The 2015 Annual Report of Changchai Company, Limited
CHANGCHAI COMPANY, LIMITED
THE 2015 ANNUAL REPORT
April 2016
1
The 2015 Annual Report of Changchai Company, Limited
Section I Important Statements, Contents & Terms
The Board of Directors, the Supervisory Committee as well as the directors, supervisors and
senior management staff of Changchai Company, Limited (hereinafter referred to as the “Company”)
warrant that this Report is factual, accurate and complete without any false information, misleading
statements or material omissions. And they shall be jointly and severally liable for that.
Mr. Xue Guojun, company principal, Mr. He Jianguang, chief of the accounting work, and Mr.
Jiang He, chief of the accounting organ (chief of accounting), hereby confirm 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.
The future plans and some other forward-looking statements carried in this Report shall not be
considered as virtual promises of the Company to investors. And investors are kindly reminded to
pay attention to possible risks.
The Company’s preliminary plan for profit distribution upon review and approval at the board
meeting: Based on the total shares of 561,374,326, a cash dividend of RMB0.23 (tax included) will
be distributed to all the shareholders for every 10 shares that they hold. No bonus shares will be
granted and no capital reserves will be turned into share capital.
This Report is prepared in both Chinese and English. Should there be any understanding
discrepancy between the two versions, the Chinese version shall prevail.
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The 2015 Annual Report of Changchai Company, Limited
Contents
Section I Important Statements, Contents & Terms................................................................................................... 2
Section II Company Profile & Financial Highlights.................................................................................................. 5
Section III Business Profile ....................................................................................................................................... 8
Section IV Discussion & Analysis by the Management ............................................................................................ 9
Section V. Significant Events................................................................................................................................... 20
Section VI. Change in Shares & Shareholders ........................................................................................................ 28
Section VII. Preference Shares ................................................................................................................................ 32
Section VIII. Directors, Supervisors, Senior Management Staff & Employees ...................................................... 32
Section IX. Corporate Governance.......................................................................................................................... 36
Section X. Financial Report..................................................................................................................................... 41
Section XI. Documents Available for Reference ................................................................................................... 120
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The 2015 Annual Report of Changchai Company, Limited
Terms
Term Refers to Specific meaning
Company, the Company,
Refers Changchai Company, Limited
Changchai
Changchai Benniu Refers Chuangzhou Changchai Benniu Diesel Engine Fittings Co., Ltd.
Changchai Wanzhou Refers Changchai Wanzhou Diesel Engine Co., Ltd.
Housheng Investment Refers Changzhou Housheng Investment Co., Ltd.
Housheng Agricultural
Refers Changzhou Changchai Housheng Agricultural Equipment Co., Ltd.
Equipment
Yuan, Ten thousand Yuan Refers RMB Yuan, RMB Ten thousand
Reporting period Refers 1 Jan. 2015-31 Dec. 2015
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The 2015 Annual Report of Changchai Company, Limited
Section II Company Profile & Financial Highlights
I. Basic information of the Company
Stock abbr. Changchai A, Changchai B Stock code 000570, 200570
Stock abbr. after change (if any) No changes
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 常柴股份有限公司
Abbr. of Company name in Chinese 苏常柴
Company name in English (if any) CHANGCHAI COMPANY, LIMITED
Abbr. of Company name in English (if any) CHANGCHAI CO., LTD.
Legal representative Xue Guojun
Registered address 123 Huaide Middle Road, Changzhou, Jiangsu, China
Zip code 213002
Office address 123 Huaide Middle Road, Changzhou, Jiangsu, China
Zip code 213002
Company website http://www.changchai.com.cn
Email address cctqm@public.cz.js.cn
II. Contact information
Company Secretary Securities Affairs Representative
Name Shi Jianchun He Jianjiang
123 Huaide Middle Road, Changzhou, 123 Huaide Middle Road, Changzhou,
Contact address
Jiangsu, China Jiangsu, China
Tel. (86)519-86610041 (86)519-68683155
Fax (86)519-86630954 (86)519-86630954
E-mail address ccsjc@changchai.com cchjj@changchai.com
III. About information disclosure and where this Report is placed
Newspapers designated by the Company for information disclosure Securities Times, Ta Kung Pao (HK)
Internet website designated by CSRC for disclosing this Report http://www.cninfo.com.cn
Where this Report is placed Board Secretariat
IV. Changes in the registered information
Organizational code 91320400134792410W
Changes in main business since listing (if any) No changes
Changes of controlling shareholder (if any) 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
Signing accountants Wang Wenkai, He Taifeng
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The 2015 Annual Report of Changchai Company, Limited
Sponsor engaged by the Company to conduct consistent supervision during the reporting period
□ Applicable √ Inapplicable
Financial consultant engaged by the Company to conduct consistent supervision during the reporting period
□ Applicable √ Inapplicable
VI. Accounting and financial highlights
Does the Company adjust retrospectively or restate the accounting data of previous years due to changes in the
accounting policy or correction of accounting errors?
□ Yes √ No
Increase/decrea
se of current
2015 2014 2013
year over last
year
Operating revenues (RMB Yuan) 2,519,799,547.29 2,489,792,063.33 1.21% 2,927,593,052.78
Net profits attributable to
shareholders of the Company (RMB 71,102,792.49 64,202,144.29 10.75% 75,712,361.04
Yuan)
Net profits attributable to
shareholders of the Company after
61,588,462.29 58,685,034.57 4.95% 71,950,142.51
extraordinary gains and losses (RMB
Yuan)
Net cash flows from operating
127,926,882.95 -51,507,355.52 —— 31,406,848.48
activities (RMB Yuan)
Basic EPS (RMB Yuan/share) 0.13 0.11 18.18% 0.13
Diluted EPS (RMB Yuan/share) 0.13 0.11 18.18% 0.13
Weighted average ROE (%) 3.53% 3.28% 0.25% 4.14%
Increase/decrea
As at 31 Dec. As at 31 Dec. se of current As at 31 Dec.
2015 2014 year-end than 2013
last year-end
Total assets (RMB Yuan) 3,232,406,102.20 3,166,783,758.18 2.07% 3,082,340,149.65
Net assets attributable to
shareholders of the Company (RMB 2,002,910,311.01 1,936,936,835.27 3.41% 1,809,577,062.45
Yuan)
VII. Differences of the accounting data under the domestic and the overseas accounting
standards
1. Differences of the net profits and the net assets disclosed in the financial reports prepared under the
international and the Chinese accounting standards
□ Applicable √ Inapplicable
No such differences for the reporting period.
2. Differences of the net profits and the net assets disclosed in the financial reports prepared under the
overseas and the Chinese accounting standards
□ Applicable √ Inapplicable
No such differences for the reporting period.
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The 2015 Annual Report of Changchai Company, Limited
VIII. Financial highlights by quarter
Unit: RMB Yuan
Q1 Q2 Q3 Q4
Operating revenues 650,305,530.50 709,590,370.19 815,273,308.97 344,630,337.63
Net profits attributable to shareholders of
17,279,138.61 20,284,260.57 36,184,587.95 -2,645,194.64
the Company
Net profits attributable to shareholders of
the Company after extraordinary gains and 15,137,500.97 20,573,118.31 35,546,486.10 -9,668,643.09
losses
Net cash flows from operating activities 1,795,087.91 44,932,653.21 48,916,342.35 32,282,799.48
Any material differences between the financial indicators above or their summations and those which have been
disclosed in quarterly or semi-annual reports?
□ Yes √ No
IX. Extraordinary gains and losses
√ Applicable □ Inapplicable
Unit: RMB Yuan
Item 2015 2014 2013 Note
Gains/losses on disposal of non-current assets
(including offset amount of asset impairment 211,929.61 118,901.99 568,054.78
provisions)
Governmental grants recorded into current gains and
losses (excluding those closely related to business of
11,903,636.62 10,344,073.62 2,022,736.01
the Company and granted at certain quotas or amounts
according to government’s standards)
Capital occupation charges on non-financial
enterprises that are recorded into current gains and 1,523,155.52 1,505,666.68 2,224,950.00
losses
Gains and losses on fair value changes of transactional
financial assets and liabilities & investment gains on
disposal of transactional financial assets and liabilities
1,793,021.58 572,812.70 439,841.66
as well as financial assets available for sale, except for
effective hedging related to normal business of the
Company
Impairment provision reversal for accounts receivable
1,879,038.74
on which impairment test is carried out separately
Non-operating income and expense other than above -4,109,778.32 -6,029,012.72 -1,918,603.81
Less: Income tax effects 1,747,894.80 995,341.14 1,236,496.89
Minority interests effects (after tax) 59,740.01 -8.59 217,301.96
Total 9,514,330.20 5,517,109.72 3,762,218.53 --
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in
the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Extraordinary Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said
explanatory announcement as a recurrent gain/loss item
□ Applicable √ Inapplicable
No such cases in the reporting period.
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The 2015 Annual Report of Changchai Company, Limited
Section III Business Profile
I. Main business during the 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 the main assets
1. Significant changes in the main assets
Main asset Reason for any significant change
Closing amount at RMB498,502,274.42, up 58.64% from opening
Notes receivable amount, mainly because the Company enhanced payment collection and
adopted notes more often for settlement with customers
Closing amount at RMB5,622,539.81, down 35.09% from opening
Other receivables amount, mainly because subsidiary Changchai Wanzhou recovered
guarantee deposit of RMB2 million in current period
Net closing amount at RMB60,304,691.41, up 90.06% from opening
Other current assets amount, mainly because of bank financial products purchased by the
Company in current period
2. Main assets overseas
□ Applicable √ Inapplicable
III. Core competitiveness analysis
1. Brand advantage
Incorporated in 1913, the Company has a history over 100 years, with its diesel engines well received both at
home and abroad.
The trademark of “Changchai” was the first among the production goods in the country to be recognized as a
“Famous Trademark of China”. In 2005, the single-cylinder diesel engines of the Company were among the first
to be titled as “Brandname Products of China”. In 2013, reviewed and approved by AQSIQ, the Company
produced for export had gained the qualification of exemption. In 2014, Changchai was awarded the honorary title
of “Y2012-Y2013 State-level Enterprise of Observing Contracts and Keeping Promise” and had been awarded the
title of “China Pacesetter Enterprise of Internal Combustion Engine and Accessories Manufacturing Industry” for
five years in a row. In 2015, the Company was honorably ranked among “the Demonstration Chinese Enterprises
in Export Quality and Safety”, was selected in “the Top One Hundred Chinese Enterprises in Engineering
Industry”, won as the leading brand in agricultural machinery industry in “Jing Geng” competition, and the
Company’s well-selling products, the 4G33TC, 3M78 and 4H11, respectively won the golden award among the
annual products in Chinese engineering industry, the golden award among accessories in Chinese agricultural
machinery, and the innovation award. For decades, the Company developed in a sound manner and cultivated the
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The 2015 Annual Report of Changchai Company, Limited
“Changchai” brand, a famous small diesel engine brand of China with independent intellectual property rights
2. Product advantage
Currently, the Company is mainly engaged in small power single-cylinder and multi-cylinder diesel engines.
It has a complete product range, a wide power level coverage, a high reputation and intellectual property rights for
its main products. It owns a state-level technical center, a post doctoral scientific research station and Jiangsu
Small-and Medium-Power Internal Combustion Engine Engineering Research Center. Quite a few of its
multi-cylinder diesel engines have passed the European Union EC certification and the America EPA certification.
Besides, it has the capability to develop and put into pass production products meeting the national emission
standard IV.
3. Sales network advantage
The Company has built up a sales service network covering the whole country. With 11 marketing units, 31
sales service centers, over 400 service locations and 600 cooperation maintenance stations, the service network
covering the major cities and the countryside, the Company is able to provide quality, efficient and timely services
for its customers.
Section IV Discussion & Analysis by the Management
I. Summary
In 2015, in face of multiple unfavorable factors such as the slowing-down macro-economy, a continuous
decrease in the gross output and sales volume in the diesel engine industry as well as the mounting pressure on
production safety and environmental protection, we carefully analyzed the market situation, beefed up the
adjustment to our product mix by various means, and seized opportunities in the domestic and overseas markets.
We also kept improving our equipment capability, increased the quality of our employees, strictly controlled our
product quality and enhanced management. As a result, we were able to deliver a good business performance,
which has further solidified our position in the diesel engine industry.
In 2015, we sold 907,700 units of various engines and machine sets and achieved sales revenues of
RMB2,519,799,500, almost the same with last year, of which 776,300 units of single-cylinder engines were sold,
down 6.58% from last year; and 131,400 units of multi-cylinder engines were sold, up 5.04% from last year,
maintaining a good development momentum. We exported 95,800 units of various engines and machine sets by
ourselves, generating an income of USD36.48 million. We achieved net profits of RMB71,102,800 attributable to
the shareholders of the Company, up 10.75% on a year-on-year basis.
In terms of single-cylinder engines, the Company launched multiple new products to meet the emission
requirements and the market needs. It grasped the opportunity of product upgrade and de-stocking in the second
half year, and accelerated market sales. It also transferred work focus, made market layout to the targeted
direction, enhanced the sales force for big-bore single-cylinder engines, and firmed the market share.
Concerning multi-cylinder engines, the Company stepped up product innovation, benchmarking management
and lean production. Making full use of its competitive products such as the 4G33 in the non-road field, it
strengthened the promotion of its multi-cylinder engines for harvesters and wheel-tractors, and vigorously broke
into new fields such as plant-protect machines and engineering machines, resulting in a year-on-year increase of
non-road multi-cylinder engines. Meanwhile, a second assembly line for multi-cylinder engines was set up to
meet the assembly requirements of various products.
As for overseas sales, the Company was under severe pressure from the overseas market. The Company
stuck to relying on the support from factors as technology and brand, strengthened the maintenance and
management for key markets and key clients, locked the target markets and target client, try hard efforts to
improve the sales of advantaged traditional products, and accelerated the expansion of new markets.
As for market service, the Company laid emphasis on optimization and integration of web resources for
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The 2015 Annual Report of Changchai Company, Limited
market service, planned diversified forms of training, continuously optimized management of market service,
accessory reserve, and accessory launch, met the demand from key clients and for key products in time, constantly
improved service satisfaction, and obtained obvious efforts in market service and management.
To sum up, in 2015, by stepping up product development and input to technical innovation, the Company
improved the overall competitiveness of its products and kept its leading position in medium and small
horsepower diesel engines. Meanwhile, the constantly low prices of raw and auxiliary materials contributed to the
result of saving internal costs and expenses, which ensured the sustainable and stable development of the
Company’s efficiency.
II. Main business analysis
1. Summary
See “I. Summary” in “Discussion & Analysis by the Management”.
2. Revenues and costs
(1) Breakdown of operating revenues
Unit: RMB Yuan
2015 2014
In total In total +/-%
Amount operating Amount operating
revenues revenues
Total of the operating income 2,519,799,547.29 100% 2,489,792,063.33 100% 1.21%
Classified by industries
Internal combustion engine
2,495,248,411.83 99.03% 2,461,692,196.75 98.87% 1.36%
industry
Other 24,551,135.46 0.97% 28,099,866.58 1.13% -12.63%
Classified by products
Diesel engines 2,495,248,411.83 99.03% 2,461,692,196.75 98.87% 1.36%
Other 24,551,135.46 0.97% 28,099,866.58 1.13% -12.63%
Classified by regions
Domestic 2,288,815,564.77 90.83% 2,208,186,564.77 88.69% 3.65%
Overseas 230,983,982.52 9.17% 281,605,498.56 11.31% -17.98%
(2) Industries, products or areas contributing over 10% of operating revenues or profit
√ Applicable □ Inapplicable
Unit: RMB Yuan
Operating
Gross Operating Gross profit
Operating cost: +/-%
Operating cost profit revenue: +/-% margin: +/-%
revenue from last
margin from last year from last year
year
Classified by industries
Internal combustion
2,495,248,411.83 2,094,368,998.80 16.07% 1.36% 0.22% 0.95%
engine industry
Classified by products
Diesel engines 2,495,248,411.83 2,094,368,998.80 16.07% 1.36% 0.22% 0.95%
Classified by regions
Domestic 2,264,264,429.31 1,870,059,314.22 17.41% 3.86% 3.05% 0.65%
Overseas 230,983,982.52 224,309,684.58 2.89% -17.98% -18.44% 0.55%
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The 2015 Annual Report of Changchai Company, Limited
Main business data of the previous year restated according to the changed statistical caliber for the reporting
period
□ Applicable √ Inapplicable
(3) Are the Company’s goods selling revenue higher than the service revenue?
√ Yes □ No
Classified by industries Item Unit 2015 2014 YoY +/-
Sales volume Piece 907,715 956,116 -5.06%
Diesel engines Output Piece 870,754 952,186 -8.55%
Stock Piece 63,514 100,475 -36.79%
(4) List of the execution of the signed significant sales contracts of the Company up to the reporting period
□ Applicable √ Inapplicable
(5) Operating cost form
Category of the industries and products
Unit: RMB Yuan
2015 2014
Ratio to the Ratio to the YoY
Category of the industries Item
Amount operating Amount operating +/-
cost cost
Internal combustion engine Raw
1,771,572,695.44 83.95% 1,784,220,009.29 84.75% -0.71%
industry materials
Internal combustion engine
Wages 200,838,801.68 9.52% 178,684,278.79 8.49% 12.40%
industry
Internal combustion engine
Depreciation 77,956,874.68 3.69% 72,536,387.35 3.45% 7.47%
industry
Internal combustion engine
Energy 30,561,457.15 1.45% 34,919,192.51 1.66% -12.48%
industry
Unit: RMB Yuan
2015 2014
Classified by
Item Ratio to the Ratio to the YoY +/-
products Amount Amount
operating cost operating cost
Diesel engines Raw materials 1,771,572,695.44 83.95% 1,784,220,009.29 84.75% -0.71%
Diesel engines Wages 200,838,801.68 9.52% 178,684,278.79 8.49% 12.40%
Diesel engines Depreciation 77,956,874.68 3.69% 72,536,387.35 3.45% 7.47%
Diesel engines Energy 30,561,457.15 1.45% 34,919,192.51 1.66% -12.48%
(6) Whether there were changes of the consolidation scope during the reporting period
□ Yes √ No
(7) List of the significant changes or adjustment of the industries, products or services of the Company
during the reporting period
□ Applicable √ Inapplicable
(8) 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 Yuan) 975,317,914.69
Ratio of the total sales to the top 5 customers to the annual total sales 38.71%
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The 2015 Annual Report of Changchai Company, Limited
Information of the top 5 customers of the Company
No. Name of customer Sales amount (RMB Yuan) Proportion in annual total sales
1 Customer 1 264,203,167.86 10.49%
2 Customer 2 262,183,617.40 10.40%
3 Customer 3 224,968,565.10 8.93%
4 Customer 4 122,012,118.47 4.84%
5 Customer 5 101,950,445.86 4.05%
Total -- 975,317,914.69 38.71%
Notes of the other situation of the major customers
□ Applicable √ Inapplicable
List of the major suppliers of the Company
Total purchase to the top 5 suppliers (RMB Yuan) 288,333,190.50
Ratio of the total purchase to the top 5 suppliers to the annual total purchase 13.70%
Information of the top 5 suppliers of the Company
Ratio to the annual purchase
No. Name of supplier Purchase amount (RMB Yuan)
amount
1 Customer 1 94,366,043.98 4.48%
2 Customer 2 67,130,484.66 3.19%
3 Customer 3 45,873,883.69 2.18%
4 Customer 4 45,854,727.69 2.18%
5 Customer 5 35,108,050.50 1.67%
Total -- 288,333,190.50 13.70%
Notes of the other situation of the major suppliers
□ Applicable √ Inapplicable
3. Expenses
Unit: RMB Yuan
2015 2014 YoY +/- Notes of the significant changes
Mainly due to the expansion of the service
Selling expenses 98,122,345.71 92,235,311.13 6.38% strength of the products market by the
Company.
Management
197,678,915.43 197,704,824.42 -0.01%
expenses
Mainly due to the depreciation of the current
Financial expenses -15,723,785.00 -10,932,468.28 43.83% Renminbi and the increase of the exchange
earnings.
4. R&D investment
√ Applicable □ Inapplicable
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
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The 2015 Annual Report of Changchai Company, Limited
2015 2014 Varied ratio
Number of the R&D personnel (person) 363 325 11.69%
Ratio to the R&D personnel 10.76% 10.59% 0.17%
Investment amount of the R&D (RMB10,000’) 77,961,271.34 90,058,586.14 -13.43%
Ratio of the R&D investment to the operating income 3.09% 3.62% -0.53%
Amount of the capitalized R&D investment (RMB Yuan) 0.00 0.00 0.00%
Ratio of the capitalized R&D investment to the R&D
0.00% 0.00% 0.00%
investment
Reason of remarkable changes over the last year of the ratio of the total R&D investment amount to the operating
income
□ Applicable √ Inapplicable
Reason of the greatly change of the ratio of the R&D investment capitalization and its reasonable explanation
□ Applicable √ Inapplicable
5. Cash flow
Unit: RMB Yuan
Item 2015 2014 YoY +/-
Subtotal of cash inflows from operating activities 2,686,973,788.27 2,736,050,730.30 -1.79%
Subtotal of cash outflows from operating activities 2,559,046,905.32 2,787,558,085.82 -8.20%
Net cash flows from operating activities 127,926,882.95 -51,507,355.52 ——
Subtotal of cash inflows from investing activities 17,469,925.84 11,488,203.39 52.07%
Subtotal of cash outflows from investing activities 68,003,567.09 85,211,666.98 -20.19%
Net cash flows from investing activities -50,533,641.25 -73,723,463.59 -31.46%
Subtotal of cash inflows from financing activities 17,000,000.00 20,280,600.00 -16.18%
Subtotal of cash outflows from financing activities 32,438,823.99 41,194,562.05 -21.25%
Net cash flows from financing activities -15,438,823.99 -20,913,962.05 -26.18%
Net increase in cash and cash equivalents 61,954,417.71 -146,120,395.68 ——
Notes of the major effects on the YoY significant changes occurred of the data above
□ Applicable √ Inapplicable
Notes to the reason of the significant differences between the net cash flow from the operating activities and the
net profits of 2015 of the Company during the reporting period
√ Applicable □ Inapplicable
III. Analysis of the non-core business
√ Applicable □ Inapplicable
Unit: RMB Yuan
Ratio to the Whether was
Amount total profits Notes of the causes sustainability
amount
Mainly due to the received dividends
Investment profits 9,120,105.94 period the
10.23% from the reportingfinancial ofassets Could not be
available-for-sale judged
held by the Company.
Variable profit and loss of fair -109,642.19 -0.12% No
value
Mainly due to the inventory falling
Assets impairment losses 47,252,175.34 52.99% price reserves withdrawn by the No
Company of the reporting period.
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The 2015 Annual Report of Changchai Company, Limited
Mainly due to each governmental
Non-operating revenues 14,048,268.56 15.75% subsidies received by the Company No
during the reporting period.
Mainly due to the losses of disposing
the current assets and the
Non-operating costs 8,510,877.99 9.54% expenditures of the flood control No
security fund of the Company during
the reporting period.
IV. List of the assets and liabilities
1. List of the significant changes of the assets form
Unit: RMB Yuan
As at 31 Dec. 2015 As at 31 Dec. 2014
Proportion Explain any
Proportion in Proportion in
Amount Amount change major change
total assets total assets
Monetary funds 601,312,715.62 18.60% 531,969,747.91 16.80% 1.80%
Accounts receivable 308,596,920.50 9.55% 374,335,355.22 11.82% -2.27%
Inventories 397,290,012.36 12.29% 497,588,717.86 15.71% -3.42%
Investing real estate 57,281,030.03 1.77% 59,489,370.83 1.88% -0.11%
Long-term equity
20,769,304.76 0.64% 20,459,975.99 0.65% -0.01%
investment
Fixed assets 554,601,893.23 17.16% 572,785,946.61 18.09% -0.93%
Construction in progress 108,198,455.01 3.35% 134,948,317.87 4.26% -0.91%
Short-term loans 17,000,000.00 0.53% 20,000,000.00 0.63% -0.10%
2. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
Unit: RMB Yuan
Gain/loss on Cumulative Impairment Sold
Purchased
fair value fair value provisions amount in
Opening amount in the Closing
Item change in the change in the the
amount reporting amount
reporting recorded reporting reporting
period
period into equity period period
Financial assets
Financial assets
measured at fair
value and whose
changes are
recorded into 2,109,642.19 -109,642.19 2,000,000.00 0.00
current gains and
losses (excluding
derivative financial
assets)
Available-for-sale 452,650,000. 353,519,675.
5,130,000.00 457,780,000.00
financial assets 00 00
Subtotal of financial 454,759,642. 353,519,675.
5,020,357.81 2,000,000.00 457,780,000.00
assets 19 00
454,759,642. 353,519,675.
Total of the above 5,020,357.81 2,000,000.00 457,780,000.00
19 00
Financial liabilities 0.00 0.00
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The 2015 Annual Report of Changchai Company, Limited
Did any significant change occur to the attribute of the Company’s main asset measurement during the reporting
period?
□ Yes √ No
V. List of the investment
1. Overall condition
√ Applicable □ Inapplicable
Investment amount of the reporting Investment amount of the same
Variation amount
period (RMB Yuan) period of last year (RMB Yuan)
0.00 27,550,000.00 ——
2. List of the significant equity investment acquired from the reporting period
□ Applicable √ Inapplicable
3. List of the significant non-equity investment has been executing during the reporting period
□ Applicable √ Inapplicable
4. Investment on the financial assets
(1) List of the securities investment
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
(2) List of the derivative investment
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
5. Use of raised funds
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
VI. Selling of the significant assets and the equities
1. List of the selling of the significant assets
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
2. List of the selling of the significant equities
□ Applicable √ Inapplicable
VII. Analysis of the major controlling and stock-participating companies
√ Applicable □ Inapplicable
List of the stock-participating companies with more than 10% influences on the net profits of the major
subsidiaries and the Company
Unit: RMB Yuan
Registered Operating Operating
Name Type Main services Total assets Net assets Net profit
capital revenues profit
Production of
Changchai
Subsidiary diesel engine 55,063,000.00 162,583,829.00 97,366,218.64 132,031,738.21 -6,037,438.58 -4,775,723.46
Benniu
fittings
Assembling
Changchai of diesel
Subsidiary 85,000,000.00 70,402,783.63 43,312,833.11 99,618,978.42 4,302,652.05 3,763,210.92
Wanzhou engine
fittings
15
The 2015 Annual Report of Changchai Company, Limited
External
investment
Housheng
Subsidiary and 30,000,000.00 35,125,825.23 34,409,899.89 1,523,155.52 1,811,302.76 1,508,235.97
Investment
consulting
service
Agricultural
machinery
Housheng
product of
Agricultural Subsidiary 10,000,000.00 17,059,693.21 5,306,404.38 5,594,781.07 -2,472,022.99 -2,474,819.32
rice
Equipment
transplanter
etc.
Assembling
Joint stock USD4,500,000.
Fuji Robin of gasoline 81,683,756.04 62,937,287.79 139,148,868.35 2,857,665.35 2,138,273.61
company 00
engines
Subsidiaries acquired or disposed during the reporting period
□ Applicable √ Inapplicable
VIII. List of the structured main bodies controlled by the Company
□ Applicable √ Inapplicable
IX. Outlook of the Company’s future development
1. Industry competition structure and development tendency
Influenced by the multiple factors such as the national macro economy descending, stricter and stricter
products laws and regulations, the growth rate of the farm machinery industry slowed down and the growth power
had transferred with the industrial competition had upgraded. Although the growth rate of the industry slowed
down, the national agricultural mechanization degree was still in the mid-term development phase with the market
demand of the high quality and high efficient farm machinery products was rather strong that the policy bonus
which regarded the purchase subsidy policy of the farm machinery as the main policy will continue to release with
the renew demand of the market inventory was more and more prosperous. Commercial vehicle market had
declined with the construction machinery market was depressed. Thus the competition of the diesel engine market
was fierce with the industry concentration ratio had improved and the product structure demand would have rather
big change as well as the environmental protection and efficient diesel engine products would become the
mainstream of the market development.
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 equipments 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
16
The 2015 Annual Report of Changchai Company, Limited
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 2016:
To achieve a sales income of RMB2.6 million and the earnings of the foreign exchange through exports of
USD40 million.
The above operation plan not represent the profit forecast of Y2016 by the listed companies and whether
could be realized was depend on various factors on the changes of the market conditions and the effort level of the
running team which with great uncertainty that the investors should pay special attention.
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:
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.
X. List of the received researches, visits and interviews
1. Particulars about researches, visits and interviews received in this reporting period
√ Applicable □ Inapplicable
Way of
Time of reception Visitor type Index of the researches basic information
reception
Shareholding increase or decrease plan of the major
28 Dec. 2015 Other Individual
shareholders
24 Dec. 2015 Other Individual Sales of the Company
24 Dec. 2015 Other Individual Products of the Company
24 Dec. 2015 Other Individual List of the industrial park construction
23 Dec. 2015 Other Individual List of the cooperation of the Company and other business
17
The 2015 Annual Report of Changchai Company, Limited
units
7 Dec. 2015 Other Individual List of the industrial park construction
4 Dec. 2015 Other Individual List of the market share of the Company’s products
4 Dec. 2015 Other Individual List of the operation of the Housheng Agricultural Equipment
3 Dec. 2015 Other Individual List of the Company’s shareholders
List of the market share of the Company’s products and the
30 Nov. 2015 Other Individual
competitors
17 Nov. 2015 Other Individual List of the Company’s future plan
7 Nov. 2015 Other Individual List of the equities of Jiangsu Bank held by the Company
2 Nov. 2015 Other Individual List of the production equipments of the Company
8 Oct. 2015 Other Individual List of the products development
Development orientation of the future technology products of
20 Sep. 2015 Other Individual
the Company
List of the progress of the state-owned enterprise reform of the
9 Sep. 2015 Other Individual
Company
19 Aug. 2015 Other Individual Relevant situation of the assets finance of the Company
26 Jul. 2015 Other Individual Suggestion for the future development of the Company
7 Jul. 2015 Other Individual List of the refinancing business participated by the Company
6 Jul. 2015 Other Individual Sales of the Company’s multi-cylinder diesel engine
1 Jul. 2015 Other Individual Future development strategies of the Company
List of the execution progress of the national significant special
25 Jun. 2015 Other Individual
projects of the Company
List of the planning of the power industrial park of the
23 Jun. 2015 Other Individual
Company
15 Jun. 2015 Other Individual List of the shareholders’ number
16 Jun. 2015 Other Individual List of the shares of Jiangsu Bank held by the Company
List of the planning of the power industrial park of the
3 Jun. 2015 Other Individual
Company
26 May 2015 Other Individual Planning of the future development of the Company
25 May 2015 Other Individual List of the shareholders’ number
24 May 2015 Other Individual List of the Company’s products
19 May 2015 Other Individual List of the shareholders’ number
List of the Tsinghua Industrial Company participated by the
9 May 2015 Other Individual
Company
5 May 2015 Other Individual Planning of the future development of the Company
4 May 2015 Other Individual Planning of the future development of the Company
29 Apr. 2015 Other Individual Whether the Company has the organization intention
28 Apr. 2015 Other Individual Planning of the future development of the Company
List of the aspects such as the state-owned enterprise reform
28 Apr. 2015 Other Individual
and the employees’ shareholding
28 Apr. 2015 Other Individual Sales of the multi-cylinder diesel engine
List of the planning of the power industrial park of the
16 Apr. 2015 Other Individual
Company
15 Apr. 2015 Other Individual List of the planning of the power industrial park of the
18
The 2015 Annual Report of Changchai Company, Limited
Company
15 Apr. 2015 Other Individual List of the shareholders’ number
15 Apr. 2015 Other Individual Planning of the future development of the Company
26 Mar. 2015 Other Individual List of the future development of the Company
23 Mar. 2015 Other Individual List of the future development of the Company
22 Mar. 2015 Other Individual List of the future development of the Company
16 Mar. 2015 Other Individual List of the share price of the Company
15 Mar. 2015 Other Individual List of the internet influences of the Company
12 Mar. 2015 Other Individual List of the future development of the Company
12 Mar. 2015 Other Individual List of the future development of the Company
List of the newly serving Independent Directors of the
12 Mar. 2015 Other Individual
Company
8 Mar. 2015 Other Individual List of the mixed ownership reform of the Company
1 Mar. 2015 Other Individual List of the agricultural informatization
27 Feb. 2015 Other Individual List of the external cooperation of the Company
27 Feb. 2015 Other Individual List of the external cooperation of the Company
25 Feb. 2015 Other Individual List of the mixed ownership reform of the Company
16 Feb. 2015 Other Individual Relevant situation of the Company’s products
9 Feb. 2015 Other Individual List of the shareholders’ number
21 Jan. 2015 Other Individual List of the state-owned enterprise reform
19 Jan. 2015 Other Individual List of the agricultural modernization
14 Jan. 2015 Other Individual List of the stock price trend of the Company
13 Jan. 2015 Other Individual List of the Company’s shareholders
12 Jan. 2015 Other Individual List of the Company’s shareholders
1 Jan. 2015 Other Individual List of the Company’s shareholders
Reception times 62
Number of reception institutions 0
Number of reception person 62
Number of receipting other targets 0
Whether disclose, reveal or let out unpublished
No
significant information
19
The 2015 Annual Report of Changchai Company, Limited
Section V. Significant Events
I. List of the profits distribution of the common shares and turning capital reserve into share
capital of the Company
List of the formulation, execution or adjustment of the profits distribution policies of the common shares,
especially the cash dividend policies
√ Applicable □ Inapplicable
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
Yes
requirements 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
Turning capital
Dividend year Profits distribution proposal reserve into share Execution
capital proposal
Distributed RMB0.23 of every 10 Still needed to submit to the
2015 No
shares (taxes including) Annual General Meeting
Distributed RMB0.20 of every 10
2014 No Finished the execution
shares (taxes including)
Distributed RMB0.15 of every 10
2013 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 Yuan
The ratio accounting in
Net profit belonging
net profit which Ratio of the
Amount of cash to shareholders of the Amount of the
Dividend belongs to shareholders cash dividend
dividend listed company in cash dividend by
year of the listed company by other
(including tax) consolidated statement other methods
in consolidated methods
of dividend year
statement
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%
2013 8,420,614.89 75,712,361.04 11.12% 0.00 0.00%
20
The 2015 Annual Report of Changchai Company, Limited
The Company (including its subsidiaries) made profit in the reporting period and the profits distribution of the
common shares held by the shareholders of the Company (without subsidiaries) was positive, but it did not put
forward a preplan for cash dividend distribution of the common shares:
□ Applicable √ Inapplicable
II. Pre-plan for profit allocation and turning capital reserve into share capital for the
reporting period
√ Applicable □ Inapplicable
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB Yuan) (tax included) 0.23
Turning capital reserve into share capital for every 10 shares
0
(share)
Total shares as the basis for the allocation preplan (share) 561374326
Total cash dividends (RMB Yuan) (tax included) 12,911,609.50
Distributable profit (RMB Yuan) 561,189,656.87
Percentage of the cash bonus of the total profits dividends 100.00%
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. 2015, the Company distributed the cash bonus of
RMB0.23 (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 2015.
III. Performance of commitments
1. Commitments completed by the Company, the shareholders, the actual controllers, the purchasers, the
Directors, the Supervisors and the Senior Executives or the other related parties during the reporting
period and those hadn’t been completed execution up to the period-end
√Applicable □Inapplicable
Type of Time of
Commitment Period of
Commitment commit Contents making Fulfillment
maker commitment
ment commitment
Commitment on
share reform
Commitment in
the acquisition
report or the
report on equity
changes
Commitments
made upon the
assets
reorganization
Commitments
made upon IPO or
refinancing
Equity incentive
commitments
21
The 2015 Annual Report of Changchai Company, Limited
The Changzhou
SASAC invested
RMB20 million to
increase its
1. Committed not to shareholding in the
State-owned decrease its holding of Company by
Assets “Changchai A” within 6 2,347,500 shares (a
Supervision months since 10 Jul. stake of 0.42% in the
Sharehol
and 2015. Within 6 Company’s total
ding
Administratio 2. Committed to invest months shares) through the
increase 10 Jul. 2015
n RMB20 million for since 10 Jul. centralized quotation
commit
Commission increasing its holding of 2015 trading system of the
ment
of Changzhou “Changchai A” in a Shenzhen Stock
Municipal proper timing within 6 Exchange during the
Government months since 10 Jul. period from 16 Jul.
2015. 2015 to 26 Aug.
2015. As such, this
shareholding increase
commitment has
been fulfilled.
Planning for Returns for
Shareholders in the
Coming Three Years
(2014-2016):
Other Where the
commitments distributable profits
made to minority (after-tax profits after
shareholders making up for loss and
withdrawing capital
reserves) achieved by
the Company for a year
or the first half of a year
are positive, and its cash
flows are sufficient that
cash dividend payout
Changchai Dividend
will not affect its going 14 May Y2014-Y20
Company, commit In normal execution
concern ability, the 2014 16
Limited ment
profits distributed in
cash shall not be less
than 10% of the
distributable profits
achieved by the
Company for the year or
the first half of the year,
and the profits
accumulatively
distributed in cash shall
not be less than 30% of
the annual average
distributable profits for
any three consecutive
accounting years.
Executed on time Yes
2. Assets or projects existing profit forecast, which were still in the profit forecast period, the Company
made note and explain to the assets or project arrived at original profit forecast
□ Applicable √ Inapplicable
22
The 2015 Annual Report of Changchai Company, Limited
IV. Occupation of the Company’s capital by the controlling shareholder or its related parties
for non-operating purposes
□ Applicable √ Inapplicable
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 √ Inapplicable
VI. Explanation of the changes of the accounting policy, the accounting estimates and the
accounting methods compared to the last financial report
□ Applicable √ Inapplicable
No such cases in the reporting period.
VII. Explain retrospective restatement due to correction of significant accounting errors in
the reporting period
□ Applicable √ Inapplicable
No such cases in the reporting period.
VIII. Explain change of the consolidation scope as compared with the financial reporting of
last year
□ Applicable √ Inapplicable
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 (ten
70
thousand Yuan)
Consecutive years of the audit services provided by domestic CPAs firm 14
Name of domestic CPAs firm Wang Wenkai, He Taifeng
Reengage the CPAs firm at current period or not?
□ Yes √ No
Particulars on engaging the audit firm for the internal control, financial adviser or sponsor
√Applicable □Inapplicable
During reporting period, the Company hired Jiangsu Gongzheng Tianye Certified Public Accountants LLP as the
internal control institution of the Company, the cost of audit was RMB150000.
X. Particulars about trading suspension and termination faced after the disclosure of annual
report
□ Applicable √ Inapplicable
XI. Bankruptcy and reorganization
□ Applicable √ Inapplicable
No such cases in the reporting period.
XII. Significant lawsuit or arbitrations
√ Applicable □ Inapplicable
23
The 2015 Annual Report of Changchai Company, Limited
Amount
involved Trial
Execution
in the Forming result and
situation on
litigatio the Progress of the influence Index to
Basic situation of the litigation the judgment Disclosure
n estimated litigation of the the
(arbitration) of the date
(arbitrati liabilities (arbitration) litigation disclosed
litigation
on) or not? (arbitratio
(arbitration)
(RMB n)
0’000)
About the lawsuit case of
Shandong Hongli Group Co.,
Ltd., the accused company owed Under the
accumulatively RMB 14.36 compulsory
million to the Company. The execution by
Company sued to Changzhou Judged for the the court and
1,436 No
Intermediate People’s Court in second trial in the process
2001 and sued for compulsory of liquidation
execution in April, 2002. and
Currently, the defendant has bankruptcy
started 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.
Had mediated.
According to the paper of civil
Up the end of
mediation issued by the people's
the reporting
court of Beijing Shunyi on 31 http//ww
period, Baic
Oct. 2013, the Company will w.cninfo.
Changsheng 30 Aug.
amortize the arrears of com.cn.
had paid 2013
RMB8.0636 million. If Baic 806.36 No Announc
RMB4.2 6 Nov.
Changsheng failed to execute ement
million to the 2013
the reconciliation agreement on No.:
Company.
time, the Company should 2013-015
Under
applied for the compulsory , 019
compulsory
execution of the whole unpaid
execution
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
□ Applicable √ Inapplicable
No such cases in the reporting period.
XIV. The honesty situations of the Company and its controlling shareholders and actual
controller
□ Applicable √ Inapplicable
XV. The actual implementation of the stock incentive plan, ESOP, or other Staff incentives
□ Applicable √ Inapplicable
No such cases in the reporting period.
24
The 2015 Annual Report of Changchai Company, Limited
XVI. Significant related-party transactions
1. Related-party transactions relevant to routine operation
□ Applicable √ Inapplicable
No such cases in reporting period.
2. Related-party transactions incurred by assets or equity purchase
□ Applicable √ Inapplicable
No such cases in the reporting period.
3. Related-party transactions common external investment
□ Applicable √ Inapplicable
No such cases in the reporting period.
4. Credits and liabilities with related parties
□ Applicable √ Inapplicable
No such cases in the reporting period.
5. Other significant related-party transactions
□ Applicable √ Inapplicable
No such cases in the reporting period.
XVII. Significant contracts and their execution
1. Trusteeship, contracting and leasing
(1) Trusteeship
□ Applicable √ Inapplicable
No such cases in the reporting period.
(2) Contract
□ Applicable √ Inapplicable
No such cases in the reporting period.
(3) Lease
□ Applicable √ Inapplicable
No such cases in the reporting period.
2. Significant guarantees
√ Applicable □ Inapplicable
(1) Guarantees provided by the Company
Unit: RMB Ten Thousand Yuan
Guarantees provided by the Company for external parties (excluding those for subsidiaries)
Disclosur Guarant
Actual
e date of Amount Actual ee for a
occurrence Type of Period of Execute
Guaranteed party relevant for guarantee related
date (date of guarantee guarantee d or not
announce guarantee amount party or
agreement)
ment not
Guarantees provided by the Company for its subsidiaries
Disclosur Actual Guarant
Amount Actual
e date of occurrence Type of Period of Execute ee for a
Guaranteed party for guarantee
relevant date (date of guarantee guarantee d or not related
guarantee amount
announce agreement) party or
25
The 2015 Annual Report of Changchai Company, Limited
ment not
Changzhou
Changchai
Housheng 4 Dec. General
1,000 4 Dec. 2015 1,000 1 year No No
Agricultural 2015 guarantee
Equipment Co.,
Ltd.
Total actual occurred
Total guarantee line approved amount of guarantee for
for the subsidiaries during the 1,000 the subsidiaries during 1,000
reporting period (B1) the reporting period
(B2)
Total actual guarantee
Total guarantee line that has
balance for the
been approved for the
1,000 subsidiaries at the end 1,000
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 Guarant
Actual
e date of Amount Actual ee for a
occurrence Type of Period of Execute
Guaranteed party relevant for guarantee related
date (date of guarantee guarantee d or not
announce guarantee amount party or
agreement)
ment not
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 1,000 1,000
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
1,000 1,000
the reporting period the reporting period
(A3+B3+C3) (A4+B4+C4)
Proportion of total actual guarantee amount
0.50%
（A4+B4+C4）in the net assets of the Company
Of which:
Guarantee amount provided for shareholders, actual controllers and its related
0
parties(D)
Amount of debt guarantee provided for the guaranteed party whose asset-liability
0
ratio is not less than 70% directly or indirectly（E）
Part of the amount of the total guarantee over 50% of net assets （F） 0
Total amount of the above three guarantees （D+E+F） 0
Explanation on possibility to bear joint liability due to undue guarantees (if any) Inapplicable
Explanation on the external guarantees in violation of stipulated procedures (if
Inapplicable
any)
(2) Illegal external guarantee
□ Applicable √ Inapplicable
No such case during reporting period
3. Cash assets management entrustment
(1) Wealth management entrustment
√ Applicable □ Inapplicable
26
The 2015 Annual Report of Changchai Company, Limited
Unit: RMB Ten Thousand Yuan
Relat Principal Amount Actual
ed Remuner amount Withdraw n of actual withdra
w of
Name of trans Type Amo Initial actually
Ended determina received impairme mate orprofits profits
ation Esti
losses or losses
the trustee actio unt date Date tion in nt profit in
n or method reporting provision in
reportin reporting
not period ( if any) g period period
Break-even One-time
Ping An No floating proceeds 1,000 29 Jan. 28 Jul. confirmat 1,000 0 23.92 23.92 23.92
Bank financial products 2015 2015 ion when
expired
Bank Break-even One-time
of No floating proceeds 1,000 22 Apr. 21 Oct. confirmat 1,000 0 22.94 22.94 22.94
Jiangshu financial products 2015 2015 ion when
expired
Break-even 26 One-time
Bank of No floating proceeds 1,000 Aug. 24 Feb. confirmat 0 0 17.95 0 0
Jiangshu financial products 2015 2016 ion when
expired
Break-even One-time
Bank of No floating proceeds 1,000 32015
Nov. 4 May confirmat 0 0 18.45 0 0
Jiangshu financial products 2016 ion when
expired
Total 4,000 -- -- -- 2,000 0 83.26 46.86 --
Capital resources Self-owned raising funds
Cumulative amount of principal and earnings maturity that fail to
0
recover
Self-own idle fund Inapplicable
Disclosure date of announcement on wealth management entrustment
13 Jan. 2015
reviewed and approved by the Board of Directors
Disclosure date of announcement on wealth management entrustment
Inapplicable
reviewed and approved by the Board of Shareholders
Whether there is wealth management entrustment plan in future or not? Yes
（2）Entrustment loans
□ Applicable √ Inapplicable
No such cases in the reporting period.
4.Other significant contracts
□ Applicable √ Inapplicable
No such cases in the reporting period.
XVIII. Other significant events
□ Applicable √ Inapplicable
No such cases in the reporting period.
XIX. Significant events of subsidiaries
□ Applicable √ Inapplicable
XX. Social responsibilities
□ Applicable √ Inapplicable
XXI. Corporation bonds
Whether existing corporation bonds public issued and listed in Stock Exchange and maturity or maturity but not
fully paid on the approval report date of annual report
No
27
The 2015 Annual Report of Changchai Company, Limited
Section VI. Change in Shares & Shareholders
I. Changes in shares
I. Changes in shares
Unit: share
Before the change Increase/decrease (+/-) After the change
Capitalizatio
Proporti Newly Bonus Othe Proporti
Amount n of public Subtotal Amount
on issue share shares r on
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
561,374,326 100.00% 561,374,326 100.00%
trading moratorium
1. RMB ordinary shares 411,374,326 73.28% 411,374,326 73.28%
2. Domestically listed
150,000,000 26.72% 150,000,000 26.72%
foreign shares
3. Oversea listed foreign
0 0.00% 0 0.00%
shares
4. Other 0 0.00% 0 0.00%
III. Total shares 561,374,326 100.00% 561,374,326 100.00%
Reason for the change in shares
□ Applicable √ Inapplicable
Approval of the change in shares
□ Applicable √ Inapplicable
Reason for the change in shares
□ Applicable √ Inapplicable
Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to common
shareholders of the Company and other financial indexes over the last year and last period
□ Applicable √ Inapplicable
Other contents that the Company considered necessary or were required by the securities regulatory authorities to
disclose
□ Applicable √ Inapplicable
28
The 2015 Annual Report of Changchai Company, Limited
2. Changes in restricted shares
□ Applicable √ Inapplicable
II. Issuance and listing of securities
1. Issuance of securities (excluding preferred stock) in reporting period
□ Applicable √ Inapplicable
2. Explanation on changes in share capital & the structure of shareholders, the structure of assets and
liabilities
□ Applicable √ Inapplicable
3. Existent shares held by internal staffs of the Company
□ Applicable √ Inapplicable
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholding
Unit: share
Total number of preferred
Total number of
Total number Total number of stockholder with vote
shareholders on the 30th
of shareholders preferred stockholder right restored on the 30th
57,048 trading day before the 54,693 0 0
at the reporting with vote right trading day before the
disclosure date of the
period restored( if any) disclosure date of the
annual report
annual report( note 8)
Shareholding of shareholders holding more than 5% shares
Number of Pledged or frozen
Number of Increase and Number of
shares held shares
Holding shareholding decrease of shares held
Nature of subject to
Name of shareholder percentag at the end of shares during not subject to
shareholder trading Status of
e (%) the reporting reporting trading Amount
moratoriu shares
period period moratorium
m
State-owned Assets Supervision
and Administration
On behalf of
Commission of Changzhou 30.43% 170,845,236 170,845,236
the State
Municipal People’s
Government
Domestic
Huang Lihou 1.02% 5,705,000 5,705,000
individual
Overseas
KGI Asia Limited 0.57% 3,224,845 3,224,845
corporation
BNP Paribas Wealth
Overseas
Management Hong Kong 0.55% 3,099,873 3,099,873
corporation
Branch
Southwest Securities-
ICBC-Southwest Securities
Shuangxi Huixin ICBC No. 2 Other 0.36% 2,000,000 2,000,000
Collected Asset Management
Plan
Domestic
Li Min 0.34% 1,918,950 1,918,950
individual
China Securities Finance Corp. Other 0.33% 1,826,700 1,826,700
Southwest Securities-
ICBC-Southwest Securities
Shuangxi Huixin ICBC No. 1 Other 0.31% 1,750,000 1,750,000
Collected Asset Management
Plan
Bank of Communications Co., Other 0.30% 1,661,600 1,661,600
29
The 2015 Annual Report of Changchai Company, Limited
Ltd.-Changxin Quantified Core
Pioneer Mixed Investment
Fund
Vanguard Total International Overseas
0.29% 1,626,592 1,626,592
Stock Index Fund corporation
Strategic investors or the general legal person
due to the placement of new shares become Naught
the top 10 shareholders (if any) (note 3)
It is unknown whether there was any associated relationship among the top ten tradable
Explanation on associated relationship or/and shareholders and among the top ten shareholders not subject to trading moratorium, or
persons whether they are persons acting in concert as described by Measures for the
Administrative of Disclosure of Shareholder Equity Changes.
Particulars about shares held by top 10 shareholders not subject to trading moratorium
Number of shares held not Type of share
subject to trading
Name of shareholder
moratorium at the end of the Type of share Amount
period
State-owned Assets Supervision and Administration
Commission of Changzhou Municipal People’s 170,845,236 RMB ordinary shares 170,845,236
Government
Huang Lihou 5,705,000 RMB ordinary shares 5,705,000
KGI Asia Limited 3,224,845 Domestically listed foreign shares 3,224,845
BNP Paribas Wealth Management Hong Kong
3,099,873 Domestically listed foreign shares 3,099,873
Branch
Southwest Securities- ICBC-Southwest Securities
Shuangxi Huixin ICBC No. 2 Collected Asset 2,000,000 RMB ordinary shares 2,000,000
Management Plan
Li Min 1,918,950 RMB ordinary shares 1,918,950
China Securities Finance Corp. 1,826,700 RMB ordinary shares 1,826,700
Southwest Securities- ICBC-Southwest Securities
Shuangxi Huixin ICBC No. 1 Collected Asset 1,750,000 RMB ordinary shares 1,750,000
Management Plan
Bank of Communications Co., Ltd.-Changxin
1,661,600 RMB ordinary shares 1,661,600
Quantified Core Pioneer Mixed Investment Fund
Vanguard Total International Stock Index Fund 1,626,592 Domestically listed foreign shares 1,626,592
Explanation on associated relationship among the
top ten shareholders of tradable share not subject to It is unknown whether there was any associated relationship among the top ten
trading moratorium, as well as among the top ten tradable shareholders and among the top ten shareholders not subject to trading
shareholders of tradable share not subject to trading moratorium, or whether they are persons acting in concert as described by Measures
moratorium and top ten shareholders, or for the Administrative of Disclosure of Shareholder Equity Changes.
explanation on acting-in-concert
Shareholder Huang Lihou held a total of 5,705,000 shares in the Company,
representing a stake of 1.02%, through a common securities account and a client
account of collateral securities for margin trading. Conducting margin trading in the
Particular about shareholder participate in the reporting period, he held 5,600,000 shares (a stake of 1.00% in the Company)
securities lending and borrowing business ( if any) through a client account of collateral securities for margin trading in Guotai Junan
Securities Co., Ltd. Shareholder Li Lin held 1,918,950 shares in the Company (a
stake of 0.34%) through a client account of collateral securities for margin trading
in Guosen Securities Co. , Ltd.
Did any of the Company’s top 10 common shareholders or top 10 non-restricted common shareholders conduct
any agreed buy-back in the reporting period?
□ Yes √ No
There was no shareholder of a company conduct the transaction of repurchase under the agreement during the
reporting period.
30
The 2015 Annual Report of Changchai Company, Limited
2. Particulars about the controlling shareholder
Nature of controlling shareholder: Local state-controlled
Type of controlling shareholder: legal person
Legal representative / Date of Organization Business
Name of controlling shareholder
company principal establishment code scope
State-owned Assets Supervision and
Administration Commission of Changzhou Lu Qiang 01411025-1
Municipal People’s Government
Shares held by the controlling shareholder in
other listed companies by holding or Inapplicable
shareholding during the reporting period
Change of the controlling shareholder during the reporting period
□ Applicable √ Inapplicable
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 representative / Date of Organization Business
Name of the actual controller
company principal establishment code scope
State-owned Assets Supervision and
Administration Commission of Changzhou Lu Qiang 01411025-1
Municipal People’s Government
Equity of shareholding and participating
shares of actual controllers in other domestic
Inapplicable
and foreign listed company during the
reporting period
Change of the actual controller during the reporting period
□ Applicable √ Inapplicable
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
30.43%
CHANGCHAI COMPANY, LIMITED
The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Inapplicable
4. Particulars about other corporate shareholders with shareholding proportion over 10%
□ Applicable √ Inapplicable
5. Particulars about restriction of reducing holding-shares of controlling shareholders, actual controller,
restructuring parties and other commitment entities
□ Applicable √ Inapplicable
31
The 2015 Annual Report of Changchai Company, Limited
Section VII. Preference Shares
□ Applicable √ Inapplicable
There was no preferred stock during reporting period.
Section VIII. Directors, Supervisors, Senior Management Staff &
Employees
I. Changes in shareholding of directors, supervisors and senior management staff
Amount Amount
Shares of shares of shares Number
Beginnin Ending Other
held at increased decreased of shares
Current/f g date of date of changes
Name Position Gender Age the at the at the held at
ormer office office increase/d
year-begi reporting reporting period-en
term term ecrease
n (share) period period d (share)
(share) (share)
Chairman of the 26 Jun. 25 Jun.
Xue Guojun Current Male 53 0 0 0 0 0
Board 2013 2016
26 Jun. 31 Mar.
Jiang Huaping Director Former Male 53 0 0 0 0 0
2013 2015
Director, General
26 Jun. 25 Jun.
He Jianguang Manager, Chief Current Male 52 0 0 0 0 0
2013 2016
Engineer
Director, Deputy
General Manager, 26 Jun. 25 Jun.
Shi Jianchun Current Male 54 0 0 0 0 0
Secretary of the 2013 2016
Board
26 Jun. 25 Jun.
Xu Zhenping Director Current Male 59 0 0 0 0 0
2013 2016
26 Jun. 25 Jun.
Zhuang Rongfa Director Current Male 72 0 0 0 0 0
2013 2016
1 Apr. 25 Jun.
Xu Qian Director Current Female 53 0 0 0 0 0
2015 2016
Independent 26 Jun. 25 Jun.
Shen Ningwu Current Male 74 0 0 0 0 0
director 2013 2016
Independent 26 Jun. 31 Mar.
Zhu Jianming Former Male 60 0 0 0 0 0
director 2013 2015
Independent 26 Jun. 31 Mar.
Cao Huiming Former Male 67 0 0 0 0 0
director 2013 2015
Independent 1 Apr. 25 Jun.
Li Minghui Current Male 42 0 0 0 0 0
director 2015 2016
Independent 1 Apr. 25 Jun.
Jia Bin Current Male 38 0 0 0 0 0
director 2015 2016
26 Jun. 25 Jun.
Yin Lihou Vice GM Current Male 52 0 0 0 0 0
2013 2016
26 Jun. 25 Jun.
Xu Yi Vice GM Current Male 52 0 0 0 0 0
2013 2016
26 Jun. 25 Jun.
Liu Xiaoyun Vice GM Current Male 54 0 0 0 0 0
2013 2016
26 Jun. 25 Jun.
Wei Jinxiang Vice GM Current Male 53 0 0 0 0 0
2013 2016
22 Apr. 25 Jun.
Zhang Xin Vice GM Current Male 50 0 0 0 0
2015 2016
Chairman of the 26 Jun. 25 Jun.
Ni Mingliang Current Male 49 0 0 0 0 0
Supervisor 2013 2016
26 Jun. 25 Jun.
Zhong Lei Supervisor Current Male 47 0 0 0 0 0
2013 2016
26 Jun. 25 Jun.
Lu Zhonggui Supervisor Current Male 49 0 0 0 0 0
2013 2016
26 Jun. 25 Jun.
Xie Guozhong Supervisor Current Male 47 0 0 0 0 0
2013 2016
26 Jun. 25 Jun.
Liu Yi Supervisor Current Male 47 0 0 0 0 0
2013 2016
32
The 2015 Annual Report of Changchai Company, Limited
II. Particulars about changes of Directors, Supervisors and Senior Executives
Name Position Type Date Reason
Jiang Huaping Director Former 31 Mar. 2015 Job changes
Zhu Jianming Independent director Former 31 Mar. 2015 Left the post
Cao Huiming Independent director Former 31 Mar. 2015 Left the post
III. Resumes of important personnel
Main working experience of current directors, supervisors and senior management staff
Xue Guojun: Now he acts as Chairman of the Board, Deputy Secretary of Party Committee of the Company.
He Jianguang: Now he acts as Director, General Manager, and Chief Engineer of the Company.
Shi Jianchun: Now he acts as Party Secretary, Director, Deputy General Manager and Secretary of the Board of
the Company, and Chairman of the Board of Changzhou 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.
Xu Zhenping: He successively held the posts of Director and Deputy General Manager of the Company. Now he
acts as Director and Senior of the Company as well as Chairman of The Board of Housheng Agricultural
Equipment Co., Ltd.
Zhuang Rongfa: He successively took the posts of Deputy Director, Deputy Secretary of CPC in Changzhou
Municipal Economic Committee. Now he acts as the director of the Company.
Shen Ningwu: Now he acts the consultant in China Association of Automobile Manufacturers, the Independent
Director in Chongqing Jinguan Automobile Manufacture Co., Ltd., Hangzhou Zhaofeng Autoparts Manufacturing
Co., Ltd., and the Company.
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. and Baosheng Science & Technology Innovation 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: Now he acts as Deputy General Manager of the Company, and the Chairman of the Board of Directors
of Changchai Wanzhou Diesel Engine Co., Ltd. Now he acts as Deputy General Manager of the Company.
Liu Xiaoyun: 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.
Zhang Xin: He successively held the posts of GM of Sales Company, General Manager Assistant of the Company.
Now he acts as Deputy General Manager of the Company.
Ni Mingliang: Now he acts as Deputy Secretary, Vice Chairman of Labor Union and Chairman of the Supervisory.
Now he acts as Section Chief of the General Office of State-owned Assets Supervision and Administration
Commission of Changzhou Municipal People’s Government.
Lu Zhonggui: Now he acts as Special Discipline Inspector of Discipline Inspection Committee and Secretary of
Organ Party General Branch as well as supervisor of the Company.
Xie Guozhong: Now he acts as Secretary of Party General Branch of the sales company, Deputy General Manager
and Supervisor of the Company and Supervisor of Housheng Agriculture Equipment.
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.
33
The 2015 Annual Report of Changchai Company, Limited
Post-holding in shareholder units
√ Applicable □ Inapplicable
Name of the Position in Receives
Beginning Ending date payment from
person holding Name of the shareholder unit the date of office of office the shareholder
any post in any shareholder term term
shareholder unit unit unit?
State-owned Assets Supervision and Section Chief
Zhong Lei Administration Municipal
Changzhou
Commission of the 25 Jun.
People’s ofOffice General 1Aug. 2009 2016 Yes
Government
State-owned Assets Supervision and
Xu Qian Administration Commission of Deputy 1 Apr. 2015 25 Jun. Yes
Changzhou Municipal People’s Researcher 2016
Government
Post-holding in other units
□ Applicable √ Inapplicable
Particulars about the Company's current directors, supervisors and senior executives ‘punishments from Securities
Regulatory Institution of recent three years in reporting period
□ Applicable √ Inapplicable
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 2015, 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 Zhong Lei 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 Ten Thousand Yuan
Total before-tax Whether gained
remuneration remuneration from
Name Position Gender Age Current/former
gained from the the related parties of
Company the Company
Xue Guojun Chairman of the Board Male 53 Current 80.93 No
Jiang Huaping Director Male 53 Former 0 No
Director, General Manager,
He Jianguang Male 52 Current 80.98 No
Chief Engineer
Director, Deputy General
Shi Jianchun Male 54 Current 80.53 No
Manager, Secretary of the Board
Xu Zhenping Director Male 59 Current 50.09 No
Zhuang Rongfa Director Male 72 Current 0 No
Xu Qian Director Female 53 Current 0 Yes
Shen Ningwu Independent director Male 74 Current 5 No
Zhu Jianming Independent director Male 60 Former 0 No
Cao Huiming Independent director Male 67 Former 0 No
Li Minghui Independent director Male 42 Current 5 No
Jia Bin Independent director Male 38 Current 5 No
Yin Lihou Vice GM Male 52 Current 59.9 No
Xu Yi Vice GM Male 52 Current 66.14 No
Liu Xiaoyun Vice GM Male 54 Current 62.79 No
Wei Jinxiang Vice GM Male 53 Current 57.59 No
Zhang Xin Vice GM Male 50 Current 61.7 No
Ni Mingliang Chairman of the Supervisor Male 49 Current 53.07 No
34
The 2015 Annual Report of Changchai Company, Limited
Zhong Lei Supervisor Male 47 Current 0 Yes
Lu Zhonggui Supervisor Male 49 Current 13.96 No
Xie Guozhong Supervisor Male 47 Current 27.09 No
Liu Yi Supervisor Male 47 Current 13.23 No
Total -- -- -- -- 723 --
Situations of equity incentives awarded to the directors, supervisors and senior management of the Company
during the reporting period
□ Applicable √ Inapplicable
V. About employees
1. Number, structure and education of employees
Number of on-job employees in parent company(person) 2,956
Number of on-job employees in main subsidiaries(person) 630
Total number of on-job employees (person) 3,586
Total number of employees obtaining salaries (person) 3586
Total number of retired employees the Company or the subsidiaries should
0
bare the retirement fee (person)
Professional structure
Category Number (person)
Production personnel 2,504
Sale personnel 220
Technicians 363
Financial personnel 41
Administrative personnel 325
Others 133
Total 3,586
Education
Category Number (person)
Junior high school or lower 1,633
Junior high school 1,119
College and technical secondary school 525
Bachelor degree 288
Master degree 21
Total 3,586
2. Employee’s 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.
3. Employee’s training plan
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. Outsourcing situation
□ Applicable √ Inapplicable
35
The 2015 Annual Report of Changchai Company, Limited
Section IX. Corporate Governance
I. Basic details 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.
Whether it exists any difference between the corporate governance and the Company Law and relevant rules of
CSRC or not?
□ Yes √ No
There is no difference between the corporate governance and the Company Law and relevant rules of CSRC.
II. Particulars about the Company’s separation from the controlling shareholder in respect of
business, personnel, assets, organization and financial affairs
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 √ Inapplicable
IV. Particulars about the annual shareholders’ general meeting and special shareholders’
general meetings held during the reporting period
1.Particulars about the shareholders’ general meeting in reporting period
Proportion of Convening Disclosure Index to the
Session Type investors' date date disclosed
participation
The Annual Shareholders’ The Annual 20 May.
General Meeting of 2014 Shareholders’
Meeting
General 0.04% 19 May 2015 2015 2015-016
The First Special
Shareholders’ Shareholders’
General Special Meeting
General 0.03% 31 Mar. 2015 1 Apr. 2015 2015-006
Meeting for 2015
2. Special Shareholders’ General Meeting applied by the preferred stockholder with restitution of voting
right
□ Applicable √ Inapplicable
36
The 2015 Annual Report of Changchai Company, Limited
V. Performance of the Independent Directors
1. Particulars about the independent directors attending the board sessions and the shareholders’ general
meetings
1. Particulars about the independent directors attending the board sessions
Non-attendance
Sessions required
Attendance by way in person for
Independent to attend during Attendance Entrusted Absenc
of two
director the reporting in person presence (times) e rate
telecommunication consecutive
period
times
Shen Ningwu 8 3 5 0 0 No
Cao Huiming 2 0 2 0 0 No
Zhu Jianming 2 0 2 0 0 No
Li Minghui 6 3 2 1 0 No
Jia Bin 6 3 3 0 0 No
General meetings sat in on by independent directors 2
2. Particulars about independent directors proposing objection on relevant events
Whether independent directors propose objection on relevant events or not?
□ Yes √ No
During the reporting period, no independent directors proposed any objection on relevant events of the Company.
3. Other explanations about the duty performance of independent directors
Whether advices to the Company from independent directors were adopted or not
√ Yes □ No
Explanation on the advices of independent directors for the Company being adopted or not adopted
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,
VI. Performance of the Special Committees under the Board during the 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
37
The 2015 Annual Report of Changchai Company, Limited
Directors;
6) Advised to continue the appointment of Jiangsu Gongzheng Certified Public Accountants Co., Ltd as the audit
institution of the Company in 2015.
(2) Written opinions on financial statements of the Company issued by the Audit Committee
1) On 1 Apr. 2016, 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 31 Dec. 2015, as well as the business results and cash flows in 2015 in all
material aspects.
2) With regard to the audited financial statements 2015, on 12 Apr. 2016, the Audit Committee made the following
resolution: the Audit Committee reviewed the financial statements 2015 audited by auditors, and believed that the
said financial statements faithfully reflected the financial position of the Company as at 31 Dec. 2015, as well as
the business results and cash flows in 2015 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 2015:
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 31 Dec. 2015, as well as the business results and cash flows in 2015, 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 12 Apr. 2016 to review the matter concerning the employment
of a CPAs firm for the audit in 2016, and the review opinion was as follows:
Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd had accomplished the audit of the
Company 2015, and the auditor’s report reflected the actual financial status of the Company in 2015 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 2016.
The said proposal was agreed to be submitted to the 16th Session of the 7th 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 2015, based on the fulfillment of the main financial indicators and operation
targets in 2015, which were determined in the Contract for Appraisal of Senior Executives in 2015.
In the reporting period, based on relevant regulations and rules, the Remuneration & Appraisal Committee
examined the remuneration of the Company’s senior executives in 2015 and issued opinions as follows:
The Remuneration & Appraisal Committee held that, the remuneration of the Company’s senior executives
in 2015 was in accordance with provisions in the Contract for Appraisal of Senior Executives in 2015, as well as
the laws, regulations and rules of the Company.
38
The 2015 Annual Report of Changchai Company, Limited
VII. Performance of the Supervisory Committee
During the reporting period, the Supervisory Committee found whether there was risk in the Company in the
supervisory activity
□ Yes √ No
The Supervisory Committee has no objection on the supervised events during the reporting period.
VIII. Performance Evaluation and Incentive Mechanism for Senior Management Staff
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. Particulars about significant defects found in the internal control during reporting period
□ Yes √ No
2. Self-appraisal report on internal control
Disclosure date of the Self-appraisal Report on Internal Control 14Apr. 2016
Disclosure index of the Self-appraisal Report on Internal Control 2016-004
The proportion of total assets included in evaluation scope entities in
100.00%
the Company's total assets of the consolidated financial statements
The proportion of operation revenue included in evaluation scope
entities in the Company's operation revenue of the consolidated 100.00%
financial statements
Defect judging standards
Category Section XI. Financial Report Non-Financial Report
The Company classified the defects as
great defect, significant defect and
general defect according to the influence
degree from the internal control: random
(1) Great defect: refers to one or multiple Defects with the followingrecognized
characteristics should be
groups with control defect which may as great defect:
lead the enterprise seriously deviates the 1) Seriously violated the national
control target; administrative regulations
(2) Significant defect: refers to one or lawstheandnormative documents;
and
multiple groups with control defect with 2) “three significant one great” event
the severity and the economic results had not been through the collective
lower than the great defect but may still decision-making process;
lead the enterprise seriously deviates the 3) the significant events involved
control target;
Qualitative criteria
the production
(3) General defect: refers to other defect with Company lackedandofoperation of
the
except for the great defect and significant control or the institutionalsystematic
system
defect. was invalid;
Qualitative criteria: defects with the 4) the internal control of the
following random characteristics should information disclosure was invalid,
be recognized as great defect:
1) the defect involves with the which led theby Companysupervision
condemned the
be open
malpractice of the Directors, Supervisors department;
and Senior Executives; the the
2) revised the disclosed financial report; 5)assessmentgreat defect thefrominternal
results of
3) CPAs discovered the great
misstatement among the current financial control had not been revised.
statement while which could not be found
during the operating process of the
internal control;
39
The 2015 Annual Report of Changchai Company, Limited
4) the supervision from the Audit
Committee and the internal audit
institution of the enterprise was invalid.
to the quantitative
Quantitative criteria: the quantitative Referinternal control defectcriteria theof
the
criteria of recognizing the significant financial report, to recognizeof the
degree of the misstatement (including the quantitative criteria of the significant
false negatives) of the consolidated degree of the internal control defect
financial report of the listed companies of the non-financial report of the
based on the data from the 2015 listed companies as:
consolidated statements was as:
Quantitative criteria Great defect: misstatement≥5% of the Great defect: ofpossibly caused directly
losses≥0.1% the net assets
annual profits
Significant defect: 2.5% of the annual Significant defect: 0.05% of thelosses net
profits≤misstatement＜5% of the annual assets≤possiblynetcaused directly
＜0.1% of the assets
profits defect: possibly
General defect ＜ 2.5% of the annual General losses ＜ 0.05% of thecaused
directly net
profits assets
Number of significant defects
0
of financial report (Piece)
Number of significant defects
0
of non- financial report (Piece)
Number of important defects
0
of financial report (Piece)
Number of important defects
0
of non-financial report (Piece)
X. Audit report on internal control
√ Applicable □ Inapplicable
Audit opinion paragraphs in the Audit Report on Internal Control
We considered that, the Changchai Shares maintained effective internal control of the financial report in
significant aspects according to the Basic Norms of Internal Control and relevant regulations on 31 Dec. 2015.
Particulars about Audit Report on Internal Control Disclosure
Disclosure index of the Audit Report on Internal Control 14Apr. 2016
Type of Audit Report on Internal Control Unqualified auditor's report
Whether there is significant defect in non-financial report No
Whether the CPAs firm issues an Audit Report on Internal Control with non-standard opinion or not?
□ Yes √ No
Whether the Audit Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report
from the Board or not?
√ Yes □ No
40
The 2015 Annual Report of Changchai Company, Limited
Section X. Financial Report
I. Auditor’s Report
Type of audit opinion Standard unqualified opinion
Date of signing the auditor’s report 12 Apr. 2016
Jiangsu Gongzheng Tianye Certified Public Accountants Company
Name of the audit firm
Limited (LLP)
Reference number of the auditor’s
SGW [2016] No. A457
report
Name of the CPA Wang Wenkai, He Taifeng
Text of the Auditor’s Report
All shareholders of Changchai Co., Ltd.:
We have audited the attached financial statements of Changchai Co., Ltd. (hereinafter referred to as “the
Company”), including the consolidated and the Company’s financial statements as at 31 Dec. 2015, the
consolidated and the Company’s income statement, the consolidated and the Company’s cash flow statement, and
the consolidated and the Company’s statement of changes in equity for the year then ended, as well as the notes to
the financial statements.
I. Responsibility of the management on the financial statements
It is the responsibility of the Company’s management to prepare the financial statements according to the
enterprise accounting standards, which includes: (1) designing, implementing and maintaining the internal control
related to the financial statement preparation, so as to avoid significant errors in the financial statements caused by
malpractices or mistakes; (2) choosing and adopting proper accounting policies; and (3) making rational
accounting estimates.
II. Responsibility of the certified public accountants
Our responsibility is to express our auditing opinion based on our audit. And we have conducted the audit
according to the Auditing Standards for Chinese Registered Accountants, which requires us to conform to ethical
standards, plan and carry out the audit, so as to reasonably ensure that there exist no significant errors in the
financial statements.
The audit work involves implementing the auditing procedure so as to acquire audit evidences for the data
carried in the financial statements. The choice of auditing procedures depends on the judgment of the registered
accountants, including the risk assessment of significant financial statement errors caused by malpractices or
mistakes. When conducting the risk assessment, we will consider the internal control related to financial statement
preparation so as to design a proper auditing procedure, with no purpose to express opinions on the effectiveness
of the internal control. Our audit work also involves evaluating the rationality of the accounting policy chosen and
the accounting estimates made by the management, as well as the general presentation of the financial statements.
We believe that the auditing evidences we obtained are sufficient and proper, which provides a foundation for
us to express our auditing opinion.
III. Audit opinion
We believe that the financial statements of the Company have been prepared in accordance with the
requirements of the Enterprises Accounting Standards, and presented fairly, in all material respects, the financial
position of the Company as at 31 Dec. 2015, and the results of its operations and its cash flows for the year then
ended.
Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. (LLP) CPA of China: Wang Wenkai
Wuxi China CPA of China: He Taifeng
12 Apr. 2016
41
The 2015 Annual Report of Changchai Company, Limited
II. Financial statements
Monetary unit of notes to financial statements: RMB Yuan
1. Consolidated balance sheet
Prepared by Changchai Company, Limited
31 Dec. 2015
Unit: RMB Yuan
Item 31 Dec. 2015 31 Dec. 2014
Current Assets:
Monetary funds 601,312,715.62 531,969,747.91
Settlement reserves
Intra-group lendings
Financial assets measured at fair value of which changes are
2,109,642.19
recorded in current profits and losses
Derivative financial assets
Notes receivable 498,502,274.42 314,236,128.92
Accounts receivable 308,596,920.50 374,335,355.22
Accounts paid in advance 12,882,271.70 15,092,855.36
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract reserves
Interest receivable
Dividend receivable
Other accounts receivable 5,622,539.81 8,662,701.30
Financial assets purchased under agreements to resell
Inventories 397,290,012.36 497,588,717.86
Assets held for sale
Non-current assets due within 1 year
Other current assets 60,304,691.41 31,729,042.18
Total current assets 1,884,511,425.82 1,775,724,190.94
Non-current assets:
Loans by mandate and advances granted
Available-for-sale financial assets 502,980,000.00 497,850,000.00
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment 20,769,304.76 20,459,975.99
Investing real estate 57,281,030.03 59,489,370.83
Fixed assets 554,601,893.23 572,785,946.61
Construction in progress 108,198,455.01 134,948,317.87
42
The 2015 Annual Report of Changchai Company, Limited
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 103,101,462.47 104,441,092.62
R&D expense
Goodwill
Long-term deferred expenses
Deferred income tax assets 962,530.88 1,084,863.32
Other non-current assets
Total of non-current assets 1,347,894,676.38 1,391,059,567.24
Total assets 3,232,406,102.20 3,166,783,758.18
Current liabilities:
Short-term borrowings 17,000,000.00 20,000,000.00
Borrowings from Central Bank
Customer bank deposits and due to banks and other financial
institutions
Intra-group borrowings
Financial liabilities measured at fair value of which changes
are recorded in current profits and losses
Derivative financial liabilities
Notes payable 238,200,000.00 218,351,400.00
Accounts payable 535,978,470.07 550,858,517.60
Accounts received in advance 26,665,671.38 29,364,756.16
Financial assets sold for repurchase
Handling charges and commissions payable
Payroll payable 60,309,349.29 61,303,762.60
Tax payable 10,798,062.93 14,511,976.27
Interest payable
Dividend payable 3,891,433.83 3,891,433.83
Other accounts payable 201,151,632.46 196,560,865.32
Reinsurance premiums payable
Insurance contract reserves
Payables for acting trading of securities
Payables for acting underwriting of securities
Liabilities held for sale
Non-current liabilities due within 1 year
43
The 2015 Annual Report of Changchai Company, Limited
Other current liabilities 2,403,287.06 2,992,996.74
Total current liabilities 1,096,397,907.02 1,097,835,708.52
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables
Specific payables
Estimated liabilities
Deferred income 53,121,605.70 54,185,979.32
Deferred income tax liabilities 62,385,825.00 61,616,325.00
Other non-current liabilities
Total non-current liabilities 115,507,430.70 115,802,304.32
Total liabilities 1,211,905,337.72 1,213,638,012.84
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves 164,328,665.43 164,328,665.43
Less: Treasury stock
Other comprehensive income 353,519,675.00 349,159,175.00
Specific reserves 10,069,746.98 8,332,077.21
Surplus reserves 305,758,285.91 298,151,696.96
Provisions for general risks
Retained profits 607,859,611.69 555,590,894.67
Total equity attributable to owners of the Company 2,002,910,311.01 1,936,936,835.27
Minority interests 17,590,453.47 16,208,910.07
Total owners’ equity 2,020,500,764.48 1,953,145,745.34
Total liabilities and owners’ equity 3,232,406,102.20 3,166,783,758.18
Legal representative: Xue Guojun Person-in-charge of the accounting work: He Jianguang
Chief of the accounting division: Jiang He
44
The 2015 Annual Report of Changchai Company, Limited
2. Balance sheet of the Company
Unit: RMB Yuan
Item 31 Dec. 2015 31 Dec. 2014
Current Assets:
Monetary funds 572,530,396.20 494,366,603.39
Financial assets measured at fair value of which changes are
recorded in current profits and losses
Derivative financial assets
Notes receivable 490,777,874.42 312,466,128.92
Accounts receivable 263,878,166.23 331,239,446.99
Accounts paid in advance 6,512,574.55 10,139,747.15
Interest receivable
Dividend receivable
Other accounts receivable 4,885,363.01 5,712,047.44
Inventories 348,179,430.41 426,235,429.74
Assets held for sale
Non-current assets due within 1 year
Other current assets 41,403,182.61 20,637,141.03
Total current assets 1,728,166,987.43 1,600,796,544.66
Non-current assets:
Available-for-sale financial assets 495,780,000.00 490,650,000.00
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment 205,235,804.76 204,926,475.99
Investing real estate 57,281,030.03 59,489,370.83
Fixed assets 445,343,167.61 454,717,057.95
Construction in progress 108,198,455.01 134,948,317.87
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 81,159,855.82 81,914,372.57
R&D expense
Goodwill
Long-term deferred expenses
Deferred income tax assets 962,530.88 1,084,863.32
Other non-current assets
45
The 2015 Annual Report of Changchai Company, Limited
Total of non-current assets 1,393,960,844.11 1,427,730,458.53
Total assets 3,122,127,831.54 3,028,527,003.19
Current liabilities:
Short-term borrowings
Financial liabilities measured at fair value of which changes
are recorded in current profits and losses
Derivative financial liabilities
Notes payable 218,200,000.00 206,351,400.00
Accounts payable 527,416,373.82 501,904,239.41
Accounts received in advance 24,537,940.90 37,247,846.51
Payroll payable 55,068,743.12 56,426,935.61
Tax payable 8,521,233.87 12,438,714.42
Interest payable
Dividend payable 3,243,179.97 3,243,179.97
Other accounts payable 194,650,090.70 191,066,117.22
Liabilities held for sale
Non-current liabilities due within 1 year
Other current liabilities
Total current liabilities 1,031,637,562.38 1,008,678,433.14
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables
Specific payables
Estimated liabilities
Deferred income 53,121,605.70 54,185,979.32
Deferred income tax liabilities 62,385,825.00 61,616,325.00
Other non-current liabilities
Total non-current liabilities 115,507,430.70 115,802,304.32
Total liabilities 1,147,144,993.08 1,124,480,737.46
Owners’ equity:
Share capital 561,374,326.00 561,374,326.00
Other equity instruments
Of which: preferred shares
46
The 2015 Annual Report of Changchai Company, Limited
Perpetual bonds
Capital reserves 183,071,147.70 183,071,147.70
Less: Treasury stock
Other comprehensive income 353,519,675.00 349,159,175.00
Specific reserves 10,069,746.98 8,332,077.21
Surplus reserves 305,758,285.91 298,151,696.96
Retained profits 561,189,656.87 503,957,842.86
Total owners’ equity 1,974,982,838.46 1,904,046,265.73
Total liabilities and owners’ equity 3,122,127,831.54 3,028,527,003.19
47
The 2015 Annual Report of Changchai Company, Limited
3. Consolidated income statement
Unit: RMB Yuan
Item 2015 2014
I. Total operating revenues 2,519,799,547.29 2,489,792,063.33
Including: Sales income 2,519,799,547.29 2,489,792,063.33
Interest income
Premium income
Handling charge and commission income
II. Total operating costs 2,445,178,600.59 2,418,623,839.64
Including: Cost of sales 2,110,216,135.62 2,105,359,867.94
Interest expenses
Handling charge and commission expenses
Surrenders
Net claims paid
Net amount withdrawn for the insurance contract reserve
Expenditure on policy dividends
Reinsurance premium
Taxes and associate charges 7,632,813.49 749,136.23
Selling and distribution expenses 98,122,345.71 92,235,311.13
Administrative expenses 197,678,915.43 197,704,824.42
Financial expenses -15,723,785.00 -10,932,468.28
Asset impairment loss 47,252,175.34 33,507,168.20
Add: Gain/(loss) from change in fair value (“-” means loss) -109,642.19 109,642.19
Gain/(loss) from investment (“-” means loss) 9,120,105.94 12,014,333.27
Including: share of profits in associates and joint ventures 670,328.77 1,366,650.26
Foreign exchange gains (“-” means loss)
III. Business profit (“-” means loss) 83,631,410.45 83,292,199.15
Add: non-operating income 14,048,268.56 12,619,459.28
Including: Gains on disposal of non-current assets 298,236.45 437,606.94
Less: non-operating expense 8,510,877.99 10,654,493.23
Including: Losses on disposal of non-current assets 86,306.84 318,704.95
IV. Total profit (“-” means loss) 89,168,801.02 85,257,165.20
Less: Income tax expense 16,684,465.13 19,587,550.64
V. Net profit (“-” means loss) 72,484,335.89 65,669,614.56
Net profit attributable to owners of the Company 71,102,792.49 64,202,144.29
Minority shareholders’ income 1,381,543.40 1,467,470.27
VI. After-tax net amount of other comprehensive incomes 4,360,500.00 71,378,330.67
48
The 2015 Annual Report of Changchai Company, Limited
After-tax net amount of other comprehensive incomes
4,360,500.00 71,378,330.67
attributable to owners of the Company
(I) Other comprehensive incomes that will not be
reclassified into gains and losses
1. Changes in net liabilities or assets with a defined
benefit plan upon re-measurement
2. Enjoyable shares in other comprehensive incomes in
investees that cannot be reclassified into gains and losses under
the equity method
(II) Other comprehensive incomes that will be reclassified
4,360,500.00 71,378,330.67
into gains and losses
1. Enjoyable shares in other comprehensive incomes in
investees that will be reclassified into gains and losses under the
equity method
2. Gains and losses on fair value changes of
4,360,500.00 71,311,600.00
available-for-sale financial assets
3. Gains and losses on reclassifying held-to-maturity
investments into available-for-sale financial assets
4. Effective hedging gains and losses on cash flows
5. Foreign-currency financial statement translation
66,730.67
difference
6. Other
After-tax net amount of other comprehensive incomes
attributable to minority shareholders
VII. Total comprehensive incomes 76,844,835.89 137,047,945.23
Attributable to owners of the Company 75,463,292.49 135,580,474.96
Attributable to minority shareholders 1,381,543.40 1,467,470.27
VIII. Earnings per share
(I) Basic earnings per share 0.13 0.11
(II) Diluted earnings per share 0.13 0.11
Legal representative: Xue Guojun Person-in-charge of the accounting work: He Jianguang
Chief of the accounting division: Jiang He
49
The 2015 Annual Report of Changchai Company, Limited
4. Income statement of the Company
Unit: RMB Yuan
Item 2015 2014
I. Total sales 2,516,865,611.28 2,494,339,556.14
Less: cost of sales 2,129,587,480.88 2,134,763,196.27
Business taxes and surcharges 7,167,609.31
Distribution expenses 92,215,078.66 87,132,202.53
Administrative expenses 182,609,958.75 181,276,503.47
Financial costs -17,089,993.07 -13,220,902.08
Impairment loss 42,554,499.55 15,048,198.38
Add: gain/(loss) from change in fair value (“-” means loss)
Gain/(loss) from investment (“-” means loss) 7,808,397.71 13,682,952.59
Including: income form investment on associates and joint
670,328.77 1,366,650.26
ventures
II. Business profit (“-” means loss) 87,629,374.91 103,023,310.16
Add: non-operating income 12,294,626.92 11,180,798.60
Including: Gains on disposal of non-current assets 82,621.37 257,729.86
Less: non-operating expense 8,218,111.06 10,476,546.75
Including: Losses on disposal of non-current assets 53,999.76 318,266.72
III. Total profit (“-” means loss) 91,705,890.77 103,727,562.01
Less: Income tax expense 15,640,001.29 18,506,336.32
IV. Net profit (“-” means loss) 76,065,889.48 85,221,225.69
V. After-tax net amount of other comprehensive incomes 4,360,500.00 71,311,600.00
(I) Other comprehensive incomes that will not be reclassified
into gains and losses
1. Changes in net liabilities or assets with a defined benefit
plan upon re-measurement
2. Enjoyable shares in other comprehensive incomes in
investees that cannot be reclassified into gains and losses under
the equity method
(II) Other comprehensive incomes that will be reclassified into
4,360,500.00 71,311,600.00
gains and losses
1. Enjoyable shares in other comprehensive incomes in
investees that will be reclassified into gains and losses under the
equity method
2. Gains and losses on fair value changes of
4,360,500.00 71,311,600.00
available-for-sale financial assets
50
The 2015 Annual Report of Changchai Company, Limited
3. Gains and losses on reclassifying held-to-maturity
investments into available-for-sale financial assets
4. Effective hedging gains and losses on cash flows
5. Foreign-currency financial statement translation
difference
6. Other
VI. Total comprehensive incomes 80,426,389.48 156,532,825.69
VII. Earnings per share
(I) Basic earnings per share
(II) Diluted earnings per share
51
The 2015 Annual Report of Changchai Company, Limited
5. Consolidated cash flow statement
Unit: RMB Yuan
Item 2015 2014
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering of
2,636,363,557.61 2,688,286,109.60
service
Net increase of deposits from customers and dues from banks
Net increase of loans from the central bank
Net increase of funds borrowed from other financial
institutions
Cash received from premium of original insurance contracts
Net cash received from reinsurance business
Net increase of deposits of policy holders and investment fund
Net increase of disposal of financial assets measured at fair
value of which changes are recorded into current gains and losses
Cash received from interest, handling charges and
commissions
Net increase of intra-group borrowings
Net increase of funds in repurchase business
Tax refunds received 28,895,174.42 33,639,405.87
Other cash received relating to operating activities 21,715,056.24 14,125,214.83
Subtotal of cash inflows from operating activities 2,686,973,788.27 2,736,050,730.30
Cash paid for goods and services 2,072,255,235.99 2,375,158,372.15
Net increase of customer lendings and advances
Net increase of funds deposited in the central bank and amount
due from banks
Cash for paying claims of the original insurance contracts
Cash for paying interest, handling charges and commissions
Cash for paying policy dividends
Cash paid to and for employees 311,707,299.43 286,745,413.05
Various taxes paid 86,777,245.36 40,280,909.48
Other cash payment relating to operating activities 88,307,124.54 85,373,391.14
Subtotal of cash outflows from operating activities 2,559,046,905.32 2,787,558,085.82
Net cash flows from operating activities 127,926,882.95 -51,507,355.52
II. Cash flows from investing activities:
Cash received from withdrawal of investments 2,000,000.00
Cash received from return on investments 8,810,777.17 11,151,322.56
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The 2015 Annual Report of Changchai Company, Limited
Net cash received from disposal of fixed assets, intangible
6,659,148.67 336,880.83
assets and other long-term assets
Net cash received from disposal of subsidiaries or other
business units
Other cash received relating to investing activities
Subtotal of cash inflows from investing activities 17,469,925.84 11,488,203.39
Cash paid to acquire fixed assets, intangible assets and other
36,003,567.09 60,611,666.98
long-term assets
Cash paid for investment 32,000,000.00 2,000,000.00
Net increase of pledged loans
Net cash paid to acquire subsidiaries and other business units 22,600,000.00
Other cash payments relating to investing activities
Subtotal of cash outflows from investing activities 68,003,567.09 85,211,666.98
Net cash flows from investing activities -50,533,641.25 -73,723,463.59
III. Cash Flows from Financing Activities:
Cash received from capital contributions 280,600.00
Including: Cash received from minority shareholder
280,600.00
investments by subsidiaries
Cash received from borrowings 17,000,000.00 20,000,000.00
Cash received from issuance of bonds
Other cash received relating to financing activities
Subtotal of cash inflows from financing activities 17,000,000.00 20,280,600.00
Repayment of borrowings 20,000,000.00 30,000,000.00
Cash paid for interest expenses and distribution of dividends
12,410,748.99 10,794,562.05
or profit
Including: dividends or profit paid by subsidiaries to
430,680.00
minority shareholders
Other cash payments relating to financing activities 28,075.00 400,000.00
Sub-total of cash outflows from financing activities 32,438,823.99 41,194,562.05
Net cash flows from financing activities -15,438,823.99 -20,913,962.05
IV. Effect of foreign exchange rate changes on cash and cash
24,385.48
equivalents
V. Net increase in cash and cash equivalents 61,954,417.71 -146,120,395.68
Add: Opening balance of cash and cash equivalents 464,761,820.50 610,882,216.18
VI. Closing balance of cash and cash equivalents 526,716,238.21 464,761,820.50
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The 2015 Annual Report of Changchai Company, Limited
6. Cash flow statement of the Company
Unit: RMB Yuan
Item 2015 2014
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering of
2,709,527,428.26 2,699,873,240.85
service
Tax refunds received 28,895,174.42 33,639,405.87
Other cash received relating to operating activities 18,196,561.87 11,580,677.83
Subtotal of cash inflows from operating activities 2,756,619,164.55 2,745,093,324.55
Cash paid for goods and services 2,197,759,847.18 2,426,842,672.28
Cash paid to and for employees 276,172,157.36 252,341,688.21
Various taxes paid 79,691,910.58 29,401,425.57
Other cash payment relating to operating activities 80,587,740.62 77,786,287.60
Subtotal of cash outflows from operating activities 2,634,211,655.74 2,786,372,073.66
Net cash flows from operating activities 122,407,508.81 -41,278,749.11
II. Cash flows from investing activities:
Cash received from retraction of investments
Cash received from return on investments 7,499,068.94 13,022,100.00
Net cash received from disposal of fixed assets, intangible
6,440,518.67 838,078.00
assets and other long-term assets
Net cash received from disposal of subsidiaries or other
1,027,642.33
business units
Other cash received relating to investing activities 4,000,000.00
Subtotal of cash inflows from investing activities 17,939,587.61 14,887,820.33
Cash paid to acquire fixed assets, intangible assets and other
31,944,367.09 54,243,469.12
long-term assets
Cash paid for investment 20,000,000.00 33,500,000.00
Net cash paid to acquire subsidiaries and other business units 21,126,700.00
Other cash payments relating to investing activities 4,000,000.00
Subtotal of cash outflows from investing activities 55,944,367.09 108,870,169.12
Net cash flows from investing activities -38,004,779.48 -93,982,348.79
III. Cash Flows from Financing Activities:
Cash received from capital contributions
Cash received from borrowings
Cash received from issuance of bonds
Other cash received relating to financing activities
Subtotal of cash inflows from financing activities
54
The 2015 Annual Report of Changchai Company, Limited
Repayment of borrowings
Cash paid for interest expenses and distribution of dividends
11,227,486.52 8,420,614.89
or profit
Other cash payments relating to financing activities
Sub-total of cash outflows from financing activities 11,227,486.52 8,420,614.89
Net cash flows from financing activities -11,227,486.52 -8,420,614.89
IV. Effect of foreign exchange rate changes on cash and cash
equivalents
V. Net increase in cash and cash equivalents 73,175,242.81 -143,681,712.79
Add: Opening balance of cash and cash equivalents 430,758,675.98 574,440,388.77
VI. Closing balance of cash and cash equivalents 503,933,918.79 430,758,675.98
55
The 2015 Annual Report of Changchai Company, Limited
7. Consolidated statement of changes in owners’ equity
2015
Unit: RMB Yuan
2015
Equity attributable to owners of the Company
Other equity
Item instruments Less: Other Minority Total owners’
Share Specific General Retained
Prefer Perpet Capital reserve treasury comprehensive Surplus reserve interests equity
capital reserve risk reserve profit
red ual Other stock incomes
shares bonds
I. Balance at the end of the 561,374, 555,590,894. 1,953,145,74
164,328,665.43 349,159,175.00 8,332,077.21 298,151,696.96 16,208,910.07
previous year 326.00 67 5.34
Add: change of accounting
policy
Correction of errors in
previous periods
Business mergers under
the same control
Other
II. Balance at the beginning of 561,374, 555,590,894. 1,953,145,74
164,328,665.43 349,159,175.00 8,332,077.21 298,151,696.96 16,208,910.07
the year 326.00 67 5.34
III. Increase/ decrease in the 52,268,717.0 67,355,019.1
4,360,500.00 1,737,669.77 7,606,588.95 1,381,543.40
period (“-” means decrease) 2 4
(I) Total comprehensive 71,102,792.4 76,844,835.8
4,360,500.00 1,381,543.40
incomes 9 9
(II) Capital increased and
reduced by owners
1. Common shares
increased by shareholders
2. Capital increased by
holders of other equity
instruments
56
The 2015 Annual Report of Changchai Company, Limited
3. Amounts of
share-based payments
recognized in owners’ equity
4. Other
-18,834,075.4 -11,227,486.5
(III) Profit distribution 7,606,588.95
7 2
1. Appropriations to
7,606,588.95 -7,606,588.95
surplus reserves
2. Appropriations to
general risk provisions
3. Appropriations to -11,227,486.5 -11,227,486.5
owners (or shareholders) 2 2
4. Other
(IV) Internal carry-forward
of owners’ equity
1. New increase of capital
(or share capital) from capital
public reserves
2. New increase of capital
(or share capital) from surplus
reserves
3. Surplus reserves for
making up losses
4. Other
(V) Specific reserve 1,737,669.77 1,737,669.77
1. Withdrawn for the
4,394,339.56 4,394,339.56
period
2. Used in the period 2,656,669.79 2,656,669.79
(VI) Other
561,374, 10,069,746.9 607,859,611. 2,020,500,76
IV. Closing balance 164,328,665.43 353,519,675.00 305,758,285.91 17,590,453.47
326.00 8 69 4.48
57
The 2015 Annual Report of Changchai Company, Limited
2014
Unit: RMB Yuan
2014
Equity attributable to owners of the Company
Other equity
Item instruments Less: Other Minority Total owners’
Share Specific General Retained
Prefer Perpet Capital reserve treasury comprehensive Surplus reserve interests equity
capital reserve risk reserve profit
red ual Other stock incomes
shares bonds
I. Balance at the end of the 561,374, 502,779,906. 1,826,059,15
171,016,154.25 277,780,844.33 6,996,256.56 289,629,574.39 16,482,094.15
previous year 326.00 92 6.60
Add: change of accounting
policy
Correction of errors in
previous periods
Business mergers under
the same control
Other
II. Balance at the beginning of 561,374, 502,779,906. 1,826,059,15
171,016,154.25 277,780,844.33 6,996,256.56 289,629,574.39 16,482,094.15
the year 326.00 92 6.60
III. Increase/ decrease in the 52,810,987.7 127,086,588.
-6,687,488.82 71,378,330.67 1,335,820.65 8,522,122.57 -273,184.08
period (“-” means decrease) 5 74
(I) Total comprehensive 64,202,144.2 137,047,945.
71,378,330.67 1,467,470.27
incomes 9 23
(II) Capital increased and
-6,714,326.57 4,210,926.57 -2,503,400.00
reduced by owners
1. Common shares 20,250,000.0
20,250,000.00
increased by shareholders 0
2. Capital increased by
holders of other equity
instruments
3. Amounts of
share-based payments
recognized in owners’ equity
58
The 2015 Annual Report of Changchai Company, Limited
-22,753,400.0
4. Other -6,714,326.57 -16,039,073.43
0
-16,942,737.4
(III) Profit distribution 8,522,122.57 -400,000.00 -8,820,614.89
6
1. Appropriations to
8,522,122.57 -8,522,122.57
surplus reserves
2. Appropriations to
general risk provisions
3. Appropriations to
-8,420,614.89 -400,000.00 -8,820,614.89
owners (or shareholders)
4. Other
(IV) Internal carry-forward
of owners’ equity
1. New increase of capital
(or share capital) from capital
public reserves
2. New increase of capital
(or share capital) from surplus
reserves
3. Surplus reserves for
making up losses
4. Other
(V) Specific reserve 1,335,820.65 1,335,820.65
1. Withdrawn for the
4,841,316.33 4,841,316.33
period
2. Used in the period 3,505,495.68 3,505,495.68
(VI) Other 26,837.75 5,551,580.92 -5,551,580.92 26,837.75
561,374, 555,590,894. 1,953,145,74
IV. Closing balance 164,328,665.43 349,159,175.00 8,332,077.21 298,151,696.96 16,208,910.07
326.00 67 5.34
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The 2015 Annual Report of Changchai Company, Limited
8. Statement of changes in owners’ equity of the Company
2015
Unit: RMB Yuan
2015
Other equity instruments Other
Item Less: treasury Specific Surplus Total owners’
Share capital Preferre Perpetua Capital reserve comprehensive Retained profit
Other stock reserve reserve equity
d shares l bonds incomes
8,332,077. 298,151,696. 1,904,046,26
I. Balance at the end of the previous year 561,374,326.00 183,071,147.70 349,159,175.00 503,957,842.86
21 96 5.73
Add: change of accounting policy
Correction of errors in previous periods
Other
8,332,077. 298,151,696. 1,904,046,26
II. Balance at the beginning of the year 561,374,326.00 183,071,147.70 349,159,175.00 503,957,842.86
21 96 5.73
III. Increase/ decrease in the period (“-” means 1,737,669. 70,936,572.7
4,360,500.00 7,606,588.95 57,231,814.01
decrease) 77 3
80,426,389.4
(I) Total comprehensive incomes 4,360,500.00 76,065,889.48
8
(II) Capital increased and reduced by owners
1. Common shares increased by
shareholders
2. Capital increased by holders of other
equity instruments
3. Amounts of share-based payments
recognized in owners’ equity
4. Other
60
The 2015 Annual Report of Changchai Company, Limited
-11,227,486.5
(III) Profit distribution 7,606,588.95 -18,834,075.47
2
1. Appropriations to surplus reserves 7,606,588.95 -7,606,588.95
2. Appropriations to owners (or -11,227,486.5
-11,227,486.52
shareholders) 2
3. Other
(IV) Internal carry-forward of owners’ equity
1. New increase of capital (or share capital)
from capital public reserves
2. New increase of capital (or share capital)
from surplus reserves
3. Surplus reserves for making up losses
4. Other
1,737,669.
(V) Specific reserve 1,737,669.77
77
4,394,339.
1. Withdrawn for the period 4,394,339.56
56
2,656,669.
2. Used in the period 2,656,669.79
79
(VI) Other
10,069,746 305,758,285. 1,974,982,83
IV. Closing balance 561,374,326.00 183,071,147.70 353,519,675.00 561,189,656.87
.98 91 8.46
61
The 2015 Annual Report of Changchai Company, Limited
2014
Unit: RMB Yuan
2014
Other equity instruments Other
Item Less: treasury Specific Surplus Total owners’
Share capital Preferre Perpetu Capital reserve comprehensive Retained profit
Other stock reserve reserve equity
d shares al bonds incomes
6,996,256.5 289,629,574. 1,754,571,39
I. Balance at the end of the previous year 561,374,326.00 183,044,309.95 277,847,575.00 435,679,354.63
6 39 6.53
Add: change of accounting policy
Correction of errors in previous periods
Other
6,996,256.5 289,629,574. 1,754,571,39
II. Balance at the beginning of the year 561,374,326.00 183,044,309.95 277,847,575.00 435,679,354.63
6 39 6.53
III. Increase/ decrease in the period (“-” means 1,335,820.6 149,474,869.
26,837.75 71,311,600.00 8,522,122.57 68,278,488.23
decrease) 5 20
156,532,825.
(I) Total comprehensive incomes 71,311,600.00 85,221,225.69
69
(II) Capital increased and reduced by owners
1. Common shares increased by
shareholders
2. Capital increased by holders of other
equity instruments
3. Amounts of share-based payments
recognized in owners’ equity
4. Other
62
The 2015 Annual Report of Changchai Company, Limited
(III) Profit distribution 8,522,122.57 -16,942,737.46 -8,420,614.89
1. Appropriations to surplus reserves 8,522,122.57 -8,522,122.57
2. Appropriations to owners (or
-8,420,614.89 -8,420,614.89
shareholders)
3. Other
(IV) Internal carry-forward of owners’ equity
1. New increase of capital (or share capital)
from capital public reserves
2. New increase of capital (or share capital)
from surplus reserves
3. Surplus reserves for making up losses
4. Other
1,335,820.6
(V) Specific reserve 1,335,820.65
5
4,841,316.3
1. Withdrawn for the period 4,841,316.33
3
3,505,495.6
2. Used in the period 3,505,495.68
8
(VI) Other 26,837.75 26,837.75
8,332,077.2 298,151,696. 1,904,046,26
IV. Closing balance 561,374,326.00 183,071,147.70 349,159,175.00 503,957,842.86
1 96 5.73
63
The 2015 Annual Report of Changchai Company, Limited
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 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 12 Apr. 2016.
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
64
The 2015 Annual Report of Changchai Company, Limited
occurred, the Group prepared financial statements in accordance with Enterprises—Basic Standard> 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 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 65 The 2015 Annual Report of Changchai Company, Limited 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 66 The 2015 Annual Report of Changchai Company, Limited 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: 67 The 2015 Annual Report of Changchai Company, Limited (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. 68 The 2015 Annual Report of Changchai Company, Limited (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 69 The 2015 Annual Report of Changchai Company, Limited 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 Recognition criteria of accounts receivable with individual and significant amount: significant single amounts refers to the accounts receivable of the single amount more than RMB 1 million (RMB 1 million include) (including accounts receivable and other accounts receivable) Withdrawal method of the bad debt provision of the accounts receivable with significant single amounts: 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 predicted 70 The 2015 Annual Report of Changchai Company, Limited future cash flow lower than book value. Upon independent impairment test, the accounts receivable with significant single amounts has not been impaired, it shall be withdrawn bad debt provision based on ending balance by adopting aging analysis method. (2) Method of recognizing the group basis and bad debt provision according to the accounts receivable which withdrew the bad debt provision by group: The Company divided the groups by taking the age of the accounts receivable as the credit risk portfolio and withdrew the bad debt provision by adopting aging analysis method. (3) Receivables with insignificant amount but being individually withdrawn the provision for bad debts Recognition criteria of accounts receivable with individual but insignificant amount: insignificant single amounts refers to the accounts receivable of the single amount lower than RMB 1 million (RMB 1 million include) (including accounts receivable and other accounts receivable). The reason and the withdrawal method of the bad debt provision of the accounts receivable with insignificant single amounts: 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 receivable that less than its carrying amount. The Company shall withdraw the bad-debt provision for such an account receivable by combining the aging method and individual judgment based on the debtor entity’s actual financial position, cash flows and other relevant information. (4) Proportion of the withdrawal of bad debts provision of accounts receivable by adopting aging analysis method: Withdrawal proportion of accounts Withdrawal proportion of other Aging receivable (%) accounts receivable (%) Within 1 year 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 Withdrawal policy of bad debts provision of the related parties: According to the 4th Session of the 9th Board of Directors, as for the accounts receivable of the related parties of the Company which owned the sustainable operation ability, the bad debts provision should not exceed 60% at best. 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 cost 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 71 The 2015 Annual Report of Changchai Company, Limited 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 consumption goods and packages Is one time amortization method of low-value consumption goods and packages when consuming. 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) 72 The 2015 Annual Report of Changchai Company, Limited 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 73 The 2015 Annual Report of Changchai Company, Limited 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 74 The 2015 Annual Report of Changchai Company, Limited 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 of various fixed assets Category of fixed Annual deprecation Method Useful life (Year) assets (%) Average method of Houses and buildings 20-40 2.50-5 useful life Average method of Machine equipment 6-15 6.67-16.67 useful life Transportation Average method of 5-10 10-20 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 75 The 2015 Annual Report of Changchai Company, Limited 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 76 The 2015 Annual Report of Changchai Company, Limited 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 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. (3) 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. 77 The 2015 Annual Report of Changchai Company, Limited 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 78 The 2015 Annual Report of Changchai Company, Limited 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 79 The 2015 Annual Report of Changchai Company, Limited 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 80 The 2015 Annual Report of Changchai Company, Limited 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 81 The 2015 Annual Report of Changchai Company, Limited 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 There was no change of the main accounting policy during the reporting period. (2) Change of main accounting estimates There was no change of the main accounting estimate during the reporting period. 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. 82 The 2015 Annual Report of Changchai Company, Limited (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 83 The 2015 Annual Report of Changchai Company, Limited 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 of the reporting period 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 Education surcharge Taxable turnover amount 5% Corporate income tax Taxable income 25% or 15% 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 Yuan Item Closing balance Opening balance Cash on hand 252,373.65 557,508.42 Bank deposits 526,463,864.56 464,204,312.08 Other monetary funds 74,596,477.41 67,207,927.41 Total 601,312,715.62 531,969,747.91 Of which: total amount deposited abroad At the period-end, the restricted monetary fund was of RMB74,596,477.41 in total, of which the bank acceptance deposit was of RMB74,596,477.41. 2. Financial assets measured by fair value and the changes be included in the current gains and losses Unit: RMB Yuan Item Closing balance Opening balance Tradable financial assets 2,109,642.19 Total 2,109,642.19 84 The 2015 Annual Report of Changchai Company, Limited 3. Notes receivable (1) Notes receivable listed by category Unit: RMB Yuan Item Closing balance Opening balance Bank acceptance bill 498,502,274.42 314,236,128.92 Total 498,502,274.42 314,236,128.92 (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 Yuan Amount of recognition Amount of not terminated Item termination at the period-end recognition at the period-end Bank acceptance bill 358,686,637.51 Total 358,686,637.51 (4) There was no notes transferred to accounts receivable because drawer of the notes fails to executed the contract or agreement。 (5) 58.64% increase at the period-end when compared to the period-begin, mainly due to the Company intensified the reflow of corporate sales income and adopted the bill settlement method more with the customers. 4. Accounts receivable (1) Accounts receivable disclosed by category Unit: RMB Yuan Closing balance Book balance Bad debt provision Category Withdrawal Book value Proportion Amount Amount proportion (%) (%) Accounts receivable with significant single amount for 32,966,572.81 6.03 28,743,568.09 87.19 4,223,004.72 which bad debt provision separately accrued Accounts receivable withdrawn bad debt provision according to 511,838,003.05 93.66 207,464,087.27 40.53 304,373,915.78 credit risks characteristics Accounts receivable with insignificant single amount for 1,686,716.39 0.31 1,686,716.39 100.00 which bad debt provision separately accrued Total 546,491,292.25 100.00 237,894,371.75 43.53 308,596,920.50 85 The 2015 Annual Report of Changchai Company, Limited Unit: RMB Yuan Opening balance Book balance Bad debt provision Category Withdrawal Book value Proportion Amount Amount proportion (%) (%) Accounts receivable with significant single amount for 28,819,671.25 4.75 23,459,404.33 81.40 5,360,266.92 which bad debt provision separately accrued Accounts receivable withdrawn bad debt provision according to 576,527,035.06 94.96 207,915,091.26 36.06 368,611,943.80 credit risks characteristics Accounts receivable with insignificant single amount for 1,776,159.00 0.29 1,413,014.50 79.55 363,144.50 which bad debt provision separately accrued Total 607,122,865.31 100.00 232,787,510.09 38.34 374,335,355.22 Accounts receivable with significant single amount for which bad debt provision separately accrued at period end Unit: RMB Yuan Account Bad debt Withdrawal proportion Book balance Withdrawal reason receivable provision (%) Customer 1 3,863,600.00 1,931,800.00 50.00 Estimated difficult to recover Customer 2 1,902,326.58 1,902,326.58 100.00 Difficult to recovered Customer 3 6,215,662.64 6,193,248.32 99.64 Difficult to recovered Customer 4 4,486,746.29 2,217,955.89 49.43 Estimated difficult to recover Customer 5 3,279,100.00 3,279,100.00 100.00 Estimated difficult to recover Customer 6 2,742,177.01 2,742,177.01 100.00 Estimated difficult to recover Customer 7 5,359,381.00 5,359,381.00 100.00 Difficult to recovered Customer 8 2,584,805.83 2,584,805.83 100.00 Difficult to recovered Customer 9 1,038,651.32 1,038,651.32 100.00 Difficult to recovered Customer 10 1,494,122.14 1,494,122.14 100.00 Difficult to recovered Total 32,966,572.81 28,743,568.09 In the groups, accounts receivable adopting aging analysis method to accrue bad debt provision: Unit: RMB Yuan Closing balance Aging Withdrawal Accounts receivable Bad debt provision proportion (%) Within 1 year 302,059,097.60 6,041,182.50 2.00 1 to 2 years 3,343,346.16 167,167.33 5.00 2 to 3 years 742,175.95 111,326.42 15.00 3 to 4 years 6,075,129.63 1,822,538.88 30.00 4 to 5 years 740,953.96 444,572.39 60.00 Over 5 years 198,877,299.75 198,877,299.75 100.00 Total 511,838,003.05 207,464,087.27 86 The 2015 Annual Report of Changchai Company, Limited (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 RMB12,321,726.771; the amount of the reversed or collected part during the reporting period was of RMB7,214,865.11. (3) The actual write-off accounts receivable N/A (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 RMB108,318,934.68, 19.82% of the closing balance of the accounts receivable and the relevant closing balance of bad debt provision was RMB21,417,408.33. 5. Prepayment (1) List by aging analysis: Unit: RMB Yuan Aging Closing balance Opening balance Amount Proportion (%) Amount Proportion (%) Within 1 year 11,891,116.78 92.30 14,026,514.13 92.93 1 to 2 years 7,418.00 0.06 127,345.30 0.84 2 to 3 years 114,790.79 0.89 70,049.80 0.46 3 to 4 years 4 to 5 years Over 5 years 868,946.13 6.75 868,946.13 5.77 Total 12,882,271.70 100.00 15,092,855.36 100.00 (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 RMB8,983,298.32, 69.73% of the closing balance of the accounts receivable. 6. Other accounts receivable (1) Other accounts receivable disclosed by category Unit: RMB Yuan Closing balance Book balance Bad debt provision Category Withdrawal Book value Proportion Amount Amount proportion (%) (%) Other accounts receivable with significant single amount for 2,853,188.02 7.66 2,853,188.02 100.00 which bad debt provision separately accrued Other accounts receivable withdrawn bad debt provision 32,431,210.57 87.10 26,808,670.76 82.66 5,622,539.81 according to credit risks characteristics Other accounts receivable with insignificant single amount for 1,952,628.15 5.24 1,952,628.15 100.00 which bad debt provision separately accrued Total 37,237,026.74 100.00 31,614,486.93 84.90 5,622,539.81 87 The 2015 Annual Report of Changchai Company, Limited Unit: RMB Yuan Opening balance Book balance Bad debt provision Category Withdrawal Book value Proportion Amount Amount proportion (%) (%) Other accounts receivable with significant single amount for 2,853,188.02 7.24 2,853,188.02 100.00 which bad debt provision separately accrued Other accounts receivable withdrawn bad debt provision 34,618,397.46 87.90 25,955,696.16 74.98 8,662,701.30 according to credit risks characteristics Other accounts receivable with insignificant single amount for 1,910,737.23 4.86 1,910,737.23 100.00 which bad debt provision separately accrued Total 39,382,322.71 100.00 30,719,621.41 78.00 8,662,701.30 Other accounts receivable with significant single amount for which bad debt provision separately accrued Unit: RMB Yuan Withdrawal Withdrawal Other account receivable Book balance Bad provision proportion (%) reason Changchai Group Import & Export Difficult to 2,853,188.02 2,853,188.02 100 Company recover 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 Yuan Closing balance Aging Withdrawal proportion Other accounts receivable Bad debt provision (%) Within 1 year 4,002,446.71 80,048.94 2.00 1 to 2 years 209,258.48 10,462.92 5.00 2 to 3 years 721,433.99 108,215.10 15.00 3 to 4 years 419,414.38 125,824.31 30.00 4 to 5 years 1,486,343.82 891,806.29 60.00 Over 5 years 25,592,313.19 25,592,313.19 100.00 Total 32,431,210.57 26,808,670.76 (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 RMB897,805.92; the amount of the reversed or collected part during the reporting period was of RMB2,940.40. (3) The actual write-off other accounts receivable N/A 88 The 2015 Annual Report of Changchai Company, Limited (4) Other accounts receivable classified by the nature of accounts Unit: RMB Yuan Nature Closing book balance Opening book balance Margin and cash pledge 4,200.00 2,004,200.00 Unit current amount 20,433,624.06 20,035,808.86 Employee loan 2,011,484.92 2,584,081.29 Other 14,787,717.76 14,758,232.56 Total 37,237,026.74 39,382,322.71 (5) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party Unit: RMB Yuan Proportion of the total Closing Closing year end balance of balance of Name of units Nature Aging balance the accounts bad debt receivable (%) provision Changzhou Compressor Co., Ltd. Current 2,940,000.00 Over 5 years 7.90 2,940,000.00 Import and Export Company of Current 2,853,188.02 Over 5 years 7.66 2,853,188.02 Changchai Group Changzhou New District Current 1,626,483.25 Over 5 years 4.37 1,626,483.25 Accounting Center OEM Group Settlement Center Current 1,140,722.16 Over 5 years 3.06 1,140,722.16 Changzhou Xingsheng Property Current 664,451.84 Over 5 years 1.78 13,289.04 Management Co., Ltd. Total 9,224,845.27 -- 24.77 8,573,682.47 (6) 35.09% decreased at the period-end when compared with the period-begin, mainly due to the subsidiary of the Company-Changwan had received the guarantee money of RMB2 million. 7. Inventory (1) Category of inventory Unit: RMB Yuan Item Closing balance Opening balance Falling price Falling price Book balance Book value Book balance Book value reserves reserves Raw material 111,288,103.55 2,587,305.60 108,700,797.95 121,329,364.38 2,739,224.97 118,590,139.41 Materials processed on 12,310,710.53 12,478,276.04 12,478,276.04 commission 12,310,710.53 Goods in process 110,165,018.34 23,144,279.29 87,020,739.05 134,613,551.41 19,830,684.94 114,782,866.47 Finished product 208,519,567.29 20,277,368.92 188,242,198.37 269,416,214.26 19,634,150.34 249,782,063.92 Low price and easily 1,300,787.34 1,955,372.02 1,955,372.02 worn articles 2,316,353.80 1,015,566.46 Total 444,599,753.51 47,309,741.15 397,290,012.36 539,792,778.11 42,204,060.25 497,588,717.86 89 The 2015 Annual Report of Changchai Company, Limited (2) Falling price reserves of inventory Unit: RMB Yuan Increased amount Decreased amount Opening Item Reverse or Closing balance balance Withdrawal Other Other write-off Raw materials 2,739,224.97 64,092.47 216,011.84 2,587,305.60 Goods in process 19,634,150.34 16,741,289.06 16,098,070.48 20,277,368.92 Inventory goods 19,830,684.94 23,144,279.29 19,830,684.94 23,144,279.29 Low price and 1,300,787.34 1,300,787.34 easily worn articles Total 42,204,060.25 41,250,448.16 36,144,767.26 47,309,741.15 8. Other current assets Unit: RMB Yuan Item Closing balance Opening balance The VAT tax credits 28,304,691.41 28,131,657.32 Bank financing 20,000,000.00 Securities financing 12,000,000.00 Export drawback receivable 3,597,384.86 Total 60,304,691.41 31,729,042.18 90.06% increase at the period-end when compared with the period-begin, which mainly due to the purchase of the bank financing. 9. Available-for-sale financial assets (1) List of available-for-sale financial assets Unit: RMB Yuan Closing balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Available-for-sale equity instruments: Measured by fair 457,780,000.00 457,780,000.00 452,650,000.00 452,650,000.00 value Measured by cost 46,410,000.00 1,210,000.00 45,200,000.00 46,410,000.00 1,210,000.00 45,200,000.00 method Total 504,190,000.00 1,210,000.00 502,980,000.00 499,060,000.00 1,210,000.00 497,850,000.00 (2) Available-for-sale financial assets measured by fair value at the period-end Unit: RMB Yuan Available-for-sale equity Category Total instruments Cost of equity instruments 41,874,500.00 41,874,500.00 Fair value 457,780,000.00 457,780,000.00 Changes of fair value accumulated recorded into 353,519,675.00 353,519,675.00 other comprehensive income Amount withdrawn bad debt provision 90 The 2015 Annual Report of Changchai Company, Limited (3) Available-for-sale financial assets measured by cost at the period-end Unit: RMB Yuan Book balance Impairment provision Shareholdi Cash ng bonus of proportion Investee Period Incre Decre Period Period- Incre Decre Period the among the -begin ase ase -end begin ase ase -end reporting investees period (%) Jiangsu 38,000, 38,000, 3,040,000.0 0.42 Bank 000.00 000.00 0 Qidong Liantong 7,200,0 7,200,0 3.2 717,273.40 Dynamomet 00.00 00.00 er Co., Ltd. 1,210,0 1,210,0 1,210,00 1,210,0 Others 00.00 00.00 0.00 00.00 46,410, 46,410, 1,210,00 1,210,0 3,757,273.4 Total 000.00 000.00 0.00 00.00 0 Other: RMB510,000 in Chengdu Changwan Diesel Engine Marketing Corp., and RMB2,900,000 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 Yuan Available for sale equity Category Total instruments Balance of the withdrawn impairment at the period-begin 1,210,000.00 1,210,000.00 Balance of the withdrawn impairment at the period-begin Decrease in reporting period Balance of the withdrawn impairment at the period-end 1,210,000.00 1,210,000.00 10. Long-term equity investment Unit: RMB Yuan Increase/decrease Investees Opening Gains and losses balance Additional Reduced recognized Adjustment of other investment investment under the equity comprehensive method income Associated enterprises Changzhou Fuji Changchai Robin 20,459,975.99 670,328.77 Gasoline Engine Co., Ltd. Beijing Tsinghua Industrial Investment Management Co., Ltd. Total 20,459,975.99 670,328.77 91 The 2015 Annual Report of Changchai Company, Limited (Continued) Unit: RMB Yuan Increase/decrease Withdra Closing Closing balance Investees Changes Cash bonus wal of of impairment or profits balance provision of other announced impairme Other equity to issue nt provision Associated enterprises Changzhou Fuji Changchai Robin 361,000.00 20,769,304.76 Gasoline Engine Co., Ltd. Beijing Tsinghua Industrial Investment 44,182.50 Management Co., Ltd. Total 361,000.00 20,769,304.76 44,182.50 11. Investment property (1) Investment property adopted the cost measurement mode Unit: RMB Yuan Houses and construction in Item Land use right Total buildings progress I. Original book value 1. Opening balance 87,632,571.14 87,632,571.14 2. Increased amount of the period (1) Outsourcing (2) Transfer of inventory\fixed assets\project under construction 3. Decreased amount of the period (1) Disposal (2) Other transfer 4.Closing balance 87,632,571.14 87,632,571.14 II. The accumulative depreciation and accumulative amortization 1. Opening balance 28,143,200.31 28,143,200.31 2. Increased amount of the period 2,208,340.80 2,208,340.80 (1) The depreciation or amortization 2,208,340.80 2,208,340.80 3. Decreased amount of the period (1) Disposal (2) Other transfer 4.Closing balance 30,351,541.11 30,351,541.11 III. Impairment provision 1. Opening balance 2. Increased amount of the period (1) Disposal 3. Decreased amount of the period (1) Disposal 92 The 2015 Annual Report of Changchai Company, Limited (2) Other transfer 4.Closing balance IV. Book value 1.Closing book value 57,281,030.03 57,281,030.03 2.Opening book value 59,489,370.83 59,489,370.83 12. Fixed assets (1) List of fixed assets Unit: RMB Yuan Houses and Machinery Electronic Transportation Item Other buildings equipment equipment equipment I. Original book value 1. Opening balance 396,824,164.27 770,295,559.04 24,972,308.30 34,203,362.24 1,226,295,393.85 2. Increased amount of the period 22,585,759.98 37,610,694.57 1,301,254.02 3,574,578.22 65,072,286.79 (1) Purchase 1,438,875.68 1,014,003.12 2,452,878.80 (2) Construction project transfer 22,585,759.98 36,171,818.89 1,301,254.02 2,560,575.10 62,619,407.99 3. Decreased amount of the period 5,117,077.23 2,726,146.34 2,806,366.26 10,649,589.83 (1) Disposal or Scrap 5,117,077.23 2,726,146.34 2,806,366.26 10,649,589.83 4. Closing balance 419,409,924.25 802,789,176.38 23,547,415.98 34,971,574.20 1,280,718,090.81 II. The accumulative depreciation 1. Opening balance 193,417,610.61 414,049,314.25 15,860,361.40 26,148,708.39 649,475,994.65 2. Increased amount of the period 18,674,263.23 58,839,660.03 1,991,957.50 3,487,059.44 82,992,940.20 (1) Withdrawal 18,674,263.23 58,839,660.03 1,991,957.50 3,487,059.44 82,992,940.20 (2) Enterprise combination and increase 3. Decreased amount of the period 4,696,725.45 2,484,106.81 2,790,174.04 9,971,006.30 (1) Disposal or Scrap 4,696,725.45 2,484,106.81 2,790,174.04 9,971,006.30 4. Closing balance 212,091,873.84 468,192,248.83 15,368,212.09 26,845,593.79 722,497,928.55 III. Impairment provision 1. Opening balance 4,033,452.59 4,033,452.59 2. Increased amount of the period (1) Withdrawal 3. Decreased amount of the period 415,183.56 415,183.56 (1) Disposal or Scrap 415,183.56 415,183.56 4. Closing balance 3,618,269.03 3,618,269.03 IV. Book value 1.Closing book value 207,318,050.41 330,978,658.52 8,179,203.89 8,125,980.41 554,601,893.23 2.Opening book value 203,406,553.66 352,212,792.20 9,111,946.90 8,054,653.85 572,785,946.61 The accumulative depreciation in reporting period was RMB82,992,940.20; the original value of construction in progress transfer into fix assets was RMB62,619,407.99. 93 The 2015 Annual Report of Changchai Company, Limited 13. Construction in progress (1) List of construction in progress Unit: RMB Yuan Closing amount Opening amount Item Book balance Bad debt Book value Book balance Bad debt Book value provision provision Trial production workshop project 22,960,533.29 22,960,533.29 27,883,095.92 27,883,095.92 technology center Casting renovation 396,000.00 396,000.00 741,568.90 741,568.90 project Expansion capacity ofnd multi-cylinder (The 2 40,050,712.95 40,050,712.95 27,757,667.58 27,757,667.58 Period) Base of land in Hehai 33,550.53 33,550.53 748,806.82 748,806.82 Road Diesel Engine Cylinder Body Flexible 1,851,752.13 1,851,752.13 10,913,075.99 10,913,075.99 Manufacturing Line Equipment to be installed and payment 42,905,906.11 42,905,906.11 66,904,102.66 66,904,102.66 for projects Total 108,198,455.01 108,198,455.01 134,948,317.87 134,948,317.87 (2) Changes of significant construction in progress Unit: RMB Yuan Capitaliz Amount that Other ation rate Increased Capital Opening transferred to decreased of the Name o f item amount of the Closing balance resourc balance fixed assets of amount of interests period es the period the period of the period Trial production workshop Self 27,883,095.92 1,032,651.06 5,955,213.69 22,960,533.29 project -raised technology center Casting Self renovation 741,568.90 277,006.95 622,575.85 396,000.00 -raised project Expansion capacity of Self multi-cylinder 27,757,667.58 12,322,105.20 29,059.83 40,050,712.95 -raised (The 2nd Period) Base of land in Self 748,806.82 422,350.53 33,550.53 Hehai Road 1,137,606.82 -raised Diesel Engine Cylinder Body Self Flexible 10,913,075.99 285,000.00 1,851,752.13 8,776,323.86 -raised Manufacturing Line Total 68,044,215.21 14,054,113.74 16,520,780.05 285,000.00 65,292,548.90 94 The 2015 Annual Report of Changchai Company, Limited 14. Intangible assets Unit: RMB Yuan Item Land use right Software Other Total I. Original book value 1. Opening balance 137,782,945.30 2,994,758.97 140,777,704.27 2. Increased amount of the period 2,876,932.45 2,876,932.45 (1) Purchase 2,876,932.45 2,876,932.45 (2) Equity investment 3. Decreased amount of the period (1) Withdrawal 4. Closing balance 137,782,945.30 5,871,691.42 143,654,636.72 II. Accumulated amortization 1. Opening balance 35,719,255.75 617,355.90 36,336,611.65 2. Increased amount of the period 2,792,049.12 1,424,513.48 4,216,562.60 (1) Withdrawal 2,792,049.12 1,424,513.48 4,216,562.60 3. Decreased amount of the period (1) Disposal 4. Closing balance 38,511,304.87 2,041,869.38 40,553,174.25 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 99,271,640.43 3,829,822.04 103,101,462.47 2.Opening book value 102,063,689.55 2,377,403.07 104,441,092.62 15. Deferred income tax assets/deferred income tax liabilities (1) Deferred income tax assets had not been off-set Unit: RMB Yuan Closing balance Opening balance Deductible Deferred Item Deductible Deferred income temporary income tax temporary difference tax assets difference assets Assets impairment provision 6,416,872.53 962,530.88 7,232,422.11 1,084,863.32 Total 6,416,872.53 962,530.88 7,232,422.11 1,084,863.32 95 The 2015 Annual Report of Changchai Company, Limited (2) Deferred income tax liabilities had not been off-set Unit: RMB Yuan Closing balance Opening balance Item Deductible Deferred income Deductible Deferred income temporary difference tax liabilities temporary difference tax liabilities Change in fair value of available financial 415,905,500.00 62,385,825.00 410,775,500.00 61,616,325.00 assets Total 415,905,500.00 62,385,825.00 410,775,500.00 61,616,325.00 (3) List of unrecognized deferred income tax assets Unit: RMB Yuan Item Closing amount Opening amount Bad debt provision 263,091,986.15 256,274,709.39 Inventory falling price reserves 47,309,741.15 42,204,060.25 Total 310,401,727.30 298,478,769.64 16. Other non-current assets Unit: RMB Yuan Closing impairment Opening Opening impairment Item Closing balance provision balance 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 Yuan Item Closing balance Opening balance Guaranteed loan 5,000,000.00 20,000,000.00 Mortgage loan 12,000,000.00 Total 17,000,000.00 20,000,000.00 (2) List of the short-term loans overdue but not return 18. Notes payable Unit: RMB Yuan Category Closing balance Opening balance Bank acceptance bill 238,200,000.00 218,351,400.00 Total 238,200,000.00 218,351,400.00 There was no due but not pay notes payable at the period-end. 19. Accounts payable (1) List of accounts payable Unit: RMB Yuan Item Closing balance Opening balance Payment for goods 535,978,470.07 550,858,517.60 Total 535,978,470.07 550,858,517.60 (2) Notes of the accounts payable aging over one year 96 The 2015 Annual Report of Changchai Company, Limited 20. Advance from customers (1) List of advance from customers Unit: RMB Yuan Item Closing balance Opening balance Payment for goods 26,665,671.38 29,364,756.16 Total 26,665,671.38 29,364,756.16 (2) Significant advance from customers aging over one year 21. Payroll payable (1) List of Payroll payable Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance I. Short-term salary 61,303,762.60 271,932,067.68 272,926,480.99 60,309,349.29 II. welfare after departure- defined contribution plan 38,586,479.44 38,586,479.44 III. Termination benefits 194,339.00 194,339.00 Total 61,303,762.60 310,712,886.12 311,707,299.43 60,309,349.29 (2) List of Short-term salary Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance 1.Salary, bonus, allowance, 55,397,399.62 226,108,364.89 227,700,714.71 53,805,049.80 subsidy 2.Employee welfare 6,293,687.77 6,293,687.77 3. Social insurance 18,399,643.19 18,399,643.19 Including: 1. Medical insurance 14,328,125.50 14,328,125.50 premiums Work-related injury insurance 3,176,160.86 3,176,160.86 Maternity insurance 895,356.83 895,356.83 4.Housing fund 16,733,840.00 16,733,840.00 5.Labor union budget and 5,906,362.98 4,396,531.83 3,798,595.32 6,504,299.49 employee education budget 6.Other short-term compensation Total 61,303,762.60 271,932,067.68 272,926,480.99 60,309,349.29 (3) List of drawing scheme Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance 1. Basic endowment insurance 35,910,749.13 35,910,749.13 2. Unemployment insurance expense 2,675,730.31 2,675,730.31 Total 38,586,479.44 38,586,479.44 97 The 2015 Annual Report of Changchai Company, Limited 22. Taxes payable Unit: RMB Yuan Item Closing balance Opening balance VAT 467,010.50 2,537.79 Business tax 2,900.00 Urban maintenance and construction tax 1,996,316.42 830,449.50 Corporate income tax 5,923,463.67 11,517,844.35 Property tax 143,204.50 343,204.46 Personal income tax 49,924.16 211,204.93 Education Surcharge 840,517.28 136.60 The comprehensive fee 1,374,726.40 1,606,598.64 Total 10,798,062.93 14,511,976.27 23. Dividends payable Unit: RMB Yuan 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 of 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 Yuan Item Closing balance Opening balance Margin and cash pledge 3,149,353.59 3,260,188.79 Unit current amount 15,550,754.25 10,133,775.91 Personal amount payable 955,910.51 965,413.51 Sales discount and three guarantees 146,392,031.63 141,620,797.47 Other 35,103,582.48 40,580,689.64 Total 201,151,632.46 196,560,865.32 (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 Yuan Item Closing balance Opening balance Sewage charge 200,000.00 200,000.00 Electric charge 1,795,289.06 2,214,092.24 Other 407,998.00 578,904.50 Total 2,403,287.06 2,992,996.74 98 The 2015 Annual Report of Changchai Company, Limited 26. Deferred income Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Formation reasons Government Government 54,185,979.32 1,064,373.62 53,121,605.70 subsidies allocations Total 54,185,979.32 1,064,373.62 53,121,605.70 Items involved in government subsidies: Unit: RMB Yuan Amount Amount of Related to the Opening accrued in Other Item newly Closing balance assets/ balance non-business changes subsidy income income Electric control of diesel engine research and Related to the development and 2,240,400.00 398,400.00 1,842,000.00 assets industrialization allocations National major project Related to the 28,770,000.00 28,770,000.00 special allocations assets Related to the Remove compensation 23,175,579.32 665,973.62 22,509,605.70 assets Total 54,185,979.32 1,064,373.62 53,121,605.70 27. Share capital Unit: RMB Yuan 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 Yuan 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 Yuan Reporting period Less: Amount After-tax Opening Amount Less: After-tax Closing Item incurred attribute balance transferred income attribute to balance before to the into profit tax minority income parent and loss in expense shareholder tax company the current 99 The 2015 Annual Report of Changchai Company, Limited period that recognized into other comprehens ive income in prior period I. Other comprehensive income can not reclassify into profits and losses in future Of which: changes of net assets and liabilities of defined benefit plans recalculated Share in other comprehensive income can not be reclassified into profits or losses in investment entity under the equity method II. Other comprehensive reclassified into profits or losses Of which: Share in other comprehensive income reclassify into profits or losses in investment entity under the equity method in future Profits or losses of change in fair 349,159,17 5,130,000. 4,360,500. 353,519,675.0 value of 769,500.00 5.00 00 00 0 available-for-sale financial assets Converted difference of the foreign currency financial statement 349,159,17 5,130,000. 4,360,500. 353,519,675.0 Total 769,500.00 5.00 00 00 0 100 The 2015 Annual Report of Changchai Company, Limited 30. Special reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Safety production cost 8,332,077.21 4,394,339.56 2,656,669.79 10,069,746.98 Total 8,332,077.21 4,394,339.56 2,656,669.79 10,069,746.98 31. Surplus reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Statutory surplus reserves 284,994,839.06 7,606,588.95 292,601,428.01 Discretional surplus 13,156,857.90 13,156,857.90 reserves Total 298,151,696.96 7,606,588.95 305,758,285.91 32. Retained profits Unit: RMB Yuan Item 2015 2014 Opening balance of retained profits before adjustments 555,590,894.67 502,779,906.92 Total opening balance of retained profits before adjustments (Increase+，decrease-) Opening balance of retained profits after adjustments 555,590,894.67 502,779,906.92 Add: Net profit attributable to owners of the Company 71,102,792.49 64,202,144.29 Less: Withdrawal of statutory surplus reserves 7,606,588.95 8,522,122.57 Withdrawal of discretional surplus reserves Dividend of common stock payable 11,227,486.52 8,420,614.89 Dividend of common stock transfer into share capital Other transfer (Minority shareholders accumulated excess 5,551,580.92 losses born by the parent Company) Closing retained profits 607,859,611.69 555,590,894.67 33. Revenues and operating costs Unit: RMB Yuan Item Reporting period Same period of last year Revenue Operating costs Revenue Operating costs Main operations 2,495,248,411.83 2,094,368,998.80 2,461,692,196.75 2,089,712,748.30 Other operations 24,551,135.46 15,847,136.82 28,099,866.58 15,647,119.64 Total 2,519,799,547.29 2,110,216,135.62 2,489,792,063.33 2,105,359,867.94 34. Business tax and surcharges Unit: RMB Yuan Item Reporting period Same period of last year Business tax 22,650.00 9,950.00 Urban maintenance and construction tax 4,424,215.49 369,692.62 Education Surcharge 3,185,948.00 369,493.61 Total 7,632,813.49 749,136.23 A YOY increase of 918.88% mainly was the increase of VAT and the relevant tax and surcharge increased. 101 The 2015 Annual Report of Changchai Company, Limited 35. Sales expenses Unit: RMB Yuan Item Reporting period Same period of last year Office expenses 21,201,667.69 26,726,523.60 Employee’s remuneration 28,684,358.57 28,030,498.73 Sales promotional expense 9,218,580.00 9,108,769.40 Three guarantees 30,238,223.49 19,044,277.38 Transport fees 8,414,005.85 9,026,772.82 Other 365,510.11 298,469.20 Total 98,122,345.71 92,235,311.13 36. Administrative expenses Unit: RMB Yuan Item Reporting period Same period of last year Office expenses 19,693,941.37 18,191,537.02 Employee’s remuneration 89,702,808.14 84,212,353.01 Depreciation and amortization 20,448,433.20 14,832,161.62 Research and development expense 37,769,695.87 48,958,053.63 Transport fees 2,948,275.12 2,663,610.42 Repair charge 5,269,797.93 4,713,258.37 Taxes 8,605,279.72 8,691,401.52 Safety expenses 1,737,669.77 3,157,253.68 Other 11,503,014.31 12,285,195.15 Total 197,678,915.43 197,704,824.42 37. Financial expenses Unit: RMB Yuan Item Reporting period Same period of last year Interest expenses 1,183,262.47 2,185,973.83 Less: Interest income 7,372,960.51 6,996,180.56 Exchange net profit or loss -6,135,135.67 -350,929.60 Other -3,398,951.29 -5,771,331.95 Total -15,723,785.00 -10,932,468.28 A YOY decrease of 43.83% mainly was the RMB devaluation, and the exchange profits increased. 38. Asset impairment loss Unit: RMB Yuan Item Reporting period Same period of last year I. Bad debt loss 6,001,727.18 6,832,502.57 Inventory falling price loss 41,250,448.16 25,371,265.32 Fixed assets impairment losses 1,303,400.31 Total 47,252,175.34 33,507,168.20 A YOY increase of 41.02% mainly was the increase of the inventory impairment. 102 The 2015 Annual Report of Changchai Company, Limited 39. Gains on the changes in the fair value Unit: RMB Yuan 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 Yuan Same period of last Item Reporting period year Long-term equity investment income accounted by equity method 670,328.77 1,366,650.26 Investment income from the disposal of long-term equity investment -48,639.55 Investment income received from disposal of financial assets measured by fair value and the changes be included in the current 594,434.83 463,170.51 profits and losses during holding period Investment income received from holding of available-for-sale 6,547,113.40 10,120,500.00 financial assets Investment income from disposal of bank financial products 468,547.94 112,652.05 Financing security gains 839,681.00 Total 9,120,105.94 12,014,333.27 41. Non-operating gains 1. Non-operating gains Unit: RMB Yuan Recorded in the amount Same period of Item Reporting period of the non-recurring last year gains and losses Total gains from disposal of non-current 298,236.45 437,606.94 298,236.45 assets Including: Gains from disposal of fixed 298,236.45 437,606.94 298,236.45 assets Gains from disposal of fixed assets Insurance compensation 1,133,046.55 640,183.28 1,133,046.55 Penalty income 163,851.65 107,879.30 163,851.65 Government subsidies 11,903,636.62 10,344,073.62 11,903,636.62 Income from disposal of current assets 539,523.00 480,726.00 539,523.00 Account payable no need to pay 233,293.74 Other 9,974.29 375,696.40 9,974.29 Total 14,048,268.56 12,619,459.28 14,048,268.56 103 The 2015 Annual Report of Changchai Company, Limited (2) Lists of government subsidies Unit: RMB Yuan Reporting Same period of Related to the Item period last year assets/ income Related to the The central budget investment plans 3,000,000.00 1,000,000.00 income Ultra-low emissions of non-road diesel engine new Related to the 800,000.00 clean combustion key technology income Special fund for Promoting the transformation of Related to the 6,510,000.00 30,000.00 industrial economy steady growth income Related to the The mayor award 500,000.00 100,000.00 income Energy conservation and circular economy development Related to the 260,000.00 special funds income Related to the Science and Technology Progress Award 30,000.00 income Related to the Talent development funds 184,000.00 10,000.00 income Related to the Other science and technology project allocations 130,000.00 310,000.00 income Related to the Other incentives and subsidies 485,263.00 126,000.00 income Related to the Compensation for demolition 665,973.62 665,973.62 assets The special national high technology research and Related to the 2,720,000.00 development plan income R & D and industrialization of electric non-road diesel Related to the 398,400.00 4,322,100.00 engine assets Total 11,903,636.62 10,344,073.62 42. Non-operating expenses Unit: RMB Yuan Recorded in the Same period of last amount of the Item Reporting period year non-recurring gains and losses Loss on disposal of non-current assets 86,306.84 318,704.95 86,306.84 Including: Loss on disposal of fixed assets 86,306.84 318,704.95 86,306.84 Loss on disposal of intangible assets Donation 260,000.00 320,000.00 260,000.00 The flood control security fund 2,468,397.34 2,468,996.84 Loss on disposal of current assets 4,489,449.93 7,130,347.68 4,489,449.93 Other 1,206,723.88 416,443.76 1,206,723.88 Total 8,510,877.99 10,654,493.23 6,042,480.65 104 The 2015 Annual Report of Changchai Company, Limited 43. Income tax expense (1) Lists of income tax expense Unit: RMB Yuan Item Reporting period Same period of last year Current income tax expense accounted by tax and relevant 16,562,132.69 19,476,423.70 regulations Deferred income taxes 122,332.44 111,126.94 Total 16,684,465.13 19,587,550.64 (2) Adjustment process of accounting profit and income tax expense Unit: RMB Yuan Item Reporting period Total profits 89,168,801.02 Current income tax expense accounted by tax and relevant regulations 13,375,320.15 Influence of different tax rate suitable to subsidiary -541,299.00 Influence of income tax before adjustment 26,250.00 Influence of non taxable income -1,053,794.35 Influence of not deductable costs, expenses and losses 3,750,517.88 Influence of deductable losses of deferred income tax assets derecognized used in previous period Influence of deductible temporary difference or deductible losses of deferred income tax 3,130,234.13 assets derecognized in reporting period. Tax preference incurred from qualified expense -2,002,763.68 Income tax expense 16,684,465.13 44. Supplementary information to cash flow statement (1) Other cash received relevant to operating activities Unit: RMB Yuan Item Reporting period Same period of last year Subsidies and grants 10,839,263.00 2,636,000.00 Cash received from other current account 3,502,832.73 4,493,034.27 Interest income 7,372,960.51 6,996,180.56 Total 21,715,056.24 14,125,214.83 (2) Other cash paid relevant to operating activities Unit: RMB Yuan Item Reporting period Same period of last year Sale expense paid into cash 46,608,291.02 48,804,990.49 Management expense paid into cash 39,027,007.46 35,320,350.77 Commission Expenses 701,704.94 533,714.59 Other 1,970,121.12 714,335.29 Total 88,307,124.54 85,373,391.14 105 The 2015 Annual Report of Changchai Company, Limited 45. Supplementary information to cash flow statement (1) Information of net profit to net cash flows generated from operating activities Unit: RMB Yuan Reporting Supplementary materials Last period period 1. Reconciliation of net profit to net cash flows generated from operating activities Net profit 72,484,335.89 65,669,614.56 Add: Provision for impairment of assets 47,252,175.34 33,507,168.20 Depreciation of fixed assets, of oil-gas assets, of productive biological 85,201,281.00 78,043,530.91 assets Amortization of intangible assets 4,216,562.60 2,824,125.39 Long-term unamortized expenses Losses on disposal of fixed assets, intangible assets and other long-term -211,929.61 -118,901.99 assets Losses on retirement of fixed assets Losses from variation of fair value 109,642.19 -109,642.19 Financial expenses 1,211,337.47 2,185,973.83 Investment losses -9,120,105.94 -12,014,333.27 Decrease in deferred income tax assets 122,332.44 111,126.94 Increase of deferred income tax liabilities Decrease in inventory 59,048,257.34 -49,721,106.89 Decrease in accounts receivable from operating activities -142,246,349.15 -76,391,851.77 Increase in payables from operating activities 16,574,597.23 -99,328,131.98 Other -6,715,253.85 3,835,072.74 Net cash flows generated from operating activities 127,926,882.95 -51,507,355.52 2. Investing and financing activities that do not involving cash receipts and payment: Conversion of debt into capital Convertible bonds to be expired within one year Fixed assets under finance lease 3. Net increase in cash and cash equivalents Closing balance of cash 526,716,238.21 464,761,820.50 Less: Opening balance of cash 464,761,820.50 610,882,216.18 Add: Cash equivalents at the end of the period Less: Cash at the beginning of the period Net increase in cash and cash equivalents 61,954,417.71 -146,120,395.68 106 The 2015 Annual Report of Changchai Company, Limited (2) Cash and cash equivalents Unit: RMB Yuan Item Closing balance Opening balance I. Cash 526,716,238.21 464,761,820.50 Including: Cash on hand 252,373.65 557,508.42 Bank deposit on demand 526,463,864.56 464,204,312.08 Other monetary funds on demand II. Cash and cash equivalents Of which: Bond investment due with 3 months III. Closing balance of cash and cash equivalents 526,716,238.21 464,761,820.50 46. The assets with the ownership or use right restricted Unit: RMB Yuan Item Closing book value Restricted reason Bank acceptance draft deposited in the Monetary capital 74,596,477.41 margin Houses and buildings 7,785,071.36 Pledge for bank loan Land use right 19,998,047.72 Pledge for bank loan Total 102,379,596.49 47. Foreign currency monetary items Unit: RMB Yuan Closing foreign currency Item Exchange rate Closing convert to RMB balance balance Monetary capital Including: USD 3,166,105.44 6.4936 20,559,422.29 HKD 90,124.75 0.8378 75,504.71 SGD 54,427.95 4.5875 249,688.22 Account receivable Including: USD 6,757,811.26 6.4936 43,882,523.20 VIII. Changes of merge scope N/A IX. Equity in other entities 1. Equity in subsidiary (1) The structure of the enterprise group Main Nature Holding percentage Registration Way of Name of the subsidiary operating of (%) place gaining place business Directly Indirectly Changchai Wanzhou Diesel Chongqing Chongqing Industry 60 Set-up Engine Co., Ltd. Changzhou Changchai Benniu Changzhou Changzhou Diesel Engine Fittings Co., Industry 99 1 Set-up City City Ltd. 107 The 2015 Annual Report of Changchai Company, Limited Changzhou Housheng Changzhou Changzhou Service 100 Set-up Investment Co., Ltd. City City Changzhou Changchai Changzhou Changzhou Housheng Agricultural Industry 70 25 Set-up City City Equipment Co., Ltd. (2) Significant not wholly owned subsidiary Unit: RMB Yuan Declaring Shareholding The profits and Balance of dividends proportion of losses arbitrate to minority Name of the subsidiary distribute to minority the minority shareholder at minority shareholder shareholders closing period shareholder Changchai Wanzhou Diesel 40 1,505,284.37 17,325,133.25 Engine Co., Ltd. Changzhou Changchai Housheng Agricultural 5 -123,740.97 265,320.22 Equipment Co., Ltd. (3) The main financial information of significant not wholly owned subsidiary Unit: Yuan Closing balance Non-curre Name of the subsidiary current Non-current Current Total Total assets nt assets assets liabilities liabilities liability Changchai Wanzhou 41,770,953.46 28,631,830.17 70,402,783.63 27,089,950.52 27,089,950.52 Diesel Engine Co., Ltd. Changzhou Changchai Housheng Agricultural 16,619,127.25 440,565.96 17,059,693.21 11,753,288.83 11,753,288.83 Equipment Co., Ltd. Unit: Yuan Opening balance Name of the current Non-current Current Non-current Total subsidiary Total assets assets assets liabilities liability liabilities Changchai Wanzhou Diesel Engine Co., 55,203,467.86 29,640,245.55 84,843,713.41 45,294,091.22 45,294,091.22 Ltd. Changzhou Changchai Housheng Agricultural 10,348,739.81 491,333.07 10,840,072.88 3,058,849.18 3,058,849.18 Equipment Co., Ltd. Unit: Yuan Reporting period Same period of last year Name of the Total Total Opera Operatin subsidiary Operation Net compre Operation compre ting g cash Net profit revenue profit hensive revenue hensive cash flow income income flow Changchai 99,618,978.4 3,763,210 3,763,21 6,750,035. 100,257,123. 4,428,574.4 4,428,57 -23,728 Wanzhou Diesel 2 .92 0.92 77 26 9 4.49 ,116.12 Engine Co., Ltd. Changzhou Changchai Housheng -2,474,81 -2,474,8 -5,350,193 -2,215,160. -2,215,16 -3,723, 5,594,781.07 1,752,521.48 Agricultural 9.32 19.32 .17 53 0.53 419.82 Equipment Co., Ltd. 108 The 2015 Annual Report of Changchai Company, Limited 2. Equity in joint venture or associated enterprise (1) Significant joint venture arrangement or associated enterprise Proportion Accounting treatment Main Registration Nature of Directly Indirectl of the investment of Name operating place business y joint venture or place associated enterprise Changzhou Fuji Changchai Robin Changzhou Changzhou Industry 33 Equity method Gasoline Engine Co., City City Ltd. (2) Main financial information of significant associated enterprise Unit: RMB Yuan Changzhou Fuji Changchai Robin Gasoline Engine Co., Ltd. Item Closing balance/ Opening balance / reporting period last period current assets 70,218,388.26 87,055,557.40 Non-current assets 11,465,367.78 13,200,248.78 Total assets 81,683,756.04 100,255,806.18 Current liabilities 11,746,468.25 38,255,878.32 Non-current liability 7,000,000.00 Total liabilities 18,746,468.25 38,255,878.32 Minority interests Equity attributable to owners of the Company 62,937,287.79 61,999,927.86 Portion of net assets calculated according to 20,769,304.76 20,459,975.99 proportion of shareholdings Adjusting events -Goodwill -Retained profits of internal transaction -Other Book value of investment to associated 20,769,304.76 20,459,975.99 enterprise Operation revenue 139,148,868.35 223,014,821.84 Net profit 2,138,273.61 4,326,770.93 Other comprehensive income Total comprehensive income 2,138,273.61 4,326,770.93 Equity received from associated enterprises in 361,000.00 455,000.00 reporting period 109 The 2015 Annual Report of Changchai Company, Limited 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 Yuan Closing fair value Fair value Fair value Fair value Item measurement measurement measurement Total items at level 1 items at level 2 items at level 3 I. Consistent fair value measurement 110 The 2015 Annual Report of Changchai Company, Limited (I) Financial assets calculated by fair value and changes record into current profits or losses 1. Trading financial assets (1) Debt instruments investment (2) Equity tool investment 3. Derivative financial assets 2.Financial assets assigned measured by fair value and the changes be included in the current gains and losses (1) Debt instruments investment (2) Equity tool investment (II) Available-for-sale financial assets 457,780,000.00 457,780,000.00 (1) Debt instruments investment (2) Equity tool investment 457,780,000.00 457,780,000.00 (3) Other Total assets of consistent fair value 457,780,000.00 457,780,000.00 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 The actual controller of the Company is Changzhou Government State-owned Assets Supervision and Administration Commission. As of Dec. 31 2015, it held 30.43% shares of the Company (state owned shares). 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. 5. The Company had no other related transaction need to be disclosed. 111 The 2015 Annual Report of Changchai Company, Limited X I I I . C o m m i t m e nt s a n d c o n t i n g e n c y 1. Significant commitments As of 31 Dec. 2015, there were no significant commitments to be disclosed. 2. Contingency (1) Significant contingency at balance sheet date Litigation and arbitration in the reporting period Amount involved Name of the litigation or Name of the entity Date of accepted (RMB ten Remark arbitration institutions thousand) Under the Shandong Hongli Group Co., Changzhou Intermediate 2001.6.27 1,436.00 bankruptcy and Ltd. People's Court liquidation Beijing Beiqi Changsheng Beijing Shunyi District 2013.8.12 806.36 Enforcing conduct Automobile Co., Ltd. People's Court Total 2,242.36 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 Aug. 12 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 payment of goods RMB 4.2 million, the Company had applied to the Court for compulsory execution. X I V. E v e n t s a f t e r b a l a n c e she e t d a t e 1. Profit distribution Unit: RMB Yuan Planning allocation of profits or dividends 12,911,609.50 X V. O t h e r s i g n i fi ca n t e v e n ts 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 2015 annual enterprise income tax. X V I . N o t e s o f m a i n i t e m s i n t h e f in an c i a l s t ate m e n t s of t h e C o m p a n y 1. Accounts receivable 112 The 2015 Annual Report of Changchai Company, Limited (1) Accounts receivable classified by category Unit: RMB Yuan Closing balance Category Book balance Bad debt provision Proportion Withdrawal Book value Amount Amount (%) proportion Accounts receivable with insignificant single amount 44,942,468.52 9.24 35,630,157.18 79.28 9,312,311.34 for which bad debt provision separately accrued Accounts receivable withdrawal of bad debt 439,906,391.76 90.41 185,340,536.87 42.13 254,565,854.89 provision of by credit risks characteristics: Accounts receivable with insignificant single amount 1,686,716.39 0.35 1,686,716.39 100.00 for which bad debt provision separately accrued Total 486,535,576.67 100.00 222,657,410.44 45.76 263,878,166.23 Unit: RMB Yuan Opening balance Category Book balance Bad debt provision Proportion Withdrawal Book value Amount Amount (%) proportion Accounts receivable with insignificant single amount 43,791,478.96 7.96 31,949,287.94 72.96 11,842,191.02 for which bad debt provision separately accrued Accounts receivable withdrawal of bad debt 504,838,706.00 91.72 185,804,594.53 36.80 319,034,111.47 provision of by credit risks characteristics: Accounts receivable with insignificant single amount 1,776,159.00 0.32 1,413,014.50 79.55 363,144.50 for which bad debt provision separately accrued Total 550,406,343.96 100.00 219,166,896.97 39.82 331,239,446.99 Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end Unit: RMB Yuan Account Bad debt Withdrawal Book balance Withdrawal reason receivable provision proportion Customer 1 3,863,600.00 1,931,800.00 50.00 Estimated difficult to recover Customer 2 1,902,326.58 1,902,326.58 100.00 Difficult to recover Customer 3 6,215,662.64 6,193,248.32 99.64 Difficult to recover Customer 4 4,486,746.29 2,217,955.89 49.43 Estimated difficult to recover Customer 5 3,279,100.00 3,279,100.00 100.00 Estimated difficult to recover Customer 6 2,742,177.01 2,742,177.01 100.00 Estimated difficult to recover Customer 7 5,359,381.00 5,359,381.00 100.00 Difficult to recover 113 The 2015 Annual Report of Changchai Company, Limited Customer 8 2,584,805.83 2,584,805.83 100.00 Difficult to recover Customer 9 1,038,651.32 1,038,651.32 100.00 Difficult to recover Customer 10 1,494,122.14 1,494,122.14 100.00 Difficult to recover Customer 11 11,975,895.71 6,886,589.09 57.50 Estimated 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 Yuan Closing balance Aging Account receivable Bad debt provision Withdrawal proportion Within 1 year 251,499,124.35 5,029,982.56 2.00 1 to 2 years 3,070,411.86 153,520.61 5.00 2 to 3 years 742,175.95 111,326.42 15.00 3 to 4 years 6,075,129.63 1,822,538.88 30.00 4 to 5 years 740,953.96 444,572.39 60.00 Over 5 years 177,778,596.01 177,778,596.01 100.00 Total 439,906,391.76 185,340,536.87 (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 RMB12, 308,197.10; the amount of the reversed or collected part during the reporting period was of RMB8,817,683.63. (3) The actual write-off accounts receivable N/A (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 RMB108, 318,934.68, 22.26% of total closing balance of account receivable, the relevant closing balance of bad debt provision withdrawn was RMB21, 417,408.33. 2. Other accounts receivable (1) Other account receivable classified by category Unit: RMB Yuan Closing balance Book balance Bad debt provision Category Withdrawal Proportion Book value Amount Amount proportion (%) (%) Other accounts receivable with insignificant single amount for 2,853,188.02 8.44 2,853,188.02 100.00 which bad debt provision separately accrued Other accounts receivable withdrawn bad debt provision 29,010,122.91 85.79 24,124,759.90 83.16 4,885,363.01 according to credit risks characteristics Other accounts receivable with insignificant single amount for 1,952,628.15 5.77 1,952,628.15 100.00 which bad debt provision separately accrued Total 33,815,939.08 100.00 28,930,576.07 85.55 4,885,363.01 114 The 2015 Annual Report of Changchai Company, Limited Unit: RMB Yuan Opening balance Book balance Bad debt provision Category Withdrawal Book value Proportion Amount Amount proportion (%) (%) Other accounts receivable with insignificant single amount for 2,853,188.02 8.44 2,853,188.02 100.00 which bad debt provision separately accrued Other accounts receivable withdrawn bad debt provision 29,055,589.24 85.91 23,343,541.80 80.34 5,712,047.44 according to credit risks characteristics Other accounts receivable with insignificant single amount for 1,910,737.23 5.65 1,910,737.23 100.00 which bad debt provision separately accrued Total 33,819,514.49 100.00 28,107,467.05 83.11 5,712,047.44 Other accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end Unit: RMB Yuan Bad debt Withdrawal Withdrawal Other accounts receivable Book balance provision proportion (%) reason Changchai Group Import & Export Co., Difficult to 2,853,188.02 2,853,188.02 100 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 Yuan Closing balance Aging Other accounts receivable Bad debt provision Withdrawal proportion (%) Within 1 year 3,326,334.58 66,526.70 2.00 1 to 2 years 149,154.60 7,457.73 5.00 2 to 3 years 700,859.60 105,128.94 15.00 3 to 4 years 419,414.38 125,824.31 30.00 4 to 5 years 1,486,343.82 891,806.29 60.00 Over 5 years 22,928,015.93 22,928,015.93 100.00 Total 29,010,122.91 24,124,759.90 (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 RMB823, 109.02; the amount of the reversed or collected part during the reporting period was of RMB 0. (3) The actual write-off other accounts receivable N/A (4) Other account receivable classified by account nature 115 The 2015 Annual Report of Changchai Company, Limited Unit: RMB Yuan Nature Closing balance Opening balance Guarantee and cash pledge 4,200.00 4,200.00 Unit current amount 17,463,134.91 17,481,166.27 Petty cash &employee borrowing 1,560,886.41 1,575,915.66 Other 14,787,717.76 14,758,232.56 Total 33,815,939.08 33,819,514.49 (5) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party Unit: RMB Yuan Closing Proportion Bad debt Name of the entity Nature Aging balance % provision Changzhou Compressor Co., Ltd. Intercourse funds 2,940,000.00 Over 5 years 8.69 2,940,000.00 Changchai Group Import & Intercourse funds 2,853,188.02 Over 5 years 8.44 2,853,188.02 Export Co., Ltd. Changzhou New District Intercourse funds 1,626,483.25 Over 5 years 4.81 1,626,483.25 Accounting Center OEM Group Settlement Center Intercourse funds 1,140,722.16 Over 5 years 3.37 1,140,722.16 Changzhou Xingsheng Property Intercourse funds 664,451.84 Over 5 years 1.97 13,289.04 Management Co., Ltd. Total 9,224,845.27 27.28 8,573,682.47 3. Long-term equity investment Unit: RMB Yuan Closing balance Opening balance Item Depreciatio Depreciatio Book balance Book value Book balance Book value n reserves n 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 20,813,487.26 44,182.50 20,769,304.76 20,504,158.49 44,182.50 20,459,975.99 associated enterprises Total 205,279,987.26 44,182.50 205,235,804.76 204,970,658.49 44,182.50 204,926,475.99 (1) Investment to the subsidiary Unit: RMB Yuan Withdraw n Closing impairmen Opening balance of Investee Increase Decrease Closing balance t provision balance impairment in the provision reporting period Changchai Wanzhou Diesel Engine Co., 51,000,000.00 51,000,000.00 Ltd. 116 The 2015 Annual Report of Changchai Company, Limited Changzhou Changchai Benniu 96,466,500.00 96,466,500.00 Diesel Engine Fittings Co., Ltd. Changzhou Housheng 30,000,000.00 30,000,000.00 Investment 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 Yuan Increase/decrease in reporting period Investment Opening Adjustment of Investee profit and loss balance Additional Negative other recognized investment investment comprehensive under the income equity method Subsidiary of joint venture Changzhou Fuji Changchai Robin Gasoline Engine Co., 20,459,975.99 670,328.77 Ltd. Beijing Tsinghua Xingye Industrial Investment 44,182.50 Management Co., Ltd. Total 20,504,158.49 670,328.77 (Continued) Unit: RMB Yuan Increase/decrease in reporting period Closing Declaration of Closing balance of Investee Changes Withdrawn cash balance impairment of other impairment Other provision dividends or equity provision profits Subsidiary of joint venture Changzhou Fuji Changchai Robin 361,000.00 20,769,304.76 Gasoline Engine Co., Ltd. Beijing Tsinghua Xingye Industrial Investment 44,182.50 44,182.50 Management Co., Ltd. Total 361,000.00 20,813,487.26 44,182.50 117 The 2015 Annual Report of Changchai Company, Limited 4. Revenues and operating costs Unit: RMB Yuan Item Reporting period Same period of last year Revenue Operating costs Revenue Operating costs Main operations 2,495,008,065.10 2,115,049,779.90 2,469,762,995.76 2,120,724,877.54 Other operations 21,857,546.18 14,537,700.98 24,576,560.38 14,038,318.73 Total 2,516,865,611.28 2,129,587,480.88 2,494,339,556.14 2,134,763,196.27 5. Investment income Unit: RMB Yuan Same period of last Item Reporting period year Long-term equity investment income accounted by cost method 2,446,600.00 Long-term equity investment income accounted by equity method 670,328.77 1,366,650.26 Investment income arising from disposal of long-term equity -250,797.67 investments Investment income received from holding of available-for-sale 5,829,840.00 10,120,500.00 financial assets Investment income from disposal of bank financial products 468,547.94 Financing security gains 839,681.00 Total 7,808,397.71 13,682,952.59 XVII. S u p p l e m e n t ar y m a t e r i a l s 1. Items and amounts of extraordinary gains and losses Unit: RMB Yuan Item Amount Explanation Gains/losses on the disposal of non-current assets 211,929.61 Tax rebates, reductions or exemptions due to approval beyond 11,903,636.62 authority or the lack of official approval documents Included in current profit and loss against the non-financial 1,523,155.52 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 available-for-sale financial assets, 1,793,021.58 other than valid hedging related to the Company’s common businesses Other non-operating income and expenses other than the above -4,109,778.32 Income tax effects 1,747,894.80 Minority interests effects 59,740.01 Total 9,514,330.20 118 The 2015 Annual Report of Changchai Company, Limited 2. Return on equity (ROE) and earnings per share (EPS) Unit: RMB Yuan Weighted average EPS (Yuan/share) Profit as of reporting period ROE (%) EPS-basic EPS-diluted Net profit attributable to common shareholders of 3.53 0.13 0.13 the Company Net profit attributable to common shareholders of the Company after deduction of non-recurring profit 3.06 0.11 0.11 and loss 119 The 2015 Annual Report of Changchai Company, Limited Section XI. Documents Available for Reference Including the following documents: 1. 2015 Annual Report with the signature of the Board Chairman of the Company; 2. Financial Statements carrying the signatures and seals of the responsible person of the Company, the head of the accounting work as well as the head of the accounting organ; 3. Text of the Auditor’s Report with the seal of the accounting firm and the signatures and seals of the certified public accountants; 4. Originals of all documents of the Company ever disclosed publicly in the reporting period on media designated by China Securities Regulatory Commission such as the Securities Times and Ta Kung Pao and the originals of all the public notices; and 5. Articles of Association of the Company. The above-mentioned documents available for reference are all placed in the Secretariat of the Board of Directors of the Company. This report is prepared in both Chinese and English. Should there be any understanding discrepancy between the two versions, the Chinese version shall prevail. 120
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