange rate risk is referred to the risk incurred form the change of exchange rate. The export sales of
the Company mainly was market of Southeast Asia region which settled by USD. Though the Company’s export
business receiving part of payment for goods in advance, but the balance had 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 the fair value
1. Closing fair value of assets and liabilities calculated by fair value
Unit: RMB
Closing fair value
Item Fair value Fair value Fair value
measurement measurement measurement Total
items at level 1 items at level 2 items at level 3
I. Consistent fair value measurement -- -- -- --
(I) Financial assets calculated by fair value
and changes record into current profits or
losses
1. Trading financial assets
Transactional financial assets
Equity tool investment 812,872,500.00 812,872,500.00
(II) Available-for-sale financial assets 812,872,500.00 812,872,500.00
Equity tool investment 812,872,500.00 812,872,500.00
Total assets of consistent fair value
-- -- -- --
measurement
2. Market price recognition basis for consistent and inconsistent fair value measurement items at level 1
Tradable financial assets and available for sale financial assets of the Company were funds and shares with the
closing price as the basis of fair value calculation at period-end.
XII. Related party and related Transaction
1. Information related to parent company of the Company
Parent company’s Parent company’s
Registration Nature of Registered
Name of parent company ownership of the voting right of the
place business capital
Company Company
Changzhou Government
State-owned Assets Changzhou
30.43% 30.43%
Supervision and City
Administration Commission
The actual controller of the Company is Changzhou Government State-owned Assets Supervision and
Administration Commission. At 31 Dec. 2016, it held 30.43% shares of the Company (state owned shares).
Final control of the Company is Changzhou Government State-owned Assets Supervision and Administration
Commission.
2. Subsidiaries of the Company
The details of subsidiaries of the Company please refer to equity in other entities in note to financial statements.
3. Information on the joint ventures and associated enterprises of the Company
The details of the joint ventures and associated enterprises of the Company please refer to equity in other
entities in note to financial statements.
4. The Company had no other related party.
N/A
5. The Company had no other related transaction need to be disclosed.
N/A
XIII. Commitments and contingency
1. Significant commitments
As of 31 Dec. 2016, there were no significant commitments to be disclosed.
2. Contingency
(1) Significant contingency at balance sheet date
Litigation and arbitration in the Reporting Period
Name of the entity Date of accepted Name of the litigation or Amount involved Remark
arbitration institutions (RMB ten
thousand)
Shandong Hongli Group Co., Ltd. 2001.6.27 1,436.00 Under the
Changzhou Intermediate
bankruptcy and
People's Court
liquidation
Beijing Beiqi Changsheng 2013.8.12 Beijing Shunyi District 806.36 Finished
Automobile Co., Ltd. People's Court
Total 2242.36
Notes to the case:
(1) About the lawsuit case of Shandong Hongli Group Co., Ltd., the accused company owed accumulatively
RMB14.36 million to the Company. The Company sued to Changzhou Intermediate People’s Court in 2001 and sued
for compulsory execution in April, 2002. Currently, the defendant has started the bankruptcy procedure. The
aforesaid payment has arranged for the full provision for bad debts.
(2) As the litigation of Beijing Beiqi Changsheng Automobile Co., Ltd., the company owned our Company 8.0636
million; Beijing Shunyi District People's Court accepted the case on 12 Aug. 2013. Under the auspices, two sides
concluded mediation agreement. Beiqi Changsheng pays RMB 8,063,600.00 to the Company by stage. Although the
Company bombarded many times, Beijing Beiqi Changsheng Automobile Co., Ltd did not perform its obligation of
payment in line with mediation agreement. As of the end of Reporting Period, the Company had paid the full
payment.
(2) The Company does not have important contingency which is required to be disclosed, explanation shall
also be given.
N/A
XIV. Events after balance sheet date
1. Profit distribution
Unit: RMB
Planning allocation of profits or dividends 16,841,229.78
2. Business merger
The Company held the interim meeting of board of directors on 26 Aug. 2016. The meeting reviewed and
approved the Proposal about Receiving 67% of Stock Rights of Changzhou Fuji Changchai Robin Gasoline Engine
Co., Ltd. Held by Fuji Heavy Industries Ltd.. After merger is completed, the Company will hold 100% of stock
rights of Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. and Changzhou Fuji Changchai Robin
Gasoline Engine Co., Ltd. will be transferred to domestic enterprise from Sino-Foreign joint venture. Changzhou
Fuji Changchai Robin Gasoline Engine Co., Ltd. completed the industrial and commercial registration of alteration
related to stock rights transfer and got Business License changed by Market Supervision Commission of Changzhou
National High-Tech Industrial Development Area (New North Area) on 20 Jan. 2017. The registered capital is RMB
37,250,000, scope of business comprises small general gasoline engine and concerned equipment (including
agricultural machinery, engineering machinery, water pump unit and small generator unit); production, processing,
research, development, sales, technical consultation of relevant components and spare parts. Changzhou Fuji
Changchai Robin Gasoline Engine Co., Ltd. will be added into the scope of consolidated statements of the Company
since January 2017 and the stock rights transfer will have certain influence on the profit and loss of the Company in
2017.
XV. Other significant events
1. Segment information
Due to the operation scope of the Company and subsidiaries were similar, the Company conduct common
management, did not divide business unit, so the Company only made single branch report.
2. Other important transactions and events have an impact on investor’s decision-making
As of the approval issue date of financial statements, the Company did not complete the liquidation procedures
of 2016 annual enterprise income tax.
XVI. Notes of main items in the financial statements of the Company
1. Accounts receivable
(1) Accounts receivable classified by category
Unit: RMB
Closing balance
Book balance Bad debt provision
Category
Amount Proportion Amount Withdrawal Book value
(%) proportion
Accounts receivable
with insignificant
single amount for
which bad debt 37,894,677.78 7.17% 31,210,576.96 82.36% 6,684,100.82
provision separately
accrued
Accounts receivable
withdrawal of bad
debt provision of by 490,383,771.93 92.78% 188,267,201.85 38.39% 302,116,570.08
credit risks
characteristics:
Accounts receivable
with insignificant
single amount for
which bad debt 276,298.29 0.05% 276,298.29 100.00%
provision separately
accrued
Total 528,554,748.00 100.00% 219,754,077.10 41.58% 308,800,670.90
Accounts receivable with significant single amount for which bad debt provision separately accrued at the
period-end
Unit: RMB
Withdrawal Withdrawal
Account receivable Book balance Bad debt provision
proportion reason
Customer 1 Difficult to
1,902,326.58 1,902,326.58 100.00%
recover
Customer 2 Difficult to
6,215,662.64 6,202,854.45 99.79%
recover
Customer 3 Estimated
4,319,339.17 2,214,607.75 51.27%
difficult to recover
Customer 4 Estimated
3,279,100.00 3,279,100.00 100.00%
difficult to recover
Customer 5 Estimated
2,133,377.01 2,133,377.01 100.00%
difficult to recover
Customer 6 Difficult to
5,359,381.00 5,359,381.00 100.00%
recover
Customer 7 Difficult to
2,584,805.83 2,584,805.83 100.00%
recover
Customer 8 Difficult to
1,714,646.59 1,714,646.59 100.00%
recover
Customer 9 Estimated
10,386,038.96 5,819,477.75 56.03%
difficult to recover
Total 44,942,468.52 35,630,157.18
In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
Unit: RMB
Closing balance
Aging
Account receivable Bad debt provision Withdrawal proportion
Within 1 year 301,185,313.00 6,023,706.26 2.00%
1 to 2 years 2,835,235.05 141,761.75 5.00%
2 to 3 years 1,709,857.97 256,478.70 15.00%
3 to 4 years 527,790.44 158,337.13 30.00%
4 to 5 years 6,096,643.65 3,657,986.19 60.00%
Over 5 years 178,028,931.82 178,028,931.82 100.00%
Total 490,383,771.93 188,267,201.85
(2) Bad debt provision withdrawal, reversed or recovered in the report period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB 5,287,674.00; the
amount of the reversed or collected part during the Reporting Period was of RMB 7,733,853.77.
(3) The actual write-off accounts receivable
Item Written-off amount
Changge Shiying Machinery Co., Ltd. 457,153.57
(4) Top five of account receivable of closing balance collected by arrears party
The total amount of top five of account receivable of closing balance collected by arrears party was RMB
192,749,341.51, 36.47% of total closing balance of account receivable, the relevant closing balance of bad debt
provision withdrawn was RMB 20,942,174.47.
2. Other accounts receivable
(1) Other account receivable classified by category
Unit: RMB
Closing balance
Book balance Bad debt provision
Category
Amount Proportion Amount Withdrawal Book value
(%) proportion
Other accounts
receivable with
insignificant single
amount for which bad 2,853,188.02 8.56% 2,853,188.02 100.00%
debt provision
separately accrued
Other accounts
receivable withdrawn
bad debt provision 27,799,389.26 83.40% 24,104,715.33 86.71% 3,694,673.93
according to credit
risks characteristics
Other accounts
receivable with
insignificant single
amount for which bad 2,679,801.13 8.04% 2,679,801.13 100.00%
debt provision
separately accrued
Total 33,332,378.41 100.00% 29,637,704.48 88.92% 3,694,673.93
Other accounts receivable with significant single amount for which bad debt provision separately accrued at the
period-end
Unit: RMB
Bad debt Withdrawal Withdrawal
Other accounts receivable Book balance
provision proportion (%) reason
Changchai Group Import & Export Difficult to
2,853,188.02 2,853,188.02 100.00%
Co., Ltd. recover
Total 2,853,188.02 2,853,188.02 -- --
In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:
Unit: RMB
Closing balance
Aging Withdrawal proportion
Other accounts receivable Bad debt provision
(%)
Within 1 year 3,175,600.75 63,512.01 2.00%
1 to 2 years 109,930.77 5,496.54 5.00%
2 to 3 years 60,114.33 9,017.15 15.00%
3 to 4 years 600,705.43 180,211.63 30.00%
4 to 5 years 16,399.95 9,839.97 60.00%
Over 5 years 23,836,638.03 23,836,638.03 100.00%
Total 27,799,389.26 24,104,715.33
(2) Bad debt provision withdrawal, reversed or recovered in the report period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB 707,128.41; the
amount of the reversed or collected part during the Reporting Period was of RMB 000.
(3) The actual write-off other accounts receivable
N/A
(4) Other account receivable classified by account nature
Unit: RMB
Nature Closing balance Opening balance
Guarantee and cash pledge 4,200.00 4,200.00
Unit current amount 16,917,626.21 17,463,134.91
Petty cash &employee borrowing 1,056,185.37 1,560,886.41
Other 15,354,366.83 14,787,717.76
Total 33,332,378.41 33,815,939.08
(5) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party
Unit: RMB
Bad debt
Name of the entity Nature Closing balance Aging Proportion%
provision
Changzhou Compressor Co., Intercourse
2,940,000.00 Over 5 years 8.82% 2,940,000.00
Ltd. funds
Changchai Group Import & Intercourse
2,853,188.02 Over 5 years 8.56% 2,853,188.02
Export Co., Ltd. funds
Changzhou New District Intercourse
1,626,483.25 Over 5 years 4.88% 1,626,483.25
Accounting Center funds
Intercourse
OEM Group Settlement Center 1,140,722.16 Over 5 years 3.42% 1,140,722.16
funds
Changzhou Xingsheng Intercourse Within 1
496,450.56 1.49% 9,929.01
Property Management Co., Ltd. funds year
Total -- 9,056,843.99 -- 27.17% 8,570,322.44
3. Long-term equity investment
Unit: RMB
Closing balance Opening balance
Item Book balance Depreciation Book value Book balance Depreciation Book value
reserves reserves
Investment to the
184,466,500.00 184,466,500.00 184,466,500.00 184,466,500.00
subsidiary
Investment to joint
ventures and 21,050,412.53 44,182.50 21,006,230.03 20,813,487.26 44,182.50 20,769,304.76
associated enterprises
Total 205,516,912.53 44,182.50 205,472,730.03 205,279,987.26 44,182.50 205,235,804.76
(1) Investment to the subsidiary
Unit: RMB
Withdrawn
impairment Closing
Opening Closing provision balance of
Investee Increase Decrease
balance balance in the impairment
Reporting provision
Period
Changchai Wanzhou
Diesel Engine Co., 51,000,000.00 51,000,000.00
Ltd.
Changzhou 96,466,500.00 96,466,500.00
Changchai Benniu
Diesel Engine
Fittings Co., Ltd.
Changzhou
Housheng Investment 30,000,000.00 30,000,000.00
Co., Ltd.
Changzhou
Changchai Housheng
7,000,000.00 7,000,000.00
Agricultural
Equipment Co., Ltd.
Total 184,466,500.00 184,466,500.00
(2) Investment to joint ventures and associated enterprises
Unit: RMB
Increase/decrease in Reporting Period
Investme
Closing
nt profit Withdraw
Additiona Adjustment Change Declaratio balance of
Opening Negative and loss n Closing
Investee l of other s of n of cash Othe impairme
balance investme recognize impairme balance
investme comprehensi other dividends r nt
nt d under nt
nt ve income equity or profits provision
the equity provision
method
I. Associated Enterprises
II. Joint Ventures
Changzhou
Fuji
Changchai
20,769,304.7 236,925.2 21,006,230.0
Robin
6 7
Gasoline
Engine Co.,
Ltd.
Beijing
Tsinghua
Xingye
Industrial 44,182.50 44,182.50 44,182.50
Investment
Manageme
nt Co., Ltd.
20,813,487.2 236,925.2 21,050,412.5
Subtotal 44,182.50
6 7
Total 20,813,487.2 236,925.2 21,050,412.5
44,182.50
6 7
4. Revenues and operating costs
Unit: RMB
Item Reporting Period Same period of last year
Revenue Operating costs Revenue Operating costs
Main operations 2,238,155,721.58 1,856,049,114.70 2,495,008,065.10 2,115,049,779.90
Other operations 23,268,342.48 16,348,177.30 21,857,546.18 14,537,700.98
Total 2,261,424,064.06 1,872,397,292.00 2,516,865,611.28 2,129,587,480.88
5. Investment income
Unit: RMB
Item Reporting Period Same period of last
year
Long-term equity investment income accounted by equity method 236,925.27 670,328.77
Investment income received from holding of available-for-sale
2,673,250.00 5,829,840.00
financial assets
Investment income from disposal of bank financial products 364,000.00 468,547.94
Financing security gains 839,681.00
Total 3,274,175.27 7,808,397.71
XVII. Supplementary materials
1. Items and amounts of extraordinary gains and losses
Unit: RMB
Item Amount Explanation
Gains/losses on the disposal of non-current assets 6,254,028.26
Tax rebates, reductions or exemptions due to approval
7,948,135.65
beyond authority or the lack of official approval documents
Included in current profit and loss against the non-financial
1,340,364.82
enterprises occupation fee funds collected
Gain/loss from change of fair value of transactional assets
and liabilities, and investment gains from disposal of
transactional financial assets and liabilities and 1,058,569.81
available-for-sale financial assets, other than valid hedging
related to the Company’s common businesses
Other non-operating income and expenses other than the
-9,328,953.27
above
Less: Income tax effects 1,294,119.50
Minority interests effects 273,695.88
Total 5,704,329.89 --
2. Return on equity (ROE) and earnings per share (EPS)
EPS (RMB/share)
Profit as of Reporting Period Weighted average ROE (%)
EPS-basic EPS-diluted
Net profit attributable to common
3.00% 0.11 0.11
shareholders of the Company
Net profit attributable to common
shareholders of the Company after
2.73% 0.10 0.10
deduction of non-recurring profit
and loss
Section XII Documents Available for Reference
Documents available for reference include the following:
1. This Annual Report carrying the signature of the Board Chairman;
2. The financial statements signed and sealed by the legal representative, the accounting head for
this Report and the head of the accounting department;
3. The original Auditor’s Report signed and sealed by the CPAs, as well as sealed by the CPAs
firm;
4. The originals of all the Company’s documents and announcements which were disclosed on
Securities Time and Ta Kung Pao (HK) (newspapers designated by the CSRC for information
disclosure) during this Reporting Period; and
5. The Articles of Association of the Company.
The above-mentioned documents available for reference are all kept in the Secretariat of the
Board of Directors of the Company.
This Annual Report and its abstract have been prepared in both Chinese and English. Should
there be any discrepancies or misunderstandings between the two versions, the Chinese version shall
prevail.
The Board of Directors
Changchai Company, Limited
April 13, 2017
